Overview





We currently produce boric acid in the Peoples Republic of China (PRC) and plan
to expand our existing manufacturing facilities through a joint venture to
produce lithium carbonate and lithium hydroxide for electric vehicle battery
market in China. The Company also plans to produce of lithium carbonate from
existing ore deposits it purchases from an affiliated mining company. We
formerly sold plate heat exchangers and heat pumps and sold those operations on
September 30, 2019.



On December 31, 2018 (the "Closing Date"), we entered into a Share Exchange
Agreement and Plan of Reorganization, as amended January 24, 2019 (the "Share
Exchange Agreement") with Mid-Heaven Sincerity International Resources
Investment Co., Ltd (Mid-heaven BVI) and its shareholders Mao Zhang, Jian Zhang,
and Ying Zhao, constituting all of the shareholders of Mid-heaven BVI (the
"Mid-heaven Shareholders"). Pursuant to the terms of the Share Exchange
Agreement, the shareholders of Mid-heaven BVI delivered all of the issued and
outstanding shares of capital stock of Mid-Heaven BVI to SmartHeat, for
106,001,971 shares of our Common Stock. Mid-heaven BVI, through two
subsidiaries, Qinghai Mid-Heaven Sincerity Technology Co., Ltd ("Sincerity") and
Qinghai Mid-Heaven Sincerity Salt-Lake R&D Co., Ltd ("Salt-Lake") owns 100% of
Qing Hai Mid-Heaven Boron & Lithium Technology Company, Ltd. ("Qinghai
Technology").



The Acquisition was structured as a tax-free reorganization. As a result of the
share exchange agreement, Mid-heaven BVI's shareholders own approximately 57% of
the combined company. For accounting purposes, the transaction was accounted for
as a reverse acquisition of the Company by Mid-heaven BVI.



The main operating entity, Qinghai Technology was incorporated December 18,
2018. The business of Qinghai Technology was carved out of the business of
Qinghai Zhongtian Boron & Lithium Mining Co., Ltd ("Qinghai Mining") on December
20, 2018. Qinghai Mining was founded March 6, 2001, and manufactures and
wholesales boric acid and related compounds for industrial and consumer usage.
Qinghai Technology obtains its raw material minerals exclusively from Qinghai
Mining and currently processes boric acid by crushing and processing ore.



On September 30, 2019, Heat HP, Inc. and Heat PHE, Inc, our wholly owned
subsidiaries, sold their respective equity interests in Jinhui, SmartHeat
Investment, SmartHeat Trading, SmartHeat Pump and Heat Exchange for $353. The
equity interests were sold to individuals and businesses in the PRC. Each
subsidiary was sold for nominal cash consideration as below and, as the
transactions were structured as purchases of equity interests, the subsidiary
companies retained all liabilities when sold.

SmartHeat Jinhui (Beijing) Energy Technology Ltd - 100 RMB

SmartHeat (China) Investment Ltd - 400 RMB

SmartHeat (Shanghai) Trading Co., Ltd - 400 RMB

SmartHeat (Shenyang) Heat Pump Technology Co., Ltd - 400 RMB

SanDeKe Co., Ltd - 600 RMB

SmartHeat Heat Exchange Equipment Co - 600 RMB

On October 23, 2019, we filed a certificate of amendment to its certificate of incorporation to change its name from "SmartHeat, Inc." to "Lithium & Boron Technology, Inc." to better reflect the operations of the Company.





In December 2019, a novel strain of coronavirus (COVID-19) was reported in
Wuhan, China. The World Health Organization declared the outbreak to constitute
a "Public Health Emergency of International Concern." This contagious disease
outbreak, which continues to spread to additional countries, and disrupts supply
chains and affecting production and sales across a range of industries as a
result of quarantines, facility closures, and travel and logistics restrictions
in connection with the outbreak. The COVID-19 outbreak impacted the Company's
operations for the first quarter of 2020.  The Company had less production in
the first quarter of 2020; the Company's factory was reopened one month later
than originally planned, and it did not resume the production one week after the
factory reopened due to the shortage of master liquid pool resulting from the
longer period of shutdown of the machine.  The cost of our coal increased during
the first quarter of 2020 due to the overall lockdown in China. The Company's
sales also decreased for the first quarter of 2020 due to logistics restrictions
put into place to curb travel. To facilitate the sales, the Company reduced the
selling price by RMB 50 ($7) per ton to certain customers.   The number of
transportation vehicles has increased to meet the market's shipping needs since
April 2020.  In addition, the Company was able to procure sulfuric acid, a major
raw material, from a local supplier at lower prices than usual due to excess
supplies on the market.  The Company's production and sales has been gradually
increasing since April 2020.  The impact of COVID-19 to the Company's operation
was mitigated as of this report date.  Even though the Company was able to
resume normal operations in HaiXi since its facilities are far removed from big
cities which have more challenges with respect to monitoring and controlling the
outbreak, but the Company's executives, auditors and attorneys who are located
in large cities in China and in the United States were subject to various travel
and quarantine restrictions which delayed the compilation of information needed
to timely file this report on Form 10-Q.



