UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549



FORM
10-Q



☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For
the quarterly period ended      September 30, 2016



or



☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For
the transition period from ____ to _____



Commission
File Number:  000-28767



YOSEN
GROUP, INC.



(Exact
name of registrant as specified in its charter)



|Nevada                                                                         | 88-0403070                              
|------------------------------------------------------------------------------ | ----------------------------------------
|(State
        or other jurisdiction of incorporation or
        organization) | (I.R.S.
    Employer Identification No.)





368
HuShu Nan Road

HangZhou
City, Zhejiang Province, China 310014



(Address
of Principal Executive Offices) (Zip Code)



086-0571-88381700

(Registrant’s
telephone number, including area code)








(Former
name, former address and former fiscal year, if changed since last report)



Indicate
by check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days:

Yes
☒ No ☐



Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes
☐ No ☐



Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.



|Large
                           accelerated
        filer
        ☐ | Accelerated
    filer ☐ | Non-accelerated
                           filer ☐
        (Do
        not check if a smaller
        reporting
        company) | Smaller
                           reporting
        company
        ☒
|-------------------------------------------------------------------- | ----------------------- | -------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------



Indicate
by check mark whether the registrant is a shell company (as defined in Rule No 12b-2 of the Exchange Act).

Yes
☐ No ☒



As
of November 14, 2016, the registrant had 9,907,818 shares of common stock outstanding.





i









TABLE
OF CONTENTS



|                                                                                                                                        |  | PAGE
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|PART
    I. FINANCIAL INFORMATION                                                                                                       |  |     
|                                                                                                                                        |  |     
|Item
    1. Financial Statements                                                                                                        |  | 1   
|                                                                                                                                        |  |     
|Consolidated
    Balance Sheets as of June 30, 2016 (Unaudited) and December 31, 2015                                                   |  | 1   
|                                                                                                                                        |  |     
|Consolidated
    Statements of Operations and Comprehensive Income (Loss) for the Six Months Ended June 30, 2016 and 2015 (Unaudited)   |  | 2   
|                                                                                                                                        |  |     
|Consolidated
    Statements of Operations and Comprehensive Income (Loss) for the Three Months Ended June 30, 2016 and 2015 (Unaudited) |  | 3   
|                                                                                                                                        |  |     
|Consolidated
    Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015 (Unaudited)                                   |  | 4   
|                                                                                                                                        |  |     
|Notes
    to Consolidated Financial Statements                                                                                          |  | 5   
|                                                                                                                                        |  |     
|Item
    2. Management’s Discussion and Analysis of Financial Condition and Results of Operations                                       |  | 20  
|                                                                                                                                        |  |     
|Item
    3. Quantitative and Qualitative Disclosure About Market Risk                                                                   |  | 28  
|                                                                                                                                        |  |     
|Item
    4. Controls and Procedures                                                                                                     |  | 28  
|                                                                                                                                        |  |     
|PART
    II. OTHER INFORMATION                                                                                                          |  |     
|                                                                                                                                        |  |     
|Item
    1. Legal Proceedings                                                                                                           |  | 28  
|                                                                                                                                        |  |     
|Item
    1A. Risk Factors                                                                                                               |  | 29  
|                                                                                                                                        |  |     
|Item
    2. Unregistered Sales of Equity Securities and Use of Proceeds                                                                 |  | 29  
|                                                                                                                                        |  |     
|Item
    3. Defaults Upon Senior Securities                                                                                             |  | 29  
|                                                                                                                                        |  |     
|Item
    4. Mine Safety Disclosures                                                                                                     |  | 29  
|                                                                                                                                        |  |     
|Item
    5. Other Information                                                                                                           |  | 29  
|                                                                                                                                        |  |     
|Item
    6. Exhibits                                                                                                                    |  | 29  
|                                                                                                                                        |  |     
|Signatures                                                                                                                              |  | 30  





ii







PART
I. FINANCIAL INFORMATION



Item
1.  Financial Statements



YOSEN
GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED
BALANCE SHEETS





|                                                                                                                                                                    |  | September
    30, |             | December
    31,
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | ----------------
|                                                                                                                                                                    |  | 2016              |             | 2015            
|                                                                                                                                                                    |  | (Unaudited)       |             |                 
|ASSETS                                                                                                                                                              |  |                   |             |                 
|                                                                                                                                                                    |  |                   |             |                 
|Current
    assets:                                                                                                                                                 |  |                   |             |                 
|Cash
    and equivalents                                                                                                                                            |  | $                 | 184,886     |                 
|Accounts
    receivable, net                                                                                                                                        |  |                   | 19,856      |                 
|Inventories                                                                                                                                                         |  |                   | 1,453,606   |                 
|Advances
    to suppliers                                                                                                                                           |  |                   | 454,880     |                 
|Advance
    to related party                                                                                                                                        |  |                   | —           |                 
|Prepaid
    expenses and other current assets                                                                                                                       |  |                   | 165,595     |                 
|Total
    current assets                                                                                                                                            |  |                   | 2,278,823   |                 
|Property
    and equipment, net                                                                                                                                     |  |                   | 659,292     |                 
|Intangible
    asset                                                                                                                                                |  |                   | 19,729      |                 
|Other
    non-current assets                                                                                                                                        |  |                   | 69,054      |                 
|Total
    assets                                                                                                                                                    |  | $                 | 3,026,898   |                 
|                                                                                                                                                                    |  |                   |             |                 
|                                                                                                                                                                    |  |                   |             |                 
|                                                                                                                                                                    |  |                   |             |                 
|Current
    liabilities:                                                                                                                                            |  |                   |             |                 
|Short-term
    loans                                                                                                                                                |  | $                 | 3,073,740   |                 
|Accounts
    payable                                                                                                                                                |  |                   | 1,189,615   |                 
|Accrued
    expenses and other payables                                                                                                                             |  |                   | 104,095     |                 
|Advance
    from customers                                                                                                                                          |  |                   | 107,314     |                 
|Advance
    from related party                                                                                                                                      |  |                   | 265,625     |                 
|Income
    tax payable                                                                                                                                              |  |                   | 687,534     |                 
|Total
    liabilities                                                                                                                                               |  |                   | 5,427,923   |                 
|                                                                                                                                                                    |  |                   |             |                 
|Commitments
    and contingencies                                                                                                                                   |  |                   |             |                 
|                                                                                                                                                                    |  |                   |             |                 
|Stockholders’
    deficit:                                                                                                                                          |  |                   |             |                 
|Common
    stock, $0.001 par value, 50,000,000 shares authorized, 9,907,818 and 9,717,286 issued and outstanding as of September 30,
    2016 and December 31, 2015 |  |                   | 9,908       |                 
|Additional
    paid-in capital                                                                                                                                      |  |                   | 27,968,875  |                 
|Subscription
    receivable                                                                                                                                         |  |                   | (50,000     | )               
|Statutory
    reserve                                                                                                                                               |  |                   | 11,542,623  |                 
|Other
    comprehensive income                                                                                                                                      |  |                   | 8,124,280   |                 
|Accumulated
    deficit                                                                                                                                             |  |                   | (50,177,945 | )               
|Total
    Yosen Group's stockholders’ deficit                                                                                                                       |  |                   | (2,582,259  | )               
|Noncontrolling
    interest                                                                                                                                         |  |                   | 181,234     |                 
|Accumulated
    deficit                                                                                                                                             |  |                   | (2,401,025  | )               
|Total
    liabilities and stockholders’ deficit                                                                                                                     |  | $                 | 3,026,898   |                 





The
accompanying notes are an integral part of these unaudited consolidated financial statements.



