U.S. Securities and Exchange Commission

Washington, D.C. 20549


FORM 10-K


[X]

Annual Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934

for the Fiscal Year Ended March 31, 2014


[ ]

Transition Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 for the Transition Period from _______ to _______


ASIA TRAVEL CORPORATION

(Name of Registrant as specified in its charter)


Nevada

000-21909

86-0779928

(State or other jurisdiction of

(Commission File Number)

(IRS Employer ID No.)

incorporation or organization)

 

 


Unit 1202, Level 12, One Peking,

1 Peking Road, Tsim Sha Tsui,

Kowloon, Hong Kong

(Address of principal executive offices)



Registrant’s telephone number, including area code: +852 39809369



Securities registered under Section 12(b) of the Exchange Act:


Title of each class

 

Name of each exchange

on which registered

None

 

Not Applicable


Securities registered under Section 12(g) of the Exchange Act:

Common Stock, par value $0.001


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes [ ] No [x]


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes [ ] No [x]


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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 [x] No [ ]


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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 [x] No [ ]


Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    Yes [x] 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 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 £

 

 

Smaller reporting company S

 


Indicate by check mark whether the registrant is a shell company (as defined in rule 12b-2 of the exchange act).    Yes [ ] No [x]


State the aggregate market value of the voting and non-voting common equity held by non-affiliates (139,578,400 shares of common stock as September 30, 2013) computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such



1


common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. The bid on September 30, 2013, was $0.05 giving the shares held by non-affiliates a market value of $6,798,920.

As of June 30, 2014, the Registrant had177,748,501 shares of common stock and 20,000 shares of preferred stock issued and outstanding.



2



TABLE OF CONTENTS

PART I:


Item 1. Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures


PART II:


Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 8. Financial Statements and Supplementary Data

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information


PART III:


Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accounting Fees and Services

Item 15. Exhibits, Financial Statement Schedules





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ITEM 1. BUSINESS

Organization and Corporate History

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 December 15, 2011, the Company filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada changing its name from Piranha Ventures, Inc. to Asia Travel Corporation. During December 2011, the Company established a subsidiary in Hong Kong, Asia Travel (Hong Kong) Limited (formerly “Realgold Venture Pte Limited”) (“Asia Travel (Hong Kong)”).


On November 22, 2012, Asia Travel (Hong Kong) 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 Asia Travel (Hong Kong). Based on the agreement, Asia Travel (Hong Kong) obtained 20 years of business operation right from Tengda Travel from November 11, 2012 to November 19, 2032 for a consideration of US$16,048 (RMB100,000) per year.


On November 25, 2012, Asia Travel (Hong Kong) entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Tengfei Investment. Under the Ownership Transfer Agreement, Tengfei Investment transfers to Asia Travel (Hong Kong) 100% of the ownership of Zhuhai Tengda Business Hotel Co., Ltd. (“Tengda Hotel”) for a total transfer price of RMB400,000 Yuan (approximately $64,192).


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 Asia Travel (Hong Kong). On March 26, 2013, Guangdong Province Department of Foreign Trade and Economic Cooperation approved this ownership transfer.


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 consolidated 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 $47,662 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 $79,403 based on the 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 became the wholly owned subsidiary of Asia Travel (Hong Kong).


On November 6, 2013, Tengda Hotel entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Zhou Hui Juan and Yu Li Ying. Under the Ownership Transfer Agreement, Zhou Hui Juan and Yu Li Ying transfers to Tengda Hotel 100% of the ownership of Tengfei Investment for a total transfer price of RMB5,000,000 Yuan (approximately $820,309).


On January 22, 2014, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer of Tengfei Investment to Tengda Hotel.




4


Upon the completion of the said ownership transfer, Tengfei Investment became the wholly owned subsidiary of Tengda Hotel. Lease Management Agreement would be automatically terminated on January 22, 2014.


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.


Set forth below is the Company’s organizational chart:

Asia Travel Corporation

100%


Asia Travel (Hong Kong) Limited (Hong Kong)

100%


Zhuhai Tengda Business Hotel Co., Ltd. (PRC)

100%

Zhuhai Tengfei Investment Co., Ltd. (PRC)

100%

Zhuhai Tengda International Travel Agency Co., Ltd. (PRC)


Stock Split

On June 13, 2011, the Company effected a reverse stock split of the issued and outstanding shares of the Company on a ten (10) to one (1) basis with all fractional shares rounded up to the nearest whole share. The capital stock accounts, all share data and earnings per share data give effect to the stock split, applied retrospectively, to all periods presented.

Overview of the Business

We operate a travel agency, hotel and Tengfei through direct ownership in China.

Travel Agency

Tengda Travel, our wholly owned subsidiary in China, operates a travel agency (Tengda Travel) in Zhuhai, Guangdong Province, China. Tengda Travel was opened in late 2011, we provide the following travel services and products:

(1)

Packaged tours

Tengda Travel contracts with traffic service providers, accommodation providers and leisure service providers to purchase tickets, accommodation, leisure or entertainment packages in bulk and then resell them to our customers with a mark-up.

(2)

Reservation of hotel rooms and golf course.

Tengda Travel has contracted with a number of hotels and golf courses in China to offer the reservation services. Our customers receive confirmed bookings with those hotels and golf courses through us.

(3)

Corporate conferences, exhibits and show events

Tengda Travel also occasionally organizes corporate conferences, exhibits and show events for our institutional customers, however, it is not one of our main lines of business.

Hotel

Tengda Hotel, our wholly owned subsidiary in China, operates a hotel (Tengda Business Hotel) in Zhuhai, Guangdong Province, China. Tengda Business Hotel was opened in late 2006. It 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.

Tengfei



5


Tengfei, our wholly owned subsidiary in China, operates a hotel (Tengfei) in Zhuhai, Guangdong Province, China. Tengfei was opened in February 2012. It is a three-star hotel with 66 guest rooms, including 62 Standard Rooms and 4 Deluxe Rooms.

Customers

Our customers are primarily tourists and business travelers. Our tourist customers are from mainland China, Hong Kong, Macau, Taiwan, Singapore, Malaysia and other southeastern Asian countries. We also assist other travel agencies to arrange their tours. In addition, we organize annual or quarterly corporate conferences and exhibition events for enterprises and institutional customers.

Our customers are diverse. Most of our customers are individuals and none of our customers comprise more than 1% of our revenue. The loss of any one of our customers will not have a material adverse effect on any segment of our business or our business, as a whole.

Our Competitors

There are hundreds of travel agencies and thousands of hotels in China. We are relatively very small compared to those province level or national level travel agencies and those large hotels. Due to the size of our operations and assets, neither our travel agency nor our hotel has any significant market share in China (less than 1% of the travel service and hotel service markets in China).

Insurance

As a travel agency, Tengda Travel subscribed to various types of travel insurance including visitors accidental injury insurance, personal accident travel insurance, accommodation tourist life insurance, travel assistance insurance and travel bailout insurance.

As a hotel, Tengda Hotel subscribed to various types of insurance including visitors accidental injury insurance and property insurance.

