NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2017 AND 2016 (UNAUDITED)
Note
1 -
ORGANIZATION
Yosen
Group, Inc. (the “Company” or “Yosen”) was incorporated on August 20, 1998 under the laws of the State
of Nevada. Capital Future Developments Limited (“Capital”) was incorporated on July 22, 2004 under the laws of the
British Virgin Islands. Zhejiang YongXin Digital Technology Company Limited (“Zhejiang”), Yiwu YongXin Communication
Limited (“Yiwu”), Hangzhou Wang Da Electronics Company Limited (“Wang Da”) were incorporated under the
laws of the Peoples Republic of China (“PRC” or “China”) on July 11, 2005, July 18, 1997, March 30, 1998,
respectively. Zhejiang set up a new operating entity, Hangzhou Letong Digital Technology Co., Ltd. (“Letong”) on March
10, 2009. On January 6, 2014 the Company established Yosen Trading Inc. (“Yosen Trading”), its wholly owned US based
subsidiary in New York. On April 23, 2015, the Company established a wholly owned subsidiary Hangzhou Yongxin Lamapai E-commerce
Co., Ltd (“Hangzhou Lamapai”). On September 24, 2015, Hangzhou Lamapai established a new company Zhejiang Yongxin
Lamapai E-commerce Co., Ltd (“Zhejiang Lamapai”). In 2016, Zhejiang Lamapai established Ningbo Yongxin Lamapai E-commerce
Co. Ltd ("Ningbo") and Hangzhou Saizhuo brand management Co., Ltd ("Saizhuo"). The Company invested RMB 6,193,541(USD
934,620) to Zhejiang Lamapai. As a result of the investment, the Company owns 64.1% of Zhejiang Lamapai as of March 31, 2017. At
the end of March 2017, Saizhuo ceased operation.
On
December 21, 2005, Capital became a wholly owned subsidiary of Yosen through a reverse merger (“Merger Transaction”).
Yosen acquired all of the issued and outstanding capital stock of Capital pursuant to a Merger Agreement dated December 21, 2005
by and among Yosen, XY Acquisition Corporation, Capital and the shareholders of Capital (the “Merger Agreement”).
Pursuant to the Merger Agreement, Capital became a wholly owned subsidiary of Yosen and, in exchange for the Capital shares, Yosen
issued 7,000,000 shares of its common stock to the shareholders of Capital, representing 93% of the issued and outstanding capital
stock of Yosen at that time and cash of $500,000.
On
August 15, 2007, we executed a series of contractual agreements between Capital and Zhejiang. The contractual agreements give
Capital and its equity owners an obligation, and having ability to absorb, any losses, and rights to receive returns; however,
these contractual agreements did not change the equity ownership of Zhejiang. We did not dispose Capital’s actual equity
ownership of Zhejiang when we executed the contractual agreements. Capital entered into share-holding entrustment agreements with
five individuals - Zhenggang Wang, Yimin Zhang, Huiyi Lv, Xiaochun Wang and Zhongsheng Bao to hold 35%, 20%, 20%, 15% and 10%,
respectively, of the equity interest of Zhejiang on behalf of Capital on November 21, 2005. The entrustment agreements confirm
that Capital is the actual owner of Zhejiang. Capital enjoys the actual shareholder’s rights and has the right to obtain
any benefits received by the nominal holders. Zhenggang Wang is the CEO and shareholder of Yosen. Yimin Zhang, Huiyi Lv, Xiaochun
Wang and Zhongsheng Bao have no other relationship with Yosen. No consideration was given to these individuals who held the equity
of Zhejiang on behalf of Capital.
Letong
ceased operations in 2011. Yiwu closed all its stores in stores locations in 2012. Wang Da closed all its stores in the second
quarter 2014. Yosen Trading ceased operation in 2015. Saizhuo ceased operation in March 2017.
ORGANIZATIONAL
CHART
Our
corporate structure as of March 31, 2017 is as follows:
ORGANIZATIONAL
CHART
*
These entities ceased operation in 2011.
**
The entity ceased operation in 2014.
***
The entity ceased operation in 2015.
****
The entity ceased operation in 2017.
Note
2 -
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying consolidated financial statements (“CFS”) were prepared in conformity with accounting principles generally
accepted in the United States of America (“US GAAP”). The Company’s subsidiaries – Wang Da, Yiwu,
Zhejiang, Hangzhou Lamapai and Zhejiang Lamapai’s functional currency is the Chinese Renminbi (“RMB”), however,
the accompanying consolidated financial statements were translated and presented in United States Dollars (“$”, or
“USD”). Yosen is the parent company incorporated on August 20, 1998 under the laws of the State of Nevada. The parent
company does not have operations. Its main activities were incurring public company expenses. Yosen pays all its expenses in USD,
its functional currency. Capital was incorporated on July 22, 2004 under the laws of the BVI. Capital is a holding company and
does not have operations. As a result, we determined its functional currency is USD.
Going
Concern
The
accompanying CFS were prepared on a going concern basis which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company realized net loss of $244,165 for the three months ended March 31, 2017. The Company
had accumulated deficit of $51,128,801 as of March 31, 2017. There can be no assurance that the Company will become profitable
or that it will survive as a public company. These issues raise substantial doubt regarding the Company’s ability to continue
as a going concern.
Starting
from 2011, we closed most of our stores in stores locations and laid off most of our employees. We retained highly qualified personnel
and a small number of stores with stable revenues. As a result, we significantly cut our operating expenses and our losses are
decreasing over time. We are now concentrating on improving our product mix, upgrading the stores that are currently open and
strengthening cooperation with China Telecom, China Unicom and other large state-owned operators to develop new businesses.
