Longwen Group Corp. - Quarter Report: 2009 December (Form 10-Q)
United
States
Securities
and Exchange Commission
Washington,
D.C. 20549
Form
10-Q
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For
the quarter ended: December 31, 2009
Commission
file no.: 0-11596
EXPERTELLIGENCE,
INC.
(Name
of Small Business Issuer in its Charter)
|
Nevada
|
95-3506403
|
|
|
(State or other jurisdiction of
incorporation)
|
(IRS Employer Identification No.) | |
|
2101
Vista Pkwy. Ste. 292
West Palm Beach FL
|
33411 | |
|
(Address
of principal executive offices)
|
(Zip Code) |
Issuer's
telephone number: (561) 228-6148
| Securities registered under Section 12(b) of the Act: | ||
| Title of each class |
Name of each
exchange on which
registered
|
|
| None | None | |
| Securities registered under Section 12(g) of the Act: | ||
| Common Stock, $0.0001 par value per share |
|
|
| (Title of class) | ||
| Copies of Communications Sent to: | ||
Indicate
by Check whether the issuer (1) filed
all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes x
No o
Indicate
by check mark whether the registrant is an accelerated filer, a non-accelerated
filer, or a smaller reporting company.
|
|
Large
accelerated
filer
o
Non-accelerated
filer o
|
Accelerated
filer
o
Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes x No o
APPLICABLE
ONLY TO CORPORATE ISSUERS:
State the
number of shares outstanding of each of the issuer's classes of common equity,
as of the latest practicable date:
As of
January 29, 2010, there were 25,104,818 shares of voting stock of the registrant
issued and outstanding.
PART
I
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
INDEX
TO FINANCIAL STATEMENTS
|
Balance
Sheet
|
F-2
|
|
Statements
of Operations
|
F-3
|
|
Statements
of Stockholders' Equity
|
F-4
|
|
Statements
of Cash Flows
|
F-5
|
|
Notes
to Financial Statement
|
F-6
|
F-1
EXPERTELLIGENCE,
INC.
(A
Development Stage Enterprise)
Balance
Sheets
|
December
31,
2009
|
September
30,
2009
|
|||||||
|
(unaudited)
|
||||||||
|
ASSETS
|
||||||||
|
CURRENT
ASSETS
|
||||||||
|
Cash
and equivalents
|
$ | 6,134 | $ | 333 | ||||
|
Promissory
note receivable
|
0 | 0 | ||||||
|
Total
current assets
|
6,134 | 333 | ||||||
|
PROPERTY
AND EQUIPMENT
|
||||||||
|
Equipment
|
0 | 0 | ||||||
|
Less:
Accumulated depreciation
|
0 | 0 | ||||||
|
Net
property and equipment
|
0 | 0 | ||||||
|
OTHER
ASSETS
|
||||||||
|
Deposits
|
0 | 0 | ||||||
|
Total
other assets
|
0 | 0 | ||||||
|
Total
Assets
|
$ | 6,134 | $ | 333 | ||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
CURRENT
LIABILITIES
|
||||||||
|
Accounts
Payable and accrued liabilities
|
$ | 2,747 | $ | 2,747 | ||||
|
Accrued
interest payable
|
115,383 | 107,215 | ||||||
|
Total
current liabilities
|
118,130 | 109,962 | ||||||
|
Line
of credit payable
|
333,210 | 313,210 | ||||||
|
Total
long-term liabilities
|
333,210 | 313,210 | ||||||
|
Total
liabilities
|
451,340 | 423,172 | ||||||
|
STOCKHOLDERS'
EQUITY
|
||||||||
|
Preferred
stock, $0.0001 par value, 25,000,000 shares authorized, 0
issued and outstanding
|
0 | 0 | ||||||
|
Common
stock, $0.0001, authorized 300,000,000 shares; 25,104,818 issued
and outstanding
|
2,510 | 2,510 | ||||||
|
Additional paid in capital in excess of par
|
14,139,858 | 14,139,858 | ||||||
|
Deficit accumulated during the development stage
|
(14,587,574 | ) | (14,565,207 | ) | ||||
|
Total
stockholders' equity
|
(445,206 | ) | (422,839 | ) | ||||
|
Total
Liabilities and Stockholders' Equity
|
$ | 6,134 | $ | 333 | ||||
The
accompanying notes are an integral part of the financial statements
F-2
EXPERTELLIGENCE,
INC.
