LIVING 3D HOLDINGS, INC. - Annual Report: 2015 (Form 10-K)

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2015

or

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to __________

Commission file number:  000-01900

Living 3D Holdings, Inc.
(Exact name of registrant as specified in its charter)

Room S, 2/F, Block D East Sun Industrial Center,

(Address of principal executive offices, including zip code)

(852)3563-9280
Registrant's telephone number, including area code

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No  ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

Yes ☐ No  ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ☒  No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐ 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.  

 

 

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ☐  No ☒

As of June 30, 2015, the aggregate market value of the registrant's voting and non-voting common equity held by non-affiliates computed by reference to the average bid and ask price ($0.10) of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter was: $1,010,701.

There were 69,703,480 shares of the registrant's common stock issued and outstanding as of March 30, 2016.

Documents Incorporated by Reference:  None.

Special Note Regarding Forward-Looking Statements

This annual report contains forward-looking statements, as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "should," "would" and similar expressions intended to identify forward-looking statements.  Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties.

Given these uncertainties, you should not place undue reliance on these forward-looking statements.  These forward-looking statements include, among other things, statements relating to:

·	our ability to find suitable markets for and increase sales of products we develop and commercialize;

·	our ability to successfully source manufacturing capacity for our products;

·	our ability to obtain additional capital in future years to fund expansion of our product line, new marketing initiatives and/or acquisitions;

·	economic, political, regulatory, legal and foreign exchange risks associated with our operations; or

·	the loss of key members of our senior management.

Also, forward-looking statements represent our estimates and assumptions only as of the date of this annual report. You should read this report and the documents that we reference and filed as exhibits to this report completely and with the understanding that our actual future results may be materially different from what we expect.  Except as required by law, we assume no obligation to update any forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in any forward-looking statements, even if new information becomes available in the future or other events occur in the future.

Use of Certain Defined Terms

Except where the context otherwise requires and for the purposes of this report only:

·	"Company," "we," "us," "our," "Living 3D" and "Registrant" refer to Living 3D Holdings, Inc. (formerly known as AirWare International Corp.; formerly known as Concrete Casting Incorporated), a corporation incorporated in Nevada;

·	"Exchange Act" refers to the Securities Exchange Act of 1934, as amended;

·	"PRC," "China," and "Chinese," refer to the People's Republic of China (excluding Hong Kong, Macau and Taiwan);

·	"Securities Act" refers to the Securities Act of 1933, as amended;

·	"U.S. dollars," "dollars" and "$" refer to the legal currency of the United States;

·	"HK Dollars" refers to Hong Kong dollars, the legal currency of Hong Kong.

·	"Renminbi" and "RMB" refers to the legal currency of the People's Republic of China.

Unless otherwise stated, we have translated balance sheet amounts with the exception of equity at December 31, 2015 at HK Dollars 7.8 to US $1.00 and at HK dollars 7.8 and RMB 6.2061 to US $1.00 at December 31, 2014.  We have stated equity accounts at their historical rates.  The average translation rates applied to income statement accounts for the year ended December 31, 2015 were at HK Dollars 7.8, and HK Dollars 7.8 and RMB 6.1610 for the year ended December 31, 2014.  We make no representation that the HK Dollars, Renminbi or U.S. dollar amounts referred to in this annual report could have been or could be converted into U.S. dollars, HK Dollars or Renminbi as the case may be, at any particular rate or at all.

For the sake of clarity, this report follows English naming convention of first name followed by last name, regardless of whether an individual's name is Chinese or English. For example, the name of our President will be presented as "Man Wah Stephen Yip," even though, in Chinese, his name would be presented as "Yip Man Wah Stephen."

 

Where to Obtain More Information

We are a reporting company under the Exchange Act. You may obtain annual, quarterly, and special reports and other information that we file with the Securities and Exchange Commission ("SEC").  You may read and copy any document that we file with the SEC at the SEC's Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549.  You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  Electronic filings filed on or after July 1, 1992 are available via the Electronic Data Gathering Analysis and Retrieval System ("EDGAR") at the public reference facility.  The SEC also maintains a web site that contains reports, proxy and information statements and other materials that are filed through EDGAR which can be accessed at http://www.sec.gov.

Our filings may also be accessed through the SEC's website (http://www.sec.gov).  We will provide a copy of any or all documents incorporated by reference herein (exclusive of exhibits unless such exhibits are specifically incorporated by reference therein), without charge, to each person to whom this annual report is delivered, upon written or oral request to Living 3D Holdings, Inc., at Room S, 2/F, Block D East Sun Industrial Center, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong, our telephone number is (852-3563-9280) and our web address is ltdh-online.com .

We intend to furnish record-holders of our securities with annual reports containing financial statements, audited and reported upon by our independent auditors, and may also furnish quarterly reports containing unaudited interim financial information and such other periodic reports as we determine to be appropriate or as may be required by law.

Part I

Living 3D is a globally integrated enterprise that targets intersection of 3D Technology and effective business. The Company specializes in the design, development, production, sale and marketing of "auto stereoscopic 3D" technology, or Auto 3D products. The products we market are based on  "auto stereoscopic 3D" technology, or Auto 3D  which means that viewers are not required to wear 3D glasses in order to experience the 3D effects of the screen, and instant switching between two dimensional, or 2D, and 3D viewing is enabled.  We believe that this gives us a competitive advantage over other suppliers of 3D products requiring the use of a visor or glasses in order to experience a 3D effect.

The Company also provides technical and support services of 3D in software development, contents production and hardware configuration to a wide range of industries, including entertainment, education, consumer electronics, medical diagnosis, scientific research and, in particular, media and advertising. The Company aims at customizing product requirements and specifications in order to enhance the power of product displays in business advertising and special operational environments.

          Through innovative and reliable provision of products and services as well as collaboration with other strategic partners, the Company is embarking on the following new strategic directions:

·	Enabling enterprises to fully exploit the power and capacity of 3D technology;

·	Satisfying the full range of media display in business advertising and business operation;

·	Enabling a truly integrated solution for 3D applications and powerful display specially customized for business requirements and operations; and

·	Developing and delivering a comprehensive low cost media content development and productivity environment.

We market our 3D technologies and products under our Living 3D brand in the PRC.

With the change in the Company's control in December 2015, the Company redefined its business from 3D technology development to computer software development with major operations in Hong Kong and Mainland China. The Company focuses on the research and development of ecommerce platform, mobile game and virtual reality application. Our ecommerce platform seeks to integrate web application with product manufacturing which will increase the productivity and efficiency of the operation. Along with the ever increasing usage of the internet, our O2O (O2O stands for "online to offline." It's a term used to describe a variety of ecommerce services that provide online information, services, or discounts to consumers that enhance their offline shopping experiences.) ecommerce platform is expected to bring in more business opportunities to the manufacturer.

Corporate History

Concrete Casting was incorporated on October 28, 1987 in the state of Nevada under the name Staco Incorporated.  It was organized for the purpose of conducting business as a transfer agent.  This business was unsuccessful as a transfer agent and became inactive.  The business remained inactive until November 30, 2001, when it acquired certain assets from Cordell Henrie, a sole proprietor doing business as "Concrete Casting" and he became its president.  Staco Incorporated changed its name to Concrete Casting Incorporated on January 17, 2002.  The assets acquired included drawings, plans and concepts regarding the design of replicas of antiquities to be cast in concrete and marketed to the U.S. landscaping market.  From such point through December 31, 2007, Concrete Casting focused on concrete products though its emphasis changed from replicas of antiquities to construction applications, such as casted window wells and water features for landscaping use. Mr. Henrie eventually was no longer able to devote the time necessary to Concrete Casting's product development and he resigned as an officer and a director as of December 31, 2007.  Because Concrete Casting's development in the concrete casting business was not sufficiently mature to make it commercially viable, the decision was made to shut down development of concrete products and discontinue those operations.

In 2008, Concrete Casting hired Kevin J. Asher as its new president to locate and acquire new business opportunities.  At such time, Concrete Casting was a shell company with nominal assets whose sole business was to identify, evaluate and investigate various companies with the intent to effect a reverse merger transaction under which it would acquire a target company with an operating business to continue the acquired company's business as a publicly-held entity. On July 1, 2010, Concrete Casting changed its name to "AirWare International Corp." and on September 27, 2011, AirWare International changed its name to "Living 3D Holdings, Inc."

 

On December 8, 2011, certain of the prior shareholders of Living 3D Holdings, Inc. (formerly AirWare International Corp. and formerly Concrete Casting Incorporated), a Nevada corporation and a publicly held and traded company (the "Company"), who were the holders of a majority of the issued and outstanding shares of capital stock of the Company (the "Selling Shareholders") and Jimmy Kent-Lam Wong, June Mon Yon, Chang Li, Kin Wah Ngai and Lin Su (each, a "Purchaser" and collectively, the "Purchasers"), entered into a stock purchase agreement (the "Stock Purchase Agreement").  Under the terms of the Stock Purchase Agreement, the Purchasers purchased from the Selling Shareholders an aggregate of 3,627,426 of the shares (the "Purchase Shares") of common stock, par value $0.001 per share, of the Company owned by the Selling Shareholders on December 8, 2011 (the "Closing Date"), for an aggregate consideration of $385,000 (the "Stock Purchase").