                                       22

--------------------------------------------------------------------------------

Table of Contents





On March 27, 2020 (PRC time), Qinghai Technology entered into an Investment
Cooperation Agreement, Memorandum of Cooperation and Licensing Agreement with
Xi'an Jinzang Membrane Environmental Protection Technology Co., Ltd. (Xi'an
Jinzang) to produce up to 20,000 tons of battery grade lithium hydroxide and
10,000 tons of lithium carbonate annually, subject to funding. On April 15,
2020, the parties formed a joint venture company Qinghai Zhonglixinmo Technology
Co., Ltd (Qinghai Zhongli or JV) to process brine supplied by Qinghai
Technology. Qinghai Technology owns 51% of the joint venture and Xi' Jinzang
owns the remaining 49%. The Joint Venture cooperation agreement calls for a
capital contribution of RMB 140 million ($19,746,000), which shall be paid in
three phases according to the project construction progress: RMB 36 million
($5,077,000) to be paid within 10 days from the date of registration and
establishment of the JV, RMB 72 million ($10,155,000) to be paid before July 31,
2020, and RMB 32 million ($4,513,000) to be paid before October 31,2020. All
shareholders shall pay the capital in accordance with their respective
shareholding ratio. The Company promises and guarantees that, during the
existence of the project company, it will provide the JV with lithium bearing
brine resources for free. During the construction and operation of the project,
all parties agree to actively raise construction funds by means of bank loans,
self-owned funds, etc. if the funds are not raised in time, the term of paid in
capital can be extended accordingly upon consensus of all parties. Each party
made an initial capital contribution of RMB 5 million ($0.71 million) in April
2020.



Related Party Transactions



Qinghai Technology purchased raw material boron rock from Qinghai Mining (owned
by three major shareholders of the Company); in addition, Qinghai Technology
sometimes received no-interest short-term advances from Qinghai Mining for daily
operation needs. As of March 31, 2020 and December 31, 2019, , due from Qinghai
Mining (was the net amount of intercompany transactions between Qinghai
Technology and Qinghai Mining due to carve out) was $0.73 million and $0.55
million, respectively. Qinghai Technology purchased $113,528 and $192,570 boron
ore from Qinghai Mining during the three months ended March 31, 2020 and 2019,
respectively.



On July 1, 2019, Qinghai Technology and Qinghai Mining entered a boron ore
purchase contract for a term of one year. Qinghai Mining is to supply Qinghai
Technology boron ore based on Qinghai Technology's monthly production plan at a
price of RMB 62 ($8.77) per ton. The price is adjustable in the future if there
is a significant fluctuation of the market price for the boron ore. In the
fourth quarter of 2019, this price was adjusted to RMB 70.46 ($10.21) per ton.
In the first quarter of 2020, Qinghai Technology and Qinghai Mining entered a
new purchase contract, the price for boron ore was adjusted to RMB 77.5 ($11.10)
per ton, and the price for slag was RMB 30 ($4.23) per ton.



Qinghai Technology used equipment that belongs to Qinghai Province DaChaiDan
ZhongTian Resources Development Co., Ltd ("Zhongtian Resources", owned by two
major shareholders of the Company) for production. The depreciation of these
fixed assets had an impact on the production costs of boric acid of the Company,
and was included in the Company's cost of sales. The depreciation of these fixed
assets for the three months ended March 31, 2020 and 2019 was $6,263 and $8,984,
respectively. Due to Zhongtian Resources resulting from using its equipment and
payment of worker's compensation made by Zhongtian Resource for Qinghai
Technology was $54,633 and $49,125 at March 31, 2020 and December 31, 2019,
respectively.



