U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10QSB
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the period ended March 31, 2005
COMMISSION
FILE NUMBER 000-30426
LARGO
VISTA GROUP, LTD
(Name of
Small Business Issuer in Its Charter)
|
Nevada |
76-0434540 |
|
(State
of Incorporation) |
(IRS
Employer Identification No.) |
|
4570
Campus Drive |
Newport
Beach, CA 92660 |
(Address
of Principal Executive Offices)
(949)
252-2180
ISSUER'S
TELEPHONE NUMBER
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [ ]
State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date: 375,000,000 shares of Common Stock ($.001 par
value) as of April 27, 2005.
LARGO
VISTA GROUP, LTD.
Table of
Contents
|
PART
I. |
FINANCIAL
INFORMATION |
|
| |
|
|
|
Item
1. |
Financial
Statements (Unaudited) |
3 |
| |
|
|
| |
Condensed
Consolidated Balance Sheets |
3 |
| |
March
31, 2005 and December 31, 2004 |
|
| |
|
|
| |
Condensed
Consolidated Statements of Losses |
4 |
| |
Three
Months Ended March 31, 2005 and 2004 |
|
| |
|
|
| |
Condensed
Consolidated Statements of Cash Flows |
5 |
| |
Three
Months Ended March 31, 2005 and 2004 |
|
| |
|
|
| |
Notes
to Unaudited Condensed Consolidated Financial Information |
6 |
| |
March
31, 2005 |
|
| |
|
|
| |
|
|
|
Item
2. |
Management's
Discussion and Analysis |
8 |
| |
|
|
|
Item
3. |
Controls
and Procedures |
10 |
| |
|
|
|
PART
II. |
OTHER
INFORMATION |
|
| |
|
|
|
Item
1. |
Legal
Proceedings |
11 |
| |
|
|
|
Item
2. |
Changes
in Securities and Use of Proceeds |
11 |
| |
|
|
|
Item
3. |
Defaults
Upon Senior Securities |
11 |
| |
|
|
|
Item
4. |
Submission
of Matters to a Vote of Security holders |
11 |
| |
|
|
|
Item
5. |
Other
Information |
11 |
| |
|
|
|
Item
6. |
Exhibits |
11 |
2
PART I.
FINANCIAL INFORMATION
Item 1.
Financial Statements (Unaudited)
|
LARGO
VISTA GROUP, LTD. |
|
CONDENSED
CONSOLIDATED BALANCE SHEETS |
| |
|
|
| |
(Unauidted) |
|
| |
March
31, 2005 |
December
31, 2004 |
|
ASSETS |
|
|
|
Current
assets: |
|
|
|
Cash
and cash equivalent |
$
41,402 |
$
94,565 |
|
Accounts
receivable, net |
-
|
6,865
|
|
Employee
advances |
19,004
|
13,532
|
|
Inventories,
at cost (Note B) |
11,230
|
8,834
|
|
Prepaid
expenses and other |
45,096
|
12,541
|
|
Total
current assets |
116,732
|
136,337
|
| |
|
|
|
Property
and equipment, at cost |
16,221
|
16,221
|
|
Less:
accumulated depreciation |
10,034
|
9,273
|
| |
6,187
|
6,948
|
| |
|
|
|
Deposits |
755
|
755
|
| |
|
|
|
Total
assets |
$
123,674 |
$
144,040 |
| |
|
|
|
LIABILITIES
AND DEFICIENCY IN STOCKHOLDERS' EQUITY |
|
|
Current
Liabilities: |
|
|
|
Accounts
payable and accrued liabilities |
$
401,250 |
$
467,632 |
|
Customer
deposits |
4,831
|
4,831
|
|
Notes
payable to related parties |
434,782
|
434,782
|
|
Due
to related parties |
142,588
|
157,393
|
|
Total
Current Liabilities |
983,451
|
1,064,638
|
| |
|
|
|
Commitment
and contingencies |
-
|
-
|
| |
|
|
|
Preferred
stock, $0.001 par value; 25,000,000 shares authorized, none issued and
outstanding at March 31, 2005 and December 31, 2004 (Note
C) |
|
|
|
Common
stock, $0.001 par value; 400,000,000 shares authorized, 277,635,403 and
269,963,856 shares issued and outstanding at March 31, 2005 and December
31, 2004, respectively (Note C) |
277,635
|
269,964
|
|
Additional
paid-in capital |
15,344,344
|
15,184,356
|
|
Subscription
payable |
-
|
18,458
|
|
Accumulated
deficit |
(16,485,456) |
(16,397,076) |
|
Accumulated
other comprehensive income: |
|
|
|
Foreign
currency translation adjustment |
3,700
|
3,700
|
|
Deficiency
in stockholders' equity |
(859,777) |
(920,598) |
| |
|
|
|
Total
liabilities and deficiency in stockholders' equity |
$
123,674 |
$
144,040 |