Government Regulation

Foreign Currency Exchange

Pursuant to the Foreign Currency Administration Rules promulgated on January 29, 1996 and amended on August 1, 2008, as well as various regulations issued by State Administration of Foreign Exchange (“SAFE”) and other relevant PRC government authorities, the RMB is freely convertible into a foreign currency for current account items, including trade-related receipts and payments, interest and dividends, but not for capital account items, such as direct equity investments, loans and repatriation of investment, unless prior approval from SAFE or a local branch has been obtained. Transactions that occur within the PRC must be settled in RMB. Almost all of our revenues will be settled in RMB and, any future restrictions on currency exchanges may limit our ability to use revenue generated in RMB to fund any future business activities outside China or to make dividend or other payments in U.S. dollars.

Travel Agency Regulatory Authority

Travel agencies are directly administrated by local tourism bureaus while these bureaus are attributed to China National Tourism Administration (“CNTA”). CNTA is the tourism policies and regulations maker and statistics distributor. Regulations on Administration of Tourism Agencies are formulated by CNTA.

Local government, local tourism supervisory authorities and local consumer associations perform supervisory duties. Tengda Travel is under the supervision of Zhuhai City Urban Tourism Bureau.

There are a series of regulations on the administration of travel agencies. Those who violated these regulations would be punished with fining, warning, business suspension, cancellation of the license or criminal penalties.

Hotel Regulatory Authorities

The hotel industry is regulated by multiple government authorizes including the Public Security Bureau, the Civil Defense Bureau, Trade and Industry Administration. The hotel License is only issued and approved after review of these relevant departments.



6


License, Permit and Approval

We have all the following licenses, permits and approvals under PRC laws:


For travel agency:


Travel agency business license

Corporate business license

Tax registration certificate

Organization code certificate


For hotel:


Fire inspection certificate

Special trade license

Corporate business license

Tax registration certificate

Organization code certificate


Intellectual Property

We do not own any intellectual property rights other than our legal business names which were reserved in our business license and may not be used by other parties.

Properties

Tengfei owned a land and building situated at Block 4, Qing Hua Shi Er Jun, 8 Cui Fu Lu, Xiang Zhou District, Zhuhai, Guangdong Province, China which operate a hotel since the end of 2013.

Tengda Hotel leased an 8-story-building for hotel services from Zhuhai City Xiangzhou District Meihua Street Office under a lease agreement dated November 1, 2010 for a ten-year term commencing November 1, 2010 to October 31, 2020. The rental expenses were $104,596 for the fiscal year ended March 31, 2014 as compared to $102,580 for the fiscal year ended March 31, 2013.

Environmental Laws

Our business operations are not subject to environmental laws.

Employees

As of June 30, 2014, Tengda Hotel has 16 employees, 10 of whom had entered into official employment agreements with Tengda Hotel. Tengfei has 15 employees, 10 of whom had entered into official employment agreements with Tengfei. Tengda Travel has 22 employees, 15 of whom had entered into official employment agreements with Tengda Travel. In addition, Tengda Travel has 18 non-employee sales agents and 14 non-employee contracted tour guides.

Sales and Marketing

Tengda Hotel and Tengfei conducts direct sales and marketing. Tengda Travel uses both the direct sale and agency sale. Tengda Travel has 18 non-employee sales agents who are compensated with the commissions of the sales they make for Tengda Travel.

Management

Tan Lung Lai, President, Treasurer, Director, CEO and CFO of Asia Travel, Malaysian, age 37. He is an Executive Director of Estancia Holding Sdn Bhd. He was appointed to the Board and as Chief Executive Office, Chief Financial Officer, Director, President, and Treasurer of Realgold in 2011. Mr. Tan has competencies in overseeing the total business management with expertise in identifying, pursuing and developing new projects and market position. With more than 10 years experience, he has successfully managed international trade business such as the exports and imports of electronic components and computer hardware such as RAM, IC chip and etc. He has also worked in hospitality industry at Genesis



7


Jewel Hotel in Melaka, a vibrant tourist destination. He also explored the gold mining industry and acquired a land with rich mineral reservoir from Dataran Mineral Sdn Bhd in Kelantan.

Tan Po Hwa, director and secretary of Asia Travel, Malaysian, age 32, graduated from Sekolah Menengah_Seri Kota in 2000. He also received a Certificate from Malaysian Insurance Institute in 2001. From 2001 to 2011, he served as an insurance representative at American International Assurance (AIA). His responsibilities included calling policy holders to explain the terms and conditions of the policies, calculating premium, customizing the insurance programs, selling various insurance products, developing and maintaining new accounts, and collecting information when claims are made.


Tan Po Hwa is the cousin of Tan Lung Lai.


None of our executive officers and board directors has been involved in any of the following proceedings during the past ten (10) years:


1. any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;


2. any conviction in a criminal proceeding or being subject to a pending criminal proceedings (excluding traffic violations and other minor offenses);


3. being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or


4. being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.


ITEM 1A. RISK FACTORS

Not required for Smaller Reporting Company


ITEM 1B. UNRESOLVED STAFF COMMENTS

None.


ITEM 2. PROPERTIES

We own a land and building situated at Block 4, Qing Hua Shi Er Jun, 8 Cui Fu Lu, Xiang Zhou District, Zhuhai, Guangdong Province, China which operate a hotel since the end of 2013.

We leased an 8-story-building for hotel services from Zhuhai City Xiangzhou District Meihua Street Office under a lease agreement dated November 1, 2010 for a ten-year term commencing November 1, 2010 to October 31, 2020. The rental expenses were $104,596 for the fiscal year ended March 31, 2014 as compared to $102,580 for the fiscal year ended March 31, 2013.

We believe that our existing facilities are well maintained, in good operating condition and sufficient to support growth of the business. As we continue to analyze our business we will re-evaluate our facility needs which could include relocation.


ITEM 3. LEGAL PROCEEDINGS

None



8



ITEM 4. MINE SAFETY DISCLOSURES

None



9


PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Asia Travel’s Common Stock is quoted on the over the counter bulletin board under the symbol “ATSR”. The following table represents the high and low per share bid information for our common stock for each quarterly period in fiscal 2014 and 2013. Such high and low bid information reflects inter-dealer quotes, without retail markup, markdown or commissions and may not represent actual transactions.


Year Ended 2014

 

High

Low

Quarter ended June 30

$0.60

0.30

Quarter ended September 30

0.95

0.05

Quarter ended December 31

1.05

0.05

Quarter ended March 31

0.98

0.45

 

 

 

Year Ended 2013

 

High

Low

Quarter ended June 30

$1.42

0.72

Quarter ended September 30

1.23

0.70

Quarter ended December 31

1.23

0.71

Quarter ended March 31

0.80

0.50


Since its inception, Asia Travel has not paid any dividends on its Common Stock, and Asia Travel does not anticipate that it will pay dividends in the foreseeable future. At June 30, 2014, Asia Travel had 134 stockholders of record. As of June 30, 2014, Asia Travel had 177,748,501 shares of its Common Stock issued and outstanding.