Also on the Closing Date, the Company, Living 3D Holdings, Limited, a British Virgin Islands corporation and a privately held company ("L3D-BVI"), and all of the shareholders of L3D-BVI (the "L3D-BVI Shareholders") entered into a share acquisition and exchange agreement (the "Share Exchange Agreement"). Under the terms of the Share Exchange Agreement, the Company acquired from the L3D-BVI Shareholders all of the issued and outstanding shares of common stock of L3D-BVI (the "L3D-BVI Shares"), making L3D-BVI a wholly-owned subsidiary of the Company, and, in exchange for all of the L3D-BVI Shares (the "Share Exchange"), the Company issued to the L3D-BVI Shareholders an aggregate of 62,590,880 shares (the "Exchange Shares") of its common stock.  L3D-BVI was incorporated on June 23, 2008 under the laws of the British Virgin Islands and was, at the time of the Stock Purchase and Share Exchange, a privately held company, while the Company was a publicly held and traded company on the OTC Bulletin Board under the symbol "CCSG."

Upon the completion of the Stock Purchase and the Share Exchange, our business became that of L3D-BVI, our wholly-owned subsidiary. As prior to the Stock Purchase and the Share Exchange, the Company had no operating activities, the financial statements and Management's Discussion and Analysis reflect the activity of L3D-BVI for all periods presented.  Upon the closing of the Stock Purchase and the Share Exchange, the shareholders of the Company retained an aggregate of 3,485,174 shares of common stock and the former L3D-BVI Shareholders acquired an aggregate of 66,218,306 shares of common stock, for a total of 69,703,480 shares of common stock issued and outstanding.  Accordingly, the former L3D-BVI Shareholders owned approximately 95% of the Company's total issued and outstanding common stock.  The foregoing descriptions of the terms of the Stock Purchase Agreement and the Share Exchange Agreement are qualified in their entirety by reference to the provisions of such documents included as exhibits in our filings with the SEC.

On November 30, 2015, Jimmy Kent-Lam Wong, who was the holder of a majority of the issued and outstanding shares of the capital stock of the Company ("Wong"), and Man Wah Stephen Yip ("Yip") entered into a stock purchase agreement (the "Wong-Yip Stock Purchase Agreement"). Under the terms of the Wong-Yip Stock Purchase Agreement, Yip purchased from Wong an aggregate of 37,883,841 of the shares (the "Wong-Yip Purchase Shares") of common stock, par value $0.001 per share, of the Company owned by Wong, for a nominal consideration of $100.

By a separate Stock Purchase Agreement dated November 30, 2015, the Company had disposed of all of its subsidiary companies, namely, Living 3D Holdings, Limited, Living 3D International (HK) Limited, Colombia College Hollywood International Limited and Living 3D Technology Group Limited to Jimmy Kent-Lam Wong at a nominal consideration of $100. The disposal was effective as of October 1, 2015.

The terms the "Company," "we," "us," or "our" refer to Living 3D Holdings, Inc., a Nevada corporation, (formerly known as AirWare International Corp. and formerly known as Concrete Casting Incorporated).

Recent Developments

On June 18, 2013, Living 3D (Hong Kong) Limited ("L3D-HK") entered into an agreement with China 3D Industrial Park Company Limited, a Chinese corporation ("China 3D"), and Tianjin 3D Technology Company Limited, a Chinese corporation ("Tianjin 3D"), to form a joint venture company, 3D Science & Cultural Products International Exchange Center. The principal activities of the joint venture company were to be the provision of a platform for the exhibition and trading of 3D products and the transfer of 3D technology.

              The total capital of 3D Science & Cultural Products International Exchange Center was RMB 10,000,000 (approximately US $1.6 million).  L3D-HK and China 3D each committed to contribute RMB 4,500,000 (approximately US $0.7 million) of such amount and each owned 45% of the joint venture.  L3D-HK and China 3D made their respective capital contributions as follows: RMB 1,500,000 (approximately US $0.24 million) on or before July 31, 2013; RMB 1,500,000 (approximately US $0.24 million) on or before December 31, 2013; and RMB 1,500,000 (approximately US $0.24 million) on or before May 31, 2014. L3D-HK and China 3D had made their capital contribution on August 30, 2013 and August 1, 2013, respectively. Tianjin 3D contributed certain assets valued at RMB 1,000,000 (approximately US $0.16 million) for its equity interest of 10% in the joint venture.

              Jimmy Kent-Lam Wong, the Company's former CEO, former director and former principal shareholder, was also one of two directors of China 3D and through his affiliates owned a 50% interest in China 3D.  Chang Li, the Company's former Chief Technology Officer and a former director, was the second director of China 3D.  Additionally, Chang Li was the sole director and shareholder of Tianjin 3D, which also owned a 50% interest in China 3D.

              By a Sale and Purchase Agreement dated June 26, 2014, L3D-HK had sold its 45% of 3D Science & Cultural Products International Exchange Center to Excellent Plus Group Limited, an independent third party, for a consideration of US$250,000, effective on April 1, 2014. The consideration of US$250,000 was satisfied by the forgiveness of debt of the same amount due to Kingdom Industry Group Inc.

By a Stock Purchase Agreement dated November 30, 2015, the Company had sold all its interests in Living 3D Holdings, Limited to Jimmy Kent-Lam Wong, our former CEO, former director and former principal shareholder, for a nominal consideration of US$100, effective on October 1, 2015.

Sourcing and Manufacturing

We have contracted with third party manufacturers for the production of the displays we have sold to date.  Such manufacturers produced these products using OEM parts under specifications and informal licenses granted by certain of our former directors and principal shareholder.  These former directors and principal shareholder do not receive any compensation for these licenses.  See Item 13 "Certain Relationships and Related Transactions, and Director Independence."  We do not have any contracts with our third party manufacturers.

Marketing, Distribution and Sales

We have conducted limited marketing efforts to date.  We have made all of our sales to date in the PRC to government and research entities and educational institutions.  We have sold large LED displays (approximately three by three meters), 3D TV's and 3D panels.  We do not have any personnel dedicated to marketing, distribution and sales, nor do we have any agreements in place related to those functions.  To date, certain of our former directors and principal shareholder have carried out these functions, but their efforts have been limited to the sale of a small number of products.  We intend to continue to utilize their services as necessary as we seek to add additional personnel to assist in our marketing and sales functions.  In the future, given sufficient capital, we intend to market the products we sell through our participation in industry trade shows and conferences and through public relations and event sponsorships.

Sources and Availability of Raw Materials and Principal Suppliers

We have relied, and expect to continue to rely, on third parties to manufacture products for us to market and sell.  Although we may use our current manufacturers for future product orders we obtain, we do not have any obligation to use such manufacturers nor do we have any future product orders pending.  Given our current level of operations, we have not had problems obtaining sufficient supplies of raw materials or component parts.  We do not have multiple sources of supply for these items, but believe there are readily available alternative sources at acceptable prices.

Inventory, Operating Capital and Seasonality

We have no inventory because we have our products manufactured only after we receive orders.  In the future, we may seek to store products pending sale at the manufacturing facilities that produced such products, if feasible.  We do not maintain any warehouse facility. Our business is too new to be able to assess whether seasonality could be a material factor in our business.  We do not require material amounts of operating capital because we are in the development stage.

Dependence on Major Customers

We have no major customers at this point.

Competition

The market for 3D hardware technology is still in its early stages.  Nonetheless, there are already many established and early stage companies that address the 3D display market in one way or another, including makers of 3D televisions and mobile phones, such as Panasonic Corporation, Samsung Electronics Corporation, Ltd., Sony Corporation and X6D Limited.  For the most part, these companies do not use Auto 3D technology, and thus do not compete directly with the products we seek to market.  However, at this time, we consider them to be competitors generally in the effort to market 3D monitor solutions to end-user businesses.  Nearly all of these companies have significantly greater human and economic resources than we do and there can be no assurance that we will be able to effectively compete with them for market share.

Intellectual Property

We rely on certain intellectual property rights held by Jimmy Kent-Lam Wong, who is a former director and principal shareholder, for the manufacture of the 3D products we have marketed and sold to date.  He has licensed these rights on an informal, as needed basis, to third party manufacturers and to us to enable us to make the sales we have made to date.  Such intellectual property consists principally of trade secrets and know-how.  The owner of the intellectual property has not explored whether it may be protectable by patents.  We have not paid any compensation to the license holder for these licenses.  These licenses have been verbal and the license holder is under no obligation to continue to offer us such licenses in the future, nor have the licenses included any terms other than the implied right to use the intellectual property to manufacture the products we have sold to date.  For example, the verbal licenses have not included any indemnification provision to protect us if the products infringe on any third-party intellectual property rights, or any representations or warranties with regard to non-infringement or other matters.  Accordingly, we may have liability for infringement or similar matters that arise with respect to the products we have sold to date.  We can offer no assurance that we will be able to obtain future licenses on terms acceptable to us, or on any terms, or to successfully develop or contract for the development of new designs to enable us to manufacture new products for sale in the future.

Patents, Trademarks and Trade Secrets

We own the internally developed trademarks and copyrights used in connection with the marketing, distribution and sale of products we have sold to date.  However, we have not registered any of these trademarks or copyrights and there can be no assurance that we will be able to protect such trademarks and copyrights from infringement or third party claims, if any.  We have not filed for any patents on our products or technologies.