See
accompanying notes to the unaudited condensed consolidated financial
information
3
|
LARGO
VISTA GROUP, LTD. |
|
CONDENSED
CONSOLIDATED STATEMENTS OF LOSSES |
|
(Unaudited) |
| |
|
|
| |
For
the three months ended March 31, |
| |
2005 |
2004 |
|
Revenue
|
$
54,611 |
$
124,692 |
|
Cost
of sales |
66,066
|
103,231
|
|
Gross
profit (loss) |
(11,455) |
21,461
|
| |
|
|
|
Operating
expenses: |
|
|
|
Selling
general and administrative |
68,554
|
89,230
|
|
Depreciation
|
762
|
762
|
|
Total
operating expenses |
69,316
|
89,992
|
| |
|
|
|
Loss
from operations |
(80,771) |
(68,531) |
| |
|
|
|
Other
income (expenses): |
|
|
|
Other
income, net |
-
|
6,562
|
|
Interest
income (expense) |
(7,609) |
(7,871) |
|
Total
other income (expenses) |
(7,609) |
(1,309) |
| |
|
|
|
Loss
from operations before income taxes |
(88,380) |
(69,840) |
|
Provision
for income taxes |
-
|
-
|
|
Net
loss |
$
(88,380) |
$
(69,840) |
| |
|
|
|
Loss
per common share (basic and assuming diluted) |
$
(0.00) |
$
(0.00) |
|
Weighted
average shares outstanding |
276,612,530
|
266,378,547
|
See
accompanying notes to the unaudited condensed consolidated financial
information
4
|
LARGO
VISTA GROUP, LTD. |
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
(Unaudited) |
| |
|
| |
For
the three months ended March 31, |
| |
2005 |
2004 |
|
CASH
FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
Net
(loss) from operations |
$
(88,380) |
$
(69,840) |
|
Adjustments
to reconcile net (loss) to net cash provided by operating
activities: |
|
|
|
Depreciation
|
762
|
762
|
|
Common
stock issued for services |
-
|
-
|
|
Changes
in assets and liabilities: |
|
|
|
Accounts
receivable |
6,865
|
11,162
|
|
Inventories |
(2,396) |
6,459
|
|
Employee
advances |
(5,472) |
(8,348) |
|
Prepaid
expenses and other |
(32,555) |
8,748
|
|
Accounts
payable and other liabilities |
17,618
|
55,975
|
|
Deferred
revenue |
-
|
15,374
|
|
NET
CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES |
(103,558) |
20,292
|
| |
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
Capital
contributions from related parties (Note C) |
40,979
|
9,356
|
|
Proceeds
from related parties, net of repayments |
9,416
|
8,941
|
|
NET
CASH PROVIDED BY FINANCING ACTIVITIES |
50,395
|
18,297
|
| |
|
|
|
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
(53,163) |
38,589
|
|
Cash
and cash equivalents at the beginning of the period |
94,565
|
7,874
|
|
Cash
and cash equivalents at the end of the period |
$
41,402 |
$
46,463 |
| |
|
|
|
Supplemental
Disclosures of Cash Flow Information |
|
|
|
Cash
paid during the period for interest |
$ -
|
$ -
|
|
Income
taxes paid |
-
|
-
|
|
Common
stock issued for accrued service fees (Note C) |
84,000
|
82,400
|
|
Common
stock issued in exchange for due to related parties (Note
C) |
24,222
|
15,078
|
|
Common
stock issued in exchange for common stock subscription (Note
C) |
18,458 |
- |
See
accompanying notes to the unaudited condensed consolidated financial
statements
5
LARGO
VISTA GROUP, LTD.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
MARCH 31,
2005
(UNAUDITED)
NOTE A -
SUMMARY OF ACCOUNTING POLICIES
---------------------------------------
General
-------
The
accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-QSB. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Accordingly,
the results from operations for the three-month period ended March 31, 2005 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 2005. The unaudited condensed consolidated financial
statements should be read in conjunction with the consolidated December 31, 2004
financial statements and footnotes thereto included in the Company's SEC Form
10-KSB.