(A
Development Stage Enterprise)
Statements
of Operations
Three
Months Ended December 31,
(unaudited)
|
Period
from
Oct
1, 2003
(Inception)
through
|
||||||||||||
|
2009
|
2008
|
Dec
31, 2009
|
||||||||||
|
REVENUES
|
$ | 0 | $ | 0 | $ | 0 | ||||||
|
OPERATING
EXPENSES
|
||||||||||||
|
General
and administrative
|
5,448 | 1,266 | 327,072 | |||||||||
|
Professional
fees
|
8,750 | 5,000 | 52,750 | |||||||||
|
Interest
expense
|
8,169 | 7,608 | 104,069 | |||||||||
|
Total
expenses
|
22,367 | 13,874 | 483,891 | |||||||||
|
Net
loss
|
$ | (22,367 | ) | $ | (13,874 | ) | $ | (483,891 | ) | |||
|
Basic
net loss per weighted average share
|
$ | 0.00 | $ | 0.00 | ||||||||
|
Weighted
average number of shares
|
25,104,818 | 25,104,818 | ||||||||||
The
accompanying notes are an integral part of the financial statements
F-3
EXPERTELLIGENCE,
INC.
(A
Development Stage Enterprise)
Statements
of Stockholders' Equity
|
Number
of Common
Shares
|
Common
Stock
|
Add'tl
Paid
in
Capital
in
Excess
of
Par
|
Deficit
Accumulated
During
the
Development
Stage
|
Total
Stockholders'
Equity
(Deficit)
|
||||||||||||||||
|
INCEPTION BALANCE, Sept
30, 2002
|
2,343,180 | $ | 234 | $ | 11,399,832 | $ | (9,226,896 | ) | $ | 2,173,170 | ||||||||||
|
Shares
issued to settle debt
|
3,117,125 | 312 | 2,691,990 | 0 | 2,692,302 | |||||||||||||||
|
Net
loss
|
0 | 0 | 0 | (4,865,472 | ) | (4,865,472 | ) | |||||||||||||
|
BALANCE, September 30,
2003
|
5,460,305 | 546 | 14,091,822 | (14,092,368 | ) | 0 | ||||||||||||||
|
Sale
of stock for cash
|
19,644,513 | 1,964 | 48,036 | 0 | 50,000 | |||||||||||||||
|
Net
loss
|
0 | 0 | 0 | (50,000 | ) | (50,000 | ) | |||||||||||||
|
BALANCE, September 30,
2004
|
25,104,818 | 2,510 | 14,139,858 | (14,142,368 | ) | 0 | ||||||||||||||
|
Net
loss
|
0 | 0 | 0 | (145,486 | ) | (145,486 | ) | |||||||||||||
|
BALANCE, September 30,
2005
|
25,104,818 | 2,510 | 14,139,858 | (14,287,854 | ) | (145,486 | ) | |||||||||||||
|
Net
loss
|
0 | 0 | 0 | (80,265 | ) | (80,265 | ) | |||||||||||||
|
BALANCE, September 30,
2006
|
25,104,818 | 2,510 | 14,139,858 | (14,368,119 | ) | (225,751 | ) | |||||||||||||
|
Net
loss
|
0 | 0 | 0 | (104,261 | ) | (104,261 | ) | |||||||||||||
|
BALANCE, September 30,
2007
|
25,104,818 | 2,510 | 14,139,858 | (14,472,380 | ) | (330,012 | ) | |||||||||||||
|
Net
loss
|
0 | 0 | 0 | (44,614 | ) | (44,614 | ) | |||||||||||||
|
BALANCE, September 30,
2008
|
25,104,818 | 2,510 | 14,139,858 | (14,516,994 | ) | (374,626 | ) | |||||||||||||
|
Net
loss
|
0 | 0 | 0 | (48,213 | ) | (48,213 | ) | |||||||||||||
|
BALANCE, September 30,
2009
|
25,104,818 | 2,510 | 14,139,858 | (14,565,207 | ) | (422,839 | ) | |||||||||||||
|
Net
loss
|
0 | 0 | 0 | (22,367 | ) | (22,367 | ) | |||||||||||||
|
ENDING BALANCE, December
31, 2009 (unaudited)
|
25,104,818 | $ | 2,510 | $ | 14,139,858 | $ | (14,587,574 | ) | $ | (445,206 | ) | |||||||||
The
accompanying notes are an integral part of the financial statements
F-4
EXPERTELLIGENCE,
INC.
