Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
There were 25,000,000 shares of common stock outstanding as of April 30, 2010.
PART I FINANCIAL INFORMATION
Item 1—Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(A Development Stage Company)
| | | As of March 31, 2010 | | | As of June 30, 2009 | |
| | | (Unaudited) | | | (AUDITED) | |
| ASSETS | | | | | | |
| | | | | | | |
| CURRENT ASSETS | | | | | | |
| Cash and cash equivalents | | $ | 2,552 | | | $ | 1,673 | |
| Prepaid expenses | | | - | | | | 1,975 | |
| | | | | | | | | |
| Total Current Assets | | | 2,552 | | | | 3,648 | |
| | | | | | | | | |
| PROPERTY AND EQUIPMENT, net | | | 2,957 | | | | 3,954 | |
| | | | | | | | | |
| OTHER ASSETS | | | | | | | | |
| Deposits | | | 6,092 | | | | 6,092 | |
| | | | | | | | | |
| TOTAL ASSETS | | | 11,601 | | | | 13,694 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFECIT | | | | | | | | |
| | | | | | | | | |
| CURRENT LIABILITIES | | | | | | | | |
| Accounts payable and accrued expenses | | $ | - | | | $ | - | |
| Other payable | | | - | | | | 256 | |
| Related party notes payables | | | 140,696 | | | | 115,924 | |
| | | | | | | | | |
| Total Current Liabilities | | | 140,696 | | | | 116,181 | |
| | | | | | | | | |
| NON-CURRENT LIABILITIES | | | - | | | | - | |
| | | | | | | | | |
| TOTAL LIABILITIES | | | 140,696 | | | | 116,181 | |
| | | | | | | | | |
| STOCKHOLDERS' EQUITY (DEFICIT) | | | | | | | | |
| Common stock, $0.001 par value, 100,000,000 shares authorized, 25,000,000 shares issued and outstanding | | | 25,000 | | | | 25,000 | |
| Deficit accumulated during the development stage | | | (154,095 | ) | | | (127,487 | ) |
| | | | | | | | | |
| Total Stockholders' (Deficit) | | | (129,095 | ) | | | (102,487 | ) |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUIT (DEFICIT) | | $ | 11,601 | | | $ | 13,694 | |
The accompanying notes are an integral part of the financial statements.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(A Development Stage Company)
| | | | | | | | | | | | | | | From Inception April 13, 3006 to | |
| | | Three months ended March 31, | | | Nine months ended March 31, | | | March 31, 2010 | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | | | (Cumulative) | |
| | | | | | | | | | | | | | | | |
| SALES | | $ | 2,372 | | | $ | 2,628 | | | $ | 7,116 | | | $ | 6,731 | | | $ | 56,645 | |
| | | | | | | | | | | | | | | | | | | | | |
| COST OF SALES | | | — | | | | — | | | | — | | | | — | | | | 500 | |
| Gross Profit: | | $ | 2,372 | | | $ | 2,628 | | | $ | 7,116 | | | $ | 6,731 | | | $ | 56,145 | |
| | | | | | | | | | | | | | | | | | | | | |
| EXPENSES | | | | | | | | | | | | | | | | | | | | |
| Depreciation expenses | | $ | 332 | | | $ | 332 | | | $ | 997 | | | $ | 1,056 | | | $ | 10,663 | |
| Selling, general and administrative expenses | | | 6,772 | | | | 9,596 | | | | 23,726 | | | | 25,853 | | | | 166,938 | |
| Total Expenses | | | 7,104 | | | | 9,928 | | | | 33,723 | | | | 26,909 | | | | 177,601 | |
| | | | | | | | | | | | | | | | | | | | | |
| LOSS FROM OPERATIONS | | | (4,732 | ) | | | (7,300 | ) | | | (26,607 | ) | | | (20,178 | ) | | | (121,456 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| OTHER INCOME (EXPENSES) | | | | | | | | | | | | | | | | | | | | |
| Interest expense | | | — | | | | — | | | | — | | | | — | | | | 1 | |
| Loss on disposal of property and equipment | | | — | | | | — | | | | — | | | | — | | | | (7,640 | ) |
| Write-off of goodwill | | | — | | | | — | | | | — | | | | — | | | | (25,000 | ) |
| Provision for income taxes | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Loss | | $ | (4,732 | ) | | $ | (7,300 | ) | | $ | (26,607 | ) | | $ | (20,178 | ) | | | (154,095 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| PER SHARE DATA: | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Basic loss per common share | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Weighted Average Common Shares Outstanding | | | 25,000,000 | | | | 25,000,000 | | | | 25,000,000 | | | | 25,000,000 | | | | | |
The accompanying notes are an integral part of the financial statements.