Business
and Basis of Presentation
----------------------------------
Largo
Vista Group, Ltd. (the "Company") was incorporated under the laws of the State
of Nevada. The Company is principally engaged in the distribution of liquid
petroleum gas (LPG) in the retail and wholesale markets in South China and in
the purchase of petroleum products for delivery to the Far East.
The
consolidated financial statements include the accounts of the Company and its
wholly-owned subsidiaries, Largo Vista, Inc., Largo Vista Construction, Inc.,
and Largo Vista International Corp. Largo Vista, Inc. is formed under the laws
of the State of California and is inactive. Largo Vista Construction, Inc. is
formed under the laws of the State of Nevada and is inactive. Largo Vista
International Corp. is formed under the laws of Panama and is inactive. The
Company also has operations through DBA (Doing Business As) agreements with
Zunyi Jiahong Gas Co., Ltd. ("Jiahong"). Jiahong is registered under the Chinese
laws in the Peoples Republic of China.
All
significant intercompany balances and transactions have been eliminated in
consolidation. All amounts in these consolidated financial statements and notes
thereto are stated in United States dollars unless otherwise
indicated.
Stock
Based Compensation
------------------------
In
December 2002, the FASB issued Statement of Financial Accounting Standards
No. 148 (“SFAS No. 148”), "Accounting for Stock-Based
Compensation-Transition and Disclosure-an amendment of SFAS 123." This
statement amends SFAS No. 123, "Accounting for Stock-Based Compensation,"
to provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, this statement amends the disclosure requirements of SFAS No. 123
to require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in APB Opinion No. 25 and related interpretations.
Accordingly, compensation expense for stock options is measured as the excess,
if any, of the fair market value of the Company's stock at the date of the grant
over the exercise price of the related option. The Company has adopted the
annual disclosure provisions of SFAS No. 148 in its financial reports for
the year ended December 31, 2004 and has adopted the interim disclosure
provisions for its financial reports for the subsequent periods. The Company has
no awards of stock-based employee compensation outstanding at March 31,
2005.
6
LARGO
VISTA GROUP, LTD.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
MARCH 31,
2005
(UNAUDITED)
NOTE A -
SUMMARY OF ACCOUNTING POLICIES (Continued)
---------------------------------------
Stock
Based Compensation (Continued)
------------------------
On
December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 123R (revised 2004), "Share-Based Payment" which is a revision of
FASB Statement No. 123, "Accounting for Stock-Based Compensation". Statement
123R supersedes APB opinion No. 25, "Accounting for Stock Issued to Employees",
and amends FASB Statement No. 95, "Statement of Cash Flows". Generally, the
approach in Statement 123R is similar to the approach described in Statement
123. However, Statement 123R requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the income
statement based on their fair values. Pro-forma disclosure is no longer an
alternative. On April 14, 2005, the SEC amended the effective date of the
provisions of this statement. The effect of this amendment by the SEC is that
the Company will have to comply with Statement 123R and use the Fair Value based
method of accounting no later than the first quarter of 2006. Management has not
determined the impact that this statement will have on Company's consolidated
financial statements.