(A
Development Stage Enterprise)
Statements
of Cash Flows
Three
Months Ended December 31,
(unaudited)
|
From
October
1, 2003 (Inception)
through
|
||||||||||||
|
2009
|
2008
|
December
31, 2009
|
||||||||||
|
(unaudited)
|
(unaudited)
|
(unaudited)
|
||||||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
|
Net
loss
|
$ | (22,367 | ) | $ | (9,899 | ) | $ | (483,891 | ) | |||
|
Adjustments
to reconcile net loss to net cash used by operating
activities:
|
||||||||||||
|
Stock
issued for services
|
0 | 0 | 0 | |||||||||
|
Changes
in operating assets and liabilities
|
||||||||||||
|
Incr
(decr) in accounts payable and accrued liabilities
|
0 | 0 | 2,747 | |||||||||
|
Increase
(decrease) in accrued interest payable
|
8,168 | 7,380 | 104,068 | |||||||||
|
Net
cash used by operating activities
|
(14,199 | ) | (2,519 | ) | (377,076 | ) | ||||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||||
|
Draw
on line of credit
|
20,000 | 2,519 | 333,210 | |||||||||
|
Proceeds
from issuance of common stock
|
0 | 0 | 50,000 | |||||||||
|
Net
cash provided by financing activities
|
20,000 | 2,519 | 383,210 | |||||||||
|
Net
increase (decrease) in cash
|
5,801 | 0 | 6,134 | |||||||||
|
CASH, beginning of
period
|
333 | 0 | 0 | |||||||||
|
CASH, end of
period
|
$ | 6,134 | $ | 0 | $ | 6,134 | ||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||||||
| NONE | ||||||||||||
The
accompanying notes are an integral part of the financial statements
F-5
EXPERTELLIGENCE,
INC.
(A
Development Stage Enterprise)
Notes
to Financial Statements
(Information
with regard to the three months ended December 31, 2009 and 2008 is
unaudited)
(1)
Summary of Significant Accounting Policies
|
|
The
Company Expertelligence, Inc., (the Company), was
incorporated on March 31, 1980, under the laws of the State of California.
On June 26, 2006, the Company reincorporated in
Nevada.
|
The
Company is a United States public company and trades on the
Over-the-Counter Bulletin Board, (OTC:BB). The Company is available
as a public shell to be acquired or to merge with another entity. The
Company is considered to be in the development stage since October 1, 2003, and
the accompanying financial statements represent those of a development stage
company in accordance with SFAS No. 7, Accounting and Reporting by Development
Stage Enterprises.
The
following summarize the more significant accounting and reporting policies and
practices of the Company:
a) Use of
estimates The financial statements have been
prepared in conformity with generally accepted accounting
principles. In preparing the financial statements, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the statements of financial condition
and revenues and expenses for the year then ended. Actual results may
differ significantly from those estimates.
b) Start-Up
costs Costs of start-up activities, including organization
costs, are expensed as incurred, in accordance with Statement of Position (SOP)
98-5.
c) Net loss per share
Basic loss per weighted average common share excludes dilution and is
computed by dividing the net loss by the weighted average number of common
shares outstanding during the period. The Company applies Statement
of Financial Accounting Standards No. 128, AEarnings
Per Share (FAS 128).
d) Fair value of financial
instruments The carrying values of cash and accrued liabilities
approximate their fair values due to the short maturity of these
instruments.
e) Income taxes The Company
accounts for income taxes according to Statement of Financial Accounting
Standards (SFAS) No. 109, Accounting for Income Taxes. Under the
liability method specified by SFAS No. 109, deferred income taxes are recognized
for the future tax consequences of temporary differences between the financial
statement carrying amounts and tax bases of assets and liabilities.
f) Interim financial
information The financial statements for the nine months ended June 30,
2009 and 2008 are unaudited and include all adjustments which in the opinion of
management are necessary for fair presentation, and such adjustments are of a
normal and recurring nature. The results for the six months are not indicative
of a full year results.