Recent Sales of Unregistered Securities

Asia Travel has sold shares of its common stock and preferred stock as follows:

On July 22, 2013, the Company entered into a Regulation S Stock Purchase Agreement (“Agreement”) with a group of 34 non-US individual purchasers (“Purchasers”). Under the Agreement, the Company issued a total of 125,788,400 shares of common stock to Purchasers for a total price of $628,943 ($ 0.005 per share). The issuance of the 125,788,400 shares is pursuant to the exemption provided by Regulation S. None of the Purchases is a US person and the transactions underlying the Agreement are carried out outside US. Accordingly, July 29, 2013, 125,788,400 shares of common stock have been issued.

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), pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933.

ITEM 6. SELECTED FINANCIAL DATA

This item does not apply to smaller reporting companies

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

Management's Discussion and Analysis or Plan of Operation

Asia Travel Corporation (formerly “Realgold International, Inc.”) (the “Company” or “Asia Travel”) was incorporated under



10


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 December 15, 2011, the Company filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada changing its name from Piranha Ventures, Inc. to Asia Travel Corporation. During December 2011, the Company established a subsidiary in Hong Kong, Asia Travel (Hong Kong) Limited (formerly “Realgold Venture Pte Limited”) (“Asia Travel (Hong Kong)”).


On November 22, 2012, Asia Travel (Hong Kong) 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 Asia Travel (Hong Kong). Based on the agreement, Asia Travel (Hong Kong) obtained 20 years of business operation right from Tengda Travel from November 11, 2012 to November 19, 2032 for a consideration of US$16,048 (RMB100,000) per year.


On November 25, 2012, Asia Travel (Hong Kong) entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Tengfei Investment. Under the Ownership Transfer Agreement, Tengfei Investment transfers to Asia Travel (Hong Kong) 100% of the ownership of Zhuhai Tengda Business Hotel Co., Ltd. (“Tengda Hotel”) for a total transfer price of RMB 400,000 Yuan (approximately $64,192).


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 Asia Travel (Hong Kong). On March 26, 2013, Guangdong Province Department of Foreign Trade and Economic Cooperation approved this ownership transfer.


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 consolidated 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 $47,662 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 $79,403 based on the 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 became the wholly owned subsidiary of Asia Travel (Hong Kong).


On November 6, 2013, Tengda Hotel entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Zhou Hui Juan and Yu Li Ying. Under the Ownership Transfer Agreement, Zhou Hui Juan and Yu Li Ying transfers to Tengda Hotel 100% of the ownership of Tengfei Investment for a total transfer price of RMB5,000,000 Yuan (approximately $820,309).


On January 22, 2014, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer of Tengfei Investment to Tengda Hotel.


Upon the completion of the said ownership transfer, Tengfei Investment became the wholly owned subsidiary of Tengda Hotel. Lease Management Agreement would be automatically terminated on January 22, 2014.


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



11


990,000,000 common shares.


Results of Operations and Business Outlook

Our main changes in results of operations are mainly derived from consolidation with our newly acquired subsidiary - Tengfei.

Net sales for the years ended March 31, 2014 and March 31, 2013 were $455,963 and $121,974, respectively. The increase in net sales is mainly due to under a promotional effect and cooperation with local travel agency.

Cost of goods sold for the years ended March 31, 2014 and March 31, 2013 were $283,581 and $96,831, respectively. Gross profit margin in percentage for the years ended March 31, 2014 and March 31, 2013 were 37.8% and 20.6%, respectively. The increase in cost of goods sold is mainly due to under a promotional effect and cooperation with local travel agency. The gross profit margin increased because Tengfei has its own building, no hire or sublet cost incurred.

Our operating expenses increased from $264,246 to $414,855 for the year ended March 31, 2014 and decreased by $1,756,724 to $264,246 for the year ended March 31, 2013, respectively. Our operating expenses consist of general and administrative and selling expenses. The increase in operating expenses is mainly due to the company under establishment, more expenses used.

For the year ended March 31, 2014, the Company had a net loss of $434,132, or $(0.00) per share, as compared to a net loss of $240,787, or $(0.01) per share, for the year of 2013. As described above, we incurred an increase in operating expenses of $193,345 mainly due to the company under establishment, increased an income cannot cover their cost amounts.

LIQUIDITY AND CAPITAL RESOURCES

We financed our operations and expansion from cash flow from operations and contribution from our shareholders. The table below sets forth certain items on our balance sheet reflecting the changes to our financial condition as of March 31, 2014 from our financial condition as of March 31, 2013.

 

As of Mar, 31

As of Mar, 31

 

 

2014

2013

Change

Cash and cash equivalents

$205,565

$6,337

3,143.62%

Current assets

369,067

810,304

(54.45%)

Fixed assets

3,995,069

-

-

Current liabilities

1,409,839

20,042

6,934,42%

Non-current liabilities

2,163,864

-

-


Cash and cash equivalents was $205,565 as of March 31, 2014, an increase of 3,143.62% from $6,337 as of March 31, 2013. The increase was primarily from the cash received generation from their hotel revenue during year ended March 31, 2014.

Current assets were $369,067 as of March 31, 2014, a decrease of 54.45% from $810,304 as of March 31, 2013. The decrease was primarily due to the repayment of advanced to related parties during year ended March 31, 2014.

Current liabilities were $1,409,839 as of March 31, 2014, an increase of 6,934.42% from $20,042 as of March 31, 2013. The increase was mainly due to the increase in accounts payable and others payable from Tengfei.

Critical Accounting Policies and Estimates

Basis of presentation

The Company’s accounting policies used in the preparation of the accompanying consolidated financial statements conform to accounting principles generally accepted in the United States of America ("US GAAP") and have been consistently applied.

Principles of consolidation



12


The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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.

Revenue Recognition

Revenue derived from hotel services is recognized when the rooms are occupied and the services are performed. Travel agency services revenues are recognized when the travel-related service, golf package service or transportation is provided, or when the organization service of corporate conferences, exhibitions and show events is commenced. Deferred revenue consisting of deposits paid in advance is recognized as revenue when the services are performed for hotels and upon commencement of travel agency services.

Credit risk

The Company may be exposed to credit risk from its cash and fixed deposits at banks. No allowance has been made for estimated irrecoverable amounts determined by reference to past default experience and the current economic environment.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Company’s financial statements are presented immediately following the signature page to this Form 10-K.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

(a) Previous Independent Accountants


On January 15, 2014, the Company dismissed Anderson Bradshaw PLLC (“Anderson Bradshaw”) as its independent accountant.  None of the reports of Anderson Bradshaw, on the Company's financial statements for either of the past two years or subsequent interim period contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles.  The decision to change independent accountants was approved by our Board of Directors on January 15, 2014.

 

During the Company’s two most recent fiscal years and through the date of this report, the Company has had no disagreements with Anderson Bradshaw, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Anderson Bradshaw, would have caused it to make reference to the subject matter of such disagreements in its report on the financial statements of the Company for such periods.

 

During our two most recent fiscal years and through the date of this report on Form 8-K, there have been no reportable events as defined under Item 304(a)(1)(v) of Regulation S-K adopted by the SEC.

 

  (b) New Independent Accountants

 

Our Board of Directors appointed Dominic K.F. Chan & Co., Certified Public Accountants (Practising) (“Dominic”) as our new independent registered public accounting firm effective as of January 15, 2014.  During the two most recent fiscal years and through the date of our engagement, we did not consult with Dominic regarding either (1) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, or (2) any matter that was either the subject of a disagreement or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).