ASIA DOCUMENT TRANSITION, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
(A Development Stage Company)
| | | For the nine-month period ended | | | April 13, 2006 (inception) to | |
| | | March 31, 2010 | | | March 31, 2009 | | | March 31, 2009 | |
| | | | | | | | | | |
| CASH FLOW FROM OPERATING ACTIVITIES | | | | | | | | | |
| Net Loss | | $ | (26,608 | ) | | $ | (20,178 | ) | | $ | (154,095 | ) |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities | | | | | | | | | | | | |
| Decrease (increase) in account receivables | | | - | | | | 1,602 | | | | - | |
| Loss on disposal of property and equipment | | | - | | | | - | | | | 7,640 | |
| Depreciation Expense | | | 997 | | | | 1,056 | | | | 10,664 | |
| | | | - | | | | - | | | | 25,000 | |
| Increase in Pre-payment and deposit | | | 1,975 | | | | - | | | | (12,541 | ) |
| Increase in other payables | | | (256 | ) | | | (256 | ) | | | - | |
| Net Cash provided by (used in) Operating Activities | | $ | (23,892 | ) | | $ | (17,776 | ) | | $ | (123,332 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Purchase of property and equipment | | | - | | | | - | | | | (48,144 | ) |
| Disposal of property and equipment | | | - | | | | - | | | | 33,333 | |
| | | | | | | | | | | | | |
| Net Cash used in Investing activities | | $ | - | | | $ | - | | | $ | (14,811 | ) |
| | | | | | | | | | | | | |
| CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | |
| Loans from (repayment to) related parties | | | 24,771 | | | | 17,847 | | | | 140,695 | |
| Net Cash provided by Financing Activities | | $ | 24,771 | | | $ | 17,847 | | | $ | 140,695 | |
| | | | | | | | | | | | | |
| NET INCREASE IN CASH | | | 879 | | | | 71 | | | | 2,552 | |
| | | | | | | | | | | | | |
| Cash beginning of period | | | 1,673 | | | | 1,519 | | | | - | |
| Cash end of period | | $ | 2,552 | | | $ | 1,590 | | | $ | 2,552 | |
The accompanying notes are an integral part of the financial statements.
ASIA DOCUMENT TRANSITION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Asia Document Transition, Inc. (the “Company”) was incorporated in the State of Nevada on April 13, 2006. The Company is in the business of (a) providing services consisting of converting documents from word processing format to HTML in order that they may be filed with the U.S. Securities and Exchange Commission ("SEC") electronically through EDGAR, the SEC's Electronic Data Gathering, Analysis, and Retrieval system and (b) providing of mailing address, phone and fax service, internet access temporary meeting space (“Virtual Office Services”) to small and single operator businesses within Hong Kong . The Company has been in the development stage since formation on April 13, 2006 and has only generated minimal revenue to date.
On April 26, 2006, the Company acquired all of the issued and outstanding shares of Vast Opportunity Limited, (VOL) a Hong Kong incorporated limited company, through the issuance of 24,500,000 common shares to the shareholders of VOL. VOL has been since its inception, a corporation with minimal operations. As of the date of the acquisition, V OL had assets of $374 and total liabilities of $1,302. The acquisition resulted in the shareholders of VOL becoming the controlling shareholders of the Company, accordingly the transaction was recorded as a recapitalization of VOL.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Accounting
The Company’s financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 fiscal year-end. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary VOL. All material intercompany balances have been eliminated.
B. Revenue Recognition
Revenues from document formatting and virtual office services are recognized at the time the services have been provided to the customer.
C. Basic Earnings (Loss) Per Share
Basic net loss per share amounts is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company.
ASIA DOCUMENT TRANSITION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
D. Cash and Cash Equivalents
For purpose of reporting the statement of flows, cash and cash equivalents include highly liquid investments with investments with maturities of three months or less at the time of purchase.
