ITEM 1BUSINESS
Business Development
Sichuan Leaders Petrochemical Company (SLPC) formally known as Quality Wall Beds, Inc. was incorporated under the laws of the State of Florida June 29, 2000. During our first thirteen (13) years of operations we had both profits and losses. In May of 2013, the Board believed that to continue to protect and increase shareholder value, it would be to the advantage, welfare and best interests of the shareholders of the Company to consider alternative corporate strategies to generate new business revenue for the Company. The Board of Directors proposed that the company pursue opportunities in Asia to acquire companies in the wholesale and resale of products in the automotive oil industry. To facilitate this action, the Board voted to dispose of the Company assets related to the retail operation of the wall bed products. This action was approved on May 21, 2013 by Shareholders representing 87% of the shares issued and outstanding.
The Companys headquarters are located in Sarasota, Florida. The elected year end is December 31.
Our Business
(1) Principal Products and Their Markets
Sichuan Leaders Petrochemical Company had been exploring various opportunities within the petrochemical field for the acquisition of companies in Asia that are wholesalers of retailers of petrochemical products for the automotive industry. Management has determined that the opportunities in the petrochemical field in Asia have declined in recent years. Management believes the change in the strategic business direction of the company will be more difficult and will take longer to complete any acquisitions and generate future cash flows. Accordingly, we have expanded our business plan to include mergers and acquisitions of non-petrochemical companies in Asia and the United States.
Current management believes a change in our business model would have no direct impact on the revenues of the company. Future cash flows, if any, are impossible to predict at this time. The realization value from any additional services to be offered is largely dependent on factors beyond our control such as the market for our services. We may raise cash from sources other than our operations. Our only other source for cash at this time is investments by our current Officers and Directors and outside investment in the Company. Any change in the strategic business direction of the company may take years to complete and future cash flows, if any, are impossible to predict at this time.
We make use of our own website
www.slpc1.com
to disseminate information regarding our services to gain access to potential clients and target companies for mergers and acquisitions.
(2) Distribution Methods of Our Products
At this time we are not distributing any products in the petrochemical industry. Management believed that the market for oil based products in the automotive industry could be successful throughout the Asian markets, but has struggled in this endeavor. Accordingly, although we have not abandoned the business model for the distribution of petrochemical products in the automotive industry, we are open for other business opportunities.
(3) Status of Any Publicly Announced New Product or Service.
We have not developed any new or unique products that would make us stand above our competition. We evaluated some petrochemical products manufactured in China for which we were considering acquiring the rights. At this time, the petrochemical products tested did not meet our expectations and we are looking elsewhere for business opportunities.
(4) Our Competition
To compete effectively in our industry, a company must understand and then respond to the specific needs of the client. Many of our competitors have greater financial resources than we have, enabling them to finance acquisition and development opportunities or develop and support their own operations. In addition, many of these companies can offer additional product offerings not provided by us. Many also have greater name recognition. Our competitors may have the luxury of sacrificing profitability in order to capture a greater portion of the market. Consequently, we may encounter significant competition in our efforts to achieve our growth objectives. Our competitors have methods of operation that have been proven over time to be successful.
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(5) Sources and Availability of Raw Materials
At this time we do not see a critical dependence on any supplier(s) that could adversely affect our operations.
(6) Dependence on Limited Clients
We do not have any limitation on clients at this time.
(7) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts
At the present time we do own the domain name
www.slpc1.com
. We may rely on certain trade secrets and know-how that are not patentable. Although we may take action to protect our unpatented trade secrets, in part, by the use of confidentiality agreements with our employees, consultants and certain of our contractors, we cannot guaranty that:
· These agreements will not be breached;
· We would have adequate remedies for any breach; or
· Our proprietary trade secrets and know-how will not otherwise become known or be independently developed or discovered by competitors.
We cannot guaranty that our actions will be sufficient to prevent imitation or duplication of our products by others or prevent others from claiming violations of their trade secrets and proprietary rights.
(8) Need for Government Approval of Principal Products.
There are no federal or state approvals that are required at this time. In the event we locate petroleum based products to import we will need to seek government approval.