1









YOSEN
GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

NINE
MONTHS ENDED SEPTEMBER 30, 2016 and 2015 (UNAUDITED)





|                                                                              |  | 2016 |            | 2015
|----------------------------------------------------------------------------- |  | ---- | ---------- | ----
|Net
    sales                                                                 |  | $    | 4,267,574  |     
|Cost
    of sales                                                             |  |      | 4,107,872  |     
|Gross
    profit                                                              |  |      | 159,702    |     
|Selling,
    general and administrative expenses                              |  |      | 1,103,052  |     
|Loss
    from continuing operations                                           |  |      | (943,350   | )   
|Other
    (income) expense                                                    |  |      |            |     
|Interest
    income                                                           |  |      | (290       | )   
|Other
    income                                                              |  |      | (8,865     | )   
|Other
    expense                                                             |  |      | 40,122     |     
|Total
    other expense                                                       |  |      | 30,967     |     
|                                                                              |  |      |            |     
|Loss
    from continuing operations before income taxes                       |  |      | (974,317   | )   
|Provision
    for income taxes                                                |  |      | —          |     
|Net
    loss from continuing operations                                       |  |      | (974,317   | )   
|Net
    loss from discontinued operations, net of income taxes                |  |      | (115,108   | )   
|Net
    loss including noncontrolling interest                                |  |      | (1,089,425 | )   
|                                                                              |  |      |            |     
|Net
    loss attributable to noncontrolling interest                          |  |      | (274,580   | )   
|                                                                              |  |      |            |     
|Net
    loss attributable to Yosen Group                                      |  |      | (814,845   | )   
|                                                                              |  |      |            |     
|Other
    comprehensive items:                                                |  |      |            |     
|Foreign
    currency translation loss attributable to Yosen Group             |  |      | 67,468     |     
|Foreign
    currency translation loss attributable to noncontrolling interest |  |      | 8,031      |     
|                                                                              |  |      |            |     
|Comprehensive
    loss attributable to Yosen Group                            |  | $    | (747,377   | )   
|Comprehensive
    loss attributable to noncontrolling interest                |  | $    | (266,549   | )   
|                                                                              |  |      |            |     
|Basic
    and diluted loss per share:                                         |  |      |            |     
|Continuing
    operations                                                     |  | $    | (0.07      | )   
|Discontinued
    operations                                                   |  |      | (0.01      | )   
|Net
    loss per share                                                        |  | $    | (0.08      | )   
|                                                                              |  |      |            |     
|Weighted
    average shares outstanding:                                      |  |      |            |     
|Basic                                                                         |  |      | 9,852,888  |     
|Diluted                                                                       |  |      | 10,375,447 |     



The
accompanying notes are an integral part of these unaudited consolidated financial statements.



2









YOSEN
GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

THREE
MONTHS ENDED SEPTEMBER 30, 2016 and 2015 (UNAUDITED)



|                                                                              |  | 2016 |            | 2015
|----------------------------------------------------------------------------- |  | ---- | ---------- | ----
|Net
    sales                                                                 |  | $    | 1,191,048  |     
|Cost
    of sales                                                             |  |      | 1,107,415  |     
|Gross
    profit                                                              |  |      | 83,633     |     
|Selling,
    general and administrative expenses                              |  |      | 488,555    |     
|Loss
    from continuing operations                                           |  |      | (404,922   | )   
|Other
    (income) expense                                                    |  |      |            |     
|Interest
    income                                                           |  |      | 105        |     
|Other
    income                                                              |  |      | (7,636     | )   
|Other
    expense                                                             |  |      | 20,401     |     
|Total
    other expense                                                       |  |      | 12,870     |     
|                                                                              |  |      |            |     
|Loss
    from continuing operations before income taxes                       |  |      | (417,792   | )   
|Provision
    for income taxes                                                |  |      | —          |     
|Net
    loss from continuing operations                                       |  |      | (417,792   | )   
|Net
    loss from discontinued operations, net of income taxes                |  |      | (34,694    | )   
|Net
    loss including noncontrolling interest                                |  |      | (452,486   | )   
|                                                                              |  |      |            |     
|Net
    loss attributable to noncontrolling interest                          |  |      | (143,881   | )   
|                                                                              |  |      |            |     
|Net
    loss attributable to Yosen Group                                      |  |      | (308,605   | )   
|                                                                              |  |      |            |     
|Other
    comprehensive items:                                                |  |      |            |     
|Foreign
    currency translation gain attributable to Yosen Group             |  |      | 38,934     |     
|Foreign
    currency translation loss attributable to noncontrolling interest |  |      | 1,243      |     
|                                                                              |  |      |            |     
|Comprehensive
    loss attributable to Yosen Group                            |  | $    | (269,671   | )   
|Comprehensive
    loss attributable to noncontrolling interest                |  | $    | (142,638   | )   
|                                                                              |  |      |            |     
|Basic
    and diluted loss per share:                                         |  |      |            |     
|Continuing
    operations                                                     |  | $    | (0.03      | )   
|Discontinued
    operations                                                   |  |      | —          |     
|Net
    loss per share                                                        |  | $    | (0.03      | )   
|                                                                              |  |      |            |     
|Weighted
    average shares outstanding:                                      |  |      |            |     
|Basic                                                                         |  |      | 9,906,426  |     
|Diluted                                                                       |  |      | 10,153,666 |     



The
accompanying notes are an integral part of these unaudited consolidated financial statements.



3









YOSEN
GROUP, INC. AND SUBSIDIARIE

CONSOLIDATED
STATEMENTS OF CASH FLOWS

NINE
MONTHS ENDED SEPTEMBER 30, 2016 and 2015 (UNAUDITED)





|                                                                                         |  | 2016 |            | 2015
|---------------------------------------------------------------------------------------- |  | ---- | ---------- | ----
|                                                                                         |  |      |            |     
|CASH
    FLOWS FROM OPERATING ACTIVITIES:                                                |  |      |            |     
|Net loss
    including noncontrolling interest                                           |  | $    | (1,089,425 | )   
|Adjustments to reconcile
    net income (loss) to net cash used in operating activities: |  |      |            |     
|Depreciation                                                                             |  |      | 25,536     |     
|Stock based compensation                                                                 |  |      | —          |     
|(Increase) decrease
    in assets:                                                       |  |      |            |     
|Accounts receivable                                                                      |  |      | 203,469    |     
|Inventories                                                                              |  |      | (724,896   | )   
|Prepaid expenses and
    other current assets                                            |  |      | 366,975    |     
|Advance to suppliers                                                                     |  |      | 224,859    |     
|Other noncurrent
    assets                                                              |  |      | (69,991    | )   
|Increase (decrease)
    in current liabilities:                                          |  |      |            |     
|Accounts
    payable                                                                     |  |      | 795,849    |     
|Accrued expenses and
    other payables                                                  |  |      | (604,702   | )   
|Advance from customers                                                                   |  |      | 61,222     |     
|Income
    tax payable                                                                   |  |      | (156,229   | )   
|Net
    cash provided by (used in) operating activities                                  |  |      | (967,333   | )   
|                                                                                         |  |      |            |     
|                                                                                         |  |      |            |     
|CASH
    FLOWS FROM INVESTING ACTIVITIES:                                                |  |      |            |     
|Purchase of property
    and equipment                                                   |  |      | (188,913   | )   
|Construction
    in progress                                                             |  |      | (471,653   | )   
|Net
    cash used in financing activities                                                |  |      | (660,566   | )   
|                                                                                         |  |      |            |     
|CASH
    FLOWS FROM FINANCING ACTIVITIES:                                                |  |      |            |     
|Proceeds from short
    term loans                                                       |  |      | 379,933    |     
|Proceeds from equity
    financing                                                       |  |      | 270,909    |     
|Advance from related
    party                                                           |  |      | 357,765    |     
|Repayment of short-term
    loan                                                         |  |      | —          |     
|Repayment
    of notes payable                                                           |  |      | —          |     
|Net
    cash provided by (used in) financing activities                                  |  |      | 1,008,607  |     
|                                                                                         |  |      |            |     
|Effect of exchange
    rate changes on cash and equivalents                              |  |      | 65,567     |     
|                                                                                         |  |      |            |     
|Net decrease in cash                                                                     |  |      | (553,725   | )   
|Cash
    and equivalents, beginning of period                                            |  |      | 738,611    |     
|Cash
    and equivalents, end of period                                                  |  | $    | 184,886    |     
|                                                                                         |  |      |            |     
|Supplemental
    disclosure of cash flow information:                                    |  |      |            |     
|Interest
    paid                                                                        |  | $    | 140,044    |     
|Income
    taxes paid                                                                    |  |      | —          |     







The
accompanying notes are an integral part of these consolidated financial statements.



4









YOSEN
GROUP, INC. AND SUBSIDIARIES

NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER
30, 2016 AND 2015 (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”), Hangzhou Sanhe Electronic
Technology, Limited (“Sanhe”), and Shanghai Joy & Harmony Electronic Development Company Limited (“Joy &
Harmony”) were incorporated under the laws of the Peoples Republic of China (“PRC” or “China”) on
July 11, 2005, July 18, 1997, March 30, 1998, April 12, 2004, and August 25, 2003, respectively. Zhejiang set up a new operating
entity, Hangzhou Letong Digital Technology Co., Ltd. (“Letong”) on March 10, 2009. On July 6, 2009, Zhejiang and Yiwu
acquired Jinhua. Jinhua was incorporated under the laws of the PRC on December 27, 2001. 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 (“Lamapai entities”). 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 Lamapaid E-commerce Co. Ltd ("Ningbo") and Hangzhou Saizhuo brand
management Co., Ltd ("Saizhuo"). Hangzhou Lamaipai, Zhejiang Lamapai, Saizhuo and Ningbo are collectively referred as
Lamapai entities ("Lamapai entities"). The Company invested RMB 6,693,540 to Zhejiang Lamapai. As a result of the investment,
the Company owns 65.9% of Zhejiang Lamapai as of September 30, 2016.



