SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended
March 31, 2016
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 000-54171
NEW ASIA ENERGY, INC.
(Exact Name of Small Business Issuer as specified in its charter)
| Colorado | 26-1381565 |
| (State or other jurisdiction | (IRS Employer File Number) |
33 Ubi Avenue 3 #07-58 Vertex Tower A Singapore | 408868 |
| (Address of principal executive offices) | (Zip code) |
+65-6702-3808 (Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files. Yes ☐ No ☑
Indicate by check mark whether the registrant is a large accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "small reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ |
Non-accelerated filer ☐ (Do not check if a smaller reporting company) | Smaller reporting company ☑ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☑
As of May 13, 2016, the Company had 326,965,299 shares of common stock issued and outstanding.
FORM 10-Q
NEW ASIA ENERGY, INC.
TABLE OF CONTENTS
| PART I FINANCIAL INFORMATION | |
| Item 1. Financial Statements for the period ended March 31, 2016 | |
| Condensed Balance Sheets as of March 31, 2016 (Unaudited) and December 31, 2015 | 3 |
| Condensed Statements of Operations for the Three Months ended March 31, 2016 and 2015 (Unaudited) | 4 |
| Condensed Statements of Cash Flows for the Three Months ended March 31, 2016 and 2015 (Unaudited) | 5 |
| Notes to (Unaudited) Condensed Financial Statements | 6 |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 13 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 15 |
| Item 4. Controls and Procedures | 15 |
| PART II OTHER INFORMATION | |
| Item 1. Legal Proceedings | 16 |
| Item 1A. Risk Factors | 16 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 16 |
| Item 3. Defaults Upon Senior Securities | 16 |
| Item 4. Mine Safety Disclosures | 16 |
| Item 5. Other Information | 16 |
| Item 6. Exhibits | 17 |
| Signatures | 18 |
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PART I FINANCIAL INFORMATION
References in this document to "us," "we," or "Company" refer to NEW ASIA ENERGY, INC.
ITEM 1. FINANCIAL STATEMENTS
NEW ASIA ENERGY, INC.
CONDENSED BALANCE SHEETS
| March 31, | December 31, | |||||||
| 2016 | 2015 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 92,782 | $ | 574,211 | ||||
| TOTAL ASSETS | $ | 92,782 | $ | 574,211 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 11,491 | $ | - | ||||
| Advances from related parties | 18,015 | 471,283 | ||||||
| TOTAL LIABILITIES | 29,506 | 471,283 | ||||||
| SHAREHOLDERS' EQUITY | ||||||||
| Preferred stock, par value $.10 per shares; Authorized | ||||||||
| 10,000,000 shares; issued and outstanding -0- shares. | - | - | ||||||
| Common Stock, par value $.001 per shares; Authorized | ||||||||
| 500,000,000 shares; issued and outstanding 326,965,299 and | ||||||||
| 326,965,299 shares respectively | 326,965 | 326,965 | ||||||
| Capital paid in excess of par value | 213,919 | 213,919 | ||||||
| Stock subscriptions receivable | - | (30,603 | ) | |||||
| Accumulated comprehensive income | 9 | 38 | ||||||
| Accumulated deficit | (477,617 | ) | (407,391 | ) | ||||
| TOTAL SHAREHOLDERS' EQUITY | 63,276 | 102,928 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 92,782 | $ | 574,211 | ||||
The accompanying notes are an integral part of these condensed unaudited financial statements
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NEW ASIA ENERGY, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| 3 Month | 3 Month | |||||||
| Ended | Ended | |||||||
| March 31, | March 31, | |||||||
| 2016 | 2015 | |||||||
| Revenue | $ | - | $ | - | ||||
| General and administrative expenses | ||||||||
| Accounting | 4,725 | 6,197 | ||||||
| Contract labor | 9,873 | - | ||||||
| Fees | 1,666 | - | ||||||
| Legal fees | 27,040 | 34,017 | ||||||
| Office | 18,546 | 1,412 | ||||||
| Rent | 1,770 | - | ||||||
| Salaries | 3,800 | - | ||||||
| Stock transfer fees | 1,323 | 816 | ||||||
| Travel | 1,483 | - | ||||||
| Total expenses | 70,226 | 42,442 | ||||||
| (Loss) from operations | (70,226 | ) | (42,442 | ) | ||||
| Net (loss) | $ | (70,226 | ) | $ | (42,442 | ) | ||