Qinghai Technology sold boric acid to Qinghai Dingjia Zhixin Trading Co., Ltd
("Dingjia", 90% owned by the son of the Company's major shareholder). For the
three months ended March 31, 2020 and 2019, the Company's sales to Dingjia was
$0 and $58,379, respectively. At March 31, 2020 and December 31, 2019,
outstanding receivables from (payable to) Dingjia was $(0.06) million and
$(0.06) million, respectively.



In addition, at March 31, 2020 and December 31, 2019, the Company had $679,891
and $573,263 due to another major shareholder of the Company, resulting from the
certain of the Company's operating expenses such as legal and audit fees that
were paid by this major shareholder on behalf of the Company. This short term
advance bore no interest, and payable upon demand.

The following table summarized the due from (to) related parties as of March 31, 2020 and December 31, 2019, respectively:





                                 2020          2019
         Related party name
Due from Qinghai Mining        $ 734,877     $ 554,527
Total                          $ 734,877     $ 554,527

Due to   Zhongtian Resources   $  54,633     $  49,125
Due to   Dingjia                  55,281        56,144
Due to   A major shareholder     679,891       573,264
Total                          $ 789,805     $ 678,533




Going Concern

The accompanying consolidated financial statements ("CFS") were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.





As reflected in the accompanying CFS, the Company had net loss of $230,628 and
$95,686 for the three months ended March 31, 2020 and 2019, respectively, which
raise substantial doubt about the Company's ability to continue as a going
concern.



                                       23

--------------------------------------------------------------------------------

Table of Contents





In addition to current boric acid production business, the Company plans to
produce lithium carbonate for the electric vehicle battery through a recently
established joint venture. The Company also plans to produce lithium carbonate
from existing ore deposits it purchases from an affiliated mining company.
Management also intends to raise additional funds by way of a private or public
offering, or by obtaining loans from banks or others. While the Company believes
in the viability of its strategy to generate sufficient revenue and in its
ability to raise additional funds on reasonable terms and conditions, there can
be no assurances to that effect.  The ability of the Company to continue as a
going concern is dependent upon the Company's ability to further implement its
business plan and generate sufficient revenue and its ability to raise
additional funds by way of a public or private offering. The CFS do not include
any adjustments related to the recoverability and classification of recorded
asset amounts or the amounts and classification of liabilities that might be
necessary if the Company is unable to continue as a going concern.

Significant Accounting Policies





While our significant accounting policies are more fully described in Note 2 to
our consolidated financial statements ("CFS"), we believe the following
accounting policies are the most critical to aid you in fully understanding and
evaluating this management discussion and analysis.



Basis of Presentation

Our CFS are prepared in accordance with accounting principles generally accepted in the United States of America, or US GAAP.





Principles of Consolidation



For the three months ended March 31, 2020, the accompanying CFS include the
accounts of the Company's US parent, and Mid-heaven BVI and its subsidiaries,
Sincerity, Salt-Lake and Qinghai Technology, which are collectively referred to
as the "Company." For the three months ended March 31, 2019, the accompanying
CFS include the accounts of the Company's US parent, and its subsidiaries Heat
HP and Heat PHE, and their subsidiaries SanDeKe, Jinhui, SmartHeat Investment,
SmartHeat Trading, SmartHeat Pump, and Heat Exchange, and Mid-heaven BVI and its
subsidiaries, Sincerity, Salt-Lake and Qinghai Technology, which are
collectively referred to as the "Company." All significant intercompany accounts
and transactions were eliminated in consolidation.



Use of Estimates



In preparing the financial statements in conformity with US GAAP, management
makes estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the dates of
the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Significant estimates, required by
management, include the recoverability of long-lived assets, allowance for
doubtful accounts, and the reserve for obsolete and slow-moving inventories.
Actual results could differ from those estimates.



Accounts Receivable



We maintain 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. Based on historical collection activity, we had bad
debt allowance for accounts receivable of $0 at March 31, 2020 and December
31,2019.



