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
September 30, 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) |
60 Paya Lebar Road 12-08 Paya Lebar Square Singapore | 409051 |
| (Address of principal executive offices) | (Zip code) |
+65-6820-8885
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
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 November 14, 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 (Unaudited) | |
Balance Sheets as of September 30, 2016 and December 31, 2015 (Unaudited) | 3 |
Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2016 and 2015 (Unaudited) | 4 |
Statements of Cash Flows for the nine months ended September 30, 2016 and 2015 (Unaudited) | 5 |
| Notes to (Unaudited) Financial Statements | 6 |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 10 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 13 |
| Item 4. Controls and Procedures | 13 |
| PART II OTHER INFORMATION | |
| Item 1. Legal Proceedings | 14 |
| Item 1A. Risk Factors | 15 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 15 |
| Item 3. Defaults Upon Senior Securities | 15 |
| Item 4. Mine Safety Disclosures | 15 |
| Item 5. Other Information | 15 |
| Item 6. Exhibits | 16 |
| Signatures | 17 |
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PART I FINANCIAL INFORMATION
References in this document to "us," "we," "NAEI," or "Company" refer to NEW ASIA ENERGY, INC.
ITEM 1. FINANCIAL STATEMENTS
NEW ASIA ENERGY, INC.
BALANCE SHEETS
(Unaudited)
| September 30, 2016 | December 31, 2015 | |||||||
| Current Assets | ||||||||
| Cash | $ | 47,569 | $ | 574,211 | ||||
| Prepaid expenses | 4,000 | - | ||||||
| TOTAL ASSETS | $ | 51,569 | $ | 574,211 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | ||||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 2,859 | $ | - | ||||
| Advances from related parties | 51,461 | 471,283 | ||||||
| TOTAL LIABILITIES | 54,320 | 471,283 | ||||||
| SHAREHOLDERS' EQUITY (DEFICIT) | ||||||||
| Preferred stock, par value $.10 per share; Authorized 10,000,000 shares, issued and outstanding -0- shares | - | - | ||||||
| Common Stock, par value $.001 per share; 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 (loss) | (238 | ) | 38 | |||||
| Accumulated deficit | (543,397 | ) | (407,391 | ) | ||||
| TOTAL SHAREHOLDERS' EQUITY (DEFICIT) | (2,751 | ) | 102,928 | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) | $ | 51,569 | $ | 574,211 | ||||
The accompanying notes are an integral part of these unaudited financial statements
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NEW ASIA ENERGY, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
| Three Months Ended September 30, 2016 | Three Months Ended September 30, 2015 | Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | |||||||||||||
| Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
| General and administrative expenses | ||||||||||||||||
| Accounting | 3,075 | 2,415 | 12,925 | 9,362 | ||||||||||||
| Contract labor | 8,400 | 11,429 | 25,173 | 14,429 | ||||||||||||
| Fees | 822 | 500 | 2,483 | 10,500 | ||||||||||||
| Legal fees | 3,290 | 6,644 | 27,861 | 59,031 | ||||||||||||
| Office | 11,320 | 7,801 | 44,435 | 12,457 | ||||||||||||
| Rent | 565 | 4,709 | 5,802 | 14,846 | ||||||||||||
| Salaries | - | - | 3,800 | 3,289 | ||||||||||||
| Stock transfer fees | 1,239 | 2,531 | 3,175 | 4,264 | ||||||||||||
| Travel | 4,624 | - | 10,352 | 13,587 | ||||||||||||
| Total operating expenses | 33,335 | 36,029 | 136,006 | 141,765 | ||||||||||||
| Loss from operations | (33,335 | ) | (36,029 | ) | (136,006 | ) | (141,765 | ) | ||||||||
| Other income | ||||||||||||||||
| Debt release | - | - | - | 10,000 | ||||||||||||
| Total other income | - | - | - | 10,000 | ||||||||||||
| Net loss | $ | (33,335 | ) | $ | (36,029 | ) | $ | (136,006 | ) | $ | (131,765 | ) | ||||
| Foreign currency translation loss | (260 | ) | (1,455 | ) | (276 | ) | (1,455 | ) | ||||||||
| Total Comprehensive loss | (33,595 | ) | (37,484 | ) | (136,282 | ) | (133,220 | ) | ||||||||
| Basic and diluted net loss per common share | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | ||||
| Weighted Average Common Shares | ||||||||||||||||
| Outstanding – Basic and Diluted | 326,965,299 | 41,215,297 | 326,965,299 | 38,836,092 | ||||||||||||
The accompanying notes are an integral part of these unaudited financial statements
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NEW ASIA ENERGY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended September 30, 2016 | Nine Months Ended September 30, 2015 | |||||||
| Net Loss | $ | (136,006 | ) | $ | (131,765 | ) | ||
| Adjustments to reconcile net loss to net cash | ||||||||
| used in operating activities: | ||||||||
| Expenses paid by shareholder | - | 6,406 | ||||||
| (Increase) in prepaid expenses | (4,000 | ) | - | |||||
