ASIA ATLANTIC RESOURCES
(An Exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
January 31, 2014
(Unaudited)
Note 1 - Nature and Continuance of Operations
The Company was incorporated in the State of Nevada on January 22, 2007 and is in the exploration stage. The Company acquired a mineral property located in the Province of British Columbia, Canada, which expired on September 17, 2008.
The Company has adopted April 30 as its fiscal year end.
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially different from carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern. At January 31, 2014, the Company had not yet achieved profitable operations, has accumulated losses of $304,567 since its inception. The Company expects to incur further losses in the development of its business, all of which casts substantial doubt about the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management anticipates that additional funding will be in the form of equity financing from the sale of common stock. Management may also seek to obtain short-term loans from the directors of the Company. There are no current arrangements in place for equity funding or short-term loans.
Note 2 - Summary of Significant Accounting Policies
Basis of presentation and interim reporting
The Company’s financial statements included herein are prepared under the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America. While the information presented in the accompanying interim financial statements is unaudited, it includes all adjustments which are in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim period presented in accordance with accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.
Although these interim financial statements follow the same accounting policies and methods of their application as the Company’s April 30, 2013 annual financial statements, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. Accordingly, it is suggested that these interim financial statements be read in conjunction with the Company’s April 30, 2013 annual financial statements. The results of operations for the period are not necessarily indicative of the results expected for a full year or for any future periods.
Development Stage Company
The Company is a development stage company as defined in the Financial Accounting Standards Board (“SASB”) Accounting Standards Codification (“ASC”) Topic 205-915, “Development Stage Entities.”
ASIA ATLANTIC RESOURCES
(An Exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
January 31, 2014
(Unaudited)
Note 2 - Summary of Significant Accounting Policies - continued
| The Company is still in the developmental stage, devoting substantially all of its present efforts to establish its business and its planned principal operations have not commenced, as only one subsidiary has started to realize some revenues but has not achieved full operations. All losses accumulated since inception have been considered as part of the Company’s development stage activities. |
Recent Accounting Pronouncements
The Company adopts new pronouncements relating to generally accepted accounting principles applicable to the Company as they are issued, which may be in advance of their effective date. Management does not believe that any pronouncement not yet effective but recently issued would, if adopted, have a material effect on the accompanying financial statements.
Note 3 - Related party transactions
The Company’s former director advanced funds to the Company. There are no repayment terms or interest attached to the advances. As at January 31, 2014 $14,486 in advances remain owing by the Company and a further $48,650 remain owing to a former Director for management fees. These transactions resulted in an amount due to related parties as at January 31, 2014 of $63,136.
Note 4 - Convertible Note
On August 19, 2008, the Company received financing of $6,500 in exchange for a note payable that is non-interest bearing and due on demand. Each $0.005 of the principal outstanding of the note may be converted into one common stock of the Company at the discretion of the note holder. Should the conversion feature be exercised, the Company would be required to issue 1,300,000 shares in exchange for the note.
On February 15, 2011, the Company entered into a convertible line of credit note, which bears no interest, has a maturity date of December 31, 2013 and is unsecured. The line allows for draws up to $100,000, of which the Company has drawn $78,250. At January 31, 2014, the Company has $21,750 which can be drawn. It is convertible at the option of the holder at the lesser of 60% of the 3 day prior closing price, $0.01 or the price shares are sold to a third party. This convertible line of credit note has been further extended to December 30, 2016.
The Company accounts for this financial instrument in accordance with FASB ASC Topic 815, "Derivatives and Hedging," Subtopic 40, “Contracts in Entity`s Own Equity.” At its inception the conversion feature was recorded separately from the debt instrument and using level 1 inputs the fair value was calculated as $nil.
ASIA ATLANTIC RESOURCES
(An Exploration Stage Company)
NOTES TO THE INTERIM FINANCIAL STATEMENTS
January 31, 2014
(Unaudited)
Note 5 - Capital Stock
On February 12, 2007, the Company issued 2,000,000 common shares for $2,000 in cash to the sole director.
On February 15, 2007, the Company issued 5,600,000 common shares for $28,000 in cash.
On November 6, 2008, the Company issued 4,000,000 commons shares for $100,000 in cash.
On October 13, 2009, the Company received share subscriptions for 500,000 common shares for $12,500 in cash.