Revenue
Recognition
------------------------
For
revenue from product sales, the Company recognizes revenue in accordance with
Staff Accounting Bulletin No. 104, REVENUE RECOGNITION ("SAB104"), which
superseded Staff Accounting Bulletin No. 101, REVENUE RECOGNITION IN FINANCIAL
STATEMENTS ("SAB101"). SAB 101 requires that four basic criteria must be met
before revenue can be recognized: (1) persuasive evidence of an arrangement
exists; (2) delivery has occurred; (3) the selling price is fixed and
determinable; and (4) collectibility is reasonably assured. Determination of
criteria (3) and (4) are based on management's judgments regarding the fixed
nature of the selling prices of the products delivered and the collectibility of
those amounts. Provisions for discounts and rebates to customers, estimated
returns and allowances, and other adjustments are provided for in the same
period the related sales are recorded. The Company defers any revenue for which
the product has not been delivered or is subject to refund until such time that
the Company and the customer jointly determine that the product has been
delivered or no refund will be required.
SAB 104
incorporates Emerging Issues Task Force 00-21 ("EITF 00-21"),
MULTIPLE-DELIVERABLE REVENUE ARRANGEMENTS. EITF 00-21 addresses accounting for
arrangements that may involve the delivery or performance of multiple products,
services and/or rights to use assets. The effect of implementing EITF 00-21 on
the Company's consolidated financial position and results of operations was not
significant.
The
Company generally recognizes revenue upon delivery of LPG to the customer.
Revenue associated with shipments of petroleum products is recognized when title
passes to the customer. There are no significant credit transactions.
In
February 2002, the Company entered into an agreement (“Agreement”) with Zunyi
Municipal Government (“Government”) to design and install LPG pipeline systems
in residential areas in the city of Zunyi, China on behalf of Government. In
exchange for installing the pipeline, the Agreement provides for the Company to
be the sole LPG supplier for those households. Pursuant to the Agreement,
Government had paid to the Company 50% of the total contracted installation
fees, and the Company has to collect the remaining 50% of contract price
directly from the customers. The Company substantially completed the
installation of the LPG pipeline as of December 31, 2002 and recognized revenues
in the amount of fees collected from Government. The Company’s management has
determined that the collectibility and length of time to collect the amount due
from customers can not be reasonably assured. Accordingly, revenues are
recognized as collected in connection with the portion of the contracted price
to be collected from customers.
7
LARGO
VISTA GROUP, LTD.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
MARCH 31,
2005
(UNAUDITED)
NOTE A -
SUMMARY OF ACCOUNTING POLICIES (Continued)
---------------------------------------
Revenue
Recognition (Continued)
------------------------
In May
2003, the Company entered into its Second Agreement (“Second Agreement”) with
Government to design and install more LPG pipeline systems in residential areas
in the city of Zunyi, China on behalf of Government. In exchange for installing
the pipeline, the Second Agreement provides for the Company to be the sole LPG
supplier for those households. Pursuant to the Second Agreement, Government is
obligated to pay to the Company 50% of the total contracted installation price,
and the Company has to collect the remaining 50% of contracted price directly
from the customers. During the year ended December 31, 2003, the Company did not
receive any payments from Government and thus delayed the installation of
pipelines. During the year ended December 31, 2004, the Company received 50% of
the total contracted price from Government and substantially completed the
installation project. The Company recognized revenues in the amount of fees
collected from Government during the year ended December 31, 2004. The Company
management has determined that the collectibility and length of time to collect
the remaining contracted price due from customers can not be reasonably assured.