Principles
of Consolidation
The
CFS include the accounts of Yosen and its wholly owned subsidiaries Capital, Wang Da, Yiwu, Zhejiang, Lamapai, Ningbo and Saizhuo
collectively referred to as the Company. All material intercompany accounts, transactions and profits were eliminated in consolidation.
Noncontrolling
Interest
As
of March 31, 2017, the Company invested RMB 6,193,541($898,852) in Zhejiang Lamapai and owns 64.1% interest in Zhejiang Lamapai.
The 35.9% owned by the third parties is presented as noncontrolling interest.
The
Company follows Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 810, “
Consolidation
,” which governs the accounting for and reporting of non-controlling interests (“NCIs”)
in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate,
among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in
the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions
or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such
allocation might result in a deficit balance. This standard also required changes to certain presentation and disclosure requirements.
The
net income attributed to the NCI is separately designated in the accompanying consolidated statements of income and other comprehensive
income (loss). Losses attributable to the NCI in a subsidiary may exceed the NCI’s interests in the subsidiary’s equity.
The excess attributable to the NCI is attributed to those interests. The NCI shall continue to attribute its share of losses even
if that attribution results in a deficit NCI balance.
Currency
Translation
The
accounts of Zhejiang, Wang Da, Yiwu, Lamapai entities were maintained, and its financial statements were expressed RMB. Such financial
statements were translated into USD in accordance with FASB ASC Topic 830-10,
“Foreign Currency Translation,”
with the RMB as the functional currency. According to FASB ASC Topic 830-10, assets and liabilities were translated at the ending
exchange rate, stockholders’ equity is translated at the historical rates and income statement items are translated
at the average exchange rate for the year. The resulting translation adjustments are reported as other comprehensive income in
accordance with FASB ASC Topic 220,
“Reporting Comprehensive Income,”
as a component of shareholders’
equity. Transaction gains and losses are reflected in the consolidated statements of operations and comprehensive loss.
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP 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 revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Risks
and Uncertainties
The
Company is subject to risks from, among other things, intense competition associated with the industry in general, other risks
associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign
currency exchange rates and the volatility of public markets.
Contingencies
Certain
conditions may exist as of the date the financial statements are issued, which could result in a loss to the Company but which
will only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent
liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal
proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s
management evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the
amount of relief sought or expected to be sought.
If
the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability
can be estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates
that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material
would be disclosed.
Loss
contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case
the guarantee would be disclosed.
Accounts
Receivable, net
The
Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts
receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and
changes in customer payment patterns to evaluate the adequacy of these reserves. Terms of the sales vary. Reserves are recorded
primarily on a specific identification basis. Allowance for doubtful accounts was $1,005,085 (unaudited) and $1,005,085 as of
March 31, 2017 and December 31, 2016, respectively.
Inventories,
net
Inventories
are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of
inventories with the market value and allowance is made for writing down their inventories to market value, if lower. As of March
31, 2017 and December 31, 2016, inventory consisted entirely of finished goods.
Property
and Equipment, net
Property
and equipment are stated at cost. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals
and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property
and equipment is provided using the straight-line method for substantially all assets with estimated lives of:
Automotive
|
5
years
|
Office Equipment
|
5
years
|
As
of March 31, 2017 and December 31, 2016, property and equipment consisted of the following:
|
|
March
31, 2017
|
|
December
31, 2016
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Automotive
|
|
$
|
40,178
|
|
|
$
|
39,870
|
|
Office
equipment
|
|
|
155,759
|
|
|
|
152,372
|
|
Plant
and equipment
|
|
|
169,850
|
|
|
|
168,212
|
|
Construction
in progress
|
|
|
335,158
|
|
|
|
328,103
|
|
Subtotal
|
|
|
700,945
|
|
|
|
689,557
|
|
Less:
accumulated depreciation
|
|
|
(204,387
|
)
|
|
|
(187,942
|
)
|
Total
|
|
$
|
496,558
|
|
|
$
|
501,615
|
|
Long-Lived
Assets
The
Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with FASB ASC 360,
“Property,
Plant and Equipment,”
which requires impairment losses to be recorded on long-lived assets used in operations when indicators
of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’
carrying amounts. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market
value of the long-lived assets. Losses on long-lived assets to be disposed of are determined in a similar manner, except that
fair market values are reduced for the cost of disposal. Based on its review, the Company believes that, as of March 31, 2017
(unaudited) and December 31, 2016, there were no significant impairments of its long-lived assets.
Fair
Value of Financial Instruments
FASB
ASC Topic 825,
“Financial Instruments”
, requires the Company disclose estimated fair values (“FVs”)
of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current
liabilities qualifying as financial instruments are a reasonable estimate of FV.