E. Property and Equipment
The value of fixed assets is at historical cost as required by generally accepted accounting principles. Depreciation is calculated on a straight-line over the 5 year expected useful life of the asset as follows:
Fixed assets at March 31, 2010 are comprised as follows:
| Office and computer equipment | | $ | 1,818 | |
| Furniture and Fixtures | | | 904 | |
| Leasehold improvement | | | 2,620 | |
| Accumulated Depreciation | | | (2,385 | ) |
| Net Property and Equipment | | $ | 2,957 | |
Depreciation of $332 had been accounted for during the quarter ended March 31, 2010.
F. Foreign currency translation
Assets and liabilities of the Company whose functional currency is the Hong Kong dollar are translated into U.S. dollars at exchange rates prevailing at the balance sheet date. Revenues and expenses are translated at average exchange rates for the year. The net exchange differences resulting from these translations will be reported in other income. Gains and losses resulting from foreign currency transactions will be included the consolidated statements of operations. There are no exchange differences or gains and losses resulting from foreign currency translations to report for the period commencing with inception and ending March 31, 2010.
G. Related Party Notes Payable
Notes Payable consists of $140,696 in loans made by an officer and shareholder of the Company to the Company and its wholly owned subsidiary, VOL. These loans bear no interest, are unsecured and due and payable upon demand.
ASIA DOCUMENT TRANSITION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
H. Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
I. Development Stage
The Company continues to devote substantially all of its efforts in the development of its plan to(a) provide services consisting of converting documents from word processing format to HTML in order that they may be filed with the SEC electronically through EDGAR, the SEC's Electronic Data Gathering, Analysis, and Retrieval system and (b) providing of mailing address, phone and fax service, internet access temporary meeting space (“Virtual Office Services”) to small and single operator businesses within Hong Kong .
J. Income Taxes
The Company accounts for income taxes in accordance with authoritative guidance on deferred income taxes which requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate to net loss before provision for income taxes for the following reasons:
| | | March 31, | |
| | | 2010 | |
| Income tax expense at statutory rate | | $ | ( 1,609 | ) |
| Valuation allowance | | | 1,609 | |
| | | | | |
| Income tax expense per books | | $ | -0- | |
ASIA DOCUMENT TRANSITION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
J. Income Taxes (Continued)
Net deferred tax assets consist of the following components as of:
| | | March 31, | | | | |
| | | 2010 | | | | |
| NOL Carryover | | $ | | | | | 52,392 | |
| Valuation allowance | | | (52,392 | ) | | | | |
| | | | | | | | | |
| Net deferred tax asset | | $ | -0- | | | | -0- | |
The Company has a net operating loss carryover of $154,095 as of March 31, 2010 which expires in 2028. Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur net operating loss carry forwards may be limited as to use in future years.
K. Equity-based compensation.
The Company accounts for its equity-based compensation using the modified prospective method. Under this transition method, stock compensation expense includes compensation expense for all stock-based compensation awards granted on or after January 1, 2006, based on the grant date’s estimated fair value.
NOTE 3. COMMON STOCK TRANSACTIONS
The Company did not issue any shares of common stock during the reporting quarter ended March 31, 2010.
NOTE 4. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of common stock.
ASIA DOCUMENT TRANSITION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 5. TRANSACTIONS WITH RELATED PARTY
On April 26, 2006, Bernard Chan, the Company’s sole Officer and Director, received 18,850,000 common shares of the Company in connection with the Company’s acquisition of Vast Opportunity, Ltd.
As of March 31, 2010, the Company is indebted to Bernard Chan in the amount of $140,696 for loans made by Bernard Chan to the Company and the Company’s wholly owned subsidiary, VOL. These loans are unsecured and bear no interest and are due and payable by the Company upon demand.
NOTE 6. RECENT ACCOUNTING PRONOUNCEMENTS
In June 2009, the Financial Accounting Standards Board (FASB) issued the Accounting Standards Codification™ (the Codification). The Codification now is the single source of authoritative accounting principles recognized by FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with Generally Accepted Accounting Principles (GAAP), in the United States. The Codification became effective for interim and annual periods ending after September 15, 2009. All other accounting literature not included in the Codification will be non-authoritative, except for additional authoritative rules and interpretive releases issued by the United States Securities Exchange Commission (SEC). The Codification is not intended to change GAAP; instead, it reorganizes the thousands of US GAAP pronouncements into approximately 90 Accounting Topics. Adoption of the Codification did not have an impact on our financial statements.