Accordingly, revenues will be recognized as collected in connection with the
portion of contracted price to be collected from customers.
Reclassifications
------------------
Certain
reclassifications have been made in prior year’s financial statements to conform
to classifications used in the current year.
NOTE B -
INVENTORIES
--------------------
Inventories
are stated at the lower of cost or market determined by the first-in, first-out
(FIFO) method. Inventories consist primarily of liquid petroleum gas available
for sale to contract clients and the public. Components of inventories as of
March 31, 2005 and December 31, 2004 are as follows:
| |
March
31, 2005 |
December
31, 2004 |
|
Liquid
petroleum gas |
$
6,073 |
$
2,860 |
|
Packaging
bottles |
4,570 |
4,428 |
|
Supplies |
587 |
1,546 |
|
Total |
$
11,230 |
$
8,834 |
NOTE C -
CAPITAL STOCK
----------------------
The
Company has authorized 25,000,000 shares of Series A Preferred Stock, with a par
value of $.001 per share. As of March 31, 2005 and December 31, 2004, the
Company has no Series A Preferred Stock issued and outstanding. The company has
authorized 400,000,000 shares of common stock, with a par value of $.001 per
share. As of March 31, 2005 and December 31, 2004, the Company has 277,635,403
and 269,963,856 shares of common stock issued and outstanding,
respectively.
In
December 2004, one of the Company’s significant shareholders agreed to subscribe
1,230,546 shares of common stock in exchange for $15,000 of notes payable and
$3,458 of accrued interest due to the shareholder. The Company accounted for the
common shares to be issued as stock subscription payable at December 31, 2004.
In January 2005, the 1,230,546 shares of common stock were issued.
8
LARGO
VISTA GROUP, LTD.
NOTES TO
CONDENSED CONSOLIDATED FINANCIAL INFORMATION
MARCH 31,
2005
(UNAUDITED)
NOTE C -
CAPITAL STOCK (Continued)
----------------------
During
the three months ended March 31, 2005, the Company issued an aggregate of
4,923,963 shares of common stock to consultants for in exchange for accrued
services fees in the amount of $84,000. All valuations of common stock issued
for services were based upon the value of the services rendered, which did not
differ materially from the fair value of the Company's common stock during the
period the services were rendered. Additionally, the Company issued an aggregate
of 1,517,038 shares of common stock to related parties in exchange for $24,222
of expenses previously paid by the related parties on behalf of the Company.
During
the three months ended March 31, 2005, the Company Chairman and significant
shareholders contributed cash of $40,979 to the Company as working
capital.
NOTE D -
DISTRIBUTION AGREEMENT
----------------------
On March
18, 2005, the Company entered into a definitive agreement with Shanghai Offshore
Oil Group (HK) Co., Ltd. (“Shanghai Oil”) to provide fuel oil from Russia to
end-users in China beginning in May of 2005 for a period of thirty-seven (37)
months. In exchange for the distribution right, the Company agreed to issue to
Shanghai Oil an aggregate of 100,000,000 shares of its common stock. The common
shares shall be issued over 3 years at 33,333,333 shares per year, commencing
May 2005.
In April
2005, the Company has prepared 15 stock certificates for an aggregate for
97,364,597 shares of common stock. These stock certificates are payable to
Shanghai Oil but are currently in the custody of the Company’s Secretary and
Treasurer, and accordingly not deemed outstanding. The certificates will be
delivered to Shanghai Oil at 33,333,333 shares per year, commencing May 2005
when the first shipment is consummated.
In
accordance with Emerging
Issues Task Force Issue 96-18, Accounting for Equity Instruments That Are Issued
to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services (“EIFT 96-18”), Issue 3 —
For Transactions in Which the Quantity and Terms Are Known Up Front, the
Accounting Prior to the Measurement Date. The Company will recognize cost of the
transaction at their then-current fair values at each of the subsequent interim
financial reporting dates. Changes in those fair values between those interim
reporting dates will be attributed in accordance with the methods illustrated in
Interpretation 28.
