CHINA LONGYI GROUP INTERNATIONAL HOLDINGS LTD

During the third financial quarter of 2017, there were two unearned revenues or advance came from Zhangjiaofei and Shanghai Beiyi Network Technology Co., Ltd.

We are a holding company that only operates through our indirect Chinese subsidiaries Beijing SOD and Chongqing SOD. Through our Chinese subsidiaries, we develop, manufacture and market our SOD products in China. SOD is a naturally occurring enzyme which may act as a potent antioxidant defense in cells that are exposed to oxygen. Certain research has shown that under certain biological conditions, SOD revitalizes cells and reduces the rate of cell destruction. It neutralizes the most common free radical—superoxide radical—by converting it into hydrogen peroxide and water. Because superoxide is harmful to human cells, and certain forms of SOD exist naturally in most humans, many studies show that SOD is valuable in protecting human cells from the harmful effects of superoxide. SOD is thought to be more powerful than antioxidant vitamins as it activates the body's productions of its own antioxidants. As a result, SOD is referred to as the “enzyme of life.” Commercially, SOD has a wide range of applications and is widely applied in foods, drinks, skin care productions, pharmaceuticals, to combat ailments ranging from sunburn to rheumatoid arthritis.

Other Income (expense).Other income was $(11,363) during the three months ended September 30, 2017, and decrease of $48,794 from $37,431during the same period in 2016. Such decrease was mainly due to the exchange rate change and a debt forgiven by a shareholder in 2016. As the parent company, we have several subsidiaries located in Hong Kang and mainland China. There were trade transactions between these subsidiaries, which resulted in the transaction gain (loss). The change of transaction gain (loss) was effected by the exchange rate fluctuation. There were exchange gains that came from internal account eliminating between China Longyi and subsidiaries located in Hong Kong.

We had $22,076 in cash and cash equivalents as of September 30, 2017. As of such date, we also had total current assets of $585,175 and total assets of $956,660.We had total current liabilities (consisting of accounts payable, accrued liabilities, due to directors, other payables, short-term loan and due to related parties and current portion of long term debt) in the amount of $2,161,677.Our stockholders’ deficit as of September 30, 2017 was $(1,240,682).Since inception, we have accumulated a net loss of $(31,187,980).

Net cash provided by financing activities for the nine-month period ended September 30, 2017was $74,533 as compared to $(81,674) used in financing activities for the same period in 2016. Such change was mainly due to a new short term loan of $14,699 borrowed from a director, a temporary borrowing of $110,244 from two unrelated individuals, a repayment of loans of $79,842 to directors and a long term loan in an amount of $29,432.