(9) Government Regulation
There are no federal or state regulations that require a special business license for our business however the City of Sarasota requires us to maintain a yearly business license. We are not required as a company to maintain workers compensation insurance and pay into the Florida unemployment compensation fund since we have no employees other than our Officers and Director. When we retain new Officers and Directors and begin to pay salaries we will then have to apply for Workers Compensation insurance and pay into the Florida unemployment compensation fund.
Typically our business license must be renewed annually with the County of Sarasota, Florida and may be suspended or revoked at any time for cause. As a Florida Corporation we must file an annual report with the Department of State in Florida.
(10) Research and Development during Our Last Two Fiscal Years
During the last two fiscal years we have concentrated our efforts in the Peoples Republic of China to locate wholesalers and retailers of petroleum based products for the automotive industry. Management has sought to acquire companies through mergers and acquisitions or in the alternative to acquire the rights to distribute products throughout the Peoples Republic of China and Southeast Asia. Since the change in control on March 31, 2012 we have been researching the development of different products to be offered. The cost of our research and development of alternative products are limited and we do not feel the cost of developing additional products will have any significant impact on our profitability.
(11) Cost and Effects of Compliance with Environmental Laws
The current status of our business does not subject us to environmental laws in any material manner.
(12) Our Employees
As of December 31
st
, 2013, we had no full time employees. We currently have two (2) unpaid employees, Andy Z. Fan, President, Treasurer and Director, and Tina Donnelly, Secretary (as of February 24, 2014), who are responsible for all of our business activities.
Reports to Security Holders
As a fully reporting company, we are required to file reports and other information with the U.S. Securities and Exchange Commission (SEC). You may read and copy any document that we file at the SEC's public reference facilities at 100 F. Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its public reference facilities. Our SEC
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filings will be available to you free of charge at the SEC\'s web site at <www.sec.gov>. We believe that we will be an electronic filer making our information available through an Internet site maintained by the SEC that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. This information may be found at
www.sec.gov
.
We are not required by the Florida Revised Statutes to provide annual financial reports. At the request of a shareholder, we will send a copy of our annual report on SEC Form 10-K to include audited financial statements.
ITEM 1ARISK FACTORS
Before you invest in our common stock, you should be aware that there are risks, as described below. You should carefully consider these risk factors together with all of the other information included in this prospectus before you decide to purchase shares of our common stock. Any of the following risks could adversely affect our business, financial condition and results of operations. We have incurred both profits and losses from inception while realizing our revenues and we may never generate substantially more revenues or be profitable in the future.
Risks Relating to Our Business in the United States
The U.S. economic downturn has negatively impacted our business with a revenue decline in fiscal 2013.
We had a loss from continuing operations, net of taxes of ($80,156) in fiscal year 2013. Our revenues decreased due to the weak performance of our company. Based on the continued loss of profitability, the Company discontinued the Florida wall bed operations on May 21, 2013.
The future performance of the U.S. economy and global economies are uncertain and are directly affected by numerous global and national factors, in addition to other factors that are beyond our control. These factors, which also affect discretionary consumer spending, include among other items, international, national, regional and local economic conditions, disposable consumer income, consumer confidence, terrorist attacks and the United States participation in military actions. We believe that these factors have adversely impacted our business and, should these conditions continue, worsen or be perceived to be worsening or should similar conditions occur in the future, we would expect them to continue to adversely impact our business.
We may experience higher operating costs, including increases in employee salaries, wages or benefits, which will adversely affect our operating results if we cannot increase our prices to cover them.
If we hire employees and begin providing compensation or benefits to them, we will have an increase in our operating costs. If we are unable or unwilling to increase our prices or take other actions to offset increased operating costs, our operating results will suffer. Factors that may affect the salaries or benefits that we pay to our existing or future employees include local unemployment rates and changes in minimum wage and employee benefits laws. Other factors that could cause our operating costs to increase include fuel prices, cost of gas and electricity, occupancy and related costs, maintenance expenditures and increases in other day-to-day expenses. In addition, various proposals that would require employers to provide health insurance for all of their employees are being considered from time-to-time in the U.S. Congress and various states. The imposition of any requirement that we provide health insurance to all employees would have an adverse effect on our operating performance.