| Increase (decrease) in accounts payable | 2,859 | (16,520 | ) | |||||
| Cash used in operating activities | (137,147 | ) | (141,879 | ) | ||||
| Cash flows from financing activities: | �� | |||||||
| Proceeds from sale of common stock | 30,603 | 17,554 | ||||||
| Payments made to related parties | (468,243 | ) | - | |||||
| Advances from related party | 48,421 | 468,243 | ||||||
| Net cash provided from (used in) financing activities | (389,219 | ) | 485,797 | |||||
| Gain (loss) on foreign exchange translation | (276 | ) | (1,455 | ) | ||||
| Net increase (decrease) in cash | (526,642 | ) | 342,463 | |||||
| Cash at beginning of period | 574,211 | - | ||||||
| Cash at end of period | $ | 47,569 | $ | 342,463 | ||||
| Supplemental disclosure information: | ||||||||
| Cash paid for taxes | $ | - | $ | - | ||||
| Cash paid for interest | $ | - | $ | - | ||||
The accompanying notes are an integral part of these unaudited financial statements
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NEW ASIA ENERGY, INC.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
Note 1 - Organization and Summary of Significant Accounting Policies
ORGANIZATION
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.
On June 16, 2016, Rong Yi Rong (Beijing) Asset Management Limited re-sold in a private transaction a total of 50,056,400 shares of Company Common stock that it owned to 12 individual Foreign National Shareholders. On August 22, 2016, Rong Yi Rong (Beijing) Asset Management Limited re-sold in a private transaction a total of 34,282,340 shares of Company Common stock that it owned to 11 individual Foreign National Shareholders. Rong Yi Rong (Beijing) Asset Management Limited currently retains a total of 83,665,610 shares of common stock representing approximately 26% of the issued and outstanding common stock of the Company.
On July 6, 2016, Beijing Run Zheng Da Technology Development Limited re-sold in a private transaction a total of 3,475,500 shares of Company common stock that it owned to 13 individual Foreign National shareholders. On October 10, 2016, Beijing Run Zheng Da Technology Development Limited re-sold in a private transaction a total of 3,773,500 shares of Company common stock that it owned to 10 individual Foreign National shareholders. Beijing Run Zheng Da Technology Development currently retains a total of 20,048,224 shares of Company common stock representing approximately 6% of the issued and outstanding common stock of the Company.
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NEW ASIA ENERGY, INC.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 unaudited interim 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.
BASIS OF PRESENTATION
The interim unaudited 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 interim financial statements should be read in conjunction with the audited 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.
GOING CONCERN
The accompanying unaudited interim 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 has reoccurring losses and an accumulated deficit of $543,397 and $407,391 for the nine-month period ended September 30, 2016 and the year ended December 31, 2015 respectively. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
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 advances from shareholders, equity and/or debt financing to fund operations.
OFFICER COMPENSATION
No officer or director has received any compensation from the Company, except for Mr. Capote who received $13,500 and $12,000 through September 30, 2016 and December 31, 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.
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NEW ASIA ENERGY, INC.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
Note 3 – 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 September 30, 2016, we had 326,965,299 shares of our Common Stock issued and outstanding. As of December 31, 2015 and September 30, 2016, we had no shares of our Preferred Stock issued and outstanding.
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 $30,603 was received after the year end. From January 1, 2016 through September 30, 2016, the Company did not issue any Common Stock or Preferred Stock.
On June 16, 2016, Rong Yi Rong (Beijing) Asset Management Limited re-sold in a private transaction a total of 50,056,400 shares of Company Common stock that it owned to 12 individual Foreign National Shareholders. On August 22, 2016, Rong Yi Rong (Beijing) Asset Management Limited re-sold in a private transaction a total of 34,282,340 shares of Company Common stock that it owned to 11 individual Foreign National Shareholders. Rong Yi Rong (Beijing) Asset Management Limited currently retains a total of 83,665,610 shares of common stock representing approximately 26% of the issued and outstanding common stock of the Company.