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 2,333,333 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 3, 2006, Capital completed the acquisition of a 100% interest in Sanhe for a cash and stock transaction valued at $8,750,000.
The consideration consisted of 61,050 newly issued shares of the Company’s common stock and $5,000,000 in cash.



On
November 28, 2006, Capital completed the acquisition of a 100% interest in Joy & Harmony for a cash and stock transaction
valued at $18,500,000. The consideration consisted of 181,541 shares of the Company’s common stock and $7,500,000 in cash.



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.



On
July 6, 2009, Yosen and its subsidiary Zhejiang and Yiwu purchased 100% of Jinhua for RMB 120 million ($17,500,000) in cash.  Zhejiang
acquired 90% and Yiwu acquired 10% of the equity interests in Jinhua.



Letong
ceased operations in 2011. Yiwu closed all its stores in stores locations in 2012. Jinhua ceased operations in October 2012 and
legally dissolved in 2013. Joy & Harmony was legally dissolved in 2013. Sanhe was legally dissolved in 2015. Wang Da closed
all its stores in the second quarter 2014. Yosen Trading ceased operation in 2015.





5









ORGANIZATIONAL
CHART



Our
corporate structure as of September 30, 2016 is as follows:









*
These entities ceased operation during 2011.

**
These entities ceased operation during 2012.

***
This entity ceased operation during 2015.



6







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 and Lamapai entities’ functional currency is the Chinese Renminbi (“RMB”), however, the accompanying
CFS 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 have been 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 $(308,625) and $(814,845) for the three and
nine months ended September 30, 2016. The Company had accumulated deficit of $50,177,945 as of September 30, 2016. There can be
no assurance 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 in our store in store mobile phone
business. 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 in the mobile phone sector. We are now focusing on opening
cross-border e-commerce business to change the Company's business model.



Principles
of Consolidation



The
CFS include the accounts of Yosen and its wholly owned subsidiaries Capital, Yosen Trading, Wang Da, Yiwu, Zhejiang, Hangzhou
Lamapai, Zhejiang Lamapai, Saizhuo and Ningbo collectively referred to as the Company, of which Yosen Trading, Wang Da, Yiwu are
discontinued operating entities, see Note 9. All material intercompany accounts, transactions and profits were eliminated in consolidation.



Noncontrolling
Interest

As
of September 30, 2016, the Company invested RMB 6,193,541($934,620) in Zhejiang Lamapai and owns 65.9% interest in Zhejiang Lamapai.
The 34.1% 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.



7









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 $984,379 (unaudited) and $975,321 as of September
30, 2016 (unaudited) and December 31, 2015, 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 September
30, 2016 and December 31, 2015, 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



8







As
of September 30, 2016, and December 31, 2015, property and equipment consisted of the following:



|                                   |  | September
                                         30, 2016 |          | December
    31, 2015
|---------------------------------- |  | ----------------------------------------------------------- | -------- | ---------------------
|                                   |  | (Unaudited)                                                 |          |                      
|Automotive                         |  | $                                                           | 41,510   |                      
|Office
    equipment               |  |                                                             | 142,029  |                      
|Plant
    and equipment            |  |                                                             | 190,528  |                      
|Construction
    in progress       |  |                                                             | 465,338  |                      
|Subtotal                           |  |                                                             | 839,404  |                      
|Less:
    accumulated depreciation |  |                                                             | (180,112 | )                    
|Total                              |  | $                                                           | 659,292  |                      



Depreciation
expenses for the nine months ended September 30, 2016 and 2015 were $25,536 and $3,936 respectively.



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 September 30, 2016
(unaudited) and December 31, 2015, there were no significant impairments of its long-lived assets.



Construction
in progress was the costs advanced to contractors and vendors to design, remodel and construct two new customer experience stores
for Zhejiang Lamapai, in Hangzhou and Yiwu. As of September 30, 2016, construction in progress was $465,338 (unaudited). We estimate
the total budget to complete the store build up will be $884,091. The Company is expected to spend additional $418,753 until completion.



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 September 30, 2016 and (unaudited) December 31, 2015, short-term loans consisted of the following:







|                                                                                                                                                                     |  | 2016 |           | 2015
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | --------- | ----
|From Bank
    of Hangzhou, dated July 13, 2016, due on July 12, 2017, with interest rate of 6.96% payable monthly                                                    |  | $    | 374,846   |     
|                                                                                                                                                                     |  |      |           |     
|From Bank of Chouzhou,
    dated July 9, 2016, due on July 10, 2017, with interest 6.00% payable monthly, personally guaranteed by the CEO                           |  |      | 749,693   |     
|                                                                                                                                                                     |  |      |           |     
|Bank loan from Bank
    of Chouzhou, dated July 16, 2016, due on July 10, 2017 with interest rate of 6.0625% payable monthly, personally guaranteed
    by the CEO   |  |      | 1,499,385 |     
|                                                                                                                                                                     |  |      |           |     
|Short term loan dated
    June 1, 2016, due on November 30, 2016, with bank interest payable monthly, personally guaranteed by the CEO*                              |  |      | 449,816   |     
|                                                                                                                                                                     |  |      |           |     
|Bank loan from Bank
    of Hangzhou, dated July 11, 2013, due on July 8, 2016, with interest rate of 7.38% payable monthly*                                          |  |      | —         |     
|                                                                                                                                                                     |  |      |           |     
|Bank loan from Bank
    of Chouzhou, dated July 10, 2015, due on July 8, 2016, with interest rate of 6.0625% payable monthly, personally guaranteed
    by the CEO*  |  |      | —         |     
|                                                                                                                                                                     |  |      |           |     
|Bank loan from Bank
    of Chouzhou, dated July 20, 2015, due on July 15, 2016, with interest rate of 6.0625% payable monthly, personally guaranteed
    by the CEO* |  |      | —         |     
|                                                                                                                                                                     |  |      |           |     
|Short
    term loan dated, dated June 1, 2016, due on November 30, 2016, with interest rate of 12% payable monthly                                                   |  |      | —         |     
|                                                                                                                                                                     |  | $    | 3,073,740 |     









9







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 is generated from sales of Yosen products through two
main revenue streams:

| | 1. | Retail.91.0%, 94.7%, 81.1% and 86.7% of the Company's revenue came from sales to customers at outlets installed inside department
    stores as well directly owned stores (i.e. store in store model) during the three and nine months ended September 30, 2016
    and 2015, respectively. Revenue is recognized at point of sale.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Wholesale.9.0% ,5.3%, 18.9% and 13.3% of the Company's revenue came from wholesale during the three and nine months ended September
    30,2016 and 2015, respectively. Recognition of income in wholesales 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:



| | 1. | Store
    in store or direct store:
| | -- | -----------------------------------



| | a. | For
    goods sold in our directly owned stores, revenue is recognized at point of sale.
| | -- | ----------------------------------------------------------------------------------------



| | 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 properly included in reported inventory balance 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.



| | 2. | Wholesale:
| | -- | ----------



| | 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.



10









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 assess 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 return except for a product defect. 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 $3,223, $7,448, $1,580 and $6,732 for the three and nine months ended September 30, 2016 and 2015, 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 $1,394, $17,958, $16,823 and $76,680 in general and administrative expenses for the three and nine months ended September
30, 2016 and 2015, respectively.



11









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 no advertising expense for the three months ended September 30,
2015. Advertising expense for the three and nine months ended September 30, 2016 was $2,210 and $11,731.



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 if 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. Excluded from the calculation of diluted earnings (loss) per share for the three and
nine months ended September 30, 2016 and 2015 were 3,333 options, as they were not dilutive.



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 nine months ended September 30, 2016 through Zhejiang and Lamapai entities.: mobile phones and E-commerce business (see Note
13).

12









Recent
Accounting Pronouncements



In
May 2014, the FASB issued ASU No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction-
and industry-specific revenue recognition guidance under current US 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 reporting periods beginning after
December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a
cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09
and has not determined the effect of the standard on our ongoing financial reporting.



In
August 2014, the FASB issued ASU No. 2014-15 (ASU 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. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue
as a going concern within one year of the date the financial statements are issued.  An entity must provide certain disclosures
if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern.  The ASU
applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with
early adoption permitted. The Company is currently evaluating the impact the adoption of ASU 2014-15 on the Company’s CFS
and disclosures.



In
November 2015, the FASB issued Accounting Standards Update No. 2015-17, "Balance Sheet Classification of Deferred Taxes".
The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified
as noncurrent on the balance sheet. This update is effective for annual periods beginning after December 15, 2016 and interim
periods within those annual periods. The Company does not anticipate the adoption of this ASU will have a significant impact on
its CFS.