We may incur additional costs or liabilities and lose revenues impacting operating results as a result of litigation and government regulation affecting the operation of our business.
Our business is not subject to extensive federal, state, and local government regulation.
The costs of operating our business may increase if there are changes in laws governing minimum hourly wages, working conditions, overtime, health care, workers compensation insurance rates, unemployment tax rates, sales taxes or other laws and regulations such as those governing access for the disabled, including the Americans with Disabilities Act. If any of these costs were to increase and we were unable to offset the increase by increasing our prices or by other means, this could have a material adverse effect on our business and results of operations.
Risks Relating to Our Business in the Peoples Republic of China
Economic events have adversely impacted our business and results of operations and may continue to do so.
We are susceptible to economic slowdowns. In particular, our business is in the beginning stages of a petrochemical company. We believe that the majority of our revenues will be derived from businesses with the working capital to retain our services.
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Accordingly, we believe that our business is particularly susceptible to any factors that cause a reduction in working capital. We also believe that companies generally are more willing to make discretionary decisions, including the retention of outside consultants, during periods in which favorable economic conditions prevail. The changes in working capital, as a result of the current economic slowdown and reduction in consumer confidence will adversely affect our revenues.
Due to the economic turmoil in the Peoples Republic of China we believe that these weak general economic conditions will continue through the year 2014 and most likely beyond. The ongoing effects of the housing crisis, inflation and the rising of commodities prices may further exacerbate current economic conditions that will impact our business opportunities in China
Due to our inability to obtain the rights to petroleum products or the economic environment deteriorates further, or is prolonged, resulting in continued decreasing revenues and our actions to respond to these conditions are not sufficient, we could continue to see our revenues decrease and we would continue to suffer losses.
Changing general economic conditions in the Peoples Republic of China have had an adverse effect on our revenues.
The future performance of the Peoples Republic of China economy and global economies are uncertain and are directly affected by numerous global and national factors, in addition to other factors that are beyond our control. These factors, which also affect discretionary business spending, include among other items, international, national, regional and local economic conditions, consumer confidence, terrorist attacks and the United States participation in military actions. We believe that these factors have adversely impacted our business and, led to the cessation of our retail operation and the disposal of our retail operational assets.
Purchases of our products were discretionary for our clients and, therefore, we were susceptible to economic slowdowns. We believe that the vast majority of our revenues were derived from working class families that must budget more closely than those with more disposable income. Accordingly, we believe that our business was particularly susceptible to any factors that cause a reduction in disposable income. We also believe that consumers generally were more willing to make discretionary purchases during periods in which favorable economic conditions prevail.
Our results of operations and revenues could be adversely affected by our inability to implement our new business model.
There are factors which may impact the amount of time and money required for the implementation of our new business model, including but not limited to, a change in laws that allow foreign operations in the Peoples Republic of China, shortages of skilled labor, delays with our approval to do business within the Peoples Republic of China and increased competition. We may need to revise the business model to include other businesses and other geographic areas.
We are subject to the reporting requirements of federal securities laws, which can be expensive
.
We are a public reporting company in the U.S. and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal securities laws, and the compliance obligations of the Sarbanes-Oxley Act. The costs of preparing and filing annual and quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders will cause our expenses to be higher than they would be if we remained a privately-held company.
Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls may be time consuming, difficult and costly
.
It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by Sarbanes-Oxley. We may need to hire additional financial reporting, internal controls and other finance staff in order to develop and implement appropriate internal controls and reporting procedures. If we are unable to comply with Sarbanes-Oxleys internal controls requirements, we may not be able to obtain the independent accountant certifications that Sarbanes-Oxley Act requires publicly-traded companies to obtain.
Our growth depends on our ability to operate profitably.
A substantial majority of our historical growth had been due to a thriving economy. When comparing fiscal 2013 to fiscal 2012, revenues were flat due to the continued recession. Our ability to implement a new business model is dependent upon a number of factors, some of which are beyond our control, including but not limited to our ability to:
·
develop additional sources of marketing that are within our budgetary constraints;
·
hire, train and retain the management and employees necessary to meet staffing needs in a timely manner;
·
raise, borrow or have available an adequate amount of money for expansion costs;
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·
successfully promote our products and compete in the market in which we are located.