Revenue Recognition



The Company recognizes revenues when its customer obtains control of promised
goods or services, in an amount that reflects the consideration which it expects
to receive in exchange for those goods. The Company recognizes revenues
following the five step model prescribed under ASU No. 2014-09: (i) identify
contract(s) with a customer; (ii) identify the performance obligations in the
contract; (iii) determine the transaction price; (iv) allocate the transaction
price to the performance obligations in the contract; and (v) recognize revenues
when (or as) we satisfy the performance obligation.



Revenues from product sales are recognized when the customer obtains control of
the Company's product, which occurs at a point in time, typically upon receipts
of the goods by customer. Sales and purchases are recorded net of VAT collected
and paid as the Company acts as an agent for the government. VAT taxes are not
affected by the income tax holiday.



Deferred Income



Deferred income consists primarily of government grants and subsidies for
supporting the Company's technology innovation and transformation of boric acid,
lithium and magnesium sulfate projects. The Company uses most of the subsidies
to purchase machinery and equipment. Deferred income is amortized to revenue
(other income) over the life of the assets for which the grant and subsidy was
used for. Subsidies for declared project fund require government inspection to
ensure proper use of the funds for the designated project.



                                       24

--------------------------------------------------------------------------------

Table of Contents

Foreign Currency Translation and Comprehensive Income (Loss)





The accounts of the US parent company are maintained in USD. The functional
currency of the Company's China subsidiaries is the Chinese Yuan Renminbi
("RMB"). The accounts of the China subsidiaries were translated into USD in
accordance with FASB ASC Topic 830, "Foreign Currency Matters." According to
FASB ASC Topic 830, all assets and liabilities were translated at the exchange
rate on the balance sheet date; stockholders' equity was translated at the
historical rates and statement of operations items were translated at
the average exchange rate for the period. The resulting translation adjustments
are reported under other comprehensive income in accordance with FASB ASC Topic
220, "Comprehensive Income."

Impairment of Long-Lived Assets





Long-lived assets, which include tangible assets, such as property and
equipment, goodwill and other intangible assets, are reviewed for impairment
whenever events or changes in circumstances indicate the carrying amount of an
asset may not be recoverable.



Recoverability of long-lived assets to be held and used is measured by comparing
the carrying amount of an asset to the estimated undiscounted future cash flows
expected to be generated by the asset. If the carrying amount of an asset
exceeds its estimated undiscounted future cash flows, an impairment charge is
recognized based on the excess of the carrying amount over the fair value ("FV")
of the assets. FV generally is determined using the asset's expected future
discounted cash flows or market value, if readily determinable.



Effective on January 1, 2020, the Company adopted ASU No. 2017-04, Simplifying
the Test for Goodwill Impairment. The guidance removes Step 2 of the goodwill
impairment test, which requires a hypothetical purchase price allocation. A
goodwill impairment will now be the amount by which a reporting unit's carrying
value exceeds its fair value, not to exceed the carrying amount of goodwill.

Recent Accounting Pronouncements





In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit
Losses (Topic 326), which requires entities to measure all expected credit
losses for financial assets held at the reporting date based on historical
experience, current conditions, and reasonable and supportable forecasts. This
replaces the existing incurred loss model and is applicable to the measurement
of credit losses on financial assets measured at amortized cost. This guidance
is effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2022. Early application will be permitted for all
entities for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2018. The Company is currently evaluating the
impact that the standard will have on its CFS.



In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for
Income Taxes, which simplifies the accounting for income taxes, eliminates
certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects
of the current guidance to promote consistent application among reporting
entities. The guidance is effective for fiscal years beginning after
December 15, 2020, and interim periods within those fiscal years, with early
adoption permitted. Upon adoption, the Company must apply certain aspects of
this standard retrospectively for all periods presented while other aspects are
applied on a modified retrospective basis through a cumulative-effect adjustment
to retained earnings as of the beginning of the fiscal year of adoption. The
Company is evaluating the impact this update will have on its CFS.



Results of Operations

Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019





The following table sets forth the consolidated results of our operations for
the periods indicated as a percentage of net sales, certain columns may not add
due to rounding.



