Item 1. Business.
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:
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Enabling enterprises to fully exploit the power and capacity of 3D technology;
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Satisfying the full range of media display in business advertising and business operation;
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Enabling a truly integrated solution for 3D applications and powerful display specially customized for business requirements and operations; and
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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.
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 Ltd, 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 own 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.
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 Development
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 CEO, a 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 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.
Sourcing and Manufacturing
We have contracted with third party manufacturers for the production of the displays we have sold to date. Such manufacturers produce these products using OEM parts under specifications and informal licenses granted by certain of our directors and principal shareholders. These directors and principal shareholders 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 directors and principal shareholders 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 expect to 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 and have not yet commenced significant revenue operations.
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 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 rely on the trade secrets and know-how of one of our directors and principal shareholders to produce the products we sell. 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 have an office in the United States at 109 Lafayette Street, Suite 802, New York, New York 10013. Our office in Hong Kong is located at Room 512, 5/F., Beverly Commercial Center, No. 87-105 Chatham Road South, Tsimshatsui, Kowloon, Hong Kong. We have no other facilities.
Employees
As of December 31, 2014, we had no full-time employees.
Corporate Information
The Company's principal executive offices in the United States are located at 109 Lafayette Street, Suite 802, New York, New York 10013.
Item 1A.
Item 1A. Risk Factors.
Not applicable.
Item 1B.
Item 1B. Unresolved Staff Comments.
None.
Item 2.
Item 2. Properties.
Our executive office in Hong Kong consists of approximately 400 square feet located at Room 512, 5/F., Beverly Commercial Center, No. 87-105 Chatham Road South, Tsimshatsui, Kowloon, Hong Kong. The lease commenced on March 1, 2015 and continues through February 28, 2017. We share this space with other affiliates of our CFO and do not pay rent. Our offices in the United States are located at 109 Lafayette Street, Suite 802, New York, New York 10013. This office is furnished to us by an individual at no charge.
Item 3.
Item 3. Legal Proceedings
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.
Item 4.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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 April 15, 2015, we had approximately 75 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 April 15, 2015, the Company does not have in place any equity compensation plans.
Recent Issuances of Unregistered Securities
None.
Item 6.
Item 6. Selected Financial Data.
Not applicable.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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
Effective as of December 8, 2011, the Stock Purchase and the Share Exchange were closed pursuant to the terms of the Stock Purchase Agreement and the Share Exchange Agreement, respectively, and L3D-BVI became a wholly-owned subsidiary of the Company. In connection with the Stock Purchase and the Share Exchange, the L3D-BVI Shareholders acquired a total of 62,590,880 shares of common stock. L3D-BVI was, at the time of the Stock Purchase and Share Exchange, a privately held company, while the Company is a publicly held and traded company. As such, the following Management Discussion and Analysis is focused on the operations of L3D-BVI and excludes the operations of the Company prior to the Stock Purchase and the Share Exchange.
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, 2014 and December 31, 2013.
Operating Results
For the Years Ended December 31, 2014 and 2013
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, 2014 and December 31, 2013, revenues were $8,512 and $6,104, respectively, an increase of $2,408. The revenues for the year ended December 31, 2014 were derived from sales of 3D technology products manufactured by third parties. The increase in revenue was due to an increase 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 increased to $7,898 from $5,548 in the year ended December 31, 2014 compared to the same period in 2013. The increase was due to the increase in sales in the current year.
Gross Profit. For the year ended December 31, 2014, the gross profit was $614 compared with $556 for the same period in 2013. The increase was because of the increase in sales in the current year.
General and Administrative Expenses. For the years ended December 31, 2014 and December 31, 2013, general and administrative expenses were $612,547 and $738,685, respectively, a decrease of $126,138. The decrease in such expenses was primarily attributable to the decrease in the general and administrative expenses of the Company’s joint venture which was disposed of effective April 1, 2014.
Gain on disposal of joint venture. For the years ended December 31, 2014 and December 31, 2013, gain on disposal of joint venture was $126,848 and $(-0-), respectively, an increase of $ 126,848. The increase 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.
Operating (Loss) or Operating Income. For the year ended December 31, 2014, the operating loss was $(485,085) and, for the same year ended December 31, 2013, the operating loss was $(738,129), a decrease of $253,044. The decrease of operating loss between the years was explained by the decrease in general and administrative expenses which were further aggravated by the gain on disposal of joint venture discussed above.