On July 6, 2016, Beijing Run Zheng Da Technology Development Limited re-sold in a private transaction a total of 3,475,500 shares of Company common stock that it owned to 13 individual Foreign National shareholders. On October 10, 2016, Beijing Run Zheng Da Technology Development Limited re-sold in a private transaction a total of 3,773,500 shares of Company common stock that it owned to 10 individual Foreign National shareholders. Beijing Run Zheng Da Technology Development currently retains a total of 20,048,224 shares of Company common stock representing approximately 6% of the issued and outstanding common stock of the Company.
Note 4 - 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 $13,500 and $12,000 for the periods ended September 30, 2016 and 2015, respectively.
The Company receives advances from related parties (Rock Capital Ltd and/or Rong Yi Rong) to assist in operations. During the period ended September 30, 2016 the Company received $48,421 from Rock Capital Ltd. At September 30, 2016, the balance due to related parties from these advances is $51,461. These advances are unsecured, due on demand and non-interest bearing.
The Company pays New Asia Momentum Pte Ltd, a Singapore private company owned and controlled by Dr. Lin Kok Peng, Chairman and CEO of the Company fees for the rental of office space and for administrative services in its Singapore Headquarters. The Company has paid New Asia Momentum Pte Ltd $10,627 and $21,251 for the three month and nine month periods ended September 30, 2016.
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NEW ASIA ENERGY, INC.
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2016
Note 4 - Related Party Activity (continued)
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 17, 2016, the Company repaid a total of $468,243 to Rock Capital Ltd. As of September 30, 2016 there is no balance due Rock Capital Ltd. related to this note.
Note 5 – Litigation
On June 9, 2016, Sharon Morrison and Morrison Enterprises ("Plaintiffs") filed a lawsuit ("Complaint") in the Circuit Court Of The Seventeenth Judicial Circuit In And For Broward County, Florida, naming Univest Tech Inc. (now known as New Asia Energy Inc. ("NAEI"), which is the Company's current name) as a defendant as well as naming other defendants (including, but not limited to, Manminderjit ("Manny") Singh, Esq., a Florida attorney, Luke Zouvas, Esq., a California attorney, and Zouvas Law Group, P.C. ("ZLG"), which is the law practice corporation owned by Mr. Zouvas) (collectively, "Defendants"). According to the Complaint, on March 24, 2014, (prior to the change in control by the present management that took place on February 6, 2015), Manny Singh, Esq., allegedly emailed Ms. Morrison offering to sell her 5,000 shares in an investment opportunity he called "Chino Valley Arizona." Allegedly, Ms. Morrison wired $10,000 in U.S. funds the next day to Luke Zouvas, Esq.'s trust account maintained by ZLG. The wire instructions stated "For Chino Valley Arizona 5000.00 Shares." On September 10, 2014, Ms. Morrison allegedly received an email from an employee of ZLG that had attached to it a September 9, 2014, letter signed by Manny Sing, Esq., transmitting a Stock Purchase Agreement that offered to sell Ms. Morrison, personally, 10,000 shares of Univest Tech Inc. (now NAEI) through a private resale of shares of capital stock purportedly held by Sandman Holdings Corp. which allegedly was a record or beneficial owner of Univest Tech, Inc., (now NAEI) stock at the time. Plaintiffs allege that they did not sign the Stock Purchase Agreement with Sandman Holdings Corp. and did not receive any shares of the capital stock of Univest Tech, Inc., (now NAEI). Plaintiffs are seeking $10,000 U.S. in damages from Defendants Manny Singh, Esq., ZLG, and Luke Zouvas, Esq., related to the Chino Valley Investment Opportunity based on various causes of action solely alleged against Defendants Manny Singh, Esq., ZLG, and Luke Zouvas, Esq. Although Plaintiffs have named Univest Tech, Inc., (now NAEI) as a party-defendant in the Complaint, the Plaintiffs have not alleged any causes of action against Univest Tech, Inc., (now NAEI) for damages or to enforce or set aside the unsigned Stock Purchase Agreement for Sandman Holdings' stock in Univest Tech, Inc., (now NAEI). Because Univest Tech, Inc., (now NAEI) has only been named in the lawsuit without seeking any damages from the Company, an estimate of the potential loss, or range of loss, if any, to the Company relating to these proceedings is not possible at this time. Although, if Plaintiffs amended the Complaint to state a cause of action for damages against Univest Tech, Inc., (now NAEI), then, based on the Plaintiffs' present allegations, such a claim for damages would be for the same $10,000 U.S. in damage Plaintiffs are seeking against Defendants Manny Sing, Esq., ZLG, and Luke Zouvas, Esq. Based on the allegations of the Complaint, the Company is of the opinion that it should not have been named as a party-defendant to the proceedings just as Jaitegh Singh, Esq. (Manny Singh's son and the Company's principal shareholder in 2014) was not named as a party-defendant. There are no allegations that the Company was involved in offering or selling (i) the Chino Valley Investment Opportunity, (ii) the Stock Purchase Agreement with Sandman Holdings Corp. (which is not named as a party-defendant) or (iii) any other shares of the Company.