                                              2020          % of Sales          2019          % of Sales
Sales                                      $ 1,010,498                       $ 1,385,751
Cost of sales                                  930,744             92.1 %      1,224,059             88.3 %
Gross profit                                    79,754              7.9 %        161,692             11.7 %
Selling expenses                                56,205              5.6 %        100,402              7.3 %
General and administrative expenses            287,002             28.4 %        202,473             14.6 %
Total operating expenses                       343,207             34.0 %        302,875             21.9 %
Loss from operations                          (263,453 )          (26.1 )%      (141,183 )          (10.2 )%
Other income                                    32,825              3.2 %         48,304              3.5 %
Loss before income taxes                      (230,628 )          (22.9 )%       (92,879 )           (6.7 )%
Income tax expense                                   -                - %              -                - %
Loss from continuing operations               (230,628 )          (22.9 )%       (92,879 )           (6.7 )%
Loss from operations of discontinued
entities, net of tax                                 -                - %         (2,807 )           (0.2 )%
Net income                                 $  (230,628 )          (22.9 )%   $   (95,686 )           (6.9 )%




                                       25

--------------------------------------------------------------------------------


  Table of Contents



Sales



Sales for the three months ended March 31, 2020 and 2019 was $1,010,498 and
$1,385,751, respectively, a decrease of $375,253 or 27.1%. For the three months
ended March 31, 2020 and 2019, the Company's sales to Dingjia, a related party
company 90% owned by the son of the major shareholder of the Company, was $0 and
$58,379, respectively. The decrease in sales for the three months ended March
31, 2020 was mainly due to the logistic restriction as a result of COVID19
outbreak; facilitate sales, we reduced our selling price by RMB 50 ($7) per ton
to certain customers.



Cost of sales



Cost of sales ("COS") for the three months ended March 31, 2020 and 2019 was
$930,744 and $1,224,059, respectively, a decrease of $293,315 or 24.0%. The
decrease was mainly due to decreased sales. The COS as a percentage of sales was
92.1% for the three months ended March 31, 2020 compared with 88.3% for 2019.
The increase in COS as a percentage of sales was mainly due to 1) decreased
sales, 2) increased average cost of production. Due to COVID19 outbreak, our
factory was reopened one month later than originally planned, and we did not
resume the production one week after the factory reopened due to the drought of
master liquid pool resulting from the longer period of shutdown of the machine,
we spent additional days and had extra acid and mineral consumption to cultivate
the concentration level of master liquid pool. In addition, the coal cost
increased during the three months ended March 31, 2020 due to the overall
lockdown in China. Our production was back to normal in April 2020.



Gross profit



The gross profit for the three months ended March 31, 2020 and 2019 was $79,754
and $161,692, respectively, a decrease of $81,938 or 50.7%. The profit margin
was 7.9% for the three months ended March 31, 2020 compared to 11.7% for the
three months ended March 31, 2019, the decrease in profit margin was mainly due
to the reasons described above.



Operating expenses



Selling expenses consist mainly of salespersons' salaries and freight out.
Selling expense were $56,205 for the three months ended March 31, 2020, compared
to $100,402 for the three months ended March 31, 2019, a decrease of $44,197 or
44.0%, mainly resulting from decreased freight out expense of $24,935 and
decreased salespersons' salaries of $4,396.



General and administrative expenses consist mainly of bad debt expense, R&D,
office, welfare, business meeting, maintenance, and utilities. General and
administrative expenses were $287,002 (including $2,568 bad debts) for the three
months ended March 31, 2020, compared to $202,473 (including $(91,888) bad debts
reversal) for the three months ended March 31 2019, an increase of $84,529 or
41.7%, mainly resulting from decreased bad debts reversal by $(94,456), which
was partly offset by decreased other G&A expenses of $9,927.



Other income



Other income was $32,825 for the three months ended March 31, 2020, compared to
$48,304 for the three months ended March 31, 2019, an decrease of $15,479 or
32.0%. For the three months ended March 31, 2020, other income mainly consisted
of subsidy income of $47,141 but offset with a charitable donation of $14,349.
For the three months ended March 31, 2019, other income mainly consisted of
subsidy income of $47,060.



Government provides grants and subsidies to support the Company's technology
innovation and transformation of boric acid, lithium and magnesium sulfate
projects. The Company uses most of the subsidies to purchase machinery and
equipment, which is amortized to revenue (other income) over the life of the
assets for which the grant and subsidy was used for. Subsidies for declared
project fund require government inspection to ensure proper use of the funds for
the designated project.