| Basic (Loss) Per Share | $ | 0.000 | $ | (0.001 | ) | |||
| Weighted Average Common Shares | ||||||||
| Outstanding | 326,965,298 | 33,998,376 | ||||||
| Net Income (Loss) | $ | (70,226 | ) | $ | (42,442 | ) | ||
| Foreign currency translation gain | 9 | - | ||||||
| Comprehensive income (Loss) | (70,217 | ) | (42,442 | ) | ||||
| Basic (Loss) per common share | $ | 0.000 | $ | (0.001 | ) | |||
| Weighted Average Common Shares | ||||||||
| Outstanding | 326,965,298 | 33,998,376 | ||||||
The accompanying notes are an integral part of these condensed unaudited financial statements
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NEW ASIA ENERGY, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| 3 Month | 3 Month | |||||||
| Ended | Ended | |||||||
| March 31, | March 31, | |||||||
| 2016 | 2015 | |||||||
| Net (Loss) | $ | (70,226 | ) | $ | (42,442 | ) | ||
| Adjustments to reconcile decrease in net assets to net cash | ||||||||
| provided by operating activities: | ||||||||
| Increase in accounts payable | 11,491 | 3,773 | ||||||
| Cash used in operating activities | (58,735 | ) | (38,669 | ) | ||||
| Cash flows from financing activities: | ||||||||
Sale of common stock | 30,603 | 17,554 | ||||||
| Payments made to related parties | (468,243 | ) | ||||||
| Advances from related party | 14,975 | 21,115 | ||||||
| Net cash provided by (used in) financing activities | (422,665 | ) | 38,669 | |||||
| Net decrease in cash | (481,400 | ) | - | |||||
| Loss on foreign currency translation | (29 | ) | ||||||
| Cash at beginning of period | 574,211 | - | ||||||
| Cash at end of period | $ | 92,782 | $ | - | ||||
| Supplemental disclosure information: | ||||||||
| Cash paid for taxes | $ | - | $ | - | ||||
| Interest paid for taxes | $ | - | $ | - | ||||
The accompanying notes are an integral part of these condensed unaudited financial statements
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NEW ASIA ENERGY, INC.
NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 2016
Note 1 - Organization and Summary of Significant Accounting Policies
ORGANIZATION AND BASIS OF PRESENTATION
New Asia Energy, Inc. (formerly known as High Desert Assets, Inc. and previously known as Univest Tech, Inc.) (the "Company"), was incorporated in the State of Colorado on November 6, 2007. The Company was originally formed to develop and market music based on technology solutions. In February 2015, the Company underwent a change in control as a result of 76% of the then issued and outstanding shares of common stock of the Company being acquired by Rock Capital Limited (wholly owned by Lin Kok Peng, Ph.D.) and management adopting a new business plan based on the development of a "Pure Play" Renewable/Alternative/Distributed Energy Technology Solutions and Wastes to Resources and Energy platforms. On December 31, 2015, the Company went through a change of control in ownership (but not a change of control in management) when (i) the Company issued under Regulation S an aggregate of 285,750,001 shares of the Company's common stock to a total of 10 accredited foreign persons in exchange for the receipt of an aggregate of $300,000, including, but not limited to, Rong Yi Rong (Beijing) Asset Management Limited (167,995,350 shares, representing 51.38% of the issued and outstanding common stock of the Company), Platinum Starlight HK Limited (15,176,877 shares), Beijing Run Zheng Da Technology Development Limited (27,297,224 shares), Million Leader HK Limited (27,297,224 shares), and Jun Wei Kang Biotechnology Ltd ("JWK") (10,000,000 shares) and (ii) Rock Capital Limited sold 14,250,000 of its 31,328,700 shares of the Company's common stock to Platinum Starlight HK Limited in exchange for the receipt of an aggregate of $100,000, altogether representing approximately 91.8% of the issued and outstanding common stock of the Company. Current management consists of Lin Kok Peng, PhD, who serves as the Company's Chief Executive Officer, Chief Financial Officer, and Chairman of the Board as well as a director, Jose Capote, who serves as the Company's Chief Technical Officer and Secretary, and Allister Lim Wee Sing, who serves as a director of the Company.