Therefore, the Company has enlisted Florida counsel to obtain the dismissal of the Complaint against the Company. Florida counsel has advised the Company about the substantive analysis provided in this disclosure. The Company is vigorously defending itself in the litigation. The Company's Florida counsel has filed a Motion to Dismiss for Lack of Jurisdiction seeking dismissal of the lawsuit on the grounds that the Florida Court lacks jurisdiction over the Company. In early October 2016, the Company's Florida counsel has also served a Motion for Sanctions Pursuant to Section 57.015 of the Florida Statutes (the "57.105 Motion") requesting that the Plaintiffs voluntarily dismiss the Company within 21 days or be subject to sanctions for continuing to pursue the lawsuit. If the Plaintiffs fail to dismiss the Company within those 21 days which expires in November, 2016, then the Company's Florida counsel will file the 57.105 Motion and ask the Court to enter a judgment for sanctions against the Plaintiffs and their attorneys in the amount of the attorneys' fees and costs incurred by the Company after the 57.105 Motion was served. However, it is impossible to predict with certainty the outcome of any litigation, and the Company can offer no assurance as to when the lawsuit will be decided, whether the Company will be successful in its defense or whether any additional similar suits will be filed by Plaintiffs.
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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 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
Three Months Ended September 30, 2016
We had no revenue for the three months ended September 30, 2016, or for the same period ended September 30, 2015.
Operating expenses, which consisted solely of general and administrative expenses for the three-month period ended September 30, 2016, were $33,335. This compares with operating expenses for the three-month period ended September 30, 2015, were $36,029. 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 small decrease in such expense in the third quarter of 2016 were related to decreased consulting fees, legal fees, rental, and stock transfer fees in connection with our implementation of our business plans. As a result of the foregoing, we had a net loss of $33,335 for the three-month period ended September 30, 2016. This compares with a net loss for the three-month period ended September 30, 2015 of $36,029. The foreign exchange loss for the three months' periods ending September 30, 2016 and September 30, 2015 were ($260) and ($1,455).
Nine Months Ended September 30, 2016
We had no revenue for the nine months ended September 30, 2016, or for the same period ended September 30, 2015.
Operating expenses, which consisted solely of general and administrative expenses for the nine-month period ended September 30, 2016, were $136,006. This compares with operating expenses for the nine-month period ended September 30, 2015, were $141,765. The major components of general and administrative expenses include office, rental, travel, accounting fees, consulting fees, salaries, legal and professional fees and stock transfer fees. The decrease in such expense in the first, second and third quarters of 2016 were related to decreased travel, rental, and legal fees in connection with our implementation of our business plans. As a result of the foregoing, we had a net loss of $136,006 for the nine-month period ended September 30, 2016. This compares with a net loss for the nine-month period ended September 30, 2015 of $131,765. The foreign exchange loss for the nine months' periods ending September 30, 2016 and September 30, 2015 were ($276) and ($1,455).
Since February 2015, after the first 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:
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| · | 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. 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.
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Liquidity and Capital Resources.
As of September 30, 2016, we had cash or cash equivalents of $47,569 and as of December 31, 2015, we had cash or cash equivalents of $574,211.
We had net cash used in operating activities of $137,147 for the nine-month period ended September 30, 2016. We had net cash used in operating activities of $141,879 for the nine-month period ended September 30, 2015. The decrease in cash used for operating activities during the nine-month period ended September 30, 2016 were due to lower legal and administrative costs.
Cash flows used in financing activities were $389,219 during the nine-month period ended September 30, 2016. Cash flows from financing activities were $485,797 during the nine-month period ended September 30, 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 shareholder, Rong Yi Rong (Beijing) Asset Management 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.
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.
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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 September 30, 2016.
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.
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Except as disclosed immediately below, as of September 30, 2016, we knew of no material, existing or pending legal proceedings against our company, nor were we involved as a plaintiff in any material proceeding or pending litigation. As of September 30, 2016, there were no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, was an adverse party or has a material interest adverse to our interest.