Our existing senior personnel, management systems, financial controls, information systems and other systems and procedures may be inadequate to support our new business model, which could require us to incur substantial expenditures that could adversely affect our operating results.
Material weaknesses in the financial reporting may cause us to restate our financial statements in the event such weaknesses are determined to not be acceptable to financial reporting requirements.
We have the responsibility to review the internal controls over financial accounting. During this review material we may discover material weaknesses that could cause us to have to restate our financial statements. This could cause us to expend additional funds that would have a material impact on our ability to generate profits and on the profits of past operations. As of December 31, 2013 we discovered a weakness in control of our bank accounts and the disclosure of funds. This caused us to restate our financials during the year 2013.
Taxing authorities may select to audit our federal or state tax returns from time to time, which may result in tax assessments and penalties that could have an adverse effect on our results of operations and financial condition.
We are subject to federal or state taxes in the U.S. Although we believe that our tax reporting is reasonable, if any taxing authority disagrees with the positions taken by the Company on its tax returns, we could have additional tax liabilities, including interest and penalties, which, if material, could have an adverse impact on our results of operations and financial condition.
Increases in the prices of labor could reduce our operating margins and our revenues.
Any operations in China or elsewhere will cause us to have additional employee costs that will further reduce our earnings. We will have the need to hire additional qualified personnel in the future and the cost of these individuals may be higher than anticipated due to demand from competitors. Our labor costs will represent a large portion of our gross revenues. If the cost of labor increases in the future and we choose not to pass, or cannot pass, these increases on to our clients, our operating margins would decrease, perhaps materially.
Our operating results may fluctuate significantly due to economic conditions and these fluctuations make it more difficult for us to predict accurately and address in a timely manner factors that may have a negative impact on our business.
Our business is subject to fluctuations that may vary greatly depending upon which international market we enter with our petrochemical products. These fluctuations can make it more difficult for us to predict accurately and address in a timely manner factors that may have a negative impact on our business. Accordingly, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year.
Our results of operations are affected by a variety of factors, including increased competition, and have fluctuated significantly in the past and can be expected to continue to fluctuate significantly in the future.
Our results of operations have fluctuated significantly in the past and can be expected to continue to fluctuate significantly in the future. Our results of operations are affected by a variety of factors, including:
·
T
he timing of business openings by competitors;
·
Changes in consumer preferences;
·
General economic conditions;
·
Government regulation; and
·
Actions by our competitors.
Negative factors or publicity surrounding our operating in China and the Asian markets could adversely affect business decisions which could make our business less valuable.
We believe that adverse publicity relating to our operating in China and the Asian markets could affect us more than it would competitors that compete primarily in the United States. Any shifts in consumer preferences away from the petrochemical products we may offer whether because of negative publicity or an improving economy, would make our business less appealing and adversely affect our revenues.
The failure to enforce and maintain our intellectual property rights could enable others to use names confusingly similar to Sichuan Leaders Petrochemical Company (SLPC) and other names and marks used by our business, which could adversely affect the value of the SLPCs brand.
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We have not registered the Sichuan Leaders Petrochemical Company mark used by our business as a trade name in Florida or any state or the United States Patent and Trademark Office. The success of our business depends on our continued ability to use our existing trade name in order to increase our brand awareness. In that regard, we believe that our trade name is valuable asset that is critical to our success. The unauthorized use or other misappropriation of our trade name could diminish the value of our business concept and may cause a decline in our revenue.
Any new indebtedness may adversely affect our financial condition, results of operations, limit our operational and financing flexibility and negatively impact our business.
Any revolving credit facility, and other debt instruments we may enter into in the future, may have negative consequences to the Company, including but not limited to the following:
·
Our ability to obtain financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;
·
We may use a substantial portion of our cash flows from operations to pay interest on any new indebtedness, which will reduce the funds available to us for operations and other purposes;
·
Our level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt;
·
Our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited; and
·
Our level of indebtedness may make us more vulnerable to economic downturns and adverse developments in our business.