Pursuant to a Memorandum of Understanding ("MOU") dated November 20, 2015, between the Company and JWK, which is a company registered in the People's Republic of China and listed on the Shanghai Equity Exchange under the symbol "SEEQ:206322", the parties agreed to evaluate the potential for the Company to (i) develop, install and operate renewable energy facilities at JWK's cultivation, production and R&D facilities in Jilin Province, China, and (ii) supply renewable energy to JWK's facilities under "take-or-pay," Build-Own-Operate or Build-Own-Operate-and Transfer contractual vehicles, in order to reduce the carbon footprint of the JWK facilities, offset the use of fossil fuels and potentially provide some cost savings to JWK. JWK owns and operates extensive facilities for the cultivation, harvesting, processing, production, distribution and sale of value-added ginseng and other related products that enhance and promote healthy living. JWK has over 5,000 square meters of office and laboratory space and research and development facilities, processing and production plants and over 50 retail stores located throughout China. Jilin Province provides over 85% of the Ginseng raw feedstocks produced in China and 70% of the ginseng raw feedstocks produced world-wide and JWK is a leading provider of Ginseng value-added products in Jilin Province and throughout China. Through its cultivation, harvesting and processing activities, JWK has access to agricultural wastes and other by-products of production that are expected to be excellent sources of feedstock for these renewable energy facilities. The Company is currently evaluating the potential for the development of these projects.
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NEW ASIA ENERGY, INC.
NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 2016
Note 2 - Summary Significant Accounting Policies
This summary of significant accounting policies is presented to assist the reader in understanding the Company's financial statements. The consolidated financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.
UNAUDITED FINANCIAL INFORMATION
The interim unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and with the instructions to Securities and Exchange Commission ("SEC") Form 10-Q and Article 8 of SEC Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments of a normal recurring nature and considered necessary for a fair presentation of its financial condition and results of operations for the interim periods presented in this Quarterly Report on Form 10-Q have been included. Operating results for the interim periods are not necessarily indicative of financial results for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. In preparing these financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
USE OF ESTIMATES
The preparation of 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 statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENT
For the Balance Sheets and Statements of Cash Flows, all highly liquid investments with maturity of 90 days or less are considered to be cash equivalents. The Company had a cash balance of $92,782 at March 31, 2016 and $574,211 as of December 31, 2015. At times such cash balances may be in excess of the FDIC limit of $250,000. As of March 31, 2016 and December 31, 2015, there is no cash equivalent.
EARNINGS PER SHARE
The Company has adopted the Financial Accounting Standards Board (FASB) ASC Topic 260 regarding earnings loss per share, which provides for calculation of "basic" and "diluted" earnings / loss per share. Basic earnings loss per share includes no dilution and is computed by dividing net income / loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings / loss per share reflect the potential dilution of securities that could share in the earnings of an entity similar to fully diluted earnings / loss per share.
There were no potentially dilutive instruments outstanding during the interim period ended March 31, 2016 or the year ended December 31, 2015.
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NEW ASIA ENERGY, INC.
NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 2016
Note 2 - Summary Significant Accounting Policies (Continued)
INCOME TAXES
The Company follows the asset and liability method of accounting for deferred income taxes. The asset and liability method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between financial accounting and tax bases of assets and liabilities. The Company accounts for income taxes pursuant to ASC 740. There was no increase in liabilities for unrecognized tax benefits as a result of this implementation.