 

We relied on the trade secrets and know-how of one of our former directors and former principal shareholder to produce the products we have sold in the past before the change in control of the Company in December 2015.  We have not entered into confidentiality or invention assignment or license agreements with such party.  Nor have we or such party entered into similar agreements with our third party manufacturers.  We do, however, generally divide the steps for production of our products among different manufacturers according to their expertise and specialization and to protect our trade secrets.  Moreover, no assurance can be given that third parties will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets and know-how.

Research and Development

We have not engaged in research and development activities since our inception.

Governmental Regulation

The market for 3D technology is affected by a wide range of U.S. and international regulations, including regulations related to taxation and import-export controls, which could negatively impact the market for the devices we sell or decrease potential profits to the Company.

Costs and Effects of Compliance with Environmental Laws; Environmental Matters

We are not aware of any material costs or impacts on our business related to compliance with federal, state or local environmental laws regarding the products we intend to market and sell.

Insurance

We do not carry any kind of product liability or other business insurance.

Legal and Administrative Proceedings

We are not a party to any material legal or administrative proceedings, and we are not aware of any threatened material legal or administrative proceedings against us.

Facilities

We had an office in the United States at 109 Lafayette Street, Suite 802, New York, New York 10013.  Our office in Hong Kong was located at Room 512, 5/F., Beverly Commercial Center, No. 87-105 Chatham Road South, Tsimshatsui, Kowloon, Hong Kong. With the change in control in December 2015, our office in Hong Kong had been moved to Room S, 2/F, Block D East Sun Industrial Center, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong and we no longer maintain our former office in the United States since then. We have no other facilities.

Employees

As of December 31, 2015, we had no full-time employees.

Corporate Information

The Company's principal executive office is located at Room S, 2/F, Block D East Sun Industrial Center, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong .

Not applicable.

None.

          Our executive office in Hong Kong consists of approximately 400 square feet located at Room S, 2/F, Block D East Sun Industrial Center, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong.  The lease commenced on March 1, 2015 and continues through February 28, 2017. This office is furnished to us by our CEO at no charge.

There are no claims, actions, suits, proceedings or investigations that are currently pending or, to our knowledge, threatened by or against us, or with respect to our operations or assets, by or against any of our officers, directors or affiliates.

Not applicable.

PART II

          The common stock of the Company is quoted on the OTC Bulletin Board under the symbol "LTDH" (previously "CCSG").  Although our common stock is quoted on the OTC Bulletin Board, it has traded sporadically with no significant volume.  Consequently, the information provided below may not be indicative of the price of our common stock under different conditions. The high/low closing prices of our common stock were as follows for the periods below.  The quotations below reflect inter-dealer bid prices without retail markup, markdown, or commission and may not represent actual transactions:

Holders of Common Stock

As of March 30, 2016, we had approximately 80 stockholders of record for our common stock.

Dividend Policy

To date, we have not declared or paid cash dividends on our shares of common stock.  The holders of our common stock will be entitled to non-cumulative dividends on the shares of common stock, when and as declared by our board of directors, in its discretion.  We intend to retain all future earnings, if any, for our business and do not anticipate paying cash dividends in the foreseeable future.  Any future determination to pay cash dividends will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements, general business conditions and such other factors as our board of directors may deem relevant.

Securities Authorized for Issuance under Equity Compensation Plans

As of March 30, 2016, the Company does not have in place any equity compensation plans.

Recent Issuances of Unregistered Securities

          None.

Not applicable.

Forward-Looking Statements

This annual report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. The words "believe," "expect," "anticipate," "intend," "estimate," "may," "should," "could," "will," "plan," "future," "continue" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. A wide variety of factors could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate.

Factors that could cause or contribute to our actual results to differ materially from those discussed herein or for our stock price to be adversely affected include, but are not limited to: (i) our lack of operating history results; (ii) our independent registered public accountants have expressed a going concern opinion; (iii) our ability to raise additional working capital that we may require and, if available, that such working capital will be on terms acceptable to us; (iv) our ability to implement our business plan; (v) uncertainties regarding our ability to increase revenues and penetrate our market; (vi) economic and general risks relating to business; (vii) our ability to manage our costs of production; (viii) our ability to protect our intellectual property through patents and other intellectual property protection; (ix) our dependence on key personnel; (x) increased competition or our failure to compete successfully; (xi) our ability to keep pace with technological advancements in our industry; (xii) our ability to comply with Section 404 of the Sarbanes-Oxley Act of 2002, as required; (xiii) our nonpayment of dividends and lack of plans to pay dividends in the future; (xiv) future sale of a substantial number of shares of our common stock that could depress the trading price of our common stock, if it trades, lower our value and make it more difficult for us to raise capital; (xv) our additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our common stock; (xvi) our ability to have our common stock trade in an active public market; (xvii) the price of our stock, if it trades, is likely to be highly volatile because of several factors, including a relatively limited public float; and (xviii) indemnification of our officers and directors.

 

General

The following discussion should be read in conjunction with our Financial Statements and notes thereto. The following discussion contains forward-looking statements, including, but not limited to, statements concerning our plans, anticipated expenditures, the need for additional capital and other events and circumstances described in terms of our expectations and intentions. You are urged to review the information set forth under the captions for factors that may cause actual events or results to differ materially from those discussed below.

Overview

           Despite the change in control in December 2015, there have not been any material changes to the nature of business.   As such, the following Management Discussion and Analysis is focused on the operations of L3D-BVI.

          We market 3D technologies and products under our Living 3D brand in the PRC.  Given sufficient capital, we plan to build our revenues by focusing on direct sales and sales to retail distributors in selected markets. The following discussion summarizes the material changes in our results of operations and our financial condition for the years ended December 31, 2015 and December 31, 2014.

Operating Results

The Statement of Operations is included in the Financial Statements attached to this annual report.  Please refer to this Statement of Operations.

Results from Operations

Revenues.  For the years ended December 31, 2015 and December 31, 2014, revenues were $6,795 and $8,512, respectively, a decrease of $1,717.  The revenues for the year ended December 31, 2015 were derived from sales of 3D technology products manufactured by third parties.  The decrease in revenue was due to a decrease in product sales in the twelve months' period over the comparable period. Moreover, the Company is still in the early stage of development and its sales fluctuate.

Cost of Revenue.  The Company's cost of revenue decreased to $6,300 from $7,898 in the year ended December 31, 2015 compared to the same period in 2014.  The decrease was due to the decrease in sales in the current year.

Gross Profit.  For the year ended December 31, 2015, the gross profit was $495 compared with $614 for the same period in 2014. The decrease was because of the decrease in sales in the current year.

General and Administrative Expenses.  For the years ended December 31, 2015 and December 31, 2014, general and administrative expenses were $343,920 and $612,547, respectively, a decrease of $268,627.  The decrease in such expenses was primarily attributable to the decrease in the general and administrative expenses of the Company's subsidiary companies which were disposed of effective October 1, 2015.

 

Gain on disposal of subsidiaries.  For the years ended December 31, 2015 and December 31, 2014, gain on disposal of subsidiaries was $2,121,795 and $(-0-), respectively, an increase of $ 2,121,795. The increase was primarily due to the net gain on the disposal of the Company's interest in Living 3D Holdings, Limited effective October 1, 2015 to Jimmy Kent-Lam Wong.

Gain on disposal of joint venture.  For the years ended December 31, 2015 and December 31, 2014, gain on disposal of joint venture was $(-0-) and $126,848, respectively, a decrease of $ 126,848. The decrease was primarily due to the net gain on the disposal of the Company's interest in 3D Science & Cultural Products International Exchange Center in Tianjin effective April 1, 2014 to Excellent Plus Group Limited and there was no such disposal in 2015.

Operating Income or Operating (Loss).  For the year ended December 31, 2015, the operating income was $1,778,370 and, for the same year ended December 31, 2014, the operating loss was $(485,085), a decrease of $2,263,455.  The decrease of operating loss between the years was explained by the decrease in general and administrative expenses which were further offset by the gain on disposal of subsidiaries discussed above.

Interest Income (Expenses). The interest expenses for the year ended December 31, 2015 amounted to ($16,267) and ($26,509) for the year ended December 31, 2014. The interest expenses represented interest payable to Kingdom Industry Group, Inc. on advances of US$300,000. The loan bears interest of 7.33% per annum.

Net (Loss) Attributable to Non-controlling interests. The net loss attributable to the non-controlling interests for the year ended December 31, 2015 amounted to ($-0-) compared with a net loss attributable to the non-controlling interests of ($35,435) for the year ended December 31, 2014, a decrease of $35,435. The net loss attributable to the non-controlling interest of ($35,435) for the year ended December 31, 2014 represented the share of the net loss by the non-controlling interests of 3D Science & Cultural Products International Exchange Center in Tianjin for the three months ended March 31, 2014. The joint venture had been disposed of effective April 1, 2014.

Net Income/(Loss) Attributable to the Company.  For the year ended December 31, 2015, the net income attributable to the Company was $1,761,796 compared with a net loss of ($476,273) for the year ended December 31, 2014, a decrease of $2,238,069. The decrease in the loss attributable to the Company was primarily due to the decrease in the general and administrative expenses which were further offset by the gain on disposal of subsidiaries as discussed above.