Loss from continuing operations





Loss from continuing operations was $230,628 loss for the three months ended
March 31, 2020, compared to $92,879 for the three months ended March 31, 2019.
The $137,749 or 148.3% increase in loss from continuing operations was mainly
due to increased G&A expense as described above.

Loss from operations of discontinued entities





Loss from operations of discontinued entities was $2,807 for the three months
ended March 31, 2019, which was the operations from Jinhui, SmartHeat
Investment, SmartHeat Trading, SmartHeat Pump and Heat Exchange, the Company
sold these entities on September 30, 2019.



                                       26

--------------------------------------------------------------------------------


  Table of Contents



Net loss



We had a net loss of $230,628 for the three months ended March 31, 2020,
compared to $95,686 for the three months ended March 31, 2019, an increase of
net loss by $134,942 or 141%. The increase in our net loss mainly resulted from
increased G&A expense and decreased sales as described above.

Liquidity and Capital Resources

As of March 31, 2020, we had cash and equivalents of $0.35 million. Working capital was $0.39 million at March 31, 2020. The ratio of current assets to current liabilities was 1.15:1 at March 31, 2020.

The following is a summary of cash provided by or used in each of the indicated types of activities during three months ended March 31, 2020 and 2019:





                                2020          2019
Cash provided by (used in):
Operating activities          $ 274,672     $  76,628
Investing activities                  -             -
Financing activities          $ (78,758 )   $ (21,485 )




Net cash provided by operating activities was $274,672 for the three months
ended March 31, 2020, compared to $76,628 for the three months ended March 31,
2019. The increase of cash inflow from operating activities for 2020 was
principally attributable to increased cash inflow from inventory by $252,973,
and increased cash inflow from accounts receivable by $286,378, which was partly
offset by increased net loss by $134,942, decreased cash inflow of unearned
revenue by $162,178 and decreased cash inflow from advances to suppliers by
$62,090.



Net cash used in financing activities was $78,758 for the three months ended
March 31, 2020, compared to $21,485 net cash used in financing activities for
the three months ended March 31, 2019. The net cash used in financing activities
in 2020 consisted of increase in due from Qinghai Mining of $191,744 and
increase in due to other related parties of $112,986. The net cash used in
financing activities in 2019 consisted of decrease in due from Qinghai Mining of
$3,975,343 and decrease in due to other related parties of $3,996,828.



Dividend Distribution



We are a US holding company that conducts substantially all of our business
through our wholly owned and other consolidated operating entities in China. We
rely in part on dividends paid by our subsidiaries in China for our cash needs,
including the funds necessary to pay dividends and other cash distributions to
our shareholders, to service any debt we may incur and to pay our operating
expenses. The payment of dividends by entities organized in China is subject to
limitations. In particular, PRC regulations currently permit payment of
dividends only out of accumulated profits as determined in accordance with
accounting standards and regulations in China. Our PRC subsidiaries also are
required to set aside at least 10% of their after-tax profit based on PRC
accounting standards each year to a statutory surplus reserve fund until the
accumulative amount of such reserve reaches 50% of registered capital. These
reserves are not distributable as cash dividends. In addition, our PRC
subsidiaries, at their discretion, may allocate a portion of their after-tax
profit to their staff welfare and bonus fund, which may not be distributed to
equity owners except in the event of liquidation. Moreover, if any of our
subsidiaries incur debt on its own behalf in the future, the instruments
governing the debt may restrict such subsidiary's ability to pay dividends or
make other distributions to us. Any limitation on the ability of one of our
subsidiaries to distribute dividends and other distributions to us could
materially and adversely limit our ability to make investments or acquisitions
that could be beneficial to our businesses, pay dividends or otherwise fund and
conduct our business.

Off-Balance Sheet Arrangements





We have not entered into any other financial guarantees or other commitments to
guarantee the payment obligations of any third parties other than as described
following under "Contractual Obligations." We have not entered into any
derivative contracts that are indexed to our shares and classified as
stockholders' equity or that are not reflected in our consolidated financial
statements. Furthermore, we do not have any retained or contingent interest in
assets transferred to an unconsolidated entity that serves as credit, liquidity
or market risk support to such entity. We do not have any variable interest in
any unconsolidated entity that provides financing, liquidity, market risk or
credit support to us or engages in leasing, hedging or research and development
services with us.



                                       27

--------------------------------------------------------------------------------

Table of Contents

© Edgar Online, source Glimpses