Short-term
Loans
As
of March 31, 2017 and December 31, 2016, short-term loans consisted of the following:
|
|
March
31,
2017
|
|
December
31, 2016
|
From
Bank of Hangzhou, dated July 13, 2016, due on July 12, 2017, with interest of 6.96% payable monthly
|
|
$
|
362,818
|
|
|
|
360,039
|
|
|
|
|
|
|
|
|
|
|
From
Bank of Chouzhou, dated July 9, 2016, due on July 10, 2017, with interest 6.00% payable monthly, personally guaranteed by
the CEO
|
|
|
725,637
|
|
|
|
720,077
|
|
|
|
|
|
|
|
|
|
|
From
Bank of Chouzhou, dated July16, 2016, due on July 10, 2017 with interest of 6.0625% payable monthly, personally guaranteed
by the CEO
|
|
|
1,451,273
|
|
|
|
1,440,154
|
|
|
|
|
|
|
|
|
|
|
Short
term loan dated June 1, 2016, due on August 28, 2017 , with interest payable monthly, personally guaranteed by the
CEO
|
|
|
435,382
|
|
|
|
432,046
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,975,111
|
|
|
$
|
2,952,316
|
|
Revenue
Recognition
In
accordance with FASB ASC Topic 605,
“Revenue Recognition,”
the Company recognizes revenues when there
is persuasive evidence of an arrangement, product delivery and acceptance have occurred, the sales price is fixed and determinable,
and collectability of the resulting receivable is reasonably assured.
The
Company records revenues when title and the risk of loss pass to the customer. Generally, these conditions occur on
the date the customer takes delivery of the product. Revenue generated from sales of Yosen products through two main
revenue streams:
|
1.
|
Retail.
100% and 91.1% of the Company's revenue came from sales to customers at outlets installed inside department stores
etc. (i.e. store in store model) during the three months ended March 31, 2017 and 2016, respectively and is mainly achieved
through two broad categories:
|
|
a.
|
Purchase
contracts
. Sales by purchase contracts have terms of 15-30 days from the transfer of goods to the customer. Under this
method, the Company delivers goods to places designated by the customers and receives confirmation of delivery. At that time,
ownership and all risks associated to the goods are transferred to the customers and payment is made within 30 days. The Company
relieves its inventory and recognizes revenue upon receipt of confirmation from the customer.
|
|
b.
|
Point
of sale transfer of ownership
. Under this method, the Company’s products are placed in third party stores and sold
by the Company’s sales people. Upon purchase of the item by the customer, the Company relieves its inventory and recognizes
revenue related to that item.
|
|
2.
|
Wholesale.
None and 8.9% of the Company's revenue came from wholesale during during the three months ended March 31, 2017 and 2016,
respectively. Recognition of income in wholesale is based on the contract terms. Upon purchase of the item by the customer,
the Company relieves its inventory and recognizes revenue related to that item.
|
Sales
revenue is therefore recognized on the following basis:
|
a.
|
For
goods sold under sales and purchase contracts, revenue is recognized when goods are received by customers.
|
|
b.
|
For
goods at customer outlets which the Company’s sales people operate, and inventory of goods is
under joint control by the customers and the Company, revenue is recognized at the point of sale to
the end buyer. Yosen has title and owns the inventory under joint control. Such joint controlled inventory
has been included in reported inventory of Yosen’s financial statements.
|
During
public holidays or department store celebration periods, we provide certain sales incentives to retail customers to increase sales,
such as gift giving and price reductions. These are the only temporary incentives during the specified periods. Sales made to
our retail customers as a result of incentives are immaterial as a percentage of total sales revenue.
|
a.
|
Revenue
is recognized at the date of goods are received by wholesale customers. We operate our wholesale business by selling large
volume orders to second-tier distributors. Revenues from wholesale are recognized at point of sale. Net sales already take
into account revenue dilution as they exclude inventory credit, discount for early payment, product obsolescence and return
of products and other allowances. Net sales also take into account the return of products in accordance with relevant laws
and regulations in China. The Company is in the process of winding down its wholesale business. It will only focus on retail
business in the future.
|
Return
policies
Our
return policy complies with China’s laws and regulations on consumer’s rights and product quality. In accordance with
Chinese law, consumers can return or exchange used products within seven days only if the goods do not meet safety and health
requirements, endanger a person’s property, or do not meet the advertised performance. If the conditions and requirements
as set out in the relevant laws and regulations are met, the retail stores are entitled to accept a return of the goods from the
consumer. In such cases, the Company shall accept the returns unconditionally. Goods returned will be redirected to the production
factory or supplier who shall bear all losses on the returns in accordance the laws and regulations. Consumer returns or exchanges
of products that have not been used, where the packaging has not been damaged, are honored if such return or exchange is within
seven days. If a consumer returns a product, the Company must refund the invoice price to the consumer. The Company will then
be responsible for returning the goods to the production factory or supplier. At that time the Company can recover the price based
on the purchase and sale contract with the producer or supplier. However, when goods are returned, the Company loses the profit
margin that it records when revenue is recognized, regardless of whether the production factory or supplier takes the product
back or not.
The
return rights granted to wholesale customers are similar to the rights granted to retail customers. Once wholesale customers purchase
the products, they follow the same return policy as retail customers. We do not honor any return from wholesale customers other
than if the products don’t meet laws and regulations or quality requirements. If the wholesale customers have a high inventory
level or product obsolescence caused by lower market demands or other operational issues, the wholesale customers bear their own
losses. When a wholesale customer returns products, the Company will return the products to the suppliers or manufacturers. A
sales return and allowance is recorded at the sales price. Meanwhile, a purchase return and allowance entry is recorded at the
invoice price because the suppliers or manufacturers bear the losses. The net effect is that the Company derecognizes the gross
profit when a return takes place, but does not record any loss on the cost of the returned item back to the supplier or manufacturer.