Income Tax Provision.  No provision for income tax benefit from net operating losses had been made for the years ended December 31, 2015 and 2014 as we had fully reserved the asset until realization is more reasonably assured.

Comprehensive Income (Loss) Attributable to Non-controlling interests.  The comprehensive loss attributable to the non-controlling interests for the year ended December 31, 2015 was ($-0-) compared with ($34,559) for the year ended December 31, 2014, a decrease of $34,559.  This decrease mainly resulted from the decrease in general and administrative expenses attributable to the non-controlling interest of the Company's joint venture which was disposed of effective April 1, 2014.

Comprehensive Income (Loss) Attributable to the Company.  The comprehensive income attributable to the Company for the year ended December 31, 2015 was $1,761,796 compared with a comprehensive loss of ($475,557) for the year ended December 31, 2014, a decrease of $(2,237,353).  This decrease was primarily due to the decrease in general and administrative expenses which were further offset by the gain on disposal of subsidiaries as discussed above.

Liquidity and Capital Resources.  Cash and cash equivalents as of December 31, 2015 and December 31, 2014 totaled $100 and $3,691, respectively, a decrease of $3,591. The decrease was attributable to the disposal of the Company's interest in Living 3D Holdings, Limited effective October 1, 2015 to Jimmy Kent-Lam Wong.

Liquidity and Capital Resources

Current and Expected Liquidity

Historically, we have financed operations primarily through the issuance of debt.  In the near future, as additional capital is needed, we expect to rely primarily on the loans from our major shareholder and sale of equity securities. We had loans payable to Kingdom Industry Group Inc., a company controlled by our former CEO and major shareholder, Jimmy Kent-Lam Wong, in an aggregate principal amount of $300,000 at December 31, 2014  that do not contain any restrictive covenants restricting our ability to issue additional debt or equity securities.  We also financed operations by increasing our payables and liabilities due to third parties. The payables and liabilities decreased from $1,401,771 at December 31, 2014 to $69,176 at December 31, 2015, a decrease of $1,332,595.  The decrease is due principally to the disposal of the Company's subsidiaries.

Our cash flows used for operating activities decreased by $81,303 from $214,135 at December 31, 2014  to $132,832 at December 31, 2015, due principally to the decrease in our general and administrative expenses and a decrease in the expenses of the subsidiaries.

Our cash used in investing activities decreased by $5,033, from $7,120 at December 31, 2014 to $2,087 at December 31, 2015, due primarily to the decrease in the purchase of the fixed assets for the Company's joint venture in 2014. The Company had disposed its joint venture in April 2014.

Our cash from financing activities decreased by $39,299, from $170,627 at December 31, 2014 to $131,328 at December 31, 2015, due principally to a decrease in loans from related parties.

We will require substantial additional capital to develop a market for our computer software product and implement our business plan.  We plan to pursue financing from private investors and institutions in and outside the PRC.  We do not have any commitments for additional financing. Such new financing could include equity, which would likely be dilutive to our shareholders, or debt, which would likely restrict our ability to borrow from other sources.  In addition, such securities may contain rights, preferences or privileges senior to the rights of our current shareholders.

There can be no assurance that additional funds will be available on terms acceptable to us or at all.  If adequate funds are not available, we may have to materially curtail our operations.  Any inability to raise adequate funds could have a material adverse effect on our business, results of operation and financial condition.

Due to the uncertainties related to these matters, there exists substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern.

Capital Commitments

We had no material commitments for capital expenditures.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements at December 31, 2015.

Critical Accounting Policies and Estimates

Accounting Estimates.  The preparation of financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results when ultimately realized could differ from those estimates.

Fair Value of Financial Instruments.  The carrying amounts of financial instruments, including cash, other receivables, accounts payable and accrued expenses, approximates their fair value due to the relatively short-term nature of these instruments.

Revenue Recognition.  We recognize revenue when the significant risks and rewards of ownership have been transferred to the customer, including factors such as when persuasive evidence of an arrangement exists, delivery or service has been performed, the sales price is fixed and determinable, and collectability is probable. The Company recognizes sales when the merchandise is shipped, title has been passed to the customers or the service is provided, and collectability is reasonably assured.

Foreign Currency Translation.  For financial reporting purposes, the financial statements of the Company, which are prepared in Hong Kong Dollars ("HKD") and Renminbi, are translated into the Company's reporting currency, United States Dollars ("USD").  Balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using the average exchange rate prevailing during the reporting period.  Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in the shareholders' equity.

We follow FASB ASC 80-30, "Foreign Currency Translation", for both the translation and re-measurement of balance sheet and income statement items into U.S. dollars.  Resulting translation adjustments are reported as a separate component of accumulated comprehensive income (loss) in shareholders' equity.

We maintain our books and accounting records in HKD and Renminbi, with HKD and Renminbi being the functional currencies.  Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates.  Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date.  Any translation gains (losses) are recorded in exchange reserve as a component of shareholders' equity.  Income and expenditures are translated at the average exchange rate of the year.

Income Taxes.  Taxes are calculated in accordance with taxation principles currently effective in Hong Kong.  We account for income taxes using the liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date.  A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

Related Parties.  A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company.  Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests.  A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one of more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

Recent Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. Also see Note 2(K) to our audited consolidated financial statements included elsewhere in this report.

Not applicable.

The financial statements of the Company are included as an exhibit to this annual report on Form 10-K commencing on page F-1.

None.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our Chief Executive Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act.  Based on his evaluation as of December 31, 2015, the end of the period covered by this annual report on Form 10-K, he concluded that our disclosure controls and procedures were effective at a reasonable assurance level to ensure that the information required to be disclosed in reports filed or submitted under the Securities Exchange Act, including this annual report, were recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and was accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting.  Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

·

Provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

·	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.  Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the filing of our annual report on Form 10-K, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015.  In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013).  Based on our assessment using those criteria, management believes that, as of December 31, 2015, our internal control over financial reporting is effective based on those criteria.

 

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting.  Management's report was not subject to attestation by the Company's independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting during the year ended December 31, 2015 that have materially affected, or are reasonably likely to materially affect, such controls.

None.

The following table sets forth the names, positions and ages of our directors and executive officers.  Our directors are typically elected at each annual meeting and serve for one year and until their successors are elected and qualify.  Officers are elected by our Board of Directors and their terms of office are at the discretion of our Board of Directors.

Man Wah Stephen Yip, Chief Executive Officer and Chairman of the Board of Directors. Mr. Yip joined the Group in November 2015. He is the Chairman of the Board of Directors, the Chief Executive Officer and the Chief Technology Officer of the Group. Before joining the Group, Mr. Yip is the Chairman of Sugar Computing Limited. Prior to that, he served in a number of senior positions in selected IT companies in Hong Kong.  Mr. Yip is now responsible for the product development of the Group. Mr. Yip has over 16 years of experience in business IT system and video game development and has developed well established connections in the industry through his extensive experience. Mr. Yip holds a LLB degree from University of London and both a BS and MS degree from Fairleigh Dickinson University in New Jersey, United States.

So Ka Yan, Secretary and Director. Ms. So joined the Group as a Director and Secretary in November 2015. Ms. So is responsible for the overall corporate strategy and the daily operations of the Group, including business development and overall management. She graduated from the Chinese University in Hong Kong and holds a law degree from University of London. She has over 10 years of experience in the market development in Mainland China and Hong Kong.  Ms. So is the wife of Mr. Yip.

Sze Cheong Eric Ng, Chief Financial Officer and Director. Mr. Ng joined the Group in 2012 as a senior consultant. He has been appointed as a Director and the Chief Financial Officer in November 2015. Mr. Ng is one of the Group's key China specialists, having spent well over a decade representing a number of listed Chinese companies in the United States.  He initially served as a manager at KPMG Peat Marwick from 1980 to 1986, responsible for audit and taxation affairs of listed companies in Hong Kong. Through his experiences at KPMG, Mr. Ng developed an expertise in mergers and acquisitions.

 

In the early 1990s, Mr. Ng acted as CFO/Finance Director for a US-listed company that became public through a reverse merger. He was responsible for fund raising, private placement transactions, and dealing with merchant bankers and the SEC. Mr. Ng was also responsible for various mergers and acquisitions for the listed company. Since then, Mr. Ng has acted as an investment consultant for numerous Chinese companies, guiding them through the complex path toward the United States public listing.

In the late 1990s, he assisted a biotech company get listed in the United States through a reverse takeover and acted as CFO/Finance Director for that company. Before joining the Group, Mr. Ng acted as an advisor to Chinese enterprises seeking growth through possible United States public listings.

Jimmy Kent-Lam Wong, Former Chief Executive Officer and Chairman of the Board of Directors.  Mr. Wong has served as our Chief Executive Officer and Chairman of the Board of Directors since 2008 until his resignation of all positions held with the Company effective November 30, 2015.  From 1999 to 2010, he was the chairman and CEO of Guang Dong Eastern Venture Group, which sells office products and small home appliances.

Kin Wah Ngai, Former Chief Financial Officer, Secretary and Director.  Mr. Ngai has served as our Chief Financial Officer and a member of the Board of Directors from 2008 until his resignation of all positions held with the Company effective November 30, 2015.  From 2004 to the present, Mr. Ngai has been the chairman of Hong Kong Commercial Management Limited, a business trading company.