We expect that we will depend primarily upon our operations to provide funds to pay our expenses and to pay any amounts that may become due under any new credit facility and any other indebtedness we may incur. Our ability to make these payments depends on our future performance, which will be affected by various financial, business, economic and other factors, many of which we cannot control.
We depend on the services of a key executive, the loss of whom could materially harm our business and our strategic direction if we were unable to replace them with executives of equal experience and capabilities.
Our senior executive, Andy Fan is important to our success because he is instrumental in setting our strategic direction, operating our business, identifying, recruiting and training key personnel, identifying expansion opportunities and arranging any necessary financing. Losing the services of Mr. Fan could adversely affect our business until a suitable replacement could be found. Mr. Fan is not bound by employment agreements with us. We do not maintain key person life insurance policies on any of our executives.
There may be a conflict of interest for our Officer and Director Andy Z. Fan.
Our President and Director Andy Z. Fan is also our largest shareholder. Mr. Fan has the ability to control all decisions of the company including agreements with other companies where Mr. Fan is the President and Director and the largest shareholder. Decisions made by Mr. Fan may not be in the best interest of individual shareholders and there is a risk that all or a part of any investment in our company could be lost.
We expect to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to manage our expenses.
We expect to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to manage our expenses.
Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel. We estimate that it will cost approximately $45,000 annually to maintain the proper management and financial controls for our filings. In addition, as a public company we are required to document and test our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, so that our management can certify as to the effectiveness of our internal controls and our independent registered public accounting firm can render an opinion on the effectiveness of our internal controls over financial reporting, which requires us to document and test the design and operating effectiveness of our internal controls over financial reporting. If our management is unable to certify the effectiveness of our internal controls or if our independent registered public accounting firm cannot render an unqualified opinion on
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the effectiveness of our internal controls over financial reporting, or if material weaknesses in our internal controls are identified, or if we fail to comply with other obligations imposed by the Sarbanes-Oxley Act rules relating to corporate governance matters, we could be subject to regulatory scrutiny and a loss of public confidence, which could have a material adverse effect on our business and our stock price. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our stock price and adversely affect our ability to raise capital.
We do not have current insurance policies that may provide adequate levels of coverage against claims and we may incur losses without such insurance.
We do not maintain insurance coverage that is customary for businesses of our size and type. However, there are types of losses we may incur that cannot be insured against or that we believe are not commercially reasonable to insure. For example, we believe that insurance covering liability for violations of wage and hour laws is generally not available. These losses, if they occur, could have a material adverse effect on our business and results of operations.
Risks Relating to our Common Stock
Our future results may vary significantly in the future which may adversely affect the price of our common stock.
It is possible that our quarterly revenues and operating results may vary significantly in the future and that period-to-period comparisons of our revenues and operating results are not necessarily meaningful indicators of the future. You should not rely on the results of one quarter as an indication of our future performance. It is also possible that in some future quarters, our revenues and operating results will fall below our expectations or the expectations of market analysts and investors. If we do not meet these expectations, the price of our common stock may decline significantly.
There may be issuances of shares of preferred stock in the future
.
Although we currently do not have preferred shares outstanding, the Board of Directors could authorize the issuance of a series of preferred stock that would grant holders preferred rights to our assets upon liquidation, the right to receive dividends before dividends would be declared to common stockholders, and the right to the redemption of such shares, possibly together with a premium, prior to the redemption of the common stock. To the extent that we do issue preferred stock, the rights of holders of common stock could be impaired thereby, including without limitation, with respect to liquidation.
We do not anticipate paying cash dividends for the foreseeable future, and therefore investors should not buy our stock if they wish to receive cash dividends.
No dividends were declared during 2013 and 2012. We have not paid any cash dividends or distributions on our capital stock. We currently intend to retain our future earnings to support operations and to finance expansion and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future.
If we fail to continue to comply with the listing requirements of the OTCBB, the price of our common stock and our ability to access the capital markets could be negatively impacted.
Our common stock is currently listed on the OTCBB and the OTC Markets. We are subject to certain continued listing standards. We cannot provide any assurance that we will be able to continue to satisfy the requirements of the OTCBBs and the OTC Markets continued listing standards. A delisting of our common stock could negatively affect the price and liquidity of our common stock and could impair our ability to raise capital in the future.