|
(2)
|
Stockholder' Equity The Company has
authorized 300,000,000 shares of $0.0001 par common stock. At December 31,
2009 and September 30, 2009 there were 25,104,818 shares issued and
outstanding.
|
|
(3)
|
Income Taxes Deferred
income taxes (benefits) are provided for certain income and expenses which
are recognized in different periods for tax and financial reporting
purposes. The Company had net operating loss carry-forwards for
income tax purposes of approximately $483,900 expiring beginning September
30, 2028. The amount recorded as deferred tax asset as of
December 30, 2009 is approximately $121,000, which represents the amount
of tax benefit of the loss
carry-forward.
|
F-6
EXPERTELLIGENCE,
INC.
(A
Development Stage Enterprise)
Notes
to Financial Statements
|
(3)
|
Income Taxes, continued
Deferred tax assets are reduced by a valuation
allowance if, in the opinion of management, it is more likely than not
that some portion or all of the deferred tax assets will not be
realized. Management's
valuation procedures consider projected utilization of deferred tax assets
prospectively over the next several years, and continually evaluate new
circumstances surrounding the future realization of such assets. The
difference between income taxes and the amount computed by applying the
federal statutory tax rate to the loss before income taxes is due to an
increase in the deferred tax asset valuation
allowance.
|
|
(4)
|
Going Concern The
accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company's
financial position and operating results raise substantial doubt about the
Company's
ability to continue as a going concern, as reflected by the net loss of
$14,587,600 accumulated from March 31, 1980 (Inception) through December
31, 2009. The ability of the Company to continue as a going
concern is dependent upon commencing operations, developing sales and
obtaining additional capital and financing. The financial
statements do not include any adjustments that might be necessary if the
Company is unable to continue as a going concern. The Company
is currently seeking additional capital to allow it to begin its planned
operations.
|
|
(5)
|
Convertible Line of Credit
Payable In October 2004, the
Company entered into a line of credit with a third party, convertible into
common stock at the discretion of the lender, for $500,000. This
line of credit carries an 10% rate of interest. It is convertible into
common stock at any time prior to repayment at a conversion rate of the
lesser of 66 2/3 of the average closing price on the date of conversion or
$0.01 per share, This line of credit carried an maturity date of December
31, 2010. As of December 31, 2009, $333,210 has been advanced under this
line of credit.
|
F-7
|
ITEM
2.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
|
Results
of Operations
The
Company had no revenues for the three months ended December 31, 2009 and 2008,
respectively.
The
Company expended $14,198 and $6,266, for the three months ended
December 31, 2009 and 2008, respectively, on operating expenses.
Future
expenditure levels are expected to be nominal, generally for the purpose of
maintaining the Company's stockholder records and filing requirements to comply
with the Securities Exchange Act of 1934 and for initiating the Company's
current business plan, as discussed previously.
The
Company does not expect to generate any meaningful revenue or incur operating
expenses for purposes other than fulfilling the obligations of a reporting
company under The Securities Exchange Act of 1934 unless and until such time
that the Company's operating subsidiary begins meaningful
operations.
Liquidity
and Capital Resources
At
December 31, 2009 and 2008, the Company had a working capital deficit of
$111,996.
It is the
intent of management and significant stockholders to provide sufficient working
capital necessary to support and preserve the integrity of the corporate entity.
However, there is no legal obligation for either management or significant
stockholders to provide additional future funding. Consequently, there is
substantial doubt about the Company's ability to continue as a going concern,
notwithstanding this funding just described.
The
Company's need for capital may change dramatically as a result of the
implementation of a business plan instead of a reverse merger.
Regardless
of whether the Company's cash assets prove to be inadequate to meet the
Company's operational needs, the Company might seek to compensate providers of
services by issuances of stock in lieu of cash.
Net
Operating Losses
The
Company has net operating loss carry-forwards of $483,900, expiring beginning
September 30, 2028. Until the Company's
current operations begin to produce earnings, it is unclear whether the Company
can utilize such carry-forwards.
Plan
of Operation
The
Company is seeking either a viable business plan or a suitable reverse merger
candidate.