FOREIGN CURRENCY
The Company headquarters is located in Singapore and the Company has operations in Singapore, however the functional and reporting currency is in U.S. dollars. Due to the functional and reporting currency both being in U.S. dollars, ASC 830-10-45-17 states that a currency translation is not necessary.
CONCENTRATION OF CREDIT RISKS
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash equivalents, notes receivables, deposits, and trade receivables. The Company places its cash equivalents with high credit quality financial institutions. As of December 31, 2015 and 2014 there were no trade receivables.
FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company applies the provisions of accounting guidance, FASB Topic ASC 825, Financial Instruments. ASC 825 requires all entities to disclose the fair value of financial instruments, both assets and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value, and defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties. As of December 31, 2015 and 2014, the fair value of cash, accounts receivable and notes receivable, accounts payable, accrued expenses, and other payables approximated carrying value due to the short maturity of the instruments, quoted market prices or interest rates which fluctuate with market rates.
The Company defines fair value as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).
Level 1 — Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 — Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 — Level 3 inputs are unobservable inputs for the asset or liability in which there is little, if any, market activity for the asset or liability at the measurement date.
The carrying value of financial assets and liabilities recorded at fair value is measured on a recurring or nonrecurring basis. Financial assets and liabilities measured on a non-recurring basis are those that are adjusted to fair value when a significant event occurs. The Company had no financial assets or liabilities carried and measured on a nonrecurring basis during the reporting periods. Financial assets and liabilities measured on a recurring basis are those that are adjusted to fair value each time a financial statement is prepared.
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NEW ASIA ENERGY, INC.
NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 2016
Note 2 - Summary Significant Accounting Policies (Continued)
RELATED PARTIES
A party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls, is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests is also a related party.
REVENUE RECOGNITION
The Company is focused on the development of a "Pure Play" Renewable/Alternative/Distributed Energy Technology Solutions and Wastes to Resources and Energy platforms. The Company does not expect to generate revenues until projects under development are realized. Once completed, revenues would be recognized as projects accrue revenues from tipping fees and/or the sale of renewable energy.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consisted of professional service fees, rent and utility expenses, meals, travel and entertainment expenses, and other general and administrative overhead costs. Expenses are recognized when incurred.
BASIC AND DILUTED NET (LOSS) PER SHARE
The Company computes loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share ("EPS") on the face of the income statement.
Basic net income (loss) per share is calculated by dividing net (loss) by the weighted-average common shares outstanding. Diluted net income per share is calculated by dividing net income by the weighted-average common shares outstanding during the period using the treasury stock method or the two-class method, whichever is more dilutive. As the Company incurred net losses for the three-month period ended March 31, 2016 and the year ended December 31, 2015 no potentially dilutive securities were included in the calculation of diluted earnings per share as the impact would have been anti-dilutive. Therefore, basic and dilutive net (loss) per share were the same as of March 31, 2016 and December 31, 2015.
GOING CONCERN
The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of approximately $477,617 and $407,391 for the three-month period ended March 31, 2016 and the year ended December 31, 2015 respectively, and Shareholders' Equity of approximately $63,276 and $102,928 at March 31, 2016 and December 31, 2015 respectively.
These matters, among others, raise substantial doubt about our ability to continue as a going concern. While the Company's cash position may not be significant enough to support the Company's daily operations, Management intends to raise additional funds by way of equity and/or debt financing to fund operations.
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NEW ASIA ENERGY, INC.
NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 2016
Note 2 - Summary Significant Accounting Policies (Continued)
OFFICER COMPENSATION
No officer or director has received any compensation from the Company, except for Mr. Capote who received $4,500 and $-0- through March 31, 2016 and 2015 respectively. Aside from the retainer paid to Mr. Capote, it is not anticipated that any officer or director will receive compensation from the Company other than reimbursement for out-of-pocket expenses incurred on behalf of the Company.