Our stock price will be extremely volatile.
The trading price of our common stock will be subject to wide fluctuations in response to announcements of our business developments or those of our competitors, quarterly variations in operating results, and other events or factors. In addition, stock markets have experienced extreme price volatility in recent years. This volatility has had a substantial effect on the market prices of companies, at times for reasons unrelated to their operating performance. Such broad market fluctuations may adversely affect the price of our stock.
Because we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and experience further dilution.
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We are authorized to issue up to 5,000,000,000 shares of common stock, of which 30,755,000 shares of common stock are issued and outstanding as of December 31, 2013. Our board of Directors has the authority to cause us to issue additional shares of common stock, and to determine the rights, preferences and privileges of such shares, without consent of any of our stockholders. Consequently, the stockholders may experience more dilution in their ownership of our stock in the future.
Since our securities are subject to penny stock rules you may have difficulty selling your shares.
Our shares of common stock are penny stocks and are covered by Section 12(g) of the 1934 Securities and Exchange Act which imposes additional sales practices which requires broker/dealers who sell Sichuan Leaders Petrochemical Companys securities including the delivery of a standardized disclosure document; disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and furnishing monthly account statements. For sales of our securities a broker/dealer must make a special suitability determination and receive from its client a written agreement prior to making a sale. The imposition of the foregoing additional sales practices could adversely affect a shareholders ability to dispose of his stock.
Our Amended and Restated Articles of Incorporation provide for one class of blank check preferred stock solely at the discretion of the Board of Directors.
Our Board of Directors may, at its sole discretion, issue stock from our authorized blank check preferred class. Shareholders do not have any control regarding the issuance of any shares from this class and may be adversely affected by any such issuance or subsequent sale in the form of dilution, voting, and value of their shares. The preferred shares may also be issued with preferences or rights that may adversely affect the holders of our common stock.
Since our Director and Chairman of the Board, Andy Z Fan, is our controlling shareholder, there may be a conflict of interest for Mr. Fan for our company and his other business interests.
Our Director and Chairman of the Board is our controlling shareholder who owns 27,330,020 shares of our common stock. Mr. Fan has the ability to control all business matters and he has clients from his other businesses that may cause a conflict with his acting independently regarding our company. Such a conflict of interest would likely cause investors to lose all or part of their investment.
At the present time our Officers and Director provides their services on an unpaid basis and may not be able to continue their services without pay.
Since our company is not currently operating with earnings and cash flows to support Officer and Director salaries, our current Officers and Director works on an unpaid basis. If and when the company has increased its operations to support salaries, we intend for our Officers/Director to be compensated, which compensation will be adjusted annually based on individual performance and performance of the Company. Revenues and earnings, as well as sufficient cash flow, will be considered when determining when salaries may be available to our Officers and Directors. Cash flows must be sufficient to meet the monthly cash needs of the business. Earnings are determined quarterly and will be analyzed along with our cash flows to determine if there is sufficient cash remaining after all expenses are paid to commence salaries for the Officers and Director. Until then, there is a risk that our Officers and Director may need to find work elsewhere to supplement their income, distracting them from our operations resulting in poor quality control and a loss of clients and business.
We must comply with the Foreign Corrupt Practices Act
.
We are required to comply with the United States Foreign Corrupt Practices Act, which prohibits U.S. companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Foreign companies, including some of our competitors, are not subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices occur from time-to-time in mainland China. If our competitors engage in these practices, they may receive preferential treatment from personnel of some companies, giving our competitors an advantage in securing business or from government officials who might give them priority in obtaining new licenses, which would put us at a disadvantage. Although we will inform our personnel that such practices are illegal, we cannot assure you that our employees or other agents will not engage in such conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties.
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We are exposed to risks associated with the ongoing financial crisis and weakening global economy, which increase the uncertainty of consumers purchasing products and/or services
.
The recent severe tightening of the credit markets, turmoil in the financial markets, and weakening global economy are contributing to a decrease in spending by consumers. If these economic conditions are prolonged or deteriorate further, the market for our services could potentially decrease accordingly.