13


ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, consisting of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

We may have inadvertently violated Section 402 of the Sarbanes-Oxley and Section 13(k) of the Exchange Act and may be subject to sanctions for such violations.

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.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Our management, the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our internal control over financial reporting as of March 31, 2014. Based on this evaluation, our management concluded that, as of March 31, 2014, our internal control over financial reporting was not effective to ensure that information required to be disclosed by us in our periodic reports is recorded, processed, summarized and reported, within the time periods specified for each report and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our financial statements are prepared by our financial and accounting staff under the direction of our Chief Financial Officer in accordance with generally accepted accounting principles in effect in the PRC; however we engage an outside consultant to convert our financial statements for presentation in accordance with generally accepted accounting principles in effect in the United States ("US GAAP"). We believe our internal controls over financial reporting in accordance with PRC GAAP are adequate for the proper supervision of the conduct of our business. Nevertheless, the need to convert our financial statements into US GAAP and the lack of familiarity of our accounting staff with US GAAP and US securities laws and regulations is a deficiency in our internal controls over financial reporting and disclosure controls and procedures. This deficiency will not be considered remediated until we hire financial and accounting personnel with the requisite knowledge and experience concerning US GAAP.

Changes in internal control over financial reporting

There have been no changes in internal control over financial reporting.


This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.



14



Item 9B. Other Information

None



15



PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The following table sets forth information with respect to the current officers and directors of Asia Travel. Asia Travel’s directors serve for a term of one year and thereafter until their successors have been duly elected by the stockholders and qualified. Asia Travel’s officers serve for a term of one year and thereafter until their successors have been duly elected by the Board of Directors and qualified.

Tan Lung Lai, President, Treasurer, Director, CEO and CFO of Asia Travel, Malaysian, age 37. He is an Executive Director of Estancia Holding Sdn Bhd. He was appointed to the Board and as Chief Executive Office, Chief Financial Officer, Director, President, and Treasurer of Asia Travel in 2011. Mr. Tan has competencies in overseeing the total business management with expertise in identifying, pursuing and developing new projects and market position. With more than 10 years experience, he has successfully managed international trade business such as the exports and imports of electronic components and computer hardware such as RAM , IC chip and etc. He has also worked in hospitality industry at Genesis Jewel Hotel in Melaka, a vibrant tourist destination. He also explored the gold mining industry and acquired a land with rich mineral reservoir from Dataran Mineral Sdn Bhd in Kelantan.

Tan Po Hwa, director and secretary of Asia Travel, Malaysian, age 32, graduated from Sekolah Menengah_Seri Kota in Year 2000. He also received a Certificate from Malaysian Insurance Institute in Year 2001. From Year 2001 to Year 2011, he served as an insurance representative at American International Assurance (AIA). His responsibilities included calling policy holders to explain the terms and conditions of the policies, calculating premium, customizing the insurance programs, selling various insurance products, developing and maintaining new accounts, and collecting information when claims are made.

Tan Po Hwa is the cousin of Tan Lung Lai,

None of our executive officers and board directors has been involved in any of the following proceeding during the past ten (10) years:

1.

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2.

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

3.

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

4.

being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.


Compliance With Section 16(A) Of The Exchange Act

The Company is not aware of any late reports filed by officers, directors and ten percent shareholders.


ITEM 11. EXECUTIVE COMPENSATION

Since inception, we have not paid any cash or non-cash executive compensation (including stock options or awards, perquisites, or deferred compensation plans), whatsoever, to the officers or directors.

The following tables set forth certain summary information concerning all plan and non-plan compensation awarded to, earned by, or paid to the named executive officers and directors by any person for all services rendered in all capacities to the Company in the past two fiscal years:



16





Name of executive officer and /or director

Position

Fiscal years

Salary

Bonus and other compensation

Securities underlying stock options

Tan Lung Lai

President/ CEO/ CFO/ Director/ Treasurer

2014

$0

$0

$0

 

 

2013

$0

$0

$0

Tan Po Hwa

Secretary/ Director

2014

$0

$0

$0

 

 

2013

$0

$0

$0


Outstanding Equity Awards At Fiscal Year-End

We had no outstanding equity awards at fiscal year end.

Option/Stock Appreciation Rights (SAR) Grants in Last Fiscal Year

In fiscal 2014, there were no stock option or SAR Grants.

Stock Option Exercise

In fiscal 2014, none of the named executives exercised any options to purchase shares of common stock.

Long-Term Incentive Plan (“LTIP”)

There were no awards granted during fiscal year 2014 under a long-term incentive plan.

Board of Directors Compensation

Each director may be paid his expenses, if any, of attendance at each meeting of the board of directors, and may be paid a stated salary as director or a fixed sum for attendance at each meeting of the board of directors or both. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefore. We did not compensate our directors for service on the Board of Directors during fiscal 2014.

No other compensation arrangements exist between Asia Travel and our officers and directors.

Employment Contracts and Termination of Employment and Change-in-Control Arrangements

Asia Travel does not have any employment contracts with our executive officer. No other compensatory plan or arrangements exist between Asia Travel and our executive officer that results or will result from the resignation, retirement or any other termination of such executive officer’s employment with Asia Travel or from a change-in-control of Asia Travel.

Code of Ethics

We have adopted a Code of Ethics that applies to all of our directors and executive officers serving in any capacity for our Company, including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions.

Board of Directors Interlocks and Insider Participation in Compensation Decisions

No such interlocks existed and no such decisions were made during fiscal year 2014.

Option Plans

Asia Travel has no option plans and no outstanding options.

Termination of Employment and Change of Control Arrangement

There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any person named in Cash Compensation set out above which would in any way result in payments to any such person because of



17


his resignation, retirement, or other termination of such person's employment with the Company or its subsidiaries, or any change in control of the Company, or a change in the person's responsibilities following a change in control of the Company.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCK HOLDER MATTERS

Security Ownership of Certain Beneficial Owners:

The following table sets forth certain information as of June 30, 2014, with respect to the beneficial ownership of Asia Travel’s Common Stock by each director of Asia Travel and each person known by Asia Travel to be the beneficial owner of more than 5% of Asia Travel’s outstanding shares of Common Stock. At June 30, 2014, there were 177,748,501 shares of common stock outstanding. For purposes of this table, information as to the beneficial ownership of shares of common stock is determined in accordance with the rules of the Securities and Exchange Commission and includes general voting power and/or investment power with respect to securities. Except as otherwise indicated, all shares of our common stock are beneficially owned, and sole investment and voting power is held, by the person named. For purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock, which such person has the right to acquire within 60 days after the date hereof. The inclusion herein of such shares listed beneficially owned does not constitute an admission of beneficial ownership.