None of the current executive officers and directors, nor any of their affiliates, beneficially owns any equity securities or rights to acquire any securities of the Company except as otherwise described in this report, and no such persons have been involved in any transaction with the Company or any of our directors, executive officers or affiliates that is required to be disclosed pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), other than with respect to the transactions that have been described in this report or in any prior reports filed by the Company with the SEC.

None of the current officers and directors has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, nor have they been a party to any judicial or administrative proceeding during the past five years, except for matters that were dismissed without sanction or settlement, that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting  activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

Board of Directors and Committee Meetings

Our Board of Directors held two meetings during the fiscal year ended December 31, 2015.  In addition, our Board of Directors acted by unanimous written consent during fiscal year ended December 31, 2015.  Each of our directors attended 100% of the meetings of the Board of Directors and the committees on which they served in the fiscal year ended December 31, 2015. Our directors are expected, absent exceptional circumstances, to attend all board meetings and meetings of any committees on which they serve.

Committees of the Board of Directors

We do not have Audit, Compensation or Nominating and Governance Committees. Our full Board of Directors discharges the duties that such committees would normally have. We do not have such committees because of our stage of development and because our Board of Directors consists of only three members.  Mr. Yip is our Chairman of the Board of Directors.

Our full Board is currently comprised of three Directors, none of whom is independent, as defined by the rules and regulations of the SEC. The three members of our Board of Directors are Man Wah Stephen Yip, So Ka Yan and Sze Cheong Eric Ng.  The Board of Directors determined that Mr. Ng qualifies as an "audit committee financial expert," as defined under the rules and regulations of the SEC.  He is not independent, as noted above; however, we do not believe that independence is required at this juncture given our early stage of development.  We intend to have an independent person in this role as we grow and expand our operations.

Under the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by the Company's independent accountants must be approved in advance by the Board to assure that such services do not impair the accountants' independence from the Company.  Our full Board of Directors performs the equivalent functions of an audit committee, therefore, no policies or procedures other than those required by SEC rules on auditor independence have been implemented.

 

Report of the Board of Directors Serving the Equivalent Functions of an Audit Committee

Review and Discussion with Management

Our Board has reviewed and discussed with management our audited financial statements for the fiscal year ended December 31, 2015, the process designed to achieve compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and our assessment of internal control over financial reporting.

Review and Discussions with Independent Registered Public Accounting Firm

Our Board has discussed with Malone Bailey, LLP, our independent registered public accounting firm for fiscal year 2015, the matters the Board, serving the equivalent functions of an audit committee, is required to discuss pursuant to Statement on Auditing Standards No. 114 (Communications with Audit Committees), which includes, among other items, matters related to the conduct of the audit of our financial statements.

Our Board also has received the written disclosures and the letter from Malone Bailey, LLP required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and has discussed with Malone Bailey, LLP any relationships that may impact its independence, and satisfied itself as to the independent registered public accounting firm's independence.

Conclusion

Based on the review and discussions referred to above, the Board, serving the equivalent functions of the audit committee, approved our audited financial statements for the fiscal year ended December 31, 2015 to be included in this annual report on Form 10-K for the fiscal year ended December 31, 2015 for filing with the SEC.

Director Independence

The members of our Board of Directors are Man Wah Stephen Yip, So Ka Yan and Sze Cheong Eric Ng.  None of these persons is considered "independent" in accordance with Rule 5605(a)(2) of the NASDAQ Marketplace Rules.  We are currently traded on the OTC Bulletin Board, which does not require that a majority of the Board be independent.  If we ever become an issuer whose securities are listed on a national securities exchange or on an automated inter-dealer quotation system of a national securities association, which has independent director requirements, we intend to comply with all applicable requirements relating to director independence.

Board of Directors' Role in the Oversight of Risk Management

We face a variety of risks, including credit, liquidity and operational risks.  In fulfilling its risk oversight role, our Board of Directors focuses on the adequacy of our risk management process and overall risk management system.  Our Board of Directors believes that an effective risk management system will (i) adequately identify the material risks that we face in a timely manner; (ii) implement appropriate risk management strategies that are responsive to our risk profile and specific material risk exposures; (iii) integrate consideration of risk and risk management into our business decision-making; and (iv) include policies and procedures that adequately transmit necessary information regarding material risks to senior executives and, as appropriate, to the Board or relevant committee.

Our Board of Directors oversees risk management for us.  Accordingly, the Board schedules time for periodic review of risk management, in addition to its other duties.  In this role, the Board receives reports from management, certified public accountants, outside legal counsel, and to the extent necessary, from other advisors, and strives to generate serious and thoughtful attention to our risk management process and system, the nature of the material risks we face, and the adequacy of our policies and procedures designed to respond to and mitigate these risks.

 

Board Leadership Structure

Our Board of Directors does not have a policy on whether or not the roles of Chief Executive Officer and Chairman of the Board of Directors should be separate and, if they are to be separate, whether the Chairman of the Board should be selected from the non-employee directors or be an employee.  Our Board of Directors believes that it should be free to make a choice from time to time in any manner that is in the best interests of us and our shareholders.  The Board of Directors believes that Mr. Yip's service as both Chief Executive Officer and Chairman of the Board is in the best interest of the Company and its shareholders.  Mr. Yip possesses detailed and in-depth knowledge of the issues, opportunities and challenges we face and is thus best positioned to develop agendas that ensure that the Board's time and attention are focused on the most critical matters.  His combined role enables decisive leadership, ensures clear accountability, and enhances our ability to communicate our message and strategy clearly and consistently to our shareholders, employees, customers and suppliers.

Shareholder Communications with the Board of Directors

Shareholders may communicate with the Board of Directors by writing to us as follows:  Living 3D Holdings, Inc., attention:  Corporate Secretary, Room S, 2/F, Block D East Sun Industrial Center, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong.  Shareholders who would like their submission directed to a particular member of the Board of Directors may so specify and the communication will be forwarded as appropriate.

Process and Policy for Director Nominations

Our full Board will consider candidates for Board membership suggested by Board members, management and our shareholders.  In evaluating the suitability of potential nominees for membership on the Board, the Board members will consider the Board's current composition, including expertise, diversity, and balance of inside, outside and independent directors.  The Board considers the general qualifications of the potential nominees, including integrity and honesty; recognized leadership in business or professional activity; a background and experience that will complement the talents of the other board members; the willingness and capability to take the time to actively participate in board and committee meetings and related activities; the extent to which the candidate possesses pertinent technological, political, business, financial or social/cultural expertise and experience; the absence of realistic possibilities of conflict of interest or legal prohibition; the ability to work well with the other directors; and the extent of the candidate's familiarity with issues affecting our business.

While the Board considers diversity and variety of experiences and viewpoints to be important factors, it does not believe that a director nominee should be chosen solely or mainly because of race, color, gender, national origin or sexual identity or orientation. Thus, although diversity may be a consideration in the Board's process, it does not have a formal policy regarding the consideration of diversity in identifying director nominees.

Shareholder Recommendations for Director Nominations. Our Board of Directors does not have a formal policy with respect to consideration of any director candidate recommendation by shareholders.  While the Board of Directors may consider candidates recommended by shareholders, it has no requirement to do so.  To date, no shareholder has recommended a candidate for nomination to the Board.  Given that we have not received director nominations from shareholders in the past and that we do not canvass shareholders for such nominations, we believe it is appropriate not to have a formal policy in that regard.  We do not pay a fee to any third party to identify or evaluate or assist in identifying or evaluating potential nominees.

Shareholder recommendations for director nominations may be submitted to the Company at the following address:  Living 3D Holdings, Inc., attention:  Corporate Secretary, Room S, 2/F, Block D East Sun Industrial Center, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong.  Such recommendations will be forwarded to the Board for consideration, provided that they are accompanied by sufficient information to permit the Board to evaluate the qualifications and experience of the nominees, and provided that they are in time for the Board to do an adequate evaluation of the candidate before the annual meeting of shareholders.  The submission must be accomplished by a written consent of the individual to stand for election if nominated by the Board of Directors and to serve if elected and to cooperate with a background check.

Shareholder Nominations of Directors.  The bylaws of the Company provide that in order for a shareholder to nominate a director at an annual meeting, the shareholder must give timely, written notice to the Secretary of the Company and such notice must be received at the principal executive offices of the Company not less than 120 days before the date of its release of the proxy statement to shareholders in connection with its previous year's annual meeting of shareholders. Such shareholder's notice shall include, with respect to each person whom the shareholder proposes to nominate for election as a director, all information relating to such person, including such person's written consent to being named in the proxy statement as a nominee, serving as a director, that is required under the Exchange Act, and cooperating with a background investigation.  In addition, the shareholder must include in such notice the name and address, as they appear on the Company's records, of the shareholder proposing the nomination of such person, and the name and address of the beneficial owner, if any, on whose behalf the nomination is made, the class and number of shares of capital stock of the Company that are owned beneficially and of record by such shareholder of record and by the beneficial owner, if any, on whose behalf the nomination is made, and any material interest or relationship that such shareholder of record and/or the beneficial owner, if any, on whose behalf the nomination is made may respectively have in such business or with such nominee. At the request of the Board of Directors, any person nominated for election as a director shall furnish to the Secretary of the Company the information required to be set forth in a shareholder's notice of nomination which pertains to the nominee.