9
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The
following discussion should be read in conjunction with the
Company's
Condensed
Consolidated Financial Statements and Notes thereto, included
elsewhere
within this Report.
DESCRIPTION
OF THE COMPANY
--------------------------
Largo
Vista Group, Ltd. (“Largo Vista” or the "Company") was formed under the laws of
the State of Nevada on January 16, 1987 under the name, "The George Group". On
January 9, 1989, The George Group acquired Waste Service Technologies, Inc.
("WST"), an Oregon corporation, and filed a name change in Nevada and changed
its name to WST, listed its stock, and began trading on OTC bulletin
Board.
On April
15, 1994, WST acquired Largo Vista, Inc., a California corporation, and filed a
name change in Nevada to change WST's name to Largo Vista Group, Ltd., OTC
bulletin Board symbol "LGOV". Largo Vista originally planned to develop housing
in China, but after shipping two factory built homes to China, never fully
implemented plans due to unanticipated financing, environmental and regulatory
complications.
Unless
the context otherwise requires, all references to the Company include its
wholly-owned subsidiaries, Largo Vista, Inc., an inactive California
corporation, Largo Vista Construction, Inc., an inactive Nevada corporation, and
Largo Vista International, Corp., an inactive Panama corporation. Largo Vista
also has operations through Doing Business As (“DBA”) agreement with Jiahong Gas
Co., Ltd. (“Jiahong”), registered under the Chinese laws in the Peoples Republic
of China, Guizhou Province.
Through
DBA agreements with Jiahong, Largo Vista is engaged in the business of
purchasing and reselling liquid petroleum gas ("LPG") in the retail and
wholesale markets to both residential and commercial consumers. Largo Vista
operated a storage depot and has an office headquarters in the City of Zunyi.
Largo Vista has found the storage depot operations to be unprofitable; and
therefore has terminated those operations in order to concentrate its resources
on supplying LPG in bottles and through pipelines.
In
February 2002, Largo Vista’s China operations entered into an agreement with the
Zunyi Municipal Government to design and install LPG pipeline systems in
residential areas in the city of Zunyi. In exchange for installing the pipeline,
the agreement provides for the Largo Vista to be the sole LPG supplier for those
households for 40 years. Largo Vista substantially completed the installation of
the LPG pipeline in 2002 and continues to operate the pipeline.
In May
2003, Largo Vista’s China operations entered into its second agreement with
Zunyi Municipal Government to design and install more LPG pipeline systems in
residential areas in the city of Zunyi, China. The pipeline project was
substantially completed in December of 2004. These two pipelines currently serve
approximately 440 customers. When natural gas becomes available to the area,
these pipelines will be in place to deliver that commodity to the same
customers.
In
addition, Largo Vista has contracted with a private developer to construct four
additional pipelines in the same area. Pipeline Number 3 will serve 42
condominiums with completion estimated in July of 2005. Pipeline Number 4 will
serve 60 condominiums. Construction schedules are being developed. Pipeline
Number 5 will serve 1,067 condominiums with completion estimated in August of
2005. Pipeline Number 6 will serve 5,000 condominiums and is currently in the
architectural development stage. All of these pipelines will be operated by
Largo Vista under exclusive 40-year supply contracts.
Largo
Vista continues to engage in the petroleum supply business in
Vietnam.
In
addition, Largo Vista has two representative offices in the Far East area, one
in Wuhan, China and another in Ho Chi Minh City, Vietnam, to supervise LPG and
gas oil trading operations in China and Vietnam, respectively. Largo Vista
continues to evaluate the acquisition of other possible business opportunities
in the Far East.