Title of class

Name of beneficial owner

Number of shares owned

Percent of class

 

Principal stockholders

(5% or more)

 

(1)

Common

Azizi Bin Maskun

9,000,000

5.06%

Common

Lee Kim Chaw

8,890,000

5.00%

Common

Li Weile

9,000,000

5.06%

Common

Lim Geok Kim

9,000,000

5.06%

Common

Tan Peng Yeng

9,000,000

5.06%

Common

Tan Tee Loong

9,000,000

5.06%

Common

Wong Chee Wah

9,000,000

5.06%

Common

Yeo Hock Heng

9,000,000

5.06%

Common

All principal stockholders

(5% or more)

71,890,000

40.42%

 

 

 

 

 

Director(s) and officers:

 

 

Common

Tan Lung Lai (2)

991,951

0.56%

Common

Tan Po Hwa (3)

0

0%

Common

All director(s) and officers as a Group

991,951

0.56%


(1)

Calculated based on the 177,748,501 shares of common stock outstanding as of March 31, 2014.

(2)

As of March 31, 2014, our CEO, CFO , Director and President Tan Lung Lai holds 991,951 shares of common stock and 20,000 shares of Series A Preferred Stock, which entitle him to a total of 20,991,951 votes, which represent approximately 11.81% of the total votes represented by all our issued and outstanding common stock and preferred stock.

(3)

Tan Po Hwa is Tan Lung Lai’s cousin.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

None



18


We do not currently have a formal related party approval policy for review and approval of transactions required to be disclosed pursuant to Item 404(a) of Regulation S-K.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees Billed For Audit and Non-Audit Services

(1)

Audit Fees - The aggregate fees billed in each of the last two fiscal years for professional services rendered by the Company’s principal accountant for the audit of the annual financial statements and review of financial statements included in the Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are:

2014

 - $50,000 – Dominic K.F. Chan & Co. – Chartered Accountants

2013

 - $26,000 – Anderson Bradshaw PLLC – Chartered Accountants

(2)

Audit - Related Fees - The aggregate fees billed in each of the last two fiscal years for assurance and related services by the Company’s principal accountant that are reasonably related to the performance of the audit or review of the financial statements and are not reported in (1) Audit Fees:

2014

 - $5,000 – Dominic K.F. Chan & Co. – Chartered Accountants

2013

 - $0 – Anderson Bradshaw PLLC – Chartered Accountants

(3)

Tax Fees - The aggregate fees billed in each of the last two fiscal years for professional services rendered by the Company’s principal accountant for tax compliance, tax advice, and tax planning:

2014

 - $0 – Dominic K.F. Chan & Co. – Chartered Accountants

2013

 - $0 – Anderson Bradshaw PLLC – Chartered Accountants

(4)

All Other Fees - The aggregate fees billed in each of the last two fiscal years for products and services provided by the Company’s principal accountant, other than the services reported in (1) Audit Fees; (2) Audit-Related Fees; and (3) Tax Fees:

2014

- $0 – Dominic K.F. Chan & Co. – Chartered Accountants

2013 - $0 – Anderson Bradshaw PLLC – Chartered Accountants

(5)

We do not have a standing audit committee, an audit committee financial expert, or any committee or person performing a similar function. We currently have limited working capital and no revenues. Management does not believe that it would be in our best interests at this time to retain independent directors to sit on an audit committee. If we are able to raise sufficient financing in the future, then we will likely seek out and retain independent directors and form an audit, compensation committee and other applicable committees.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Financial Statements – the following financial statements are included in this report:

The following financial statements, notes thereto, and the related independent registered public accounting firm’s report contained on page F-2 to F-8 to our financial statements are herein incorporated:

March 31, 2014 and March 31, 2013


Reports of Independent Registered Public Accounting Firm

Balance Sheets – As of March 31, 2014 and March 31, 2013

Statements of Operations – For the Years ended March 31, 2014 and March 31, 2013

Statement of Changes in Stockholders' Equity (Deficit) – For the Years ended March 31, 2014 and March 31, 2013

Statements of Cash Flows – For the Years ended March 31, 2014 and March 31, 2013

Notes to Financial Statements – For the Years ended March 31, 2014 and March 31, 2013


Financial Statement Schedules – There are no financial statement schedules included as part of this report




19


Exhibits – The following exhibits are included as part of this report:


Exhibits

a) Index of Exhibits:

Exhibit Table # Title of Document Location

3 (i) Articles of Incorporation Incorporated by reference*

3 (ii) Bylaws Incorporated by reference*

4 Specimen Stock Certificate Incorporated by reference*

31 Rule 13a-14(a)/15d-14a(a) Certification – CEO & CFO This filing

32 Section 1350 Certification – CEO & CFO This filing


* Incorporated by reference from the Company's registration statement on Form 10-SB filed with the Commission, SEC File No. 000-21909.



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.

Asia Travel Corporation

(Registrant)

Dated: July 11, 2014

By: /s/ Tan Lung Lai

Tan Lung Lai

Chief Executive Officer

Chief Financial Officer



20




INDEX TO FINANCIAL STATEMENTS


Report of Independent Registered Public Accounting Firm

F-2 – F-3

Consolidated Balance Sheets – As of March 31, 2014 and March 31, 2013

F-4

Consolidated Statements of Operations – For the Years ended March 31, 2014 and 2013

F-5

Consolidated Statement of Changes in Stockholders’ Equity (Deficit) – For the Years ended March 31, 2014 and 2013

F-6

Consolidated Statements of Cash Flows – For the Years ended March 31, 2014 and 2013

F-7

Notes to Consolidated Financial Statements – For the Years ended March 31, 2014 and 2013

F-8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



21





 



22


[ATSRFORM10KMARCH312014V1001.JPG]

F-2



23





24


[ATSRFORM10KMARCH312014V1002.JPG]



25



ASIA TRAVEL CORPORATION

CONSOLIDATED BALANCE SHEETS

 

 

March 31,

March 31,

 

2014

2013

 

 

 

ASSETS

 

 

Current assets:

 

 

Cash in bank

  $          205,565

 $               6,337

Other receivables

                           -

                      403

  Total current assets

                205,565

                   6,740

 

 

 

Non-current assets:

 

 

Related party receivables

               369,067

               809,901

Property, plant and equipment, net of accumulated depreciation

             3,995,069

                          -

  Total non-current assets

             4,364,136

               809,901

 

 

 

Total assets

   $       4,569,701

 $           816,641

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

Current liabilities:

 

 

Accounts payable and accrued expenses

                65,362

                   5,237

Current maturities of long-term debt

              178,621

                         -   

Related party payables

 $       1,165,856

 $             14,805

  Total current liabilities

           1,409,839

                 20,042

 

 

 

Non-current maturities of long-term debt

           2,163,864

                         -

 

 

 

Total liabilities

 $       3,573,703

 $             20,042

 

 

 

Stockholders' equity (deficit):

 

 

Preferred stock: par value $0.001 per share; 10,000,000 shares authorized, 20,000 shares issued and outstanding respectively

                       20

                        20

 

 

 

Common stock:

 

 

 $0.001 par value, 990,000,000 shares authorized;
177,748,501 and 51,960,101 shares issued and outstanding, respectively

              177,748

                 51,960

Capital in excess of par value

           9,496,072

            8,992,918

Retained deficit

         (8,682,359)

           (8,248,227)

Accumulated other comprehensive income

                  4,517

                       (72)

  Total stockholders' equity

              995,998

               796,599

 