On June 9, 2016, Sharon Morrison and Morrison Enterprises ("Plaintiffs") filed a lawsuit ("Complaint") in the Circuit Court Of The Seventeenth Judicial Circuit In And For Broward County, Florida, naming Univest Tech Inc. (now known as New Asia Energy Inc. ("NAEI"), which is the Company's current name) as a defendant as well as naming other defendants (including, but not limited to, Manminderjit ("Manny") Singh, Esq., a Florida attorney, Luke Zouvas, Esq., a California attorney, and Zouvas Law Group, P.C. ("ZLG"), which is the law practice corporation owned by Mr. Zouvas) (collectively, "Defendants"). According to the Complaint, on March 24, 2014, (prior to the change in control by the present management that took place on February 6, 2015), Manny Singh, Esq., allegedly emailed Ms. Morrison offering to sell her 5,000 shares in an investment opportunity he called "Chino Valley Arizona." Allegedly, Ms. Morrison wired $10,000 in U.S. funds the next day to Luke Zouvas, Esq.'s trust account maintained by ZLG. The wire instructions stated "For Chino Valley Arizona 5000.00 Shares." On September 10, 2014, Ms. Morrison allegedly received an email from an employee of ZLG that had attached to it a September 9, 2014, letter signed by Manny Sing, Esq., transmitting a Stock Purchase Agreement that offered to sell Ms. Morrison, personally, 10,000 shares of Univest Tech Inc. (now NAEI) through a private resale of shares of capital stock purportedly held by Sandman Holdings Corp. which allegedly was a record or beneficial owner of Univest Tech, Inc., (now NAEI) stock at the time. Plaintiffs allege that they did not sign the Stock Purchase Agreement with Sandman Holdings Corp. and did not receive any shares of the capital stock of Univest Tech, Inc., (now NAEI). Plaintiffs are seeking $10,000 U.S. in damages from Defendants Manny Singh, Esq., ZLG, and Luke Zouvas, Esq., related to the Chino Valley Investment Opportunity based on various causes of action solely alleged against Defendants Manny Singh, Esq., ZLG, and Luke Zouvas, Esq. Although Plaintiffs have named Univest Tech, Inc., (now NAEI) as a party-defendant in the Complaint, the Plaintiffs have not alleged any causes of action against Univest Tech, Inc., (now NAEI) for damages or to enforce or set aside the unsigned Stock Purchase Agreement for Sandman Holdings' stock in Univest Tech, Inc., (now NAEI). Because Univest Tech, Inc., (now NAEI) has only been named in the lawsuit without seeking any damages from the Company, an estimate of the potential loss, or range of loss, if any, to the Company relating to these proceedings is not possible at this time. Although, if Plaintiffs amended the Complaint to state a cause of action for damages against Univest Tech, Inc., (now NAEI), then, based on the Plaintiffs' present allegations, such a claim for damages would be for the same $10,000 U.S. in damage Plaintiffs are seeking against Defendants Manny Sing, Esq., ZLG, and Luke Zouvas, Esq. Based on the allegations of the Complaint, the Company is of the opinion that it should not have been named as a party-defendant to the proceedings just as Jaitegh Singh, Esq. (Manny Singh's son and the Company's principal shareholder in 2014) was not named as a party-defendant. There are no allegations that the Company was involved in offering or selling (i) the Chino Valley Investment Opportunity, (ii) the Stock Purchase Agreement with Sandman Holdings Corp. (which is not named as a party-defendant) or (iii) any other shares of the Company.
Therefore, the Company has enlisted Florida counsel to obtain the dismissal of the Complaint against the Company. Florida counsel has advised the Company about the substantive analysis provided in this disclosure. The Company is vigorously defending itself in the litigation. The Company's Florida counsel has filed a Motion to Dismiss for Lack of Jurisdiction seeking dismissal of the lawsuit on the grounds that the Florida Court lacks jurisdiction over the Company. The Company's Florida counsel has also served a Motion for Sanctions Pursuant to Section 57.015 of the Florida Statutes (the "57.105 Motion") requesting that the Plaintiffs voluntarily dismiss the Company within 21 days or be subject to sanctions for continuing to pursue the lawsuit. If the Plaintiffs fail to dismiss the Company within those 21 days which expires in November, 2016, then the Company's Florida counsel will file the 57.105 Motion and ask the Court to enter a judgment for sanctions against the Plaintiffs and their attorneys in the amount of the attorneys' fees and costs incurred by the Company after the 57.105 Motion was served. However, it is impossible to predict with certainty the outcome of any litigation, and the Company can offer no assurance as to when the lawsuit will be decided, whether the Company will be successful in its defense or whether any additional similar suits will be filed by Plaintiffs.
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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 OR SUBSEQUENT EVENTS
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 on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
NEW ASIA ENERGY, INC. | ||
Date: November 14, 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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