In
light of the aforesaid PRC laws and regulations and the Company's arrangements with suppliers, we do not provide an accrual for
any estimated losses on subsequent sale of the return of products. As a result we do not engage in assessing levels of inventory
in the distribution channel, product obsolescence and/or introductions of new products, as none of those factors have any impact
on us with respect to estimating losses on subsequent sale of returned goods. Goods return policy strictly complies with
the laws and regulations in China on consumer rights and product quality requirements. If the conditions and requirements as set
out in the relevant laws and regulations are met, customers are able to return the goods unconditionally. In such cases, the Company
shall accept the returns unconditionally. Goods returned will be redirected back to the manufacturers or suppliers who shall meet
all losses on returns in accordance the laws and regulations. The Company will only be responsible for assisting the process of
execution of goods return. The Company shall not bear any loss from goods returned. As a result, we do not provide any accrual
on subsequent return of goods sold.
Unlike
the US retail market, sellers do not accept returns caused by any change in the sales market or change in customers’ preferences
in China. Therefore, the Company generally does not honor any returns except for product defects. As such, situations relating
to return of goods from overstock in distribution channels, product obsolescence and over-budgeted goods from launching of new
products will not exist.
The
reported sales do not include estimate of returns due to defects for the period presented because we do not offer customers the
right to return in China. We do not allow the customers to return the products for cash refunds, credit, or exchange for other
products through general rights of return. If the products are defective, manufacturers are directly responsible for the defects.
Yosen Group, as a distributor, only assists customers in returning the defective products to manufacturers. The manufacturers
send replacement products to customers directly.
Cost
of Sales
Cost
of sales (“COS”) consists of actual product cost, which is the purchase price of the product less any discounts. COS
excludes freight charges, purchase and delivery costs, internal transfer, freight charges and the other costs of the Company’s
distribution network, which are identified in general and administrative expenses.
General
and Administrative Expenses
General
and administrative (“G&A”) expenses are comprised principally of payroll and benefits costs for retail and corporate
employees, occupancy costs of corporate facilities, lease expenses, management fees, traveling expenses and other operating and
administrative expenses, including freight charges, purchase and delivery costs, internal transfer freight charges and other distribution
costs.
Shipping
and Handling Fees
The
Company follows FASB ASC Sub-topic 605-45,
“Handling Costs, Shipping Costs”
. The Company does not
charge its customers for shipping and handling. The Company classifies shipping and handling fees as part of G&A expenses
which were $3,723 and $793 for the three months ended March 31, 2017 and 2016, respectively.
Vendor
Discounts
The
Company has negotiated preferred pricing arrangements with certain vendors on certain products. These arrangements are not contingent
on any levels of volume and are considered vendor discounts as opposed to rebates. The Company records these discounts along with
the purchase of the discounted items, resulting in lower inventory cost and a corresponding lower COS as the products are sold.
Management
Fees Paid to the Department Stores Under “Store in Store” Model
Under
the “store in store” business operation model, the Company may pay management fees to the department stores, which
are in the form of service charges. The management fees are reflected in general and administrative expenses. Such management
fees were $635 and $16,298 in general and administrative expenses for the three months ended March 31, 2017 and 2016, respectively.
Share
Based Payment
The
Company follows FASB ASC Sub-topic 718-10,
“Compensation-Stock Compensation,”
which addresses the accounting
for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions
in which an entity obtains employee services in share-based payment transactions. FASB ASC Sub-topic 718-10 requires measurement
of the cost of employee services received in exchange for an award of equity instruments based on the grant-date FV of the award
(with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date
must be recognized.
Advertising
Advertising
expenses consist primarily of costs of promotion for corporate image and product marketing and costs of direct advertising. The
Company expenses all advertising costs as incurred. There was $3,194 advertising expense for the three months ended March 31,
2017 and none for 2016.
Income
Taxes
The
Company utilizes FASB ASC Topic 740,
“Income Taxes.”
ASC Topic 740 requires a company to use the asset and
liability method of accounting for income taxes, whereby deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end
based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable
income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
Under
FASB Sub-topic ASC 740-10-25, evaluation of a tax position is a two-step process. The first step is to determine whether it is
more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or
litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not
threshold to determine the amount of benefit to be recognized in the financial statements.
Basic
and Diluted Earnings (Loss) per Share
Loss
per share is calculated in accordance with FASB ASC Topic 260,
“Earnings per Share.”
Basic earnings (loss)
per share is based upon the weighted average number of common shares outstanding. Diluted earnings (losses) per share is based
on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by
applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the
period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average
market price during the period. If convertible shares and stock options are anti-dilutive, the impact of conversion is not included
in the diluted net income (loss) per share.
The 10,414,325 weighted
average shares in 2016 include anti-dilutive securities.
Statement
of Cash Flows
In
accordance with FASB ASC Topic 230,
“Statement of Cash Flows,”
cash flows from the Company’s operations
are calculated based upon the functional currency, in our case the RMB. As a result, amounts related to changes in assets and
liabilities reported on the statement of cash flows will not necessarily agree with the changes in the corresponding balances
on the balance sheet.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable, advances to suppliers
and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy
financial institutions. The Company has a diversified customer base. The Company controls credit risk related to accounts receivable
through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its
customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts
and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.
Segment
Reporting
FASB
ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting.
The management approach model is based on the way a company’s management organizes segments within the company for making
operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure,
management structure, or any other manner in which management disaggregates a company. The Company operated in two segments in
the first quarter of 2017 through Zhejiang and Lamapai entities.: mobile phones and E-commerce business (see Note 13).
Recent
Accounting Pronouncements
In
January 2017, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”)
2017-01,
Business Combinations (Topic 805) Clarifying the Definition of a Business
. The amendments in this update
clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions
should be accounted for as acquisitions or disposals of assets or businesses. The definition of a business affects many areas
of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for interim and annual
periods beginning after December 15, 2017 and should be applied prospectively on or after the effective date. The Company
is in the process of evaluating the impact of this ASU.