In May 2009, new guidance was issued for accounting for subsequent events. The new guidance, which is now part of Accounting Standards Codification (ASC) Topic 855, Subsequent Events, is consistent with existing auditing standards in its definition of subsequent events, but requires disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. There are two types of subsequent events: (1) events that provide additional evidence about conditions that existed at the balance sheet date, and are recognized in the financial statements, and (2) events that provide evidence about conditions that did not exist at the balance sheet date, but arose before the financial statements are issued or are available to be issued, and are not recognized at the balance sheet date. The adoption of the new guidance had no impact on our consolidated financial statements. We evaluated all events or transactions that occurred after December 31, 1009 up through March 31, 2010, the date these financial statements were issued and filed with the SEC.
In December 2007, new guidance was issued for accounting for collaborative arrangements. The new guidance, which is now part of ASC Topic 808, Collaborative Arrangements, is effective for fiscal years beginning after December 15, 2008. The scope of the new guidance is limited to collaborative arrangements where no separate legal entity exists and in which the parties are active participants and are exposed to significant risks and rewards that depend on the success of the activity. The new guidance requires certain income statement presentation of transactions with third parties and of payments between parties to the arrangement, along with disclosure about the nature and purpose of the arrangement. The adoption of the new guidance on January 1, 2009 did not have a material impact on our financial statements.
ASIA DOCUMENT TRANSITION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 6. RECENT ACCOUNTING PRONOUNCEMENTS (CON’T)
In December 2007, new guidance was issued for accounting for business combinations. The new guidance, which is now part of ASC topic 805, Business Combinations, is effective for financial statements issued for fiscal years beginning on or after December 15, 2008. The new guidance establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any non-controlling interest in the acquiree, and the goodwill acquired in the business combination. ASC Topic 805 also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. We adopted the new guidance on January 1, 2009, which had no immediate impact on our financial statements; however, it may have an impact on the accounting for any potential future business combinations.
NOTE 7. GOING CONCERN
The accompanying financial statements have been prepared in conformity with generally accepted accounting principle, which contemplate continuation of the Company as a going concern. However, the Company has a negative net working capital of US$138,144 as of March 31, 2010 and a net loss of $4,732 and $7,300 for the quarters ended March 31, 2010 and 2009 respectively. The Company currently has limited liquidity, and has not completed its efforts to establish a stabilized source of revenues sufficient to cover operating costs over an extended period of time.
Management anticipates that the Company will be dependent, for the near future, on additional investment capital to fund operating expenses. The Company intends to position itself so that it may be able to raise additional funds through the capital markets. In light of management’s efforts, there are no assurances that the Company will be successful in this or any of its endeavors or become financially viable and continue as a going concern.
ASIA DOCUMENT TRANSITION, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 8. COMMITMENTS
The Company leases its facilities under an operating lease commencing April 16, 2008 and expiring April 15, 2010.
Pursuant to the lease, the Company is obligated to pay monthly rent of approximately $1,722 as well as a management fee of $253.
The following is a summary of future minimum lease payments under operating leases as of March 31, 2010. Rental expense was $23,000 for the period ended March 31, 2010.
Twelve months ending June 30,
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PRELIMINARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This discussion contains forward-looking statements. The reader should understand that several factors govern whether any forward-looking statement contained herein will be or can be achieved. Any one of those factors could cause actual results to differ materially from those projected herein. These forward-looking statements include plans and objectives of management for future operations, including plans and objectives relating to the products and the future economic performance of the company. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions, future business decisions, and the time and money required to successfully complete development projects, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the company. Although the company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of those assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in any of the forward-looking statements contained herein will be realized. Based on actual experience and business development, the company may alter its marketing, capital expenditure plans or other budgets, which may in turn affect the company's results of operations. In light of the significant uncertainties inherent in the forward-looking statements included therein, the inclusion of any such statement should not be regarded as a representation by the company or any other person that the objectives or plans of the company will be achieved.