To be timely in the case of a special meeting or if the date of the annual meeting is changed by more than thirty (30) days from such anniversary date, a shareholder's notice must be received at the principal executive offices of the Corporation no later than the close of business on the tenth day following the earlier of the day on which notice of the meeting date was mailed or public disclosure of the meeting date was made.

Code of Ethics and Conduct

Our Board of Directors has adopted a Code of Ethics and Conduct that is applicable to all of our employees, officers and directors. Our Code of Ethics and Conduct is intended to ensure that our employees act in accordance with the highest ethical standards.  A copy of our Code of Ethics and Conduct may be obtained by sending a written request to us at Living 3D Holdings, Inc., attention:  Corporate Secretary, Room S, 2/F, Block D East Sun Industrial Center, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong.  The Code of Ethics and Conduct is filed as an exhibit to this annual report on Form 10-K.

Section 16(a) Beneficial Ownership Reporting

Section 16(a) of the Exchange Act, as amended, requires our executive officers and directors, and persons who own more than ten percent (10%) of our common stock, to file with the Securities and Exchange Commission reports of ownership of, and transactions in, our securities and to provide us with copies of those filings. To our knowledge, based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during the year ended December 31, 2015, all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with during fiscal year 2015.

 

Item 11.

Executive Compensation.

The table below sets forth all cash compensation paid or proposed to be paid by the Company to the chief executive officer and the most highly compensated executive officers, and key employees for services rendered in all capacities to the Company during fiscal years ended December 31, 2015 and 2014.

Summary Compensation Table

 

(1)	Ceased to be the CEO and Chairman of the Board with effect from November 30, 2015.

(2)	Ceased to be a Director and Chief Technology Officer with effect from October 3, 2014.

(3)	Ceased to be the CFO, Secretary and Director with effect from November 30, 2015.

Compensation Policy.  Our executive compensation plan is based on attracting and retaining qualified professionals who possess the skills and leadership necessary to enable us to achieve earnings and profitability growth to satisfy our shareholders.  We must, therefore, create incentives for these executives to achieve both our and their individual performance objectives through the use of performance-based compensation programs.

No one component is considered by itself, but all forms of the compensation package are considered in total.  Wherever possible, objective measurements will be utilized to quantify performance, but many subjective factors still come into play when determining performance.

Compensation Components.  Because we are still in the early stages of our revenue operations, the main elements of our compensation package will consist of base salary and bonus.

Base Salary.  In general, the base salary for our executive officers will be reviewed and compared to the prior year, with considerations given for increase. As we continue to grow and financial conditions continue to improve, base salaries will be reviewed for possible adjustments.  Base salary adjustments will be based on both individual and our performance and will include both objective and subjective criteria specific to each executive's role and responsibility with us.

 

Bonuses.  To date, no bonuses have been granted because we have not achieved a profitable level of operations. As we continue to grow and provided we generate profits, we will create more defined bonus programs to attract and retain our employees at all levels.

Other.  At this time, we have no profit sharing plan in place for employees.  However, this is another area of consideration to add such a plan to provide yet another level of compensation to the compensation package.

Outstanding Equity Awards at Fiscal Year-End

The Company did not issue any options or stock awards to any of our officers, directors or employees in 2015 and 2014.

Stock Option Plan

Our board of directors has not adopted a stock option plan.

Compensation of Directors

In 2015, our directors received no compensation for serving as members of our Board of Directors.  Any non-employee directors are reimbursed for their out-of-pocket costs in attending the meetings of the Board of Directors.

Outstanding Equity Awards at Fiscal Year-End

The table above indicates that no options were granted to directors and officers in fiscal 2015.

(1) Ceased to be the CEO and Chairman of the Board with effect from November 30, 2015.

(2) Ceased to be a Director and Chief Technology Officer with effect from October 3, 2014.

(3) Ceased to be the CFO and Director with effect from November 30, 2015.

 

Employment Contracts; Termination of Employment and Change-in-Control Arrangements

None of our executive officers has entered into any employment or change-in-control agreements with the Company.

None of our current officers and directors, nor any of their affiliates, currently beneficially owns any equity securities or rights to acquire any securities of the Company except as otherwise described in this report, and no such persons have been involved in any transaction with the Company or any of its directors, executive officers or affiliates that is required to be disclosed pursuant to the rules and regulations of the SEC , other than with respect to the transactions that have been described in this report or in any prior reports filed by the Company with the SEC.

None of  our current officers and directors has been convicted in a criminal proceeding, excluding traffic violations or similar misdemeanors, nor have such persons been a party to any judicial or administrative proceeding during the past five years, except for matters that were dismissed without sanction or settlement, that resulted in a judgment, decree or final order enjoining such persons from future violations of, or prohibiting  activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.

The following table sets forth certain information regarding our common stock beneficially owned on March 30, 2016 for (i) each shareholder known to be the beneficial owner of 5% or more of our outstanding common stock, (ii) each executive officer and director, and (iii) all executive officers and directors as a group.  Unless otherwise indicated, each person in the table has sole voting and investment power with respect to the shares shown.  The table assumes a total of 69,703,480 shares of our common stock outstanding as of March 30, 2016.

 

(1)	The address of these persons is Room 512, 5/F., Beverly Commercial Center, No. 87-105 Chatham Road South, Tsimshatsui, Kowloon, Hong Kong.

(2)	The address of these persons is Room S, 2/F, Block D East Sun Industrial Center, 16 Shing Yip Street, Kwun Tong, Kowloon, Hong Kong

(3)	Man Wah Stephen Yip and So Ka Yan are husband and wife. Man Wah Stephen Yip is deemed to own the same shares which are beneficially owned by So Ka Yan.

(4)	The foregoing beneficial owners hold investment and voting power in their shares.

(5)

The percent of common stock owned is calculated using the sum of (A) the number of shares of common stock owned and (B) the number of warrants and options of the beneficial owner that are exercisable within sixty days, as the numerator, and the sum of (Y) the total number of shares of common stock outstanding and (Z) the number of warrants and options of the beneficial owner that are exercisable within sixty days as the denominator.

Change of Control

On November 30, 2015, pursuant to a Stock Purchase Agreement dated as of November 30, 2015 (the "Agreement") between Jimmy Kent Lam Wong ("Seller") and Man Wah Stephen Yip ("Purchaser"), Purchaser purchased 37,883,841 shares of the common stock of Living 3D Holdings, Inc. (the "Company") from Seller for a purchase price of US$100.

 

The 37,883,841 shares represent 54.35% of the total shares of the Company issued and outstanding on November 30, 2015.

Effective November 30, 2015, and simultaneously with the closing of the Agreement, the following appointments to and resignations of the Board of Directors, the Chief Executive Officer and the Chief Financial Officer of Living 3D Holdings, Inc. occurred.

1.	Mr. Man Wah Stephen Yip was appointed to serve as the Chairman of the Board of Directors and the Chief Executive Officer of the Company;

2.	Mr. Sze Cheong Eric Ng was appointed to serve as a director and the Chief Financial Officer of the Company;

3.	Ms. So Ka Yan was appointed to serve as a director of the Company.  Ms So is the wife of Mr. Yip, our Chairman of the Board and Chief Executive Officer;

4.	Mr. Jimmy Kent-Lam Wong resigned as the Chairman of the Board of Directors and the Chief Executive Officer of the Company.  Mr. Wong confirmed to the Company that he had no claims whatsoever against the Company; and

5.	Mr. Edward Ngai Kin Wah resigned as a director and the Chief Financial Officer of the Company.  Mr. Ngai confirmed to the Company that he had no claims whatsoever against the Company.

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Advances from Related Parties.  By the agreements dated August 28, 2013 and November 29, 2013, the Company had obtained additional advances of $250,000 and $300,000 respectively from Kingdom Industry Group Inc. Mr. Jimmy Kent-Lam Wong is one of the two directors of Kingdom Industry Group Inc. and owns 50% interest in Kingdom Industry Group Inc. The advances are unsecured, bearing interest of 7.33% per annum and are to be repayable within two years from the respective dates of the loan agreements.

In connection with the disposal of 3D Science & Cultural Products International Exchange Center, the directors of Kingdom Industry Group, Inc. had elected to relinquish all their claims on the loan of $250,000 together with any accrued interests thereon. The directors of Kingdom Industry Group Inc. confirmed that they would not have any claim whatsoever on the said loan.

By a Stock Purchase Agreement of November 30, 2015, the Company had sold all its interests in Living 3D Holdings, Limited to Jimmy Kent-Lam Wong, our former CEO, director and principal shareholder for a nominal consideration of US$100, effective on October 1, 2015.

License Agreements.  We purchased the products we have sold to date, and intend to purchase the products for which we are currently exploring new markets, from third party manufacturers, which manufacture these products under know-how and licenses granted by a former director.  This former director does not receive any compensation for these licenses.  We do not have any contracts with its third party manufacturers.

The following table is a summary of the fees billed to us by Malone Bailey, LLP for professional services for the fiscal years ended December 31, 2015 and December 31, 2014:

Audit Fees. Such amount consists of fees billed for professional services rendered in connection with the audit of our annual financial statements and review of the interim financial statements included in our quarterly reports.  It also includes services that are normally provided by our independent registered public accounting firms in connection with statutory and regulatory filings or engagements.

Audit-Related Fees. Audit-related fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under "Audit Fees." These services include accounting consultations in connection with acquisitions, attest services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.