In
November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires restricted
cash to be presented with cash and cash equivalents on the statement of cash flows and disclosure of how the statement of cash
flows reconciles to the balance sheet if restricted cash is shown separately from cash and cash equivalents on the balance sheet.
ASU 2016-18 is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The
Company is in the process of evaluating the impact of this ASU on its CFS.
In
November 2015, the FASB issued an ASU on the balance sheet classification of deferred taxes, which would require that deferred
tax assets and liabilities be classified as non-current in the balance sheet. Current GAAP requires the presentation of deferred
tax assets and liabilities as either current or non-current in the balance sheet. This ASU is effective for annual reporting periods
beginning after December 15, 2016, including interim reporting periods within those annual reporting periods. Earlier adoption
is permitted. The guidance may be applied either prospectively or retrospectively. The Company does not believe adoption of any
such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
In
October 2016, the FASB issued ASU 2016-16,
Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other than Inventory
,
which requires the recognition of the income tax consequences of an intra-entity transfer of an asset, other than inventory, when
the transfer occurs. ASU 2016-16 is effective for interim and annual periods beginning after December 15, 2018, with early
adoption permitted. The Company is in the process of evaluating the impact of this ASU on its CFS.
In
August 2016, the FASB issued ASU 2016-15,
Statement of Cash Flows (Topic 230), Classification of Certain Cash
Receipts and Cash Payments
. ASU 2016-15 provides guidance for targeted changes with respect to how cash receipts and cash
payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. ASU 2016-15 is
effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted. The Company is
in the process of evaluating the impact of this ASU on its CFS.
In
March 2016, the FASB issued ASU 2016-09,
Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting
.
ASU 2016-09, which amends several aspects of accounting for employee share-based payment transactions including the accounting
for income taxes, forfeitures, and statutory tax withholding requirements, and classification in the statement of cash flows.
ASU 2016-09 is effective for fiscal years beginning after December 15, 2016 and interim periods within annual periods beginning
after December 15, 2016, with early adoption permitted. The Company does not believe adoption of any such pronouncements
may be expected to cause a material impact on its financial condition or the results of its operations.
In
February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842)
ASU 2016-02 requires lessees to recognize lease assets
and lease liabilities on the balance sheet and requires expanded disclosures about leasing arrangements. ASU 2016-02 is effective
for fiscal years beginning after December 15, 2018 and interim periods in fiscal years beginning after December 15, 2018,
with early adoption permitted. The Company is in the process of evaluating the impact of this ASU on its CFS.
In
August 2014, the FASB issued Accounting Standards Update No. 2014-15,
Disclosure of Uncertainties about an Entity's Ability
to Continue as a Going Concern
, which provides guidance on determining when and how to disclose going-concern uncertainties
in the financial statements. ASU 2014-15 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. ASU
2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter. Early adoption is
permitted. The Company does not believe adoption of any such pronouncements may be expected to cause a material impact on
its financial condition or the results of its operations.
In
May 2014, the FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers
. ASU 2014-09 is a comprehensive
revenue recognition standard that will supersede nearly all existing revenue recognition guidance under current U.S. GAAP and
replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies
recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require
additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts,
including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract.
ASU 2014-09 is effective for interim and annual periods beginning after December 15, 2017. Early adoption is permitted
only in annual reporting periods beginning after December 15, 2016, including interim periods therein. Entities will be
able to transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption.
The Company is in the process of evaluating the impact of ASU 2014-09 on the Company's CFS.
Management
does not believe that any recently issued, but not yet effective, accounting standards could have a material effect on the accompanying
financial statements. As new accounting pronouncements are issued, we will adopt those that are applicable under the circumstances.
Other
recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities
Exchange Commission (the “SEC”) did not or are not believed by management to have a material impact on the Company’s
present or future consolidated financial statements.
Note
3 –
ADVANCES TO SUPPLIERS
Advances
to suppliers represent advance payments to suppliers for the purchase of inventory.
Note
4 -
COMMON STOCK
On
March 18, 2016, the Company sold 190,532 Units to two investors with each Unit consisting of: (i) one share of common stock, $0.001
par value per share and (ii) a three-year warrant to purchase one share of Common Stock of the Company at $0.75, for $142,898.
Pursuant to the agreement, 190,532 shares of Common Stock and 190,532 Warrant were issued in 2016. The Proceeds from the issuance
of shares and warrants were assigned to the respective securities based on relative fair values.
On
May 19, 2016, the board approved an amendment to Yosen’s Certificate of Incorporation effecting a one-for-three reverse
split of Yosen’s common stock. The reverse split was effective as of September 30, 2016. The accompanying financial
statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented.
In addition, the reverse stock split resulted in an adjustment in the number of shares of common stock issuable upon conversion
of our warrants to a 3:1 ratio.
On
December 23, 2016, the Company’s BOD adopted the Yosen Group 2016 Restricted Stock Plan (the “2016 Plan”). The
2016 Plan provides for the granting of restricted stock awards to employees, directors and consultants of the Company and the
employees, directors and consultants of the Company’s affiliates. Under the 2016 Plan, 1,360,000 shares of the Company’s
common stock were initially available for issuance for awards. As of December 31, 2016, 1,150,000 of the shares available
for issuance under the 2016 Plan were issued. In January 2017, 210,000 shares available for issuance were issued. The common stock
was valued at grant date with a FV of $476,000. During the three months ended March 31, 2017, $39,667 was recognized as stock
based compensation expense.