Interest Income (Expenses). The interest expenses for the year ended December 31, 2014 amounted to ($26,509) and ($6,806) for the year ended December 31, 2013. 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, 2014 amounted to ($35,435) compared with a net loss attributable to the non-controlling interests of ($100,847) for the year ended December 31, 2013, a decrease of $(65,412). The decrease was primarily attributable to the decrease in general and administrative expenses. 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 (Loss) Attributable to the Company. For the year ended December 31, 2014, the net loss attributable to the Company was ($476,273) compared with a net loss of ($644,599) for the year ended December 31, 2013, a decrease of ($168,326). The decrease was primarily due to the decrease in the general and administrative expenses which were further aggravated by the gain on disposal of joint venture 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, 2014 and 2013 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, 2014 was ($34,559) compared with ($99,858) for the year ended December 31, 2013, a decrease of (65,299). 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 loss attributable to the Company for the year ended December 31, 2014 was ($475,557) compared with ($643,790) for the year ended December 31, 2013, a decrease of (168,233). This decrease was primarily due to the decrease in general and administrative expenses which were further aggravated by the gain on disposal of joint venture as discussed above.
Liquidity and Capital Resources. Cash and cash equivalents as of December 31, 2014 and December 31, 2013 totaled $3,691 and $54,349, respectively, a decrease of $50,658. The decrease was attributable to the increase in funds used in operating activities which was partially offset by additional related party loans made to us by Kingdom Industry Group, Inc., a company controlled by 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 sale of equity securities. We had loans payable to Kingdom Industry Group Inc., a company controlled by 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 to $1,401,771 at December 31, 2014 from $1,075,505 at December 31, 2013, an increase of $326,266. The increase is due principally to salaries accrued for the services of our officers in the year of 2014.
Our cash flows used for operating activities decreased by $61,231 from $275,366 at December 31, 2013 to $214,135 at December 31, 2014, due principally to the decrease in our general and administrative expenses and a decrease in the expenses of the joint venture.
Our cash used in investing activities decreased by $418,155, from $425,275 at December 31, 2013 to $7,120 at December 31, 2014, due primarily to the purchase of the fixed assets for the Company’s joint venture in 2013. The Company had disposed its joint venture in April 2014.
Our cash from financing activities decreased by $556,432, from $727,059 at December 31, 2013 to $170,627 at December 31, 2014, due principally to a decrease in loans from related parties.
We will require substantial additional capital to develop a market for 3D products 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, 2014.
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(L) to our audited consolidated financial statements included elsewhere in this report.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data.
The financial statements of the Company are included as an exhibit to this annual report on Form 10-K commencing on page.
Item 9.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A.
Item 9A. Controls and Procedures.
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, 2014, 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, 2014. 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. Based on our assessment using those criteria, management believes that, as of December 31, 2014, 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, 2014 that have materially affected, or are reasonably likely to materially affect, such controls.
Item 9B.
Item 9B. Other Information.
None.
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance.
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.
Jimmy Kent-Lam Wong, 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. From 1999 to 2010 he was the chairman and CEO of Guang Dong Eastern Venture Group, which sells office products and small home appliances. He intends to devote approximately 50% of his time to our business until we are funded sufficiently to implement our business plan. Mr. Wong attended Simon Fraser University. Mr. Wong holds no public company directorships other than with the Company and currently for the previous five years. The Company believes that Mr. Wong’s entrepreneurial, financial and business expertise and his experience with 3D technology companies and his role as Chief Executive Officer provide him the qualifications and skills to serve as a Director.
Chang Li, Former Chief Technology Officer and Director. Mr. Li had served as our Chief Technology Officer and a member of our Board of Directors from 2009 to October 2014. From 1999 to the present, Mr. Li has been the chairman of Tianjin 3D Imaging Technique Co. Ltd., an entity engaged in 3D research. He received his B. Eng.D from Hebei Technology Institute. He intended to devote approximately 50% of his time to our business. Mr. Li held no public company directorships other than with the Company and currently for the previous five years.
Kin Wah Ngai, Chief Financial Officer, Secretary and Director. Mr. Ngai has served as our Chief Financial Officer and a member of the Board of Directors since 2008. From 2004 to the present, Mr. Ngai has been the chairman of Hong Kong Commercial Management Limited, a business trading company. He plans to devote approximately 50% of his time to our business. Mr. Ngai received his B.A. from Soochow University of Taiwan. Mr. Ngai holds no public company directorships other than with the Company and currently for the previous five years. The Company believes that Mr. Ngai’s entrepreneurial, financial and business expertise and his experience with 3D technology companies and his role as Chief Financial Officer provide him the qualifications and skills to serve as a Director.