 

 

Total liabilities and stockholders' equity

 $       4,569,701

 $           816,641

 

 

 

The accompanying notes are an integral part of these financial statements

F-4



26



ASIA TRAVEL CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

 

 

 

 

For the year ended

 

March 31,

March 31,

 

2014

2013

 

 

 

Revenue

 $                        455,963

 $                    121,974

Cost of sales

                            283,581

                          96,831

Gross margin

                            172,382

                          25,143

 

 

 

EXPENSES

 

 

  General and administrative

                            312,157

                        264,246

  Depreciation

                            102,698

                                   -

    Total expenses

                            414,855

                        264,246

 

 

 

OPERATING LOSS

                          (242,473)

                       (239,103)

 

 

 

OTHER INCOME AND EXPENSES

 

 

  Interest income

                                   111

                               302

  Loan interest

                          (191,770)

                                    -

     Total other income and expenses

                          (191,659)

                               302

 

 

 

LOSS BEFORE INCOME TAXES

                          (434,132)

                       (238,801)

  Provision for income taxes

                                        -

                           (1,986)

 

 

 

NET LOSS

 $                      (434,132)

 $                   (240,787)

 

 

 

Comprehensive income (loss):

 

 

Foreign currency translation gain/ (loss)

                                4,589

                                (72)

 

 

 

Comprehensive loss

 $                      (429,543)

 $                   (240,859)

 

 

 

 

 

 

LOSS PER SHARE - basic and diluted

 $                            (0.00)

 $                         (0.01)

 

 

 

WEIGHTED AVERAGE NUMBER OF COMMON SHARES
- basic and diluted

 $                 136,738,036

 $               43,230,815

 

 

 

 

 

 

The accompanying notes to the unaudited condensed consolidated financial statements

F-5




27





ASIA TRAVEL CORPORATION

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT)

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

Other

 

 

Preferred stock

Common stock

Capital in excess

Retained

Comprehensive

 

 

Shares

Amount

Shares

Amount

of par value

Deficit

Income (loss)

Total

Balance at March 31, 2012

    20,000

 $          20

        7,270,101

 $       7,270

 $        8,590,708

 $  (8,007,440)

 $                -   

 $    590,558

 

 

 

 

 

 

 

 

 

Sale of common stock

            -   

            -   

      44,690,000

        44,690

              402,210

                -   

                   -   

 $    446,900

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

            -   

            -   

                -   

             -   

                   -   

                -   

                 (72)

 $         (72)

 

 

 

 

 

 

 

 

 

Net loss

              - 

               -

                      -

                  -

                         -

        (240,787)

                         -

 $  (240,787)

Balance at March 31, 2013

    20,000

             20

      51,960,101

        51,960

           8,992,918

     (8,248,227)

                     (72)

       796,599

 

 

 

 

 

 

 

 

 

Sale of common stock

            -   

            -   

    125,788,400

      125,788

              503,154

                -   

                   -   

 $    628,942

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

            -   

            -   

                -   

              -   

                   -   

                -   

                 4,589

 $       4,589

 

 

 

 

 

 

 

 

 

Net loss

             -  

               -

                      -

                  -

                         -

        (434,132)

                        -

     (434,132)

Balance at March 31, 2014

    20,000

 $          20

    177,748,501

 $   177,748

 $       9,496,072

 $  (8,682,359)

 $             4,517

 $    995,998

 

 

 

 

 

 

 

 

 

The accompanying notes to the consolidated financial statements

F-6





28





ASIA TRAVEL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

                            For the year ended

 

March 31,

March 31,

 

2014

2013

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

Net loss

  $             (434,132)

 $                   (240,787)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

Depreciation

                  102,698

                              - 

Goodwill impairment

                     1,763   

                          59,355

Changes in assets and liabilities

 

 

  Decrease in accounts receivables

                              -

                            2,133

  Increase in other receivables

                     (4,336)

                          -

  Decrease in prepaid expenses

                                 -

                          20,941

  Increase in account payables

                    22,237

                            -

  Increase in accrued expenses and other payables

               1,195,594

                            3,815

  Decrease in accrued liabilities

                          -

                         (21,321)

    Net cash provided by/ (used by) operating activities

                   883,824

                       (175,864)

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

  Business acquisition, net of cash acquired

                                      -

                         (38,150)

  Purchase of property and equipment

              (4,161,631)

                           -

  Repayments to related parties

                  440,834

                            -

  Advances to related parties

                              -

                       (809,901)

    Net cash used by investing activities

               (3,720,797)

                       (848,051)

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

  Loan from related party

                    12,735

                          14,730

  Long-term debt

               2,379,931

                            -

  Proceeds from common stock sale

                  628,943

                           -

  Repayment of related party loan

                                  -

                         (12,442)

  Sale of common stock

                            -

                        446,900

    Net cash provided by financing activities

                3,021,609

                        449,188

 

 

 

Net increase (decrease) in cash and cash equivalents

                  184,636

                       (574,727)

Cash and cash equivalents, beginning of period

                      6,337

                        581,000

 

 

 

Effect of currency rate changes on cash

                     14,592

                                 64

 

 

 

Cash and cash equivalents, end of period

   $              205,565

 $                        6,337

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

 

 

Interest paid from long-term debt

   $              191,770

 $                               -

Taxes paid

 $                          -

 $                               -

 

 

 

Non cash investing and financing activities:

 $                          -

 $                               -

 


 

 

The accompanying notes to the consolidated financial statements

F-7



29



Asia Travel Corporation

Notes to Consolidated Financial Statements

March 31, 2014 and March 31, 2013


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


The 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, pursuant to the rules and regulations of the Securities and Exchange Commission.


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 December 15, 2011, the Company filed Amended and Restated Articles of Incorporation with the Secretary of State of Nevada changing its name from Piranha Ventures, Inc. to Asia Travel Corporation. During December 2011, the Company established a subsidiary in Hong Kong, Asia Travel (Hong Kong) Limited (formerly “Realgold Venture Pte Limited”) (“Asia Travel (Hong Kong)”).


On November 22, 2012, Asia Travel (Hong Kong) 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 Asia Travel (Hong Kong). Based on the agreement, Asia Travel (Hong Kong) obtained 20 years of business operation right from Tengda Travel from November 11, 2012 to November 19, 2032 for a consideration of US$16,048 (RMB100,000) per year.


On November 25, 2012, Asia Travel (Hong Kong) entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Tengfei Investment. Under the Ownership Transfer Agreement, Tengfei Investment transfers to Asia Travel (Hong Kong) 100% of the ownership of Zhuhai Tengda Business Hotel Co., Ltd. (“Tengda Hotel”) for a total transfer price of RMB 400,000 Yuan (approximately $64,192).


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 Asia Travel (Hong Kong). On March 26, 2013, Guangdong Province Department of Foreign Trade and Economic Cooperation approved this ownership transfer.


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 $47,662 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 $79,403 based on the 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 became the wholly owned subsidiary of Asia Travel (Hong Kong).