N
ote
5 -
STOCK WARRANTS, OPTIONS, AND COMPENSATION
Stock
options - Options issued have a 10-year life and were vested upon issuance. The option holder has no voting or dividend rights.
The grant price was the market price at the date of grant. The Company records the expense of the stock options over the related
vesting period. The options were valued using the Black-Scholes option-pricing model at the date of grant stock option pricing.
Outstanding
options and warrants by exercise price consisted of the following as of March 31, 2017:
Outstanding
|
|
|
Exercisable
|
|
Exercise Price
|
|
|
Number of
Shares
|
|
Weighted
Average
Remaining
Life (Years)
|
|
|
Weighted
Average
Exercise Price
|
|
|
Number
of Shares
|
|
|
Weighted
Average
Exercise
Price
|
|
Warrants:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.75
|
|
|
|
1,218,076
|
(1)
|
|
1.50
|
|
|
$
|
0.75
|
|
|
|
1,218,076
|
|
|
$
|
0.75
|
|
$
|
0.75
|
|
|
|
66,975
|
(2)
|
|
1.65
|
|
|
$
|
0.75
|
|
|
|
66,975
|
|
|
$
|
0.75
|
|
$
|
0.75
|
|
|
|
190,532
|
(3)
|
|
1.85
|
|
|
$
|
0.75
|
|
|
|
190,532
|
|
|
$
|
0.75
|
|
(1)
On September 1, 2015, the Company issued stock warrants to purchase 1,218,076 shares of common stock at $0.75. The stock warrants
expire on August 31, 2018. Stock warrants were valued using the Black-Scholes option pricing model. Assumptions used to value
the warrants are similar to those used in valuing the stock options as described below.
Term
|
|
3 years
|
Expected
volatility
|
|
|
196
|
%
|
Risk – free interest
rate
|
|
|
1.1
|
%
|
Dividend yield
|
|
|
0
|
%
|
Weighted-average grant
date FV
|
|
$
|
0.972
|
|
The
Company determined the FV of the 1,218,076 warrants was $1,183,970. As of March 31, 2017, warrants to purchase 1,218,076 shares
of common stock remained outstanding. These warrants were plain vanilla warrants and were classified as equity.
(2)
On November 16, 2015, the Company issued stock warrants to purchase 66,975 shares of common stock at $0.75 . The stock warrants
expire on November 15, 2018. Stock warrants were valued using the Black-Scholes option pricing model. Assumptions used to value
the warrants are similar to those used in valuing the stock options as described below.
Term
|
|
3 years
|
Expected
volatility
|
|
|
203
|
%
|
Risk – free interest
rate
|
|
|
1.2
|
%
|
Dividend yield
|
|
|
0
|
%
|
Weighted-average grant
date FV
|
|
$
|
1.215
|
|
The
Company determined the FV of the 66,975 warrants was $81,375. As of March 31, 2017, warrants to purchase 66,975 shares of common
stock remained outstanding. These warrants were plain vanilla warrants and were classified as equity.
(3)
On March 18, 2016, the Company issued stock warrants to purchase 190,532 shares of common stock at $0.75 in conjunction
with the common stock offering (See Note 5). The stock warrants expire on March 17, 2019. Stock warrants were valued using the
Black-Scholes option pricing model. Assumptions used to value the warrants are similar to those used in valuing the stock options
as described below.
Term
|
|
3 years
|
Expected
volatility
|
|
|
178
|
%
|
Risk – free interest
rate
|
|
|
1.0
|
%
|
Dividend yield
|
|
|
0
|
%
|
Weighted-average grant
date FV
|
|
$
|
1.086
|
|
The
Company determined the FV of the 190,532 warrants was $206,917. As of March 31, 2017, warrants to purchase 190,532 shares of common
stock remained outstanding. These warrants were plain vanilla warrants and were classified as equity.
No
te
6 -
INCOME TAXES
The
Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income
tax expense. The Company did not have any accrued interest or penalties associated with any unrecognized tax benefits, nor were
any interest expense or penalties recognized during the three months ended March 31, 2017 and 2016.
Under
ASC 740-10-25, evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not
that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on
the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold
to determine the amount of benefit to be recognized in the financial statements.
The
US operating entity Yosen Group is subject to the US federal income tax at a rate of 34%. Yosen Group does not conduct any operations
and only incurs public company expenses, such as legal fees, accounting fees, investor relations expenses and filing fees. In
the three months ended March 31, 2017, the US operating subsidiaries incurred a net operating loss of $61,700. As a result, $20,978
of deferred tax assets and valuation allowance was recorded. In the three months ended March 31, 2016, the US operating subsidiaries
incurred a net operating loss of $1,133. As a result, $385 of deferred tax assets and valuation allowance was recorded.
The
PRC operating subsidiaries, Zhejiang, Lamapai and Ningbo are subject to the PRC income tax at a rate of 25%. In the three months
ended March 31, 2017, Zhejiang, Lamapai and Ningbo incurred a net operating loss of $182,465. Management believes it is more likely
than not that the subsidiaries will not be able to benefit from the deferred tax assets in association with the operating losses.
As a result, $45,616 of deferred tax assets and valuation allowance were recorded in the three months ended March 31, 2017. In
the three months ended March 31, 2016, Zhejiang incurred a net operating loss of $55,248, as a result, $13,812 of deferred tax
assets and valuation allowance were recorded in the three months ended March 31, 2016.