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 three meetings during the fiscal year ended December 31, 2014. In addition, our Board of Directors acted by unanimous written consent during fiscal year ended December 31, 2014. 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, 2014. 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 two members. Mr. Wong is our Chairman of the Board of Directors.
Our full Board is currently comprised of two Directors, neither of whom is independent, as defined by the rules and regulations of the SEC. The two members of our Board of Directors are Jimmy Kent-Lam Wong and Kin Wah Ngai. The Board of Directors determined that Mr. Ngai 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, 2014, 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 2014, 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, 2014 to be included in this annual report on Form 10-K for the fiscal year ended December 31, 2014 for filing with the SEC.
Director Independence
The members of our Board of Directors are Jimmy Kent-Lam Wong and Kin Wah Ngai. Neither 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. Wong's service as both Chief Executive Officer and Chairman of the Board is in the best interest of the Company and its shareholders. Mr. Wong 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, 109 Lafayette Street, Suite 802, New York, New York 10013. 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, 109 Lafayette Street, Suite 802, New York, New York 10013. 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 his 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, 109 Lafayette Street, Suite 802, New York, New York 10013. 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, 2014, all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with during fiscal year 2014.
Item 11.
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, 2014 and 2013.
Summary Compensation Table
(1) Ceased to be a Director and Chief Technology Officer with effect from October 3, 2014.
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 2014 and 2013.
Stock Option Plan
Our board of directors has not adopted a stock option plan.
Compensation of Directors
In 2014, 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 2014.
(1) Ceased to be a Director and Chief Technology Officer with effect from October 3, 2014.
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.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information regarding our common stock beneficially owned on April 15, 2015 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 April 15, 2015.
(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 foregoing beneficial owners hold investment and voting power in their shares.
(3)
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
There are no changes of control or similar provisions relating to our directors or executive officers.
Item 13.
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.
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 one of our directors and principal shareholders. This director and principal shareholder does not receive any compensation for these licenses. We do not have any contracts with its third party manufacturers.
Item 14.
Item 14. Principal Accounting Fees and Services.
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, 2014 and December 31, 2013:
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 2014 and 2013, 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, 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. The audit report for the year ended December 31, 2013 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, 2014 and 2013, 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, 2014 and 2013, there were no reportable events (as described in Item 304(a) (1) (v) of Regulation S-K).
Item 15.
Item 15. Exhibits, Financial Statement Schedules.
32.2
Certification of Kin Wah Ngai, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Filed herewith.
* XBRL related information in Exhibit 101 to this annual report on Form 10-K shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act, except as shall be expressly set forth by specific reference in such filing or document.
LIVING 3D HOLDINGS, INC.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Living 3D Holdings, Inc.
We have audited the consolidated balance sheets of Living 3D Holdings, Inc. and its Subsidiaries (collectively, the "Company") as of December 31, 2014 and 2013, and the related consolidated statements of operations and comprehensive income(loss), shareholders' equity (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, 2014 and 2013, 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
April 15, 2015
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)
The accompanying notes are an integral 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.
On December 8, 2011, L3D entered into a share exchange agreement (the "Share Exchange") with Living 3D Holdings, Inc. (formerly AirWare International Corp. and formerly Concrete Casting Incorporated), a company incorporated in the State of Nevada on October 29, 1987. Under the Share Exchange, Living 3D Holdings, Inc. ("Living 3D" or the “Company”) issued an aggregate of 62,590,880 shares of its common stock to the shareholders of the Company in exchange for all of the issued and outstanding securities of L3D. The Share Exchange closed on December 8, 2011. As a result of the Share Exchange, L3D became the Company's wholly-owned subsidiary.
The transaction has been treated as a recapitalization of L3D and its subsidiaries, with Living 3D (the legal acquirer of L3D and its subsidiaries) considered the accounting acquiree, and L3D whose management took control of Living 3D (the legal acquiree of L3D) considered the accounting acquirer. The Company did not recognize goodwill or any intangible assets in connection with the transaction. All costs related to the transaction are being charged to operations as incurred. The 62,590,880 shares of common stock issued to the shareholders in conjunction with the Share Exchange have been presented as outstanding for all periods. The historical consolidated financial statements include the operations of the accounting acquirer for all periods presented.
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 December 31, 2014, 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 or the Company.
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 "Jimmy Kent-Lam Wong," even though, in Chinese, his name would be presented as "Wong Jimmy Kent-Lam."