Tax Fees. Tax fees consist of fees billed for professional services related to tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance, tax audit defense, customs and duties, mergers and acquisitions, and international tax planning.

All Other Fees. All other fees consist of fees for products and services other than the services reported above. In fiscal 2015 and 2014, there were no fees related to this category.

We do not have a separate audit committee. Our full board of directors performs the functions of an audit committee, therefore, no policies or procedures other than those required by SEC rules on auditor independence have been implemented.  We have the pre-approval process for the foregoing services and fees for our board of directors. All of the above services and fees were reviewed and approved by the entire board of directors before the respective services were rendered.

The audit report of Malone Bailey, LLP on the financial statements of the Company for the year ended December 31, 2015 did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles, except that it contained an explanatory paragraph regarding the Company's ability to continue as a going concern.  The audit report for the year ended December 31, 2014 did not contain an adverse opinion or disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope or accounting principles, except that it contained an explanatory paragraph regarding the Company's ability to continue as a going concern.

During our fiscal years ended December 31, 2015 and 2014, there were no disagreements with Malone Bailey, LLP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to Malone Bailey, LLP's satisfaction would have caused it to make reference to the subject matter of such disagreements in connection with its reports on the financial statements for such periods.

During our fiscal years ended December 31, 2015 and 2014, there were no reportable events (as described in Item 304(a) (1) (v) of Regulation S-K).

 

 

 

Exhibit Number

Description

Incorporated by Reference

LIVING 3D HOLDINGS, INC.

CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2015 AND 2014

Index to Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders

Living 3D Holdings, Inc.

Hong Kong

We have audited the consolidated balance sheets of Living 3D Holdings, Inc. and its Subsidiaries (collectively, the "Company") as of December 31, 2015 and 2014, and the related consolidated statements of operations and comprehensive income (loss), changes in shareholders' deficit and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Living 3D Holdings, Inc. and its Subsidiaries as of December 31, 2015 and 2014, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statements, the Company has minimal revenue to date and is dependent upon obtaining adequate financing to fulfill its development activities. These factors raise substantial doubts about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also discussed in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ MALONEBAILEY, LLP

www.malonebailey.com

Houston, Texas

March 30, 2016

The accompanying notes are an integral part of these consolidated financial statements

Living 3D Holdings, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Stated in US dollars)

 

 

Living 3D Holdings, Inc. Consolidated Statements of Changes in Shareholders' Deficit  (Stated in US dollars)
		Common stock							Additional paid –in capital				Accumulated other comprehensive income				Accumulated deficit				Total Living 3D Holdings, Inc. shareholders' equity (deficit)				Non-controlling interests				Total Equity
		Shares			Amount
Balance as of December 31, 2013			69,703,480			$	69,704			$	(69,604	)		$	809			$	(1,357,727	)		$	(1,356,818	)		$	142,896			$	(1,213,922	)
Net loss for the year			-				-				-				-				(476,273	)			(476,273	)			(35,435	)			(511,708	)
Foreign currency translation adjustment			-				-				-				716				-				716				876				1,592
Disposal of joint venture			-				-				-				(1,525	)			-				(1,525	)			(108,337	)			(109,862	)
Balance as of December 31, 2014			69,703,480			$	69,704			$	(69,604	)		$	-			$	(1,834,000	)		$	(1,833,900	)		$	-			$	(1,833,900	)
Net Income for the year			-				-				-				-				1,761,796				1,761,796				-				1,761,796
Balance as of December 31, 2015			69,703,480			$	69,704			$	(69,604	)		$	-			$	(72,204	)		$	(72,104	)		$	-			$	(72,104	)
The accompanying notes are an integrated part of these consolidated financial statements

 

 

 

 

LIVING 3D HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - DESCRIPTION OF BUSINESS AND ORGANIZATION

Living 3D Holdings Ltd ("L3D") was incorporated in the British Virgin Islands (the "BVI") on June 23, 2008. L3D is a globally integrated enterprise that targets the intersection of 3D technology and effective business. The Company specializes in the design, development, production, sale and marketing of "auto stereoscopic 3D" technology, or Auto 3D products, services and solutions. The products we market are based on "auto stereoscopic 3D" technology, or Auto 3D, which means that viewers are not required to wear 3D glasses in order to experience the 3D effects of the screen, and instant switching between two dimensional, or 2D, and 3D viewing is enabled.  We believe that this gives us a competitive advantage over other suppliers of 3D products requiring the use of a visor or glasses in order to experience a 3D effect.

The Company also provides technical and support services of 3D in software development, contents production and hardware configuration to a wide range of industries, including entertainment, education, consumer electronics, medical diagnosis, scientific research and, in particular, media and advertising. The Company aims at customizing product requirements and specifications in order to enhance the power of product displays in business advertising and special operational environments.

 

In June 2013, the Company with its strategic partners entered into a memorandum of understanding and formed a joint venture, 3D Science & Cultural Products International Exchange Center, in Tianjin, China that will enable the vendors from different countries around the world to showcase 3D technology and promote the sale and marketing of international 3D products. Effective April 1, 2014, the Company disposed of its entire equity interests in 3D Science & Cultural Products International Exchange Center.

At September 30, 2015, L3D has the following wholly owned subsidiaries: Living 3D (Hong Kong) Limited, 3D Capital Holdings Inc, Columbia College Hollywood International Limited and Living 3D Technology Group Limited. L3D and its subsidiaries are collectively referred to as L3D. 

On November 30, 2015, Jimmy Kent-Lam Wong, the Company's principal shareholder, entered into a stock purchase agreement to sell 54.35% of the Company's outstanding shares, or 37,883,841 shares, of common stock, to Man Wah Stephen Yip. Simultaneously, Living 3D Holdings, Inc. entered into a shares sale and purchase agreement with Jimmy Kent-Lam Wong, pursuant to which, the Company agreed to sell its entire ownership interest in L3D to Jimmy Kent-Lam Wong for a total consideration of $100 effective October 1, 2015.

For the sake of clarity, this report follows the English naming convention of first name followed by last name, regardless of whether an individual's name is Chinese or English. For example, the name of our President will be presented as "Man Wah Stephen Yip," even though, in Chinese, his name would be presented as "Yip Man Wah Stephen."

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

 A. BASIS OF PREPARATION

The consolidated financial statements are prepared in accordance with generally accepted accounting principles used in the United States of America.

B. PRINCIPLES OF CONSOLIDATION

 

Prior to the disposal of L3D, the consolidated financial statements include the accounts of L3D, all of its wholly owned subsidiaries and 3D Science & Cultural Products International Exchange Center, a joint venture formed in June 18, 2013.  Although L3D only owned 45% equity interest in the joint venture, its two directors had actual control of the joint venture. Accordingly, the results of 3D Science & Cultural Products International Exchange Center were included in the consolidated statements of the Company prior to June 26, 2014 (see Note 6).  The Company disposed of its entire equity interests in 3D Science & Cultural Products International Exchange Center in June 2014. All material inter-company accounts and transactions have been eliminated in consolidation. Effective October 1, 2015, the Company disposed of its entire interest in L3D.

C. USE OF ESTIMATES

 

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period including allowance for doubtful accounts, inventory provision, useful lives of property, plant and equipment, provision for income taxes and stock-based compensation. Actual results when ultimately realized could differ from those estimates.

D. CASH AND CASH EQUIVALENTS

 

The Company considers cash and cash equivalents to include cash on hand and demand deposits with banks with an original maturity of three months or less.

 

E. FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The carrying value of financial instruments including cash, other current assets, accounts payable, accrued liabilities and other payables, approximates their fair value due to the relatively short-term nature of these instruments.

F. REVENUE RECOGNITION

 

The Company recognizes revenue when the significant risks and rewards of ownership have been transferred to the customer, including factors such as when persuasive evidence of an arrangement exists, delivery or service has performed, the sales price is fixed and determinable, and collectability is probable. The Company recognizes sales when the merchandise is shipped, title has passed to the customers or service is provided, and collectability is reasonably assured.

 

G. FOREIGN CURRENCY TRANSLATION

 

The Company and all of its wholly owned subsidiaries maintain their books and accounting records in Hong Kong Dollars with the Hong Kong Dollars being the functional currency. 3D Science & Cultural Products International Exchange Center, the joint venture maintains its books and accounting records in Renminbi, which is also its functional currency. Transactions denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing on the transaction dates. Assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rates prevailing at the balance sheet date.

 

The financial statements of Living 3D Holdings, Inc., are prepared in the Company's reporting currency, United States Dollars ("USD"). For financial reporting purposes, the financial statements of Living 3D Holdings, Limited and its subsidiaries which are prepared in Hong Kong Dollar ("HKD") are translated into United States Dollars. 3D Science & Cultural Products International Exchange Center, the joint venture, maintains its books and accounting records in Renminbi. The results of the joint venture were translated into United States Dollars and were included in the consolidated statements of the Company prior to June 26, 2014. Balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using the average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in accumulated other comprehensive income (loss) in the owners' equity.

 

The exchange rates used for the foreign currency translation were as follows (USD$1 = HKD):

 

The exchange rates used for the foreign currency translation were as follows (USD$1 = RMB):

We follow FASB ASC 830-30, "Foreign Currency Translation", for both the translation and re-measurement of balance sheet and income statement items into U.S. dollars. Resulting translation adjustments are reported as a separate component of accumulated comprehensive income (loss) in stockholders' equity.