The
components of deferred tax assets and liabilities as of March 31, 2017 (unaudited) and December 31, 2016 were as follows:
|
|
2017
|
|
2016
|
Deferred
tax assets:
|
|
|
(Unaudited)
|
|
|
|
|
|
U.S.
net operating losses
|
|
$
|
20,978
|
|
|
$
|
57,635
|
|
PRC
net operating losses
|
|
|
45,616
|
|
|
|
378,391
|
|
Discontinued
operation
|
|
|
25,928
|
|
|
|
|
|
Total
deferred tax assets
|
|
|
93,000
|
|
|
|
436,026
|
|
Less
valuation allowance
|
|
|
(93,000
|
)
|
|
|
(436,026
|
)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Reconciliation
of the differences between the statutory US Federal income tax rate and the effective rate for the three months ended March 31,
2017 and 2016 is as follows:
|
|
2017
|
|
2016
|
Tax (Credit)
at US Statutory Rate
|
|
|
(34.0
|
)%
|
|
|
(34.0
|
)%
|
Tax rate difference
|
|
|
7.8
|
%
|
|
|
8.9
|
%
|
Valuation
allowance
|
|
|
26.2
|
%
|
|
|
25.1
|
%
|
Effective
rate
|
|
|
—
|
%
|
|
|
—
|
%
|
Note
7 -
COMMITMENTS
The
Company leases office facilities under operating leases that terminate at the end of 2017. Rent expense for the three months ended
March 31, 2017 and 2016 was $96,600 and $55,150, respectively.
The
future minimum obligations under these agreements are as follows by years as of March 31, 2017:
2017
|
|
|
$
|
160,946
|
|
Total
|
|
|
$
|
160,946
|
|
Note
8 -
STATUTORY RESERVE
In
accordance with the laws and regulations of the PRC, a wholly-owned Foreign Invested Enterprise’s income, after the payment
of the PRC income taxes, shall be allocated to the statutory surplus reserves and statutory public welfare fund. Prior to January
1, 2006, the proportion of allocation for reserve was 10% of the profit after tax to the surplus reserve fund and additional 5-10
percent to the public affair fund. The public welfare fund reserve was limited to 50% of the registered capital. Effective January
1, 2006, there is now only one fund requirement. The reserve is 10% of income after tax, not to exceed 50% of registered capital.
Statutory
reserve funds are restricted to offset against losses, expansion of production and operation or increase in register capital of
the respective company. Statutory public welfare fund is restricted to the capital expenditures for the collective welfare of
employees. These reserves are not transferable to the Company in the form of cash dividends, loans or advances. These reserves
are therefore not available for distribution except in liquidation. As of March 31, 2017, the Company had allocated $11,542,623
and $11,542,623 to these non-distributable reserve funds.
Note
9 –
DISCONTINUED OPERATIONS
Letong
ceased operations in 2011, Yiwu ceased operation in 2013. Wang Da ceased operation in 2014. Yosen Trading ceased operation in
2015. Saizhuo ceased operation in 2017. As a result, Letong, Yiwu , Wang Da , Yosen Trading and Saizhuo met the conditions to
be reported as discontinued operations in the CFS, and accordingly, the results of operations have been reclassified for all periods
to conform to the current period's presentation.
The
following table summarizes the assets and liabilities of the discontinued operations as of March 31, 2017 and December 31,
2016 included in the Consolidated Balance Sheets:
|
|
2017
|
|
2016
|
Cash
|
|
$
|
12,061
|
|
|
$
|
16,841
|
|
Accounts
receivable
|
|
|
3,337
|
|
|
|
—
|
|
Inventories
|
|
|
89,591
|
|
|
|
—
|
|
Advance
to suppliers
|
|
|
17,312
|
|
|
|
—
|
|
Prepaid
expenses and other receivables
|
|
|
27,763
|
|
|
|
—
|
|
Property,
plant and equipment
|
|
|
23,902
|
|
|
|
22,525
|
|
Total
assets
|
|
|
173,966
|
|
|
|
39,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
loans
|
|
|
(2,176,910
|
)
|
|
|
(2,160,232
|
)
|
Accounts
payable
|
|
|
(239,909
|
)
|
|
|
(126,005
|
)
|
Advance
from suppliers
|
|
|
(26,958
|
)
|
|
|
(30,908
|
)
|
Accrued
expenses and other payable
|
|
|
(65,106
|
)
|
|
|
—
|
|
Total
liabilities
|
|
|
(2,508,883
|
)
|
|
|
(2,317,145
|
)
|
Net
assets
|
|
$
|
(2,334,917
|
)
|
|
$
|
(2,277,819
|
)
|
The
following table summarizes the operating results of the discontinued operations included in the Consolidated Statements of Operations
and Comprehensive Loss for the three months ended March 31, 2017 and 2016:
|
|
2017
|
|
2016
|
Sales,
net
|
|
$
|
68,098
|
|
|
$
|
—
|
|
Cost
of sales
|
|
|
46,627
|
|
|
|
—
|
|
Gross
profit
|
|
|
21,471
|
|
|
|
—
|
|
General
and administrative expenses
|
|
|
(100,847
|
)
|
|
|
(15,271
|
)
|
Loss
from discontinued operations
|
|
|
(79,376
|
)
|
|
|
(15,271
|
)
|
Other
expenses
|
|
|
(26,248
|
)
|
|
|
(27,777
|
)
|
Loss
before income taxes
|
|
|
(105,624
|
)
|
|
|
(43,048
|
)
|
Provision
for income taxes
|
|
|
—
|
|
|
|
—
|
|
Net
loss from discontinued operations, net of income tax
|
|
$
|
(105,624
|
)
|
|
$
|
(43,048
|
)
|
Note
10-
OTHER COMPREHENSIVE INCOME
Other
comprehensive income as included in stockholders’ deficit for the three months ended March 31, 2017 and 2016, represents
foreign currency translation adjustment.
