SQCC Square Chain Corporation (CE)

ASIA TRAVEL CORPORATION

(FORMERLY KNOWN AS REALGOLD INTERNATIONAL INC.)

CONSOLIDATED STATEMENT OF CASH FLOWS – Unaudited

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Note 1: Basis of Presentation and Summary of Significant Accounting Policies

The interim condensed consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim condensed consolidated financial statements be read in conjunction with the Form 10-K Current Report filed by the Company on July 12, 2013. The Company follows the same accounting policies in the preparation of interim reports.

Organization  

Asia Travel Corporation (formerly Realgold International, Inc.)  (the “Company” or “Asia Travel”) was incorporated under the laws of the State of Arizona on November 14, 1994. On November 22, 1996, the Company reincorporated under the laws of the State of Nevada and effected a forward split of its common stock on a basis of approximately 242 shares of the Nevada corporation for each share of the Arizona corporation. The Company ceased to actively pursue its business operations relating to the publishing of interactive media software in July, 1999.  On May 23, 2013, the Company filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada changing its name from Realgold International Inc. to Asia Travel Corporation During December 2011, the Company established a subsidiary in Hong Kong, Realgold Venture Pte Limited (Realgold Venture”).

On November 22, 2012, Realgold Venture entered into a Lease Management Agreement (“Lease Management Agreement”) with Zhuhai Tengfei Investment Co., Ltd. (“Tengfei Investment”), a limited liability company formed under the laws of the People’s Republic of China (“China” or “PRC”). Under the Lease Management Agreement, Tengfei Investment leased the managerial and operating rights of Zhuhai Tengda International Travel Agency Co., Ltd. (“Tengda Travel”), a wholly owned subsidiary of Tengfei Investment, to Realgold Venture. Based on the agreement, Realgold obtained 20 years of business operation rights from Tengda Travel from November 2012 to November 2032 for a consideration of US$16,048 (RMB100,000) per year.

On November 25, 2012, Realgold Venture entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Tengfei Investment. Under the Ownership Transfer Agreement, Tengfei Investment transfers to Realgold Venture 100% of the ownership of Zhuhai Tengda Business Hotel Co., Ltd. (“Tengda Hotel”) for a total transfer price of RMB 400,000 Yuan (approximately $65,000).

On November 29, 2012, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer of Tengda Hotel to Realgold Venture. On March 26, 2013, Guangdong Province Department of Foreign Trade and Economic Cooperation approved the transfer of ownership.

Tengda Hotel and Tengda Travel are wholly owned subsidiaries of Tengfei Investment. They are considered as entities under common control. Accordingly, the financial statements for Tengda Hotel and Tengda Travel have been combined for all periods presented, similar to a pooling-of-interests.

Tengda Travel is a limited liability company formed under the laws of the People’s Republic of China on December 23, 2011. As of March 31, 2013, Tengda Travel had registered capital of RMB 300,000, or approximately $48,328 based on the exchange rate as of March 31, 2013. Tengda Travel’s principal activity is to provide packaged tours, air ticketing, reservation of hotel rooms and golf courses and organize corporate conferences, exhibitions and show events for its customers.

Tengda Hotel, formerly named Zhuhai Meihua Hotel Co., Ltd., is a limited liability company formed under the laws of the People’s Republic of China on January 16, 2006. Tengda Hotel had registered capital of RMB 500,000, or approximately $80,546 based on the

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exchange rate as of March 31, 2013. Tengda Hotel is a three-star hotel with 59 guest rooms, including 24 Standard Rooms, 24 Deluxe Rooms, 10 Business Rooms and 1 Luxury Suite, with many other amenities including fitness club, gym, business center, gift shop, meeting room , ballroom, game room, and a large parking lot.

Upon the completion of the said ownership transfer, Tengda Hotel becomes the wholly owned subsidiary of Realgold Venture.

On May 23, 2012, the Board of Directors of the Company adopted an Amendment to the Articles of Incorporation to increase authorized stock from 10,000,000 preferred shares and 99,000,000 common shares to 10,000,000 preferred shares and 990,000,000 common shares.

Foreign currency translation

The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the consolidated financial statements were as follows:

Income (Loss) Per Common Share

Basic and diluted net loss per common share is computed using the net loss applicable to common shareholders and the weighted average number of shares of common stock outstanding. Diluted net loss per common share does not differ from basic net loss per common share since potential shares of common stock from conversion of preferred stocks are anti-dilutive for all periods presented. The fully diluted shares would be 71,960,101 and 27,270,701 for the three months ended June 30, 2013 and June 30, 2012, respectively.

Recently Issued Accounting Pronouncements

The Company has reviewed recently issued, but not yet adopted, accounting standards in order to determine their effects, if any, on its results of operations, financial position or cash flows.  Based on that review, the Company believes that none of these pronouncements will have a significant effect on its financial statements.

Note 2: Income Taxes

The Company was incorporated in the United States and has operations in three tax jurisdictions - the United States, the Hong Kong Special Administrative Region (“HK SAR”), and mainland China.

USA

The Company and its subsidiaries are subject to income taxes on an entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. As the Company had no income generated in the United States, there was no tax expense or tax liability.

Hong Kong

Realgold Venture Pte Limited was incorporated in Hong Kong and is subject to Hong Kong income taxes. As Realgold Venture Pte Limited had no income generated in Hong Kong, there was no tax expense or tax liability.

China

Tengda Hotel and Tengda Travel, which were incorporated in the PRC, are governed by the income tax law of the PRC and are subject to PRC enterprise income tax (“EIT”).