On November 6, 2013, Tengda Hotel entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement’) with Zhou Hui Juan and Yu Li Ying. Under the Ownership Transfer Agreement, Zhou Hui Juan and Yu Li Ying transfers to Tengda Hotel 100% of the ownership of Tengfei Investment for a total transfer price of RMB5,000,000 Yuan (approximately $820,309).


On January 22, 2014, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer of Tengfei Investment to Tengda Hotel.


Upon the completion of the said ownership transfer, Tengfei Investment became the wholly owned subsidiary of Tengda Hotel. Lease Management Agreement would be automatically terminated on January 22, 2014.



30



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.


Our current organizational structure is set forth in the diagram below:


Asia Travel Corporation

100%


Asia Travel (Hong Kong) Limited (Hong Kong)

100%


Zhuhai Tengda Business Hotel Co., Ltd. (PRC)

100%

Zhuhai Tengfei Investment Co., Ltd. (PRC)

100%

Zhuhai Tengda International Travel Agency Co., Ltd. (PRC)


Stock Split

On June 13, 2011, the Company effected a reverse stock split of the issued and outstanding shares of the Company on a ten (10) to one (1) basis with all fractional shares rounded up to the nearest whole share. The capital stock accounts, all share data and earnings per share data give effect to the stock split, applied retrospectively, to all periods presented.

Going Concern

The Company’s financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company requires additional capital to continue its limited operations. Furthermore, the Company’s officers and directors serve in their capacities without compensation. The Company assumes that these arrangements and the availability of future capital sources will continue into the future, but no assurance thereof can be given. A change in these circumstances would have a material adverse effect on the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Income Taxes

The Company utilizes the liability method of accounting for income taxes as set forth in FASC 740-20, “Accounting for Income Taxes.” Under the liability method, deferred taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. An allowance against deferred tax assets is recorded when it is more likely than not that such tax benefits will not be realized.

The Company does not accrue United States income tax on unremitted earnings from foreign operations, as it is the Company’s intention to invest these earnings in the foreign operations indefinitely. The Company also believes that the total amount of unrecognized tax benefits as of March 31, 2014, if recognized, would not have a material effect on its effective tax rate. The Company further believes that there are no tax positions for which it is reasonably possible, based on current Chinese tax law and policy, that the unrecognized tax benefits will significantly increase or decrease over the next 12 months producing, individually or in the aggregate, a material effect on the Company’s results of operations, financial condition or cash flows.

Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures 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.

Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers all highly-liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. Management believes that Company’s cash and cash equivalents held by major banks located in the PRC are of high credit quality as of March 31, 2014.

Revenue Recognition

Revenue derived from hotel services is recognized when the rooms are occupied and the services are performed. Travel agency services revenues are recognized when the travel-related service, golf package service or transportation is provided, or when the organization service of corporate conferences, exhibitions and show events is commenced. Deferred revenue consisting of deposits



31


paid in advance is recognized as revenue when the services are performed for hotels and upon commencement of travel agency services.

Credit risk

The Company may be exposed to credit risk from its cash and fixed deposits at banks. No allowance has been made for estimated irrecoverable amounts determined by reference to past default experience and the current economic environment.

Property, plant and equipment

Fixed assets, comprising building are stated at cost less accumulated depreciation. Depreciation for building is computed using the straight-line method over the estimated useful lives of 20 years.

Comprehensive income

Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. For the Company, comprehensive income for the periods presented includes net income and foreign currency translation adjustments.

Foreign currency translation

Assets and liabilities of the Company with a functional currency other than US$ are translated into US$ using year end exchange rates.

Income and expense items are translated at the average exchange rates in effect during the year. Foreign currency translation differences are included as a component of Accumulated Other Comprehensive Income in Stockholders’ Equity.

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

 

2014

2013

Year end RMB : USD exchange rate

6.2163

6.2076

Year-average RMB : USD exchange rate

6.1185

6.2390


The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation.

Post-retirement and post-employment benefits

The Company contributes to a state pension plan in respect of its PRC employees. Other than the above, the Company does not provide any other post-retirement or post-employment benefits.

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.

Recently Issued Accounting Pronouncements

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.



32


The carrying values of all of our other financial instruments, which include accounts receivable, accounts payable and accrued liabilities, and due to related parties approximate their current fair values because of their nature and respective maturity dates or durations.

Note 2: Property, plant and equipment

Property, plant and equipment consisted of the following:

 

For the year ended
March 31, 2014

For the year ended
March 31, 2013

Building

$               2,957,744

$                              -

Leasehold improvements

1,138,407

-

 


 

Total property, plant and equipment

4,096,151

-

Less: exchange difference

1,616

-

Less: accumulated depreciation and amortization

(102,698)

-

 


 

Total property, plant and equipment, net

$              3,995,069

$                              -


The depreciation expenses for the years ended December 31, 2014 and 2013 were $102,698 and $nil, respectively.

Note 3: Long term debt

 

For the year ended
March 31, 2014

For the year ended
March 31, 2013

Bank loan - wholly repayable in year 2024

2,342,485

$                              -

Less: current maturities of long-term debt

(178,621)

-

 


 

Non-current maturities of long-term debt

2,163,864

$                              -


Note 4: Capital Stock

Preferred Stock

The Company has 10,000,000 shares of authorized preferred stock at $0.01 par value. As of March 31, 2014 and March 31, 2013, the Company has 20,000 and 20,000 shares of preferred stock issued and outstanding, respectively.

Accounting for the Series A Preferred Stock

The Series A Preferred Stock has been classified as permanent equity as there was no redemption provision at the option of the holders. The Company evaluated the embedded conversion feature in its Series A Preferred Stock to determine if there was an embedded derivative requiring bifurcation. The Company concluded that the embedded conversion feature of the Series A Preferred Stock is not required to be bifurcated because the conversion feature is clearly and closely related to the host instrument. The Company believes the economic risks and characteristics of the Series A Preferred Stock itself and the common stock the embedded conversion feature allows the Investor to convert into have similar economic risks and characteristics.

Stock-Based Compensation

The Company accounts for stock-based compensation under FASB ASC subtopic 718-10, Compensation – Stock Compensation: Overall. Under FASB Subtopic 718-10, the Company measures the cost of the employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the requisite service periods.

Common Stock

On July 22, 2013 the Company entered into a Regulation S Stock Purchase Agreement (“Agreement”) with a group of 34 non-US individual purchasers (“Purchasers”). Under the Agreement, the Company will issue a total of 125,788,400 shares of common stock to Purchasers for a total price of $628,943 ($0.005 per share). The issuance of the 125,788,400 shares is pursuant to the exemption provided by Regulation S. None of the Purchasers is a US person and the transactions underlying the Agreement are carried out outside US. Accordingly, July 29,2013, 125,788,400 shares of common stock have been issued.



33


Note 5: Shareholders Payables

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 March 31, 2014, the indebtedness of the Company to its shareholders and related entities with common owners and directors was $769,470 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.

Name of related party from whom loans were received

March 31, 2014

Relation

Mr. Tan Lun Lai

$         369,067

Director of the Company

Mr. Guohua Li

$   (1,138,537)

Former owner of Tengfei

 

$      (769,470)

 


Note 6: Acquisition and pro forma statement

Acquisition of Tengda Hotel

On November 22, 2012, Asia Travel’s wholly owned subsidiary Asia Travel (Hong Kong) 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 Asia Travel (Hong Kong).