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
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 owns 45% equity interest in the joint venture, its two directors have actual control of the joint venture. Accordingly, the results of 3D Science & Cultural Products International Exchange Center are included in the consolidated statements of the Company (see Note 6). The Company disposed of its entire equity interests in 3D Science & Cultural Products International Exchange Center in 2014. All material inter-company accounts and transactions have been eliminated in consolidation.
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 at December 31, 2014 due to the relatively short-term nature of these instruments.
F. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciation. Cost represents the purchase price of the asset and other costs incurred to bring the asset into its existing use.
Depreciation is provided on the straight-line basis (after taking into account the respective estimated residual values) over the estimated useful lives of property, plant and equipment. The principal useful lives and residual value are as follows:
Maintenance or repairs are charged to expense as incurred. Upon sale or disposition, the applicable amounts of asset cost and accumulated depreciation are removed from the accounts and the net amount less proceeds from disposal is charged or credited to income.
G. 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.
H. FOREIGN CURRENCY TRANSLATION
For financial reporting purposes, the financial statements of Living 3D Holdings Limited, its subsidiaries and joint venture, which are prepared in Hong Kong Dollar (“HKD”) and Renminbi (“RMB”), 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 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.
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. 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.
I. 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.
J. 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 or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
K. 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.
L. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In April 2014, 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 the ASU 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. In addition, the new guidance requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The amendments in the ASU are effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption is permitted. The Company does not expect the adoption to have a significant impact on its consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, “Revenue from contracts with Customers (Topic 606)”. This ASU affects any entity that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of non-financial assets. This ASU will supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance. The ASU also supersedes some cost guidance included in Subtopic 605-35, Revenue Recognition-Construction-Type and Production-Type Contracts. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchanged for those goods or services. The standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements.
In June 2014, the FASB issued ASU 2014-10, “Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements”. The amendments in this Update remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, thereby improving financial reporting by eliminating the cost and complexity associated with providing that information. In the quarter ended June 30, 2014, the Company has elected to early adopt this ASU by removing the inception to date information and all references to development stage.
In August 2014, the FASB issued ASU 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern”. The amendment in the ASU provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The amendments in this Update are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s financial position and results of operations.
Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.
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. At December 31, 2014, the Company has a working capital deficit of $1,533,900 and an accumulated deficit of $1,834,000. The Company is primarily funded by Jimmy Kent-Lam Wong, the Company’s 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 - PROPERTY AND EQUIPMENT AND CONSTRUCTION IN PROGRESS
Property and equipment consist of the following:
The depreciation expenses for the years ended December 31, 2014 and 2013 were $6,436 and $4,799, respectively.
NOTE 5 - RELATED PARTY TRANSACTIONS
The related parties consist of the following:
Jimmy Kent-Lam Wong, the Company’s CEO, a director and principal shareholder Kingdom Industry Group Inc., Jimmy Kent-Lam Wong is one of the two directors and owns 60% equity interest China 3D Industrial Park Company Limited (“China 3D”), Jimmy Kent-Lam Wong is one of two directors of China 3D and owns 50% equity interest through his affiliates in China 3D. Chang Li, the Company's former Chief Technology Officer and former director, is the second director of China 3D. Chang Li was removed from his position of Chief Technology Officer and director on October 3, 2014.
Due from Related Party
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
Due to related parties consists of the following:
The amounts due to related parties represent advances received to support the Company’s operations. They are unsecured, bearing no interest and repayable on demand.
Loan from Related Party
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 7).
NOTE 6 - 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 CEO, a 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 7).
NOTE 7 - 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 8 - INCOME TAXES
Living 3D Holdings Ltd 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, 2014 and 2013.
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.
NOTE 9 - SUBSEQUENT EVENTS
Management has evaluated subsequent events and the impact on the reported results and disclosures and determined that there have not been any material events that would require to be reflected in the consolidated financial statements or the notes.
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.
Living 3D Holdings, Inc.
Date: April 15, 2015
/s/ Jimmy Kent-Lam Wong
Name: Jimmy Kent-Lam Wong
Title: Chief Executive Officer and Chairman of the Board of Directors
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.
Date: April 15, 2015
/s/ Jimmy Kent-Lam Wong
Name: Jimmy Kent-Lam Wong
Title: Chief Executive Officer and Chairman of the Board of Directors
Date: April 15, 2015
/s/ Kin Wah Ngai
Name: Kin Wah Ngai
Title: Chief Financial Officer and Director
Index to Exhibits
31.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.