 Income tax expenses (benefit) consist of the following:

The Company had no material adjustments to its liabilities for unrecognized income tax benefits according to the provisions of FASB ASC 740. The Company has recorded no deferred tax assets or liabilities as of June 30, 2013, and March 31, 2013.The amount of and ultimate realization of the benefits from the operating loss carry forwards for income tax purposes is dependent, in part, upon the tax laws in effect, the future earnings of the Company and other future events, the effects of which cannot be determined at this time. Because of the uncertainty surrounding the realization of the loss carry forwards, the Company has established a valuation allowance equal to the tax effect of the loss carry forwards and, therefore, no deferred tax asset has been recognized for the loss carry forwards.

The Company has no tax positions at June 30, 2013 and June 30, 2012 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.  The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses.  During the three months ended June 30, 2013 and 2012, the Company recognized no interest and penalties.  The Company had no accruals for interest and penalties at June 30,2013 and June 30, 2012. Income tax periods 2010, 2011, and 2012 are open for examination by taxing authorities.

Note 3: Capital Stock

Preferred Stock  –

The Company has 10,000,000 shares of authorized preferred stock at $0.01 par value. As of June 30, 2013 and March  31, 2013, the Company has 20,000 and 20,000 shares of preferred stock issued and outstanding, respectively.  

On February 2012 our CEO purchased series A Preferred Stock for a total price of $20,000. One share of Series A Preferred Stock may be converted into 1,000 shares of Common Stock. The 20,000 shares of Series A Preferred Stock that our CEO, Tan Lung Lai, purchased from the Company may be converted into 20,000,000 shares of common stock. The holder of each one share of Series A Preferred Stock is entitled to 1,000 votes. There is no dividend rate for this class of Preferred Stock.

Common Stock  

In February 2012, the Company issued 6,000,000 shares of common stock to a group of 64 non-US individuals for a total price of $ 600,000 ($ 0.10 per share).

On November 21, 2012, the Company entered into a Regulation S Stock Purchase Agreement with a group of 35 non-US individual purchasers (“Purchasers”). Under the Agreement, the Company issued a total of Forty-Four Million Six Hundred Ninety Thousand (44,690,000) shares of common stock to Purchasers for a total price of $ 446,900 ($ 0.01 per share).

Note 4:  Pro Forma Statement

On November 22, 2012, Asia Travel’s wholly owned subsidiary Realgold Venture entered into a Lease Management Agreement (“Lease Management Agreement”) with Tengfei Investment. Under the Lease Management Agreement, Tengfei Investment leased the managerial and operating rights of Tengda Travel, a wholly owned subsidiary of Tengfei Investment, to Realgold Venture.

On November 25, 2012, Realgold Venture entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Tengfei Investment. Under the Ownership Transfer Agreement, Tengfei Investment transfers to Realgold Venture 100% of the ownership of Tengda Hotel for a total transfer price of RMB 400,000 Yuan (approximately $64,000).

  Pro Forma Financial Information

Note: The currency exchange rate is based on the average exchange rate of the related period.

  Note 5: Shareholders Receivables

Section 13(k) of the Exchange Act provides that it is unlawful for a company such as ours, which has a class of securities registered under Section 12(g) of the Exchange Act, to directly or indirectly, including through any subsidiary, extend or maintain credit in the form of a personal loan to or for any director or executive officer of the company. Issuers violating Section 13(k) of the Exchange Act may be subject to civil sanctions, including injunctive remedies and monetary penalties, as well as criminal sanctions. The imposition of any of such sanctions on the Company may have a material adverse effect on our business, financial position, results of operations or cash flows.

As of June 30, 2013, the indebtedness of the Company to its shareholders and related entities with common owners and directors was  as follows:  

During the periods presented, the Company has receivables due from its shareholders. The loans are unsecured and bear no interest. These loans have no fixed payment terms. The loans are unsecured and bear no interest. These loans have no fixed payment terms.

The loan to Tengfei Investment was to assist Tengfei Investment to purchase of a hotel building, the $778,843 was used as a down payment during 2012. For the period ended June 30, 2013, additional fund of $489,433 was made to complete improvements of the

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acquired building. We have agreement with Tengfei Investment shareholder to acquire the Tengfei Investment after successfully obtaining mortgage loan.  We are in the process to complete the agreement with Tengfei Investment. Upon completion of the loan receivable will be transferred as the purchase price and we will assume the mortgage loan.

Note 6: Operating Risk

Foreign currency risk

Most of the transactions of the Company were settled in Renminbi. In the opinion of the management, the Company does not have significant foreign currency risk exposure.

Company’s operations are substantially in foreign countries

Substantially all of the Company’s operations are processed in China. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in China. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations.

Note 7. Operating Lease

The Company's commitments as of March 31, 2013 did not materially change from the amounts set forth in the Company's 2012 Annual Report on Form 10-K.

Total rental expense on the operating lease amounted to $25,856 for three months ended June 30, 2103.

Note 8. Segments Reporting

The Company operates in two segments: travel agency (which provides packaged tours, air ticketing, reservation of hotel rooms and golf courses and organize corporate conferences, exhibitions and show events for its customers and travel agency.) and hotel services.

We allocate resources to and assess the performance of the reportable segment using information about revenues and operating income (loss).  We do not evaluate operating segment using discrete assets information. We do not allocate gains and losses from interest and other income, or taxes to operating segments. The Corporate and other category includes expense and charges such as corporate costs, finance and legal and stock based compensation expenses.

There were no inter-segment sales for the three months ended June 30, 2013 and 2012.

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Note 9: Advance from investors

During the three months ended June 30, 2013, we received investor deposit of $628,943 for the stock purchase agreement, see note 10..