In
February 2016, the FASB issued an ASU amending the accounting for leases. The new guidance requires the recognition of lease assets
and liabilities for operating leases with terms of more than 12 months, in addition to those currently recorded, on our consolidated
balance sheets. Presentation of leases within the consolidated statements of operations and consolidated statements of cash flows
will be generally consistent with the current lease accounting guidance. The ASU is effective for reporting periods beginning
after December 15, 2018, with early adoption permitted. We are currently evaluating the impact of the ASU; however, we expect
the ASU will have a material impact on our CFS, primarily to the consolidated balance sheets and related disclosures.



In
March 2016, the FASB issued an ASU amending the accounting for stock-based compensation and requiring excess tax benefits and
deficiencies to be recognized as a component of income tax expense rather than equity. This guidance also requires excess
tax benefits to be presented as an operating activity on the statement of cash flows and allows an entity to make an accounting
policy election to either estimate expected forfeitures or to account for them as they occur. The ASU is effective for reporting
periods beginning after December 15, 2016, with early adoption permitted. We are currently evaluating the impact of the ASU; however,
we expect the ASU will have a material impact on our CFS.



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.



13









Note
3 – ADVANCES TO SUPPLIERS



Advances
to suppliers are advance payments to suppliers for the purchase of inventory.



Note
4 – COMMON STOCK



On
September 1, 2015, the Company sold 1,218,076 Units to four 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 per share,
for an aggregate total purchase price of $913,557. Pursuant to the agreement, 1,218,076 shares of Common Stock and 1,218,076 Warrant
were issued in 2015. The Proceeds from the issuance of shares and warrants were assigned to the respective securities based on
relative fair values.



On
November 16, 2015, the Company sold 66,975 Units to one investor 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 an exercise price
of US$0.75 per share, for an aggregate total purchase price of $50,232. Pursuant to the agreement, 66,975 shares of Common Stock
and 66,975 Warrant were issued in 2015. The Proceeds from the issuance of shares and warrants were assigned to the respective
securities based on relative fair values.



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 per share, 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.



Note
5 - STOCK WARRANTS, OPTIONS, AND COMPENSATION

Stock
options - Options issued have a ten-year life and were fully 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 September 30, 2016:



|Outstanding    |      |  | Exercisable     | 
|-------------- | ---- |  | --------------- | 
|Exercise Price |      |  | Number ofShares | 
|Options:       |      |  |                 | 
|$              | 62.4 |  |                 | 
|Warrants:      |      |  |                 | 
|$              | 0.75 |  |                 | 
|$              | 0.75 |  |                 | 
|$              | 0.75 |  |                 | 



During
2016 and 2015, the Company did not issue any stock options. The 3,333 stock options outstanding as of September 30, 2015 were
issued in 2007 to our former director Mr. Kenneth Berents, have a 10 year term and vested immediately upon issuance.



14







(1)
On September 1, 2015, the Company issued stock warrants to purchase 1,218,076 shares of common stock at $0.75 in conjunction with
the common stock offering (See Note 5). 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 September 30, 2016, 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 in conjunction with
the common stock offering (See Note 5). 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 September 30, 2016, 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 September 30, 2016, warrants to purchase 190,532 shares
of common stock remained outstanding. These warrants were plain vanilla warrants and were classified as equity.



Note
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 and nine months ended September 30, 2016 and 2015.



The
US operating entity Yosen Group is subject to the US federal income tax at 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 and nine months ended September 30, 2016, the US operating subsidiaries incurred a net operating loss of $45,576 and $95,536.
As a result, $15,496 and $32,482 of deferred tax assets and valuation allowance were recorded in the three and nine months ended
September 30, 2016.



The
PRC operating subsidiaries, Zhejiang and Lamapai entities are subject to the PRC income tax at 25%. In the three and nine months
ended September 30, 2016, PRC operating subsidiaries incurred a net operating loss of $372,216 and $878,782. 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, $93,054 and $219,695 of deferred tax assets and valuation allowance were recorded in the three
and nine months ended September 30, 2016.



15









The
components of deferred tax assets and liabilities as of September 30, 2016 (unaudited) and December 31, 2015 were as follows:





|                              |  | 2016        |          | 2015
|----------------------------- |  | ----------- | -------- | ----
|Deferred
    tax assets:      |  | (Unaudited) |          |     
|U.S.
    net operating losses |  | $           | 32,482   |     
|PRC
    net operating losses  |  |             | 219,615  |     
|Bad
    debt                  |  |             | —        |     
|Total
    deferred tax assets |  |             | 252,097  |     
|Less
    valuation allowance  |  |             | (252,097 | )   
|                              |  | $           | —        |     



Reconciliation
of the differences between the statutory US Federal income tax rate and the effective rate for the three months ended September
30, 2016 and 2015 is as follows:



|                                      |  | 2016 |       | 2015
|------------------------------------- |  | ---- | ----- | ----
|Tax (Credit)
    at US Statutory Rate |  |      | (34.0 | )%  
|Tax rate difference                   |  |      | 8.1   | %   
|Valuation
    allowance               |  |      | 25.9  | %   
|Effective
    rate                    |  |      | —     | %   



Reconciliation
of the differences between the statutory US Federal income tax rate and the effective rate for the nine months ended September
30, 2016 and 2015 is as follows:





|                                      |  | 2016 |       | 2015
|------------------------------------- |  | ---- | ----- | ----
|Tax (Credit)
    at US Statutory Rate |  |      | (34.0 | )%  
|Tax rate difference                   |  |      | 8.2   | %   
|Valuation
    allowance               |  |      | 25.8  | %   
|Effective
    rate                    |  |      | —     | %   



Note
7 - COMMITMENTS



The
Company leases office facilities and stores under operating leases that terminate through 2019. Rent expenses for the three months
ended September 30, 2016 and 2015 were $149,467 and $85,714. Rent expenses for the nine months ended September 30, 2016 and 2015
were $259,050 and $194,458, respectively.



The
future minimum obligations under these agreements are as follows by years as of September 30, 2016:



| | 2017  |  |  |   | 209,169 | 
| | ----- |  |  | - | ------- | 
| | 2018  |  |  |   | 220,125 | 
| | 2019  |  |  |   | 231,082 | 
| | Total |  |  | $ | 660,376 | 



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 percent of income after tax, not to exceed 50 percent 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 September 30, 2016, the Company had allocated $11,542,623
to these non-distributable reserve funds.



16









Note
9 – DISCONTINUED OPERATIONS



Letong
ceased operations in 2011, Yiwu in 2013, Wang Da and Yosen Trading in 2015. As a result, Letong, Yiwu , Wang Da and Yosen Trading
met the conditions to be reported as discontinued operations in the financial statements, 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 September 30, 2016 (unaudited) and
December 31, 2015 included in the Consolidated Balance Sheets:

|                                           |  | 2016 |            | 2015
|------------------------------------------ |  | ---- | ---------- | ----
|Cash                                       |  | $    | 17,544     |     
|Accounts
    receivable                    |  |      | 842        |     
|Prepaid
    expenses and other receivables |  |      | —          |     
|Property,
    plant and equipment          |  |      | 22,505     |     
|Total
    assets                           |  |      | 40,891     |     
|                                           |  |      |            |     
|                                           |  |      |            |     
|Short-term
    loans                       |  |      | 2,249,078  |     
|Accounts
    payable                       |  |      | 126,005    |     
|Advance
    from suppliers                 |  |      | 10,107     |     
|Accrued
    expenses and other payable     |  |      | 16,462     |     
|Advance
    from CEO                       |  |      | 7,797      |     
|Total
    liabilities                      |  |      | 2,409,449  |     
|Net
    assets                             |  | $    | (2,368,558 | )   



The
following table summarizes the operating results of the discontinued operations included in the Consolidated Statements of Operations
and Comprehensive Loss for the three and nine months ended September 30, 2016 and 2015 (unaudited):



|                                                             |  | Three
    Months Ended September 30,
|------------------------------------------------------------ |  | ------------------------------------
|                                                             |  | 2016                                
|Sales,
    net                                               |  | $                                   
|Cost
    of sales                                            |  |                                     
|Gross
    profit (loss)                                      |  |                                     
|General
    and administrative expenses                      |  |                                     
|Loss
    from discontinued operations                        |  |                                     
|Other
    income (expenses)                                  |  |                                     
|Loss
    before income taxes                                 |  |                                     
|Provision
    for income taxes                               |  |                                     
|Net
    loss from discontinued operations, net of income tax |  | $                                   
|                                                             |  |                                     





|                                                             |  | Nine
    Months Ended September 30,
|------------------------------------------------------------ |  | -----------------------------------
|                                                             |  | 2016                               
|Sales,
    net                                               |  | $                                  
|Cost
    of sales                                            |  |                                    
|Gross
    profit (loss)                                      |  |                                    
|General
    and administrative expenses                      |  |                                    
|Loss
    from discontinued operations                        |  |                                    
|Other
    income (expenses)                                  |  |                                    
|Loss
    before income taxes                                 |  |                                    
|Provision
    for income taxes                               |  |                                    
|Net
    loss from discontinued operations, net of income tax |  | $                                  
|                                                             |  |                                    