RESULTS OF OPERATIONS
The following table shows the financial data of the consolidated statements of operations of the Company and its subsidiaries for the 3-month periods ended March 31, 2010 and March 31, 2009, as well as the 9-month periods March 31, 2010 and March 31, 2009. The data should be read in conjunction with the audited consolidated financial statements of the Company and related notes thereto.
| | | 3-month Ended | | | 9-month Ended | |
| | | March 31, | | | March 31, | | | March 31, | | | March 31, | |
| | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
| | | | | | | | | | | | | |
| (In US$ except per share data) | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net Sales | | $ | 2,372 | | | $ | 2,628 | | | $ | 7,116 | | | $ | 6,731 | |
| | | | | | | | | | | | | | | | | |
| Operating expenses | | | | | | | | | | | | | | | | |
| Depreciation expenses | | | (332 | ) | | | (332 | ) | | | (997 | ) | | | (1,056 | ) |
| Selling, general and administrative expenses | | | (6,772 | ) | | | (9,596 | ) | | | (32,726 | ) | | | (25,853 | ) |
| Total Operating expenses | | | (7,104 | ) | | | (9,928 | ) | | | (33,723 | ) | | | (26,909 | ) |
| | | | | | | | | | | | | | | | | |
| Loss from operations | | | (4,732 | ) | | | (7,300 | ) | | | (26,607 | ) | | | (20,178 | ) |
| | | | | | | | | | | | | | | | | |
| Non-operating income (expense) | | | | | | | | | | | | | | | | |
| Interest income | | | — | | | | — | | | | — | | | | — | |
| Loss on disposal of property and equipment | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | |
| Profit/(loss) before income tax and minority interests | | | (4,732 | ) | | | (7,300 | ) | | | (26,607 | ) | | | (20,178 | ) |
| Provision for income taxes | | | — | | | | — | | | | — | | | | — | |
| Minority interests | | | — | | | | — | | | | — | | | | — | |
| Net income/(loss) | | | (4,732 | ) | | | (7,300 | ) | | | (26,607 | ) | | | (20,178 | ) |
| | | | | | | | | | | | | | | | | |
| Earnings (loss) per share | | | | | | | | | | | | | | | | |
| Basic | | | (0.00 | ) | | cents | | | | (0.00 | ) | | Cents | |
3-MONTH ENDED MARCH 31, 2010 COMPARED TO 3-MONTH ENDED MARCH 31, 2009.
OPERATING REVENUE
Since commencing operations in April 2006, we have been engaged to providing Edgarizing and Virtual Office businesses. However, due mainly to the inefficient minimal scale of operating the Edgarizing business, we temporarily ceased its operation and continue only the operation of Virtual Office.
For the 3-month period ended March 31, 2010, Asia Document Transition, Inc. generated revenue in the amount of $2,372, as compared to $2,372 for the same corresponding period in year 2009, the revenue remained unchanged. During the quarter ended March 31, 2010, we provided our virtual office services for an average of 3 clients with an average monthly fee earned per client in the amount of approximately US$260, which remained the same for the corresponding period in year 2009. In addition, the existing clients are being charged in a similar manner because of the current economic situation.
DEPRECIATION EXPENSES
Depreciation expenses for the 3-month period ended March 31, 2010 amounted to $332, as compared to $332 for the same corresponding period in year 2009, depreciation expenses remained unchanged. The composition of these expenses was related to the depreciation charged on office equipments and computers.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
For the 3-month period ended March 31, 2010, selling, general and administrative expenses were $6,772, compared to $9,596 for the same corresponding period in year 2009, a decrease of $2,824 or 29.4%. This decrease was primarily the result of less professional fees being paid for the 3-month period ended March 31, 2010 for the preparation of periodically reports.
INTEREST INCOME
Interest income was none for the reporting 3-month period ended March 31, 2010, compared to none for the same corresponding period in year 2009.
NET LOSS
Net loss was $4,732 for the reporting 3-month period ended March 31, 2010, as compared to $7,300 for the same corresponding period in year 2009, a decrease of $2,568 or 35.2%. The decrease was primarily the result of the decrease of SG&A expenses mentioned above.
9-MONTH ENDED MARCH 31, 2010 COMPARED TO 9-MONTH ENDED MARCH 31, 2009.
OPERATING REVENUE
For the 9-month period ended March 31, 2010, Asia Document Transition, Inc. generated revenue in the amount of $7,116, as compared to $6,731 for the same corresponding period in year 2009, an increase of $385 or 5.7%. The increase was primarily the result of an average 3 client per month during the nine-month period ended March 31, 2010, as compared to an average of approximate 2.5 clients per month the same corresponding period in year 2009. During the 9-month period ended March 31, 2009, we provided our virtual office services for an average of 3 clients with an average monthly fee earned per client in the amount of approximately US$260, versus an average of approximate 2.5 clients for the same corresponding period in year 2009. In addition, the existing clients are being charged the same because of the current economic situation.