 

H. INCOME TAXES

 

Income tax expense is based on reported income before income taxes. The Company accounts for income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period that includes the enactment date. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.

 

 

A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.

 

J. IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews its long lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets.

 

K. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

In April 2015, the FASB issued ASU 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity". The amendments in ASU 2014-08 change the criteria for reporting discontinued operations while enhancing disclosures in this area. It also addresses sources of confusion and inconsistent application related to financial reporting of discontinued operations guidance in U.S. GAAP. Under the new guidance, only disposals representing a strategic shift in operations should be presented as discontinued operations. Those strategic shifts should have a major effect on the organization's operations and financial results. The amendments in ASU 2014-08 are effective in the first quarter of 2015 for public organizations with calendar year ends. The Company evaluated the impact of the adoption on its consolidated financial statements, and determined that its disposal of subsidiaries in 2015 did not constitute a discontinued operation, as the Company continues to engage in the design, development, production, sale and marketing of "auto stereoscopic 3D" technology and products. The Company also provides technical and support services of 3D in software development and contents production to a wide range of industries.

NOTE 3 – GOING CONCERN

The Company first generated revenue in 2010 and is still in the early stages of establishing a market for the products it sells. The Company has a working capital deficit of $72,104 as of December 31, 2015 and has generated negative cash flows from operations for the year ended December 31, 2015. The Company is primarily funded by its Chief Executive Officer ("CEO") and principal shareholder. The Company will have to raise additional capital, including through the sale of equity securities, to support its operation and expansion.

These conditions and uncertainties raise substantial doubt as to the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

NOTE 4 – RELATED PARTY TRANSACTIONS

 

The related parties consist of the following:

Man Wah Stephen Yip, the Company's CEO, a director and principal shareholder

Jimmy Kent-Lam Wong, the Company's former CEO, former director and principal shareholder

Kingdom Industry Group Inc., Jimmy Kent-Lam Wong is one of the two directors and owns 60% equity interest

Due from related party consists of the following:

The above amount represents advance to Jimmy Kent-Lam Wong for business purpose.

 

Due to related parties consists of the following:

The amounts due to related parties represent expenses paid on behalf and advances received to support the Company's operations. They are unsecured, bearing no interest and repayable on demand. In connection with the disposal of L3D, the balance of $252,197 due to Kingdom Industry Group Inc. is assumed by Jimmy Kent-Lam Wong (also see Note 7).

By the agreements dated August 28, 2013 and November 29, 2013, the Company obtained loans of $250,000 and $300,000, respectively, from Kingdom Industry Group Inc. The loans are unsecured, bearing interest of 7.33% per annum and are to be repayable within two years from the respective dates of the loan agreements. In connection with the disposal of 3D Science & Cultural Products International Exchange Center, the directors of Kingdom Industry Group, Inc. had elected to relinquish all their claims on the loan of $250,000 together with any accrued interests thereon (also see Note 6). In connection with the disposal of L3D, the loan of $300,000 is assumed by Jimmy Kent-Lam Wong (also see Note 7).

NOTE 5 – NON-CONTROLLING INTEREST

On June 18, 2013, Living 3D (Hong Kong) Limited ("L3D-HK") entered into an agreement with China 3D Industrial Park Company Limited, a Chinese corporation ("China 3D"), and Tianjin 3D Technology Company Limited, a Chinese corporation ("Tianjin 3D"), to form a joint venture company, 3D Science & Cultural Products International Exchange Center. The principal activities of the joint venture company will be the provision of a platform for the exhibition and trading of 3D products and the transfer of 3D technology.

The total capital of 3D Science & Cultural Products International Exchange Center was RMB 10,000,000 (approximately $1.6 million). L3D-HK and China 3D had each committed to contribute RMB 4,500,000 (approximately $0.7 million) of such amount and each owned 45% of the joint venture. L3D-HK and China 3D made their respective capital contributions as follows: RMB 1,500,000 (approximately $0.24 million) on or before July 31, 2013; RMB 1,500,000 (approximately $0.24 million) on or before December 31, 2013; RMB 1,500,000 (approximately $0.24 million) on or before May 31, 2014. Tianjin 3D contributed certain assets valued at RMB 1,000,000 (approximately $0.2 million) for its equity interest of 10% in the joint venture.

Both L3D-HK and China 3D made its first capital contribution of RMB 1,500,000 (approximately $0.24 million) in August 2013. No additional contribution from L3D-HK and China 3D was made. In September 2013, 3D Science & Cultural Products International Exchange Center obtained its business license from the Administration of Industry and Commerce.

Tianjin 3D made its contribution on January 6, 2014 in the form of a customer list. Since the customer list was internally generated by Tianjin 3D with no historical carrying amounts recorded, the Company did not record a value for the contribution.

Jimmy Kent-Lam Wong, the Company's former CEO, former director and principal shareholder, is also one of two directors of China 3D and through his affiliates owns a 50% interest in China 3D. Chang Li, the Company's former Chief Technology Officer and former director, is the second director of China 3D. Additionally, Chang Li is the sole director and shareholder of Tianjin 3D, which also owns a 50% interest in China 3D. Though L3D-HK only owned 45% of 3D Science & Cultural Products International Exchange Center per the agreement, Jimmy Kent-Lam Wong and Chang Li had actual control of 3D Science & Cultural Products International Exchange Center through their equity interests in L3D-HK, China 3D, and Tianjin 3D. Accordingly, the results of 3D Science & Cultural Products International Exchange Center are included in the consolidated statements of the Company. The portion of the income or loss applicable to non-controlling interest is reflected in the consolidated statements of operations.

 

In June 2014, L3D-HK entered into an agreement to dispose of its entire equity interest in 3D Science & Cultural Products International Exchange Center to Excellent Plus Group Limited, an independent third party, effective on April 1, 2014 (also see Note 6).

NOTE 6 – DISPOSAL OF JOINT VENTURE

By a sale and purchase agreement dated June 26, 2014, L3D-HK sold its 45% equity interest in 3D Science & Cultural Products International Exchange Center to Excellent Plus Group Limited, an independent third party, for a consideration of $250,000. The decision was made because the management did not have sufficient experience at managing a joint venture. The consideration of $250,000 was satisfied through the forgiveness of debt of the same amount due to Kingdom Industry Group Inc. The Agreement provided that the sale and purchase of the 45% equity interest would be effective as of April 1, 2014. The disposition resulted in a gain of $126,848, which was reported as "gain on disposal of joint venture" included in operating expense for the year ended December 31, 2014.

The Company determined that disposal of joint venture did not constitute a discontinued operation, as the Company anticipated that it will generate significant continuing cash flows from the customers of the disposed joint venture.

NOTE 7 – DISPOSAL OF SUBSIDIARIES

By a shares sale and purchase agreement dated November 30, 2015, the Company sold its entire interest in L3D to Jimmy Kent-Lam Wong, the Company's former CEO, former director and principal shareholder, for a consideration of $100. The decision was made in light of the change in control of the Company. The agreement provided that the sale and purchase of the 100% equity interest would be effective as of October 1, 2015. The disposal resulted in a gain of $2,121,795, which was reported as "gain on disposal of subsidiaries" included in operating expense for the year ended December 31, 2015.

The Company determined that disposal of subsidiaries did not constitute a discontinued operation, as the Company does not believe that the disposal represents a strategic shift. The Company continues to engage in the design, development, production, sale and marketing of "auto stereoscopic 3D" technology and products. The Company also provides technical and support services of 3D in software development and contents production to a wide range of industries.

NOTE 8 – INCOME TAXES

Living 3D Holdings, Inc. is incorporated in the State of Nevada, United States and is subject to US Corporate Income Tax ("CIT") on the taxable income in accordance with the relevant US income tax laws.

 

Living 3D Holdings, Limited is registered in BVI and under the current laws of the BVI, is not subject to incomes taxes.

 

Living 3D (Hong Kong) Ltd is registered in Hong Kong and Hong Kong profits tax is calculated at 16.5% of the estimated assessable profit for the year.

Tianjin 3D is registered in PRC and is subject to PRC Enterprise Income Tax ("EIT") on the taxable income in accordance with the relevant PRC income tax laws.

 

On March 16, 2007, the National People's Congress enacted a new enterprise income tax law, which took effect on January 1, 2008. The law applies a uniform 25% enterprise income tax rate to both foreign invested enterprises and domestic enterprises.

No provision for income taxes has been made as all of the Company's subsidiaries and joint venture suffered losses for the years ended December 31, 2015 and 2014.

A reconciliation of the income tax computed at the U.S. statutory rate and the Company's provision for income tax is as follows:

Accounting for Uncertainty in Income Taxes

 

The Company adopted the provisions of Accounting for Uncertainty in Income Taxes. The provision clarify the accounting for uncertainty in income taxes recognized in an Enterprise's financial statements in accordance with the standard "Accounting for Income Taxes,", and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions of Accounting for Uncertainty in Income Taxes also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

 

The Company has evaluated and concluded that there is no significant uncertain tax positions required recognition in its financial statement.

 

The Company may from time to time be assessed interest or penalties by major tax jurisdictions. In the event it receives an assessment for interest and/or penalties, it will be classified in the financial statements as tax expense.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Index to Exhibits