17









Note
10- OTHER COMPREHENSIVE INCOME



Other
comprehensive income as included in stockholders’ deficit for the three and nine months ended September 30, 2016 and 2015,
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 September 30, 2016, two customers accounted for more than 10% of the Company’s sales, representing
26.3% and 23.9%, respectively of the Company’s sales. During the nine months ended September 30, 2016, two customers accounted
for more than 10% of the Company’s sales, at 42.7% and 24.0%. As of September 30, 2016, two vendors comprised more than
10% of the Company’s accounts payable, at 14.7% and 10.6% of the Company’s accounts payable. As of September 30, 2016,
no customer accounted for more than 10% of the Company's accounts receivable.



During
the three months ended September 30, 2015, three customers accounted for more than 10% of the Company’s sales, at 28.3%,
25.2% and 14.5%, respectively of the Company’s sales. During the nine months ended September 30, 2015, two customers accounted
for more than 10% of the Company’s sales, which represented 40.1% and 18.0%, respectively of the Company’s sales.
As of September 30, 2015, two customers comprised more than 10% of the Company’s accounts receivable, which represented
80.8% and 18.6%, respectively. As of September 30, 2015, two vendors comprised more than 10% of the Company’s accounts payable,
which represented 76.9% and 11.8%, respectively.



Note
13 - SEGMENT INFORMATION



Zhejiang
focuses on selling Samsung and Apple and other brand name mobile phones in PRC. In September 2015, the Company established Hangzhou
Lamapai and Zhejiang Lamapai for cross border E-commerce business. Hangzhou Lamapai, Zhejiang Lamapai, Saizhuo and Ningbo collectively
are referred as Lamapai entities. Lamapai entities 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 three and nine months ended September 30, 2016.



The
following table presents summarized information by segment:



|                                                 |  | Three
    Months Ended September 30, 2016
|------------------------------------------------ |  | -----------------------------------------
|                                                 |  |                                          
|                                                 |  |                                          
|Sales,
    net                                   |  | $                                        
|Cost
    of sales                                |  |                                          
|Gross
    profit                                 |  |                                          
|Selling,
    general and administrative expenses |  |                                          
|Loss
    from continuing operations              |  |                                          
|Other
    Income (expense)                       |  |                                          
|Provision
    for income taxes                   |  |                                          
|Net
    loss from continuing operations          |  |                                          
|Net
    loss from discontinued operations        |  |                                          
|Net
    loss  including noncontrolling interest  |  | $                                        





18







|                                                 |  | Nine
    Months ended September 30, 2016
|------------------------------------------------ |  | ----------------------------------------
|                                                 |  |                                         
|                                                 |  |                                         
|Sales,
    net                                   |  | $                                       
|Cost
    of sales                                |  |                                         
|Gross
    profit                                 |  |                                         
|Selling,
    general and administrative expenses |  |                                         
|Loss
    from continuing operations              |  |                                         
|Other
    Income (expense)                       |  |                                         
|Provision
    for income taxes                   |  |                                         
|Net
    (loss) from continuing operations        |  |                                         
|Net
    loss from discontinued operations        |  |                                         
|Net
    loss including noncontrolling interest   |  | $                                       



|                  |  | September
    30, 2016 |           | December
    31, 2015
|----------------- |  | ---------------------- | --------- | ---------------------
|Mobile
    Phones |  | $                      | 1,009,775 |                      
|E-commerce        |  |                        | 2,304,479 |                      
|Other             |  |                        | (287,356  | )                    
|Total
    Assets  |  |                        | 3,026,898 |                      





19









Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.



Forward
Looking Statements



We
have included and from time to time may make in our public filings, press releases or other public statements, certain statements,
including, without limitation, those under “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” in Part II, Item 7. In some cases these statements are identifiable through the use of words such as “anticipate,”
“believe,” “estimate,” “expect,” “intend,” “plan,” “project,”
“target,” “can,” “could,” “may,” “should,” “will,” “would”
and similar expressions. You are cautioned not to place undue reliance on these forward-looking statements. In addition, our management
may make forward-looking statements to analysts, investors, representatives of the media and others. These forward-looking statements
are not historical facts and represent only our beliefs regarding future events, many of which, by their nature, are inherently
uncertain and beyond our control.



The
following discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto appearing elsewhere
in this Quarterly Report on Form 10-Q.  The following discussion contains forward-looking statements.  Our
actual results may differ significantly from those projected in the forward-looking statements.  Factors that may cause
future results to differ materially from those projected in the forward-looking statements include, but are not limited to, those
discussed in  “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.





Overview



Yosen
Group, Inc. (formerly known as “China 3C Group”) (including our subsidiaries unless the context indicates otherwise,
the “Company”, “Yosen,”“Yosen Group,”“we,” or “us”) was incorporated
on August 20, 1998 under the laws of the State of Nevada.



In
2007 we began operating r a “store in store” business model. The “store in store” business model resulted
in expanded marketing channels, thus, stimulated the growth of sales in 2007 and 2008. We were only engaged in the resale and
distribution of third party products and generated 100% of our revenue from resale of items such as mobile phones, facsimile machines,
DVD players, stereos, speakers, MP3 and MP4 players, iPods, electronic dictionaries, CD players and audio systems. We used to
operate “stores in stores” under the brand names Hangzhou Wang Da, Yiwu YongXin, Shanghai Joy & Harmony, Hangzhou
Sanhe and Zhejiang Yongxin. However, starting in 2009, we had declining sales under the model due to increased competition
from direct stores and large department stores and the impact of the economic slowdown. As a result, we closed Shanghai Joy &
Harmony and Hangzhou Sanhe in 2011. Yiwu YongXin ceased operation in 2012 and Wang Da ceased operation in 2013.



On
July 6, 2009, we acquired Jinhua Baofa Logistic Ltd. (“Jinhua”).  At that point, we started providing transportation
logistics services to businesses in Eastern China. We closed Jinhua in 2012 due to continuing losses incurred .



Under
the stores in stores model, we distribute our products mainly via the so-called concessionaire agreements with larger department
stores, supermarkets, large electronics retail stores, and other retailers. Under this model, companies such as Yosen own their
own outlets within larger stores and in so doing assume responsibility for most financial and operational aspects of those outlets
including capital cost, inventory, wages, product selections, pricing, and general management. Our retail partners are compensated
via margin they earn on the products we sell. This model is similar to that employed by many department stores in the US. However,
it is different from the model found at large electronics retailers like Best Buy and general retailers like Wal-Mart. We found
that many investors are curious as to why the model in China differs from that in the US. We believe the main reasons are:



·          We
decrease the financial risk for our retail partners by assuming responsibility for the inventory and capital expense associated
with distributing our products.



·          We
decrease operational risk for our retail partners by hiring and managing employees and handling logistics issues such as wholesale
purchase and delivery and returns and after-sales service.



·          We
decrease merchandising risk for our retail partners by bringing product expertise and specific market knowledge that is difficult
for large retailers to develop on their own across a broad range of product categories.



·          China’s
size, regional differences, logistical difficulties, managerial challenges, underdeveloped credit markets, and rapid growth rate
increases risk for all retailers and drive the need to mitigate risk which is why our retail partners rely on us.



20









On
December 21, 2012, we received confirmation from the Secretary of State of the State of Nevada that the Certificate of Change
Pursuant to NRS 78.209 (the “Certificate of Change”) to our Amended and Restated Articles of Incorporation to effect
a reverse split of our common stock, $0.001, par value per share (the “Common Stock”), at a ratio of 1-for-5 with
all fractional shares rounded up to the next whole share (the “Reverse Stock Split”) was duly filed on December 21,
2012. Immediately prior to the Reverse Stock Split, we had 93,911,327 shares of Common Stock outstanding. After the Reverse Stock
Split, we had 18,782,356 shares outstanding. Pursuant to the Reverse Stock Split, the number of authorized shares of our Common
Stock was reduced from 100,000,000 to 20,000,000 shares of Common Stock. Each shareholder's percentage ownership interest in the
Company and proportional voting power remained unchanged after the Reverse Stock Split except for minor changes and adjustments
resulting from rounding up the fractional shares.