At
December 31, 2009, we had cash and cash equivalents of $6,134. Our working
capital is presently minimal and there can be no assurance that our financial
condition will improve. To date, we have not generated cash flow from
operations. Consequently, we have been dependent upon our line of credit to fund
our cash requirements. Specifically, we have
borrowed a total of $333,210 on this line. We therefore have $166,790 available
to draw upon.
As of
December 31, 2009, we had a working capital deficit of $111,996. The Company
will seek funds from possible investors, lenders, strategic and
joint venture partners and financing to cover any short
term operating deficits and provide for long term working capital. No assurances
can be given that the Company
will successfully engage strategic or joint
venture partners or otherwise obtain sufficient financing through the sale of
equity.
No trends
have been identified which would materially increase or decrease our
results of operations or liquidity.
ITEM
3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
The
Company is not subject to any specific market risk other than that encountered
by any other public company related to being publicly traded.
Forward-Looking
Statements
This Form
10-Q includes Aforward-looking
statements@
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements, other than statements of historical facts, included or incorporated
by reference in this Form 10-Q which address activities, events or developments
which the Company expects or anticipates will or may occur in the future,
including such things as future capital expenditures (including the amount and
nature thereof), finding suitable merger or acquisition candidates, expansion
and growth of the Company's
business and operations, and other such matters are forward-looking
statements. These statements are based on certain assumptions and
analyses made by the Company in light of its experience and its perception of
historical trends, current conditions and expected future developments as well
as other factors it believes are appropriate in the
circumstances. However, whether actual results or developments will
conform with the Company's
expectations and predictions is subject to a number of risks and uncertainties,
general economic market and business conditions; the business opportunities (or
lack thereof) that may be presented to and pursued by the Company; changes in
laws or regulation; and other factors, most of which are beyond the control of
the Company. Consequently, all of the forward-looking statements made
in this Form 10-Q are qualified by these cautionary statements and there can be
no assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequence to or effects on the Company or its business or
operations. The Company assumes no obligations to update any such
forward-looking statements.
|
ITEM
4T.
|
CONTROLS
AND PROCEDURES
|
As
required by Rule 13a-15 under the Exchange Act, within the 90 days prior to the
filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's
President, Chief Executive Officer and Chief Financial Officer. Based upon that
evaluation, the Company's President, Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures are
effective. There have been no significant changes in the Company's internal
controls or in other factors, which could significantly affect internal controls
subsequent to the date the Company carried out its evaluation.
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in Company reports filed or
submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer as appropriate, to allow timely
decisions regarding required disclosure.
PART II - OTHER
INFORMATION
|
ITEM
1.
|
LEGAL
PROCEEDINGS.
|
The
Company knows of no legal proceedings to which it is a party or to which any of
its property is the subject which are pending, threatened or contemplated or any
unsatisfied judgments against the Company.
|
ITEM
2.
|
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
None
|
ITEM
3.
|
DEFAULTS
IN SENIOR SECURITIES
|
None
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
|
No matter
was submitted during the quarter ending December 31, 2009, covered by this
report, to a vote of the Company's shareholders, through the solicitation of
proxies or otherwise.
|
ITEM
5.
|
OTHER
INFORMATION
|
None
|
ITEM
6.
|
EXHIBITS
|
(a) The
exhibits required to be filed herewith by Item 601 of Regulation S-K, as
described in the following index of exhibits, are incorporated herein by
reference, as follows:
|
Exhibit
number
|
Descriptions
|
|
|
31.1*
|
Certification
pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
|
|
|
32.1*
|
Certification
pursuant to Section 906 of Sarbanes-Oxley Act of
2002.
|
* Filed
herewith.
(b) The
following sets forth the Company's reports on
Form 8-K that have been
filed during the quarter for which this report is filed:
None.
SIGNATURES
In accord
with Section 13 or 15(d) of the Securities Act of 1933, as amended, the Company
caused this report to be signed on its behalf by the undersigned, thereto duly
authorized.
| EXPERTELLIGENCE, INC. | |||
|
Dated:
February 10, 2010
|
By:
|
/s/ Jason Smart | |
| Jason Smart | |||
|
Chief
Executive Officer,
Chief
Financial Officer
President
and Chairman of the Board
|
|||