On October 22, 2009, the Company received share subscriptions for 500,000 common shares for $12,500 in cash.
On December 29, 2009, the Company issued 1,000,000 common shares in fulfillment of the subscriptions.
On December 29, 2009, the Company issued 500,000 common shares for $12,500 in cash.
There are no shares subject to options, warrants or other agreements as at January 31, 2014.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Plan of Operation
We are presently operating as a “shell company” in the process of seeking a new business opportunity. We will endeavor to enter into a corporate business combination or acquisition of assets by which we become engaged in an active business venture. There are no present binding arrangements for such a business combination or acquisition of assets.
We do not presently have sufficient funds to pay our administrative and operating expenses or to finance any potential business acquisitions. Accordingly, we are dependent upon our ability to raise funds to be able to continue our existence and finance our efforts to seek a business acquisition. We do not presently have any arrangements under which we are assured that the necessary funds will be available
We presently have no employees other than our President and Sole Director. If we are able to complete a business acquisition and enter into an active business, we will have to employ personnel with knowledge of and experience in that industry. We anticipate that we will use outside independent consultants and advisors to assist us in our acquisition efforts.
Results of Operations for the Three-Month Period Ended January 31, 2014
We had no revenues for the three-month periods ended January 31, 2014 or 2013. We have no present source of revenue and there is little likelihood we will develop any revenue source during the next 12 months.
We incurred expenses in the amount of $3,484 for the three-month period ended January 31, 2014 as compared with $1,350 for the three-month period ended January 31, 2013. The increase is due to an increase in management fees of $2,000, an increase of $184 in general and administrative fees and a $50 decrease in professional fees for the period in 2014 as compared to 2013. All these expenses were for administrative costs, management fees and professional fees.
At January 31, 2014, we had total assets of $12,779 consisting of $8,779 in cash and $4,000 in prepaid expenses. There were total liabilities of $149,936 consisting of accounts payable and accrued liabilities of $2,050 a note payable of $84,750 and advances from a related party of $63,136.
We have not attained any source of revenue or profitable operations. We are dependent upon obtaining capital financing to pay our administrative costs and pursue any business activities. For these reasons, our auditors believe that there is substantial doubt we will be able to continue as a going concern.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
None.
Item 4T. Controls and Procedures.
Management’s Report on Internal Control over Financial Reporting.
Our management, including our principal executive officer, our principal financial officer and our principal accounting officer and our Board of Directors, is responsible for establishing and maintaining a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Our management, with the participation of our principal executive officer and financial officer, evaluated the effectiveness of our internal control over financial reporting as of January 31, 2014. Our management’s evaluation of our internal control over financial reporting was based on the framework in Internal Control—Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on such evaluation, management determined that our internal control over financial reporting was not effective as of January 31, 2014 because the following material weakness in internal control over financial reporting existed as of January 31, 2014.
(i) lack of segregation of incompatible duties due to insufficient personnel; and
(ii) Insufficient Board of Directors representation.
Though no material misstatements have resulted our management has determined that until such time as sufficient representation on our Board of Directors can be achieved the Company’s inability to formulate an audit committee represents a significant risk.
A material weakness is a deficiency or a combination of control deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Limitations on Effectiveness of Controls
Our principal executive officer and principal financial officer do not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additional controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the third quarter of our fiscal year end April 30, 2014 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
PART II
Item 1. Legal Proceedings.
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Reserved
Item 5. Other Information.
The Company’s Board of Directors does not presently have a standing nominating committee or any committee performing similar functions since the Board presently consists of only one member.
Item 6. Exhibits.
(a) The following sets forth those exhibits filed pursuant to Item 601 of Regulation S-K:
| Exhibit No. | | Description of Exhibits |
| 31.1 | | * Certification of the Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | |
| 31.2 | | * Certification of the Acting Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002 |
| | | |
| 32.1 | | * Certification of the Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002. |
| | | |
| 32.2 | | * Certification of the Acting Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002. |
____________________
* Filed herewith.
(b) The following sets forth the Company’s reports on Form 8-K that have been filed during the quarter for which this report is filed:
None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | ASIA ATLANTIC RESOURCES |
| | | | | |
| Date: | March 18, 2014 | | By: | /s/ J. Francisco Terreforte |
| | | | | J. Francisco Terreforte |
| | | | | Chief Executive Officer, President and Chairman of the Board |