10
On March
18, 2005, Largo Vista signed an Agreement and Assignment of Certain Contractual
Rights and Benefits (the “Agreement”), with Shanghai Offshore Oil Group (HK)
Co., Ltd. (“Shanghai Oil”). Under the Agreement, Shanghai Oil assigns to Largo
Vista all of its rights under a prior contract with Asiacorp Investment Holding
Ltd. to purchase fuel oil from Russia and deliver it to The People’s Republic of
China (the “Asiacorp Contract”). The Agreement states that deliveries will begin
no later than May 18, 2005 and continue for a period of thirty-seven (37) months
at a rate of up to two hundred thousand (200,000) metric tons per month. The
assigned Asiacorp Contract provides that the estimated value of the maximum
potential deliveries over the life of the Agreement, at the market prices in
effect at the time of the signing of the Asiacorp Contract on July 22, 2004, to
be approximately one billion, two hundred thirty million, nine hundred sixty
thousand dollars ($1,230,960,000.00). The Agreement provides that Largo Vista
will be guaranteed a minimum of two dollars ($2.00) profit per metric ton, and
that Shanghai Oil will continue to be responsible for the logistics and
financing of the delivery of the fuel oil. In exchange, Largo Vista will issue
to Shanghai Oil one hundred million (100,000,000) shares of Largo Vista’s common
stock, to be issued in three increments, one-third within ten days of the
signing of the Agreement or thirty days before the first delivery, the second
one-third one year later, and the final one-third one year later.
FORWARD
LOOKING STATEMENTS
--------------------------
This Form
10-QSB contains certain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements included Herein
that address activities, events or developments that the Corporation expects,
believes, estimates, plans, intends, projects or anticipates will or may occur
in the future, are forward-looking statements. Actual events may differ
materially from those anticipated in the forward-looking statements. Important
risks that may cause such a difference include: general domestic
and
international
economic business conditions, increased competition in the Company's markets and
products. Other factors may include, availability and terms of capital, and/or
increases in operating and supply costs. Market acceptance of existing and new
products, rapid technological changes, availability of qualified personnel also
could be factors. Changes in the Company's business strategies and development
plans and changes in government regulation could adversely affect the Company.
Although the Company believes
that the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate. There can be no
assurance that the forward-looking statements included in this filing will prove
to be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a representation by the Company that the objectives
and expectations of the Company would be achieved.
RESULTS
OF OPERATIONS
---------------------
REVENUE
-------
During
the quarter ended March 31, 2005 the Company realized $54,611 of revenue
compared to $124,692 for the same period in the prior year, a 56.20% decrease.
This is primarily attributable to the decrease in revenues from the unprofitable
depot operations closed in the second quarter 2004.
COSTS AND
EXPENSES
------------------
The
Company incurred costs of sales of $66,066 in connection with the LPG revenues
during three months ended March 31, 2005, compared to $103,231 for the three
months ended March 31, 2004. This is primarily attributable to the decrease in
revenues from the unprofitable depot operations closed in 2004.
During
the quarter ended March 31, 2005 the Company incurred $69,316 of operating
expenses compared to $89,992 for the same period in the prior year. The decrease
was due primarily to further reduction in overhead positions and the closure of
the unprofitable depot operations.
11
LIQUIDITY
AND CAPITAL RESOURCES
-------------------------------
As of
March 31, 2005, we had a deficiency in working capital of $866,719. As result of
our net loss of $88,380, adjusted principally for $32,555 of increase in prepaid
expenses and $17,618 of decrease in accounts payable and accrued liabilities,
our cash flow used in operations was $103,558 during the three months ended
March 31, 2005. Certain shareholders and related parties have advanced funds and
contributed capital to the Company in the amount of $50,395 during the three
months ended March 31, 2005. Our net cash decreased from $94,565 at December 31,
2004 to $41,402 at March 31, 2005, a net decrease of $53,163.
In the
past we have raised capital to meet our working capital requirements. Additional
financing may not be required due to the contract agreement stated previously.