Immediately,
following the consummation of the Reverse Stock Split, on December 21, 2012, we filed a Certificate of Amendment to our Amended
and Restated Articles of Incorporation pursuant to NRS 78.385 and 78.390 (the “Certificate of Amendment”) to increase
our number of authorized shares of Common Stock from 20,000,000 to 50,000,000 shares (the “Capital Increase Amendment”)
and to approve the amendment of our Articles of Incorporation to change our name to “Yosen Group, Inc.” (the “Name
Change Amendment)”. The Reverse Stock Split, Capital Increase Amendment and the Name Change Amendment were approved by the
board of directors (“BOD” or “Board”) of the Company on October 10, 2012. In addition, the actions taken
by the BOD with respect to the Capital Increase Amendment and the Name Change Amendment were subsequently adopted by the written
consent dated as of October 10, 2012 of our stockholders entitled to vote a majority of the shares of Common Stock then outstanding.
The Reverse Stock Split was also ratified by these stockholders.



Following
the filing of the Name Change Amendment, we changed our stock symbol to "YOSN" effective as of the opening of trading
on January 30, 2013 on the OTCBB.







On
January 6, 2014 the Company established a US based wholly-owned subsidiary, Yosen Trading Inc., a New York corporation (“Yosen
Trading”), for the purpose of engaging primarily in international trade and wholesale business, initially with tile, kitchen
cabinet, granite and marble products. Yosen Trading ceased operation in 2015.



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 the first quarter of 2016, Zhejiang Lamapai established two new companies Ningbo Yongxin
Lamapai E-commerce Co. Ltd ("Ningbo") and Hangzhou Saizhuo brand management Co., Ltd ("Saizhuo"). Hangzhou
Lamapai, Zhejiang Lamapai, Saizhuo and Ningbo, collectively are referred as Lamapai entities ("Lamapai entities"). The
Company invested RMB6,193,541(USD 970,436) to Zhejiang Lamapai. As a result of the investment, the Company owns 65.9% of Zhejiang
Lamapai as of September 30, 2016.



As
of September 30, 2016, we operated 7 “stores in stores”, under the brand name Zhejiang YongXin, selling primarily
Apple and Samsung products. The Company also opened 1 direct store under Hangzhou Lamapai and 1 direct store under Saizhuo for
imported products.



On
September 30, 2016, we received confirmation from the Secretary of State of the State of Nevada that the Certificate of Change
Pursuant to NRS 78.209 (the “Certificate of Change”) to our Amended and Restated Articles of Incorporation to effect
a reverse split of our common stock, $0.001, par value per share (the “Common Stock”), at a ratio of 1-for-3 with
all fractional shares rounded up to the next whole share (the “Reverse Stock Split”) was duly filed on September 30,
2016. Immediately prior to the Reverse Stock Split, we had 29,719,277 shares of Common Stock outstanding. After the Reverse Stock
Split, we had 9,907,818 shares outstanding.



Results
of Operations for the Three Months Ended September 30, 2016 and 2015



Reportable
Operating Segments



Our
subsidiary Zhejiang invested RMB 6,193,541 (USD 970,436) to Zhejiang Lamapai. As of September 30, the Company owns 65.9% of equity
interest in Zhejiang Lamapai. As a result, we had two reportable segments: mobile phones through Zhejiang and E-commerce through
Zhejiang Lamapai.



| | a) | Mobile
    phones
| | -- | -----------------
| | b) | E-commerce       



| | a) | Mobile
    phones
| | -- | -----------------



Zhejiang
focuses on distribution of Samsung and Apple brand products.



|                  |  | Three
    Months Ended September 30, |         | Percentage
|----------------- |  | ------------------------------------ | ------- | ----------
|Mobile
    phones |  | 2016                                 |         | 2015      
|Revenue           |  | $                                    | 797,222 |           
|Gross Profit      |  | $                                    | 17,042  |           
|Profit Margin     |  |                                      | 2.1     | %         
|Operating Loss    |  | $                                    | (31,703 | )         



21









|                  |  | Nine
    Months Ended September 30, |           | Percentage
|----------------- |  | ----------------------------------- | --------- | ----------
|Mobile
    phones |  | 2016                                |           | 2015      
|Revenue           |  | $                                   | 3,679,685 |           
|Gross Profit      |  | $                                   | 56,194    |           
|Profit Margin     |  |                                     | 1.5       | %         
|Operating Loss    |  | $                                   | (129,830  | )         



For
the three months ended September 30, 2016, Mobile phones generated revenue of $797,222, a decrease of $416,424 or 34.3% compared
to $1,213,646 for the three months ended September 30, 2015. For the nine months ended September 30, 2016, Mobile phones generated
revenue of $3,679,685, a decrease of $1,663,748 or 31.1% compared to $5,343,433 for the nine months ended September 30, 2015.
The decrease in revenue was primarily due to closing of 10 store in stores and lack of new products introduced by Apple and Samsung
in the nine months ended September 30, 2016.



Gross
profit decreased $28,705 or 62.7% from $45,746 for the three months ended September 30, 2015 to $17,042 for the
three months ended September 30, 2016. Profit margin decreased from 3.8% in the three months ended September 30, 2015 to 2.1%
in the three months ended September 30, 2016, a decrease of 1.7%.  Gross profit decreased $145,328 or 72.1% from $201,521 for
the nine months ended September 30, 2015 to $56,194 for the nine months ended September 30, 2016. Profit margin decreased
from 3.8% in the nine months ended September 30, 2015 to 1.5% in the nine months ended September 30, 2016, a decrease of 2.3%. 
The decrease in gross profit was a result of the decrease in sales price and unit cost remained flat.



Operating
loss was $31,703 for the three months ended September 30, 2016, a decrease of $14,006 or 30.6% compared to operating loss
of $45,709 for the three months ended September 30, 2015. Operating loss was $129,830 for the nine months ended September 30,
2016, compared to $121,964 for the nine months ended September 30, 2015. Change in operating losses was primarily due to
change in management fee, labor cost and rent expenses.



| | b) | E-commerce
| | -- | ----------



Zhejiang
Lamapai is engaged in cross-border online to offline (“O2O”) distribution. Lamapai entities distribute a variety of
imported products including but not limited to Digital products, baby products, health nutrition and frozen food and etc. Lamapai
entities sell the products through its online store, applications on mobile devices and also in physical stores. In May 2016,
Zhejiang Lamapai opened 1 store in Yiwu. In June 2016, Saizhuo opened 1 store in Hangzhou. Ningbo did not have operation in the
nine months ended September 30, 2016.



|                   |  | Three
    Months Ended September 30,
|------------------ |  | ------------------------------------
|E-Commerce         |  | 2016                                
|Revenue            |  | $                                   
|Gross
    Profit   |  | $                                   
|Profit
    Margin  |  |                                     
|Operating
    Loss |  | $                                   



|                   |  | Nine
    Months Ended September 30,
|------------------ |  | -----------------------------------
|E-Commerce         |  | 2016                               
|Revenue            |  | $                                  
|Gross
    Profit   |  | $                                  
|Profit
    Margin  |  |                                    
|Operating
    Loss |  | $                                  



Total
Company



Net
Sales



Net
sales for the three months ended September 30, 2016 was $1,191,048, a decrease of $22,598 or 1.86% compared to $1,213,646
for the three months ended September 30, 2015. Net sales for the nine months ended September 30, 2016 was $4,267,574, a decrease
of $1,075,859 or 20.1% compared to $5,343,433 for the nine months ended September 30, 2015. The decrease was attributable
to Zhejiang closing 10 stores and lack of new products introduced by Apple and Samsung in the nine months ended September 30,
2016. Lamapai entities opened two stores in the second quarter of 2016. The stores started operations and generated revenue of
$590,550, which offset the decreased sales in Zhejiang.