On November 25, 2012, Asia Travel (Hong Kong) entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement”) with Tengfei Investment. Under the Ownership Transfer Agreement, Tengfei Investment transfers to Asia Travel (Hong Kong) 100% of the ownership of Tengda Hotel for a total transfer price of RMB400,000 Yuan (approximately $64,000). The total purchase price was allocated as follows:

Total purchase price:


Cash

$      64,000

 


Allocated as follows:


  Cash and cash equivalents

$      25,850

  Accounts receivable

2,130

  Other receivable

400

  Prepayment

1,472

  Accounts payable and accrued expenses

(25,207)

Goodwill

$      59,355

 

$      64,000

Less cash acquired

$     (25,850)

Cash, net of cash acquired

$      38,150


The excess fair value of net assets acquired over the purchase price was recorded as goodwill impairment.

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 Asia Travel (Hong Kong). On March 26, 2013, Guangdong Province Department of Foreign Trade and Economic Cooperation approved the transfer of ownership.

Upon the completion of the said ownership transfer, Tengda Hotel becomes the wholly owned subsidiary of Asia Travel (Hong Kong).


Pro forma financial information



34


The unaudited pro forma financial information presented below summarizes the consolidated operating results of the Company and Tengda Hotel and Tengda Travel for the year ended March 31, 2013, as if the acquisition had occurred on April 1, 2012.

The pro forma financial information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisition taken place on April 1, 2012. The unaudited pro forma consolidated statements of operations combine the historical results of the Company and the historical results of the acquired entity for the periods described above.

Asia Travel International

Unaudited Pro Forma Statement of Operations and Comprehensive Income

For the Year Ended March 31, 2013

 

Historical combined Tengda Hotel and Tengda Travel

Asia Travel

Adjustments

Combined Pro Forma

Revenue

$            145,190

$             121,974


$           289,758

Net loss

$            (21,836)

$           (240,787)

$           (12,000)

$         (272,637)

Loss per share – basic and diluted


$                 (0.01)


$              (0.02)

Weighted average number of common shares


13,770,465


13,770,465


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

(1)

The historical operating results of the Company were based on the Company’s financial statements for the year ended March 31, 2013.

(2)

The historical information of Tengda Hotel and Tengda Travel were derived from the books and the records of Tengda Hotel and Tengda Travel for the six months ended September 30, 2012.

(3)

Pro forma adjustment was based on the assumption that there are lease expense USD4,000 per quarter.


Acquisition of Tengfei Investment

On November 6, 2013, Tengda Hotel entered into an Ownership Transfer Agreement (“Ownership Transfer Agreement”) with Zhou Hui Juan and Yu Li Ying. Under the Ownership Transfer Agreement, Zhou Hui Juan and Yu Li Ying transfers to Tengda Hotel 100% of the ownership of Tengfei Investment for a total transfer price of RMB5,000,000 Yuan (approximately $820,309). The total purchase price was allocated as follows:

Total purchase price:


Cash

$     820,309

 


Allocated as follows:


  Cash and cash equivalents

$            131

  Other receivable

820,309

  Others payable

(1,894)

Goodwill

$         1,763

 

$     820,309

Less cash acquired

$          (131)

Cash, net of cash acquired

$    820,178


The excess fair value of net assets acquired over the purchase price was recorded as goodwill impairment.

On January 22, 2014, the Bureau of Science and Technology Industry Trade and Information of Zhuhai City approved the ownership transfer of Tengfei Investment to Tengda Hotel.

Upon the completion of the said ownership transfer, Tengfei Investment becomes the wholly owned subsidiary of Tengda Hotel.



35


Note 7: 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

Asia Travel (Hong Kong) Limited was incorporated in Hong Kong and is subject to Hong Kong income taxes. As Asia Travel (Hong Kong) Limited had no income generated in Hong Kong, there was no tax expense or tax liability.

China

Tengda Hotel, Tengfei 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:

 

For the year ended
March 31, 2014

For the year ended
March 31, 2013

Current

$                             -

$                      1986

Deferred

-

-

Total

$                             -

$                      1986


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 March 31, 2014, and 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 March 31, 2014 and March 31, 2013 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 year ended March 31, 2014 and March 31, 2013, the Company recognized no interest and penalties. The Company had no accruals for interest and penalties at March 31, 2014 and March 31, 2013. Income tax periods 2011, 2012, and 2013 are open for examination by taxing authorities.

Note 8: Earnings (loss) per share

Earnings Per Share (‘EPS”) is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year.  Diluted EPS is computed by dividing net income available to common stockholders by the weighted average number of common stock shares outstanding during the year plus potential dilutive instruments such as stock options and warrants.  

The effect of stock options on diluted EPS is determined through the application of the treasury stock method, whereby proceeds received by the Company based on assumed exercises are hypothetically used to repurchase the Company's common stock at the average market price during the period.  The Company has no stock options, warrants or other potentially dilutive instruments outstanding at March 31, 2014 and 2013.

 

For the year ended
March 31, 2014

For the year ended
March 31, 2013

Numerator – basic and diluted



Net loss

$             (434,132)

$             (240,787)

Denominator



Basic

136,738,000

43,230,815

Conversion of preferred stock

20,000,000

20,000,000

Anti-dilutive effect of preferred stock

(20,000,000)

(20,000,000)

Weighted average number of common shares outstanding – basic and diluted

136,738,000

43,230,815

 



Loss per common share – basic and diluted

$                   (0.00)

$                   (0.01)


Note 9: 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 10: Operating Lease

Tengda Hotel leased an 8-story-building for hotel services from Zhuhai City Xiangzhou District Meihua Street Office under a lease agreement dated November 1, 2010 for a ten-year term commencing November 1, 2010 to October 31, 2020. Future minimum payments under this operating lease as of March 31, 2014 as follows:

For the Twelve Months Ending March 31,

Operating leases

2015

$           106,707

2016

109,388

2017

109,388

2018

113,141

2019

115,822

Thereafter

183,384

Total future minimum lease payments

$           737,830


Total rental expense on the operating lease were $104,596 and $34,236 for the year ended March 31, 2014 and from beginning of lease on December 1, 2012 to March 31, 2013, respectively.

Note 11: 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. There were no inter-segment sales for the year ended March 31, 2014 and 2013.

 

Year ended March, 31

Net sales

Segment profit/ (loss) pre-tax

Total assets

Hotel Services

2014

251,888

(290,792)

4,100,011

Travel Agency

2014

204,075

1,377

99,750

Company

2014

-

(142,954)

369,940

Total

 

455,963

(432,369)

4,569,701


 

Year ended March, 31

Net sales

Segment profit/ (loss) pre-tax

Total assets

Hotel Services

2013

54,928

(14,997)

2,998

Travel Agency

2013

67,046

(5,307)

2,548

Company

2013

-

(220,483)

811,095

Total

 

121,974

(240,787)

816,641


Note 12: Subsequent events

There were no events or transactions other than those disclosed in this report, if any, that would require recognition or disclosure in our financial statements for the year ended March 31, 2014.



38


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