Note
11 -
CURRENT VULNERABILITY DUE TO CERTAIN RISK FACTORS
The
Company’s operations are in the PRC. Accordingly, the Company’s business, financial condition and results of operations
may be influenced by the political, economic and legal environments in the PRC, by the general state of the PRC’s economy.
The Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary
measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.
Note
12 -
MAJOR CUSTOMERS, VENDORS AND CREDIT RISK
During
the three months ended March 31, 2017, two customers accounted for more than 10% of the Company’s sales, representing 30.6%
and 15.2%. As of March 31, 2017, no customer comprised more than 10% of the Company’s accounts receivable. One vendor comprised
more than 10% of the Company’s accounts payable, representing 29.2% of the Company’s accounts payable.
During
the three months ended March 31, 2016, two customers accounted for more than 10% of the Company’s sales, representing 58.0%
and 23.3%. As of March 31, 2016, one customer comprised more than 10% of the Company’s accounts receivable, representing
84.7% of the Company's accounts receivable. One vendor comprised more than 10% of the Company’s accounts payable, representing
18.1% of the Company’s accounts payable. During the three months ended March 31, 2015, two customers accounted for more
than 10% of the Company’s sales, representing 53.2% and 13.0%. As of March 31, 2015, two customers comprised more than 10%
of the Company’s accounts receivable, representing 64.1% and 21.8%, respectively. Two vendors comprised more than 10% of
the Company’s accounts payable, representing 77.7% and 12.4% of the Company’s accounts payable.
Note
13 -
SEGMENT INFORMATION
Zhejiang
focuses on selling Samsung and Apple and other brand name mobile phones in PRC. Hangzhou Lamapai, Zhejiang Lamapai and Ningbo
collectively are the operating entities for the Company's E-commerce business. As a result, we have two reportable segments -
mobile phones and E-commerce in the first quarter of 2017.
The
following table presents summarized information by segment:
|
|
Three
Months March 31, 2017
|
|
|
Mobile
|
|
E-Commerce
|
|
|
|
|
|
|
Phones
|
|
Business
|
|
Other
|
|
Total
|
Sales,
net
|
|
$
|
621,598
|
|
|
$
|
644,216
|
|
|
$
|
—
|
|
|
$
|
1,265,815
|
|
Cost
of sales
|
|
|
(611,339
|
)
|
|
|
(583,745
|
)
|
|
|
—
|
|
|
|
(1,195,084
|
)
|
Gross
profit
|
|
|
10,260
|
|
|
|
81,941
|
|
|
|
0
|
|
|
|
92,201
|
|
Selling,
general and administrative expenses
|
|
|
(27,590
|
)
|
|
|
(146,803
|
)
|
|
|
(61,580
|
)
|
|
|
(235,973
|
)
|
Loss
from continuing operations
|
|
|
(17,330
|
)
|
|
|
(86,331
|
)
|
|
|
(61,580
|
)
|
|
|
(165,242
|
)
|
Other
expenses
|
|
|
(61,514
|
)
|
|
|
(17,290
|
)
|
|
|
(120
|
)
|
|
|
(78,924
|
)
|
Provision
for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net
loss from continuing operations
|
|
|
(78,844
|
)
|
|
|
(103,621
|
))
|
|
|
(61,700
|
)
|
|
|
(244,165
|
)
|
Net
loss from discontinued operations
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
(105,624
|
)
|
Net
loss
|
|
$
|
(78,844
|
)
|
|
$
|
(103,621
|
)
|
|
$
|
(61,700
|
)
|
|
$
|
(349,789
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months March 31, 2016
|
|
|
Mobile
Phones
|
|
E-Commerce
Business
|
|
Other
|
|
Total
|
Sales,
net
|
|
$
|
1,872,440
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,872,440
|
|
Cost
of sales
|
|
|
(1,848,800
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,848,800
|
)
|
Gross
profit
|
|
|
23,640
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,640
|
|
Selling,
general and administrative expenses
|
|
|
(80,305
|
)
|
|
|
(115,338
|
)
|
|
|
(841
|
)
|
|
|
(196,484
|
)
|
Loss
from continuing operations
|
|
|
(56,665
|
)
|
|
|
(115,338
|
)
|
|
|
(841
|
)
|
|
|
(172,844
|
)
|
Other
Income (expense)
|
|
|
1,417
|
|
|
|
46
|
|
|
|
(292
|
)
|
|
|
1,171
|
|
Provision
for income taxes
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net
income (loss) from continuing operations
|
|
|
(55,248
|
)
|
|
|
(115,292
|
)
|
|
|
(1,133
|
)
|
|
|
(171,673
|
)
|
Net
loss from discontinued operations
|
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(43,078
|
)
|
Net
income (loss)
|
|
$
|
(55,248
|
)
|
|
$
|
(115,292
|
)
|
|
$
|
(1,133
|
)
|
|
$
|
(214,751
|
)
|
|
|
March
31,
2017
|
|
December
31, 2016
|
Mobile
Phones
|
|
$
|
390,627
|
|
|
$
|
494,911
|
|
E-commerce
|
|
|
2,023,056
|
|
|
|
2,548,728
|
|
Other
|
|
|
175,717
|
|
|
|
47,478
|
|
Total
Assets
|
|
$
|
2,589,400
|
|
|
$
|
3,091,117
|
|