DEPRECIATION EXPENSE
Depreciation expense for the 9-month period ended March 31, 2010 amounted to $997, as compared to $1,056 for the same corresponding period in year 2009, a decrease of $59 or 5.6%. The decrease was primarily the result of discontinuation of one amortized item during the reporting period.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
For the 9-month period ended March 31, 2010, selling, general and administrative expenses were $32,726, compared to $25,853 for the same corresponding period in year 2009, an increase of $6,873 or 26.6%. This increase was primarily the result of yearend additional professional fees paid which were accounted for previous year in relation to the Company’s preparation and filing of the yearend report, Form 10K.
INTEREST INCOME
Interest income was none for the reporting 9-month period ended March 31, 2010, compared to none for the same corresponding period in year 2009.
NET LOSS
Net loss was approximately $26,607 for the reporting 9-month period ended March 31, 2010, as compared to $20,178 for the same corresponding period in year 2009, an increase of $6,429 or 31.9%. The increase in net loss was primarily due to the additional SG&A expenses for professional services incurred during previous year, but paid during the report period mentioned above.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2010, cash and cash equivalents totaled $2,552. This cash position was the result of a result of net cash provided by financing activities in the amount of $24,771, offsetting by net cash used in operating activities in the amount of $23,892. The cash increase in financing activities was the result of additional loans from related party. The net cash used by operating activities was mainly the result of additional professional fees in relation to our preparation and filings of previous yearend report.
We believe that the level of financial resources is a significant factor for our future development, and accordingly we may choose at any time to raise capital through private debt or equity financing to strengthen its financial position, facilitate growth and provide us with additional flexibility to take advantage of business opportunities. However, we do not have immediate plans to have a public offering of our common stock.
CRITICAL ACCOUNTING POLICIES
In presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our consolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our businesses operate in environments where we pay a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex.
Valuation of long-lived assets
We review our long-lived assets for impairment, including property, plant and equipment, and identifiable intangibles with definite lives, whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. To determine recoverability of our long-lived assets, we evaluate the probability that future undiscounted net cash flows will be greater than the carrying amount of our assets. Impairment is measured based on the difference between the carrying amount of our assets and their estimated fair value.
Allowance for Doubtful Accounts
We perform ongoing credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness. We continuously monitor collections and payments from our customers and maintain a provision for estimated credit losses based upon our historical experience and any specific customer collection issues that have been identified. While such credit losses have historically been within our expectations and the provisions established, we cannot guarantee that we will continue to experience credit loss rates similar to those we have experienced in the past. Measurement of such losses requires consideration of historical loss experience, including the need to adjust for current conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and financial health of specific customers.
Goodwill on consolidation
Our long-lived assets include goodwill. SFAS No. 142 "Goodwill and Other Intangible Assets" requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis and between annual tests in certain circumstances. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value of each reporting unit. Significant judgments required to estimate the fair value of reporting units include estimating future cash flows, determining appropriate discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value for each reporting unit.
Going Concern
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. To date, the Company generated only nominal revenue, is considered a development stage company, has experienced recurring net operating losses, had a net loss of $16,427 for the three months ended December 31, 2009, and a working capital deficiency of $133,487 at December 31, 2009. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. We will need to raise funds or implement our business plan to continue operations.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
ITEM 4A(T). CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of March 31, 2010. Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that our disclosure and controls are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes (including corrective actions with regard to significant deficiencies or material weaknesses) in our internal controls over financial reporting that occurred during the third quarter of fiscal 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
There are no legal proceedings which are pending or have been threatened against us or any of our officers, directors or control persons of which management is aware.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES |
Except as may have previously been disclosed on a current report on Form 8-K or the Company’s Registration Statement on Form S-1, we have not sold any of our securities in a private placement transaction or otherwise during the past three years.
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
Not applicable.
| ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
None.
None
Exhibit No. | | Description |
| | | |
| 31.1 | | Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | |
| 31.2 | | Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | |
| 32.1 | | Certification of Principal Executive Officer and Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
SIGNATURES
In accordance with the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
| | | |
| | ASIA DOCUMENT TRANSITION, INC. |
| | | |
| Date: April 29, 2010 | By: | /s/ Bernard Chan |
| | Bernard Chan |
| | Director, CEO, President and Treasurer |
EXHIBIT INDEX
Exhibit No. | | Description |
| | | |
| 31.1 | | Certification of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | |
| 31.2 | | Certification of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| | | |
| 32.1 | | Certification of Principal Executive Officer and Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