22







Percentage
of Sales



Percentage
of sales from retail and wholesale operations for each segment is as follows in the three months ended September 30, 2016:



| |           | Mobile
    Phones |  | E-commerce |    | Total
| | --------- | ----------------- |  | ---------- | -- | -----
| | Retail    |                   |  |            | 82 | %    
| | Wholesale |                   |  |            | 18 | %    



Percentage
of sales from retail and wholesale operations for each segment is as follows in the nine months ended September 30, 2016:



| |           | Mobile
    Phones |  | E-commerce |      | Total
| | --------- | ----------------- |  | ---------- | ---- | -----
| | Retail    |                   |  |            | 89.4 | %    
| | Wholesale |                   |  |            | 10.6 | %    





Percentage
of sales from retail and wholesale operations for each segment is as follows in the three months ended September 30, 2015:



| |           | Mobile
    Phones |  | E-commerce |      | Total
| | --------- | ----------------- |  | ---------- | ---- | -----
| | Retail    |                   |  |            | 81.1 | %    
| | Wholesale |                   |  |            | 18.9 | %    





Percentage
of sales from retail and wholesale operations for each segment is as follows in the nine months ended September 30, 2015:



| |           | Mobile
    Phones |  | E-commerce |      | Total
| | --------- | ----------------- |  | ---------- | ---- | -----
| | Retail    |                   |  |            | 86.7 | %    
| | Wholesale |                   |  |            | 13.3 | %    





Cost
of Sales



Cost
of sales (“COS”) for the three months ended September 30, 2016 was $1,107,415 compared to $1,167,900 for the three
months ended September 30, 2015, a decrease of 5.18%. COS for the nine months ended September 30, 2016 was $4,107,872 compared
to $5,141,912 for the nine months ended September 30, 2015, a decrease of 20.1%. The decreased COS for the three and nine months
was a result of the decrease in sales from the comparable periods.



Gross
Profit



Gross
profit for the three months ended September 30, 2016 was $83,633 compared to gross profit of $45,746 for the three months ended
September 30, 2015, an increase of 82.82%. Gross profit for the nine months ended September 30, 2016 was $159,702 compared to
gross profit of $201,522 for the nine months ended September 30, 2015, a decrease of 20.8%. The decreased gross profit for the
three and nine months ended September 30, 2016 was due to lower gross profit generated from mobile phone sales and the international
trade business.



Profit
Margin



Profit
margin for the three months ended September 30, 2016 was 7.0% compared to 3.8% for the three months ended September 30, 2015.
Profit margin for the nine months ended September 30, 2016 was 3.7% compared to 3.8% for the nine months ended September 30, 2015.
The profit margin increase was mainly attributed to higher gross margin in the E-Commerce business.



Selling,
General and Administrative Expenses



Selling,
general and administrative expenses for the three months ended September 30, 2016 were $488,555 or 41.0% of net sales, compared
to $91,455 or 7.5% of net sales for the three months ended September 30, 2015, an increase of 434.2% of sales. Selling, general
and administrative expenses for the nine months ended September 30, 2016 were $1,103,052 or 25.8% of net sales, compared to $454,735
or 8.5% of net sales for the nine months ended September 30, 2015, an increase of 142.6% of sales. The increase in selling, general
and administrative expenses was primarily due to general administrative expenses related opening new stores for Zhejiang Lamapai
and Saizhuo.



Operating
Loss from Continuing Operations



Operating
loss for the three months ended September 30, 2016 was $(404,922) or (34.0)% of net sales compared to $(45,709) or (3.8)% of net
sales for the three months ended September 30, 2015. Operating loss for the nine months ended September 30, 2016 was $(943,350)
or (22.1)% of net sales compared to $(253,213) or (4.7)% of net sales for the nine months ended September 30, 2015. Increase in
general administrative expenses in association with opening new stores for Zhejiang Lamapai and Saizhuo was the key factors for
the increase in operating loss from continuing operations during the three and nine months ended September 30, 2016 compared to
2015.



23









Other
(Income) Expense



Total
other expense was $12,870 for the three months ended September 30, 2016 compared to $9,286 for same period in 2015. Total other
expense was $30,967 for the nine months ended September 30, 2016 compared to $35,437 for same period in 2015.



Provision
for Income Taxes



The
provision for income taxes for the three and nine months ended September 30, 2016 and 2015 were $0 due to losses incurred by Zhejiang
and Lamapai entities.



Net
Loss from Continuing Operations



Net
loss from continuing operations was $(417,792) for the three months ended September 30, 2016 compared to $(54,995) for the three
months ended September 30, 2015. Net loss from continuing operations was $(974,317) for the nine months ended September 30, 2016
compared to net loss of $(288,650) for the nine months ended September 30, 2015. Additional general administrative expenses relating
to opening new stores for Zhejiang Lamapai and Saizhuo were the key factors for the increase in net loss from continuing operations
during the three and nine months ended September 30, 2016 compared to 2015.



Net
Loss from Discontinued Operations



Net
loss from discontinued operations for the three months ended September 30, 2016 was $(34,694) compared to $(35,472) for 2015,
a decrease of $778. Net loss from discontinued operations for the nine months ended September 30, 2016 was $(115,108) compared
to $(283,342) for 2015, a decrease of $168,234. Net Loss from discontinued operations decreased primarily due to Zhejiang's closing
store in stores to cut losses.



Net
Loss including noncontrolling interest

Net
loss including noncontrolling interest was $(452,486) for the three months ended September 30, 2016 compared to $(90,467) for
the three months ended September 30, 2015. Net loss including noncontrolling interest was $(1,089,425) for the nine months ended
September 30, 2016 compared to $(571,992) for the nine months ended September 30, 2015. The increase in net loss was due to decrease
in gross profit and increase in operating expenses



Net
loss attributable to noncontrolling interest



Net
loss attributable to noncontrolling interest was $(143,881) and $(274,580) in the three and nine months ended September 30, 2016
and $0 in 2015. Net loss attributable to noncontrolling interest represents the elimination of the income or loss attributable
to non-Yosen ownership interests in Yosen's consolidated entities - Zhejiang Lamapai, Hangzhou Lamapai, Saizhuo and Ningbo.



Net
loss attributable to Yosen Group



Net
loss attributable to Yosen Group was $(308,605) in the three months ended September 30, 2016 compared to $(90,467) in the three
months ended September 30, 2015. Net loss attributable to Yosen Group was $(814,845) in the nine months ended September 30,
2016 compared to $(571,992) in the nine months ended September 30, 2015. The increase in net loss was attributable to losses
incurred by Lamapai entities.



Foreign
Currency Translation Adjustments



The
impact of foreign translation from our accounts in RMB to USD on Yosen’s operating results was not material. During the
translation process, the assets and liabilities of all PRC subsidiaries are translated into USD at period-end exchange rates.
The revenues and expenses are translated into USD at average exchange rates of the periods. Resulting translation adjustments
are recorded as a component of accumulated other comprehensive income within stockholders’ equity.



|                                                |  | Nine
    Months Ended September 30,
|----------------------------------------------- |  | -----------------------------------
|                                                |  | 2016                               
|RMB/$ exchange
    rate at period end           |  |                                    
|Average
    RMB/$ exchange rate for the periods |  |                                    





24







Transaction
gains or losses arising from exchange rate fluctuation on transactions denominated in a currency other than the functional currency
were included in the consolidated results of operations. As a result of the translation, Yosen recorded a foreign currency gain
of $40,177 in the three months ended September 30, 2016 compared to a foreign currency loss of $107,712 in 2015. Yosen recorded
a foreign currency gain of $75,499 in the nine months ended September 30, 2016 and $88,335 in 2015, which is a separate line item
on the Statements of Operations and Comprehensive Loss.



Liquidity
and Capital Resources



Cash
has historically been generated from operations. Operations and liquidity needs are funded primarily through cash flows from operations.
Cash and equivalents were $184,886 at September 30, 2016, compared to $738,611 at December 31, 2015.



Our
cash flows for the nine month periods are summarized as follows:



|                                                           |  | Nine
    Months Ended September 30,
|---------------------------------------------------------- |  | -----------------------------------
|                                                           |  | 2016                               
|Net
    cash provided by (used in) operating activities    |  | $                                  
|Net
    cash used in investing activities                  |  |                                    
|Net
    cash provided by (used in) financing activities    |  |                                    
|Effect
    of exchange rate change on cash and equivalents |  |                                    
|Net
    decrease in cash and equivalents                   |  |                                    
|Cash
    and equivalents at beginning of period            |  |                                    
|Cash
    and equivalents at end of period                  |  | $                                  



Operating
Activities



Net
cash used in operating activities was $967,333 for the nine months ended September 30, 2016 compared to $472,227 provided
by operating activities for the nine months ended September 30, 2015, a 104.8% decrease.  Net cash used in operating
activities was mainly attributable to several factors, including (i) a decrease in accrued expenses of $604,702; (ii)increase
in inventories of $724,896, offset by the decrease in advance to suppliers of $224,859 and accounts receivable of $203,469, and
increase in accounts payable of 795,849 add back depreciation of 25,536.



|                        |  | Nine
    Months Ended September 30, |           |     
|----------------------- |  | ----------------------------------- | --------- | ----
|                        |  | 2016                                |           | 2015
|                        |  |                                     |           |     
|Sales,
    Net          |  | $                                   | 4,267,574 |     
|                        |  |                                     |           |     
|Accounts
    receivable |  | $                                   | 19,856    |     



Accounts
receivable decreased 91.2% in the nine months ended September 30, of 2016 while sales decreased 20.1%. Management monitors and
periodically assesses the collectability of accounts receivable to ensure the allowance for bad debts account is reasonably estimated.
Collection of accounts receivable is based on the terms of legal binding documents. Our accounts receivable department has periodically
reviewed the allowance for doubtful accounts. The bad debts allowance is based on the aging of receivables, credit history and
credit quality of the customers, the term of the contracts as well as the balance outstanding. If an account receivable item is
considered probable to be uncollectible, it will be charged to bad debts immediately.