LEGAL FEES
During the three-month period ended March 31, 2016 and 2015 legal fees were incurred largely as a result of services provided to the Company to assist with its regulatory requirements with the Securities and Exchange Commission.
Note 3 – Impact of New Accounting Standards
In June 2014 FASB issued Accounting Standards Update (ASU), ASU 2014-10 regarding development stage entities. The ASU removes the definition of development stage entity, as was previously defined under generally accepted accounting principles in the United States (U.S. GAAP), from the accounting standards codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP.
In addition, the ASU eliminates the requirements for development stage entities to (i) present inception-to-date information in the statement of income, cash flow and stockholders' equity, (ii) label the financial statements as those of a development stage entity, (iii) disclose a description of the development stage activities in which the entity is engaged, and (iv) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage.
The Company has chosen to adopt the ASU early for the Company's financial statements as of December 31, 2014. The adoption of this pronouncement impacted the Company by eliminating the requirement to report inception to date financial information previously required.
In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which amends the existing accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognition of revenue at an amount an entity expects to be entitled when products are transferred to customers. ASU 2014-09 will be effective for the Company beginning in its first quarter of 2017. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. The Company is currently evaluating the impact of adopting the new revenue standard on its financial statements.
In August 2014, FASB issued guidance that requires management to evaluate whether there are conditions or events that raise substantial doubt about an entity's ability to continue as a going concern. If such conditions or events exist, disclosures are required that enable users of the financial statements to understand the nature of the conditions or events, management's evaluation of the circumstances and management's plans to mitigate the conditions or events that raise substantial doubt about the entity's ability to continue as a going concern. The Company will be required to perform an annual assessment of its ability to continue as a going concern when this standard becomes effective on January 1, 2017. The adoption of this guidance is not expected to impact our financial position, results of operations or cash flows.
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NEW ASIA ENERGY, INC.
NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 2016
Note 4 – Capital Stock
The Company's Articles of Incorporation, as amended, currently authorize the issuance of 500,000,000 shares of common stock, par value of $0.001 per share ("Common Stock"), and 10,000,000 shares of preferred stock, par value of $0.10 per share ("Preferred Stock"), to have such classes and preferences as the Board of Directors may determine from time to time. As of December 31, 2015 and March 31, 2016, we had 326,965,299 shares of our Common Stock issued and outstanding. As of December 31, 2015 and March 31, 2016, we had no shares of our Preferred Stock issued and outstanding.
At formation, the Company authorized to issue 50,000,000 shares of $.001 par value common stock. On May 13, 2014, the Company filed Articles of Amendment to its Articles of Incorporation with the Secretary of State of Colorado to increase the authorized number of shares of Common Stock from fifty million (50,000,000) shares, par value $0.001, to two hundred fifty million (250,000,000) shares, par value $0.001 per share.
On May 13, 2014, the Company's Board of Directors, receiving the majority vote of the Company's shareholders and, approved: (a) an increase in the aggregate number of authorized shares of Common Stock of the Company from fifty million (50,000,000) shares, par value $0.001 per share, to two hundred fifty million (250,000,000) shares, par value $0.001 per share; and (b) a 9-for-1 forward stock split ("Forward Split") of the issued and outstanding shares of Common Stock of the Company.
The Company authorized 1,000,000 shares of $.10 par value, preferred stock, to have such preferences as the Directors of the Company may assign from time to time.
On February 6, 2015 (the "Closing Date"), the Company entered into Stock Purchase Agreements (the "Agreement") with two U.S. accredited investors, Scott C. Kline and Jose A. Capote, the Secretary and Chief Technical Officer of the Company, respectively, and two foreign investors, including Rock Capital Limited, the new majority owner of the Company, pursuant to which the Company issued an aggregate of 17,446,673 shares of common stock, or approximately 42.3% of the issued and outstanding common stock of the Company, at an aggregate purchase price of approximately $17,446. The sales of Common Stock were made following the acquisition by Rock Capital Limited.