The
effect of inflation on the Company's revenue and operating results was not
significant. The Company's operations are located in mainland China and there
are no seasonal aspects that would have a material effect on the Company's
financial condition or results of operations.
The
Company's independent certified public accountant has stated in his report
included in the Company's December 31, 2004 Form 10-KSB, that the Company has
incurred operating losses in the last two years, and that the Company is
dependent upon management's ability to develop profitable operations.
This
signed contract agreement should be sufficient to begin profitable operations.
CAUTIONARY
FACTORS THAT MAY AFFECT FUTURE RESULTS
-------------------------------------------------
Our
annual report on Form 10-KSB for the year ended December 31, 2004 includes a
detailed list of cautionary factors that may affect future results. Management
believes that there have been material changes to the factors so listed, and as
such should reflect positively on future results. That annual report can be
accessed in the EDGAR section of the SEC website.
ITEM 3.
CONTROLS AND PROCEDURES
The
Company's management including the Chief Executive Officer, President and Chief
Financial Officer, have evaluated, within 90 days prior to the filing of this
quarterly report, the effectiveness of the design, maintenance and operation of
the Company's disclosure controls and procedures. Management determined that the
Company's disclosure controls and procedures were effective in ensuring that the
information required to be disclosed by the Company in the reports that it files
under the Exchange Act is accurate and is recorded,
processed,
summarized and reported within the time periods specified in the Commission's
rules and regulations.
Disclosure
controls and procedures, no matter how well designed and implemented, can
provide only reasonable assurance of achieving an entity's disclosure
objectives. The likelihood of achieving such objectives is affected by
limitations inherent in disclosure controls and procedures. These include the
fact that human judgment in decision-making can be fully faulty and that
breakdowns in internal control can occur because of human failures such as
errors or mistakes or intentional circumvention of the established
process.
There
have been no significant changes in internal controls or in other factors that
could significantly affect these controls subsequent to the date of the
evaluation thereof, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II
OTHER INFORMATION
ITEM 1.
LEGAL PROCEEDINGS
None
12
ITEM 2.
CHANGES IN SECURITIES AND USE OF PROCEEDS
In
January 2005, the Company issued an aggregate of 4,923,963 shares of common
stock to consultants for in exchange for accrued services fees in the amount of
$84,000. The shares were issued pursuant to an exemption provided by Section
4(2) of the Securities Act.
In
January 2005, the Company issued an aggregate of 1,517,038 shares of common
stock to related parties in exchange for $24,222 of expenses previously paid by
the related parties on behalf of the Company. The shares were issued pursuant to
an exemption provided by Section 4(2) of the Securities Act.
In
January 2005, the Company issued 1,230,546 shares of common stock to a
shareholder in exchange for $15,000 of notes payable and $3,458 of accrued
interest due to the shareholder. The shares were issued pursuant to an exemption
provided by Section 4(2) of the Securities Act.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5.
OTHER INFORMATION
None
ITEM 6.
EXHIBITS
|
31.1 |
Certification
pursuant to Section 302 of the |
| |
Sarbanes-Oxley
Act of 2002 - Chief Executive Officer. |
| |
|
|
31.2 |
Certification
pursuant to Section 302 of the |
| |
Sarbanes-Oxley
Act of 2002 - Chief Financial Officer |
| |
|
|
32.1 |
Certification
of Deng Shan Pursuant to Section 906 of |
| |
the
Sarbanes-Oxley Act of 2002. |
| |
|
|
32.2 |
Certification
of Albert Figueroa Pursuant to Section |
| |
906
of the Sarbanes-Oxley Act of 2002. |
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
|
DATE:
May 11, 2005 |
LARGO
VISTA GROUP, LTD. |
| |
|
| |
/S/
DENG SHAN |
| |
----------------------- |
| |
DENG
SHAN |
| |
CHIEF
EXECUTIVE OFFICER |
13