Investing
Activities



|                                          |  | Nine
    Months Ended September 30,
|----------------------------------------- |  | -----------------------------------
|                                          |  | 2016                               
|Net
    cash used in investing activities |  | $                                  



Net
cash used in investing activities in the nine months ended September 30, 2016 and 2015 was $660,566 and $0. The investment activities
in the nine months ended September 30, 2016 were mainly attributed to construction of new customer experience stores for Zhejiang
Lamapai.





25







Financing
Activities



The
Company received $270,909 from equity financing and $379,933 from short term loans in the nine months ended September 30, 2016.
The Company had received an advance to related party of $357,765 as of September 30, 2016 compared to payment to related party
of $442,804 on September 30, 2015.



|                                                        |  | Nine
    Months Ended September 30,
|------------------------------------------------------- |  | -----------------------------------
|                                                        |  | 2016                               
|Net
    cash provided by (used in) financing activities |  | $                                  





Net
decrease in Cash and Equivalents



|                                         |  | Nine
    Months Ended September 30,
|---------------------------------------- |  | -----------------------------------
|                                         |  | 2016                               
|Net
    decrease in cash and equivalents |  | $                                  



Cash
and Equivalents



|                         |  | Nine
    Months Ended September 30,
|------------------------ |  | -----------------------------------
|                         |  | 2016                               
|Cash
    and equivalents |  | $                                  





26







Cash
and equivalents as of September 30, 2016 and December 31, 2015 were solely bank accounts in US and China. Specifically, cash and
equivalents for each subsidiary as of September 30, 2016 and December 31, 2015 included:



|Name
    of Entity   |  | Region             |  | Currency |     | September
    30, 2016 |  | December
    31, 2015
|-------------------- |  | ------------------ |  | -------- | --- | ---------------------- |  | ---------------------
|Yosen
    Group      |  | US
    entity      |  |          | USD |                        |  |                      
|Capital              |  | BVI
    entity     |  |          | USD |                        |  |                      
|Yosen
    Trading    |  | US
    entity      |  |          | USD |                        |  |                      
|Zhejiang             |  | Chinese
    entity |  |          | RMB |                        |  |                      
|Yiwu                 |  | Chinese
    entity |  |          | RMB |                        |  |                      
|Wang
    Da          |  | Chinese
    entity |  |          | RMB |                        |  |                      
|Zhejiang
    Lamapai |  | Chinese
    entity |  |          | RMB |                        |  |                      
|Hangzhou
    Lamapai |  | Chinese
    entity |  |          | RMB |                        |  |                      
|Saizhuo              |  | Chinese
    entity |  |          | RMB |                        |  |                      
|Ningbo               |  | Chinese
    entity |  |          | RMB |                        |  |                      



Cash
equivalents held in the PRC subsidiaries are not freely transferrable outside the country. The amounts not freely transferable
as of September 30, 2016 and December 31, 2015 were RMB 742,355 ($111,308) (unaudited) and RMB2,640,989 ($406,888).



Capital
Expenditures



We
had capital expenditure of $660,566 for the first nine months of 2016 mainly attributable to the construction of new customer
experience store for Zhejiang Lamapai.



Working
Capital Requirements



Historically
operations and short term financing have been sufficient to meet our cash needs. We believe we will be able to generate revenues
from sales and raise capital through private placement offerings of our equity securities to provide the necessary cash flow to
meet anticipated working capital requirements. However, our actual working capital needs for the long and short term will depend
upon numerous factors, including operating results, competition, and the availability of credit facilities, none of which can
be predicted with certainty. Future expansion will be limited by the availability of financing products and raising capital.



Off-Balance
Sheet Arrangements



We
have never entered into any off-balance sheet arrangements and have never established any special purpose entities. We have not
guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.



Critical
Accounting Policies



Our
discussion and analysis of our financial condition and results of operations is based upon our CFS, which have been prepared in
accordance with accounting principles generally accepted in the United States. The preparation of these CFS requires us to make
estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related
disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions
that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.



An
accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters
that are highly uncertain at the time the estimates are made, and if different estimates that reasonably could have been used,
or changes in the accounting estimates that are reasonably likely to occur, could materially impact the consolidated financial
statements. We believe the following critical accounting policies reflect the more significant estimates and assumptions used
in the preparation of the CFS.



Revenue
Recognition



Our
revenues are generated from sales of electronics products. All of our revenue transactions contain standard business terms and
conditions. We determine the appropriate accounting for these transactions after considering (1) whether a contract exists; (2)
when to recognize revenue on the deliverables; and (3) whether all elements of the contract have been fulfilled and delivered.
In addition, our revenue recognition policy requires an assessment as to whether collection is reasonably assured, which inherently
requires us to evaluate the creditworthiness of our customers. Changes in judgments on these assumptions and estimates could materially
impact the timing or amount of revenue recognition.



Please
refer to Note 2 in the footnotes to the financial statements for detailed description of our revenue recognition policy.



27







Inflation



Neither
inflation nor changing prices has had a material impact on the Company’s net sales, revenues or continuing operations during
the past three fiscal years.



After
Sales Service



The
after-sales services we provide to our customers are primarily repair and maintenance. If a customer buys a product from us and
needs repairs, we can usually arrange to have the manufacturer repair the product. In certain cases, clerks in our stores are
able to make the repairs directly.



Tabular
Disclosure of Contractual Obligations



Not
applicable.



Item
3. Quantitative and Qualitative Disclosures About Market Risk.



Not
applicable.



Item
4. Controls and Procedures.



Evaluation
of Disclosure Controls and Procedures



Under
the supervision and with the participation of our management, including our principal executive officer and principal financial
officer, our management conducted an evaluation of our disclosure controls and procedures as of September 30, 2016, as such term
is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer
and principal financial officer concluded that, as of such date, the Company’s disclosure controls and procedures were not
effective due to the material weakness in our internal controls identified in our Annual Report on Form 10-K for the year ended
December 31, 2015.



Disclosure
controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is
recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such
information is accumulated and communicated to our management, including our principal executive officer and principal financial
officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosures.



Changes
in Internal Control Over Financial Reporting



There
was no change in our internal control over financial reporting that occurred during the nine months ended September 30, 2016 covered
by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.



28









PART
II. OTHER INFORMATION



Item
1.    Legal Proceedings.



We
are not currently a party to any material legal proceedings. From time to time, however, we may become involved in various lawsuits
and legal proceedings which arise in the ordinary course of business.



Item
1A. Risk Factors.



There
have been no material changes from the Risk Factors previously disclosed in the Company’s Annual Report on Form 10-K for
its year ended December 31, 2015.



Item
2.    Unregistered Sales of Equity Securities and Use of Proceeds.



None.



Item
3.    Defaults Upon Senior Securities.



None.



Item
4.   Mine Safety Disclosures.



Not
applicable.



Item
5.   Other Information.



None.



Item
6.   Exhibits.



|Exhibit
        No. |  | Document Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1                |  | Certification
    of the Chief Executive Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                  
|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|31.2                |  | Certification
    of the Chief Financial Officer pursuant to Rule 13A-14(A)/15D-14(A) of the Securities Exchange Act of 1934, as adopted pursuant
    to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                  
|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|32.1                |  | Certification
    of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350 (Section 906 of the Sarbanes-Oxley
    Act of 2002).                                                                                                                                                                                                                                                                                                                                             
|                    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|101                 |  | The
    following financial statements from China 3C Group’s Quarterly Report on Form 10-Q for the quarterly period ended September
    30, 2016 formatted in XBRL (extensible Business Reporting Language): (i) the Consolidated Balance Sheets (unaudited); (ii)
    the Consolidated Statements of Operations and Comprehensive Loss (unaudited); (iii) the Consolidated Statements of Cash Flows
    (unaudited); and, (iv) the Notes to Consolidated Financial Statements, tagged as blocks of text.



29









SIGNATURES



Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.



|                            | YOSEN
    GROUP, INC.
|--------------------------- | ---------------------
|                            |                      
|Date:
    November 15, 2016 | By:                  
|                            |                      
|                            |                      
|                            |                      
|                            |                      
|Date:
    November 15, 2016 | By:                  
|                            |                      
|                            |                      



30