On the Closing Date, Rock Capital Limited acquired 14,250,000 shares of Common Stock of the Company, representing approximately 34.7% of the issued and outstanding shares of Common Stock of the Company as of the Closing Date, from Jaitegh Singh, the previous majority shareholder of the Company. At the Closing Date, Rock Capital Limited also acquired an additional 1,565,450 shares of Common Stock from several minority holders, including Loro Verde Investments, representing approximately 3.8% of the issued and outstanding shares of Common Stock of the Company. As a result of the foregoing, as of the Closing Date, Rock Capital Limited acquired Common Stock representing approximately 76% of the issued and outstanding shares of Common Stock of the Company.
On July 23, 2015, the Company filed Articles of Amendment to its Articles of Incorporation with the Colorado Secretary of State to (i) change the name of the Company from High Desert Assets, Inc. to New Asia Energy, Inc. (the "Name Change"), (ii) increase the Company's authorized common stock, par value $0.001 per share, from 250,000,000 shares to 500,000,000 shares (the "Common Stock Increase"), and (iii) increase the Company's authorized preferred stock, par value $0.10 per share, from 1,000,000 shares to 10,000,000 shares (the "Preferred Stock Increase", together with the Common Stock Increase and Name Change, the "Corporate Actions"). On July 29, 2015, the Financial Industry Regulatory Authority (FINRA) approved the Corporate Actions. The Company's stock is quoted on the OTCQB under the ticker symbol NAEI.
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NEW ASIA ENERGY, INC.
NOTES TO THE CONDENSED UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 2016
Note 4 – Capital Stock (Continued)
On December 31, 2015, the Company went through a change of control in ownership when (i) the Company issued under Regulation S an aggregate of 285,750,001 shares of the Company's common stock to a total of 10 accredited foreign persons in exchange for the receipt of an aggregate of $300,000, including, but not limited to, Rong Yi Rong (Beijing) Asset Management Limited (167,995,350 shares), Platinum Starlight HK Limited (15,176,877 shares), Beijing Run Zheng Technology Development Limited (27,297,224 shares), and Million Leader HK Limited (27,297,224 shares), and (ii) Rock Capital Limited sold 14,250,000 of its shares of the Company's common stock to Platinum Starlight HK Limited in exchange for the receipt of an aggregate of $100,000, altogether representing approximately 91.8% of the issued and outstanding common stock of the Company. The Company received $269,435 as of December 31, 2015. The remaining amount of $30,566 was received after the year end. From January 1, 2016 through March 31, 2016, the Company did not issue any Common Stock or Preferred Stock.
Note 5 - Related Party Activity
The Company has paid Mr. Capote consulting fees for acting in the capacity as Secretary and CTO of the Company in the amount of $ 4,500 and $0 for the periods ended March 31, 2016 and March 31, 2015, respectively.
On August 19, 2015, the Board of Directors of the Company approved a resolution acknowledging that Rock Capital Limited, the principal controlling shareholder of the Company, (i) had been advancing all the funds to the Company since February 6, 2015 to pay for operating expenses of the Company ("Prior Advances") and (ii) would be required to advance an additional $250,000 to the Company to fund further operating expenses and investments of the Company ("Future Advances", and together with Prior Advances, "Advances"). The Board further resolved that these Advances would constitute an interest-free loan to the Company to be repaid by the close of business on October 31, 2015. However, if the Company was unable to repay these Advances by such date, Rock Capital Limited, at its sole discretion, would have the option to extend the repayment deadline or convert all or a portion of the above Advances into Common Stock at a conversion price of $0.02 per share. In a letter dated January 8, 2016, Rock Capital Ltd requested repayment of the advances made to date and on January 31, 2016, the Company issued a letter to Rock Capital Ltd confirming its agreement to repay the advances. On March 17th 2016, the Company repaid a total of $ 468,243 to Rock Capital Ltd.
Note 6 – Subsequent Events
Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no events have occurred that require disclosure.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION
The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in, Item 1 in this Quarterly Report on Form 10-Q. This item contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking. Such forward-looking statements are based on current expectations, estimates, and projections about our industry, management beliefs, and certain assumptions made by our management. Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth in other reports and documents that we file from time to time with the Securities and Exchange Commission, particularly the Report on Form 10-K, Form 10-Q and any Current Reports on Form 8-K.
Results of Operations
Operating expenses, which consisted solely of general and administrative expenses for the three-month period ended March 31, 2016, were $70,226. This compares with operating expenses for the three-month period ended March 31, 2015, were $42,442. The major components of general and administrative expenses include office, rental, travel, accounting fees, consulting fees, legal and professional fees and stock transfer fees. The material increase in such expense in the first quarter of 2016 were related to increased legal and accounting fees in connection with our change in control and the subsequent implementation of our new business plans.
As a result of the foregoing, we had a net loss of $70,226 for the three month period ended March 31, 2016. This compares with a net loss for the three-month period ended March 31, 2015 of $42,442.
Since February 2015, after the change in control, the Company has been focusing on the development of "pure play" renewable/alternative/distributed energy technology solutions and wastes to resources and energy platforms. Our business model incorporates two synergistic and mutually aligned approaches:
| · | Commercialization and deployment of proven, proprietary technologies, including, but not limited to: advanced battery and energy storage solutions; advanced solar technologies; and wastes to biofuels; and | |
| · | Project development to provide recurring revenue streams through the integration of proven, state-of-the-art technologies, (those owned by the company and others brought by exclusive licensing/contractual arrangements) to undertake projects under build-own-operate (BOO), build-own-operate and transfer (BOOT) and joint venture contractual arrangements. |
The Company's mission is to be a leader in the deployment of solutions and the implementation of projects that create and enhanced sustainable living. Of the two billion people who lack access to modern energy services, 1.2 billion live in Asia. Governments in the region give high priority to supplying electricity to all households, including those living in remote rural areas that cannot be easily reached by the national grids. Local alternative/renewable/distributed energy resources can be used to supply electricity to these areas, using individual systems or independent grids. The demand for remote area electricity services, along with the growing concern for the environment and sustainable development, will continue to increase the demand for alternative energy products.
Furthermore, with global waste production reaching a total of 2 billion metric tons per year (over 100 million metric tons per year in ASEAN nations (Association of Southeast Asian Nations)), there is a huge, unmet, demand for utilizing these wastes in projects that recover resources (energy, recyclables and other commercial products) and thus providing, safe and environment friendly waste disposal solutions.
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The Company's business model relies on harnessing the strength of off-take and/or energy purchase agreements with marquee parties and/or multinationals to ensure the financial viability of the projects. Typically, the projects of the Company would provide for multiple diverse revenue streams, including waste tipping fees, revenues from the recovery of renewable energy and other end products (i.e. recyclables, fertilizer and biofuels).
We expect that we will need to raise additional funds to support the development expansion of our business model, including the acquisition of proprietary technologies, working capital to support the implementation of new projects, or for the acquisition of complementary businesses or technologies, or if we must respond to unanticipated events that require us to make additional investments. We cannot assure that additional financing will be available when needed on favorable terms, or at all.
We expect to undertake some near-term acquisitions that would result in the generation of revenues, however, notwithstanding these developments we expect to incur operating losses through the balance of this year because we will be incurring expenses and not generating sufficient revenues. We cannot guarantee that we will be successful in generating sufficient revenues or other funds in the future to cover these operating costs. We expect to cover such shortfall in operating margins through advances from our principal shareholder(s) and other fund-raising measures that the Company deems appropriate.
Pursuant to a Memorandum of Understanding ("MOU") dated November 20, 2015, between the Company and JWK, which is a company registered in the People's Republic of China and listed on the Shanghai Equity Exchange under the symbol "SEEQ:206322", the parties agreed to evaluate the potential for the Company to (i) develop, install and operate renewable energy facilities at JWK's cultivation, production and R&D facilities in Jilin Province, China, and (ii) supply renewable energy to JWK's facilities under "take-or-pay," Build-Own-Operate or Build-Own-Operate-and Transfer contractual vehicles, in order to reduce the carbon footprint of the JWK facilities, offset the use of fossil fuels and potentially provide some cost savings to JWK. JWK owns and operates extensive facilities for the cultivation, harvesting, processing, production, distribution and sale of value-added ginseng and other related products that enhance and promote healthy living. JWK has over 5,000 square meters of office and laboratory space and research and development facilities, processing and production plants and over 50 retail stores located throughout China. Jilin Province provides over 85% of the Ginseng raw feedstocks produced in China and 70% of the ginseng raw feedstocks produced world-wide and JWK is a leading provider of Ginseng value-added products in Jilin Province and throughout China. Through its cultivation, harvesting and processing activities, JWK has access to agricultural wastes and other by-products of production that are expected to be excellent sources of feedstock for these renewable energy facilities. The Company is currently evaluating the potential for the development of these projects.
Liquidity and Capital Resources.
As of March 31, 2016, we had cash or cash equivalents of $92,782 and as of December 31, 2015, we had cash or cash equivalents of $574,211.
We had net cash used for operating activities of $58,735 for the three month period ended March 31, 2016. We had net cash used for operating activities of $38,669 for the three month period ended March 31, 2015. The change resulted from our increased net loss during the period.
Cash flows used in financing activities were $422,665 during the three-month period ended March 31, 2016. Cash flows from financing activities were $38,669 during the three month period ended March 31, 2015. These cash flows were related to the repayment of advances made by Rock Capital Ltd (our previous principal shareholder) and company operations in the implementation of our business plan after the change in control.
Over the next twelve months we expect to use approximately $ 350,000 for working capital to develop operations in accordance with our new Business Model.
Our principal source of liquidity will initially be from advances provided by our principal shareholders, Rong Yi Rong (Beijing) Asset Management Limited and Rock Capital Limited.
Our new Business Model will provide a source of revenues from the sale and distribution of advanced, proprietary technologies and/or other sustainable living products and from the development of Renewable Energy Projects that will provide a diverse source of recurring revenue streams. We expect that such revenues would commence sometime in 2017.
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Off-Balance Sheet Arrangements
We have no significant 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 are material to stockholders.
Future Financings
We will continue to rely on advances from our principal shareholder(s) as well as from other sources of financing, including Private Placements of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.
Critical Accounting Policies
Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. 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, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
Recently Issued Accounting Pronouncements
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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act").
Based on this evaluation, our principal executive and principal financial and accounting officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of March 31, 2016.
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Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to management's reports on the Company's internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not Applicable.
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
| Exhibit | ||||
| Number | Description | Filing | ||
| 3.1 | Articles of Incorporation | Filed with the SEC on May 18, 2009 as part of our Registration Statement on Form S-1. | ||
| 3.2 | Articles of Amendment | Filed with the SEC on July 31, 2015 as Exhibit 3.1 to a Form 8-K. | ||
| 3.3 | Bylaws | Filed with the SEC on May 18, 2009 as part of our Registration Statement on Form S-1. | ||
| 31.1 | Certification of CEO pursuant to Sec. 302 | Filed herewith. | ||
| 31.2 | Certification of CFO pursuant to Sec. 302 | Filed herewith. | ||
| 32.1 | Certification of CEO pursuant to Sec. 906 | Filed herewith. | ||
| 32.2 | Certification of CFO pursuant to Sec. 906 | Filed herewith. | ||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith. | ||
| 101.INS | XBRL Instance Document | Filed herewith. | ||
| 101SCH | XBRL Taxonomy Extension Schema Document | Filed herewith. | ||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith. | ||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | Filed herewith. | ||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith. | ||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith. |
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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.
NEW ASIA ENERGY, INC. | ||
| Date: May 23, 2016 | By: | /s/ Lin Kok Peng |
| Lin Kok Peng | ||
| Chief Executive Officer, Chief Financial Officer and Chairman of the Board | ||
| (Principal Executive Officer and Principal Financial and Accounting Officer) | ||
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