| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2001
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________________ to ____________________.
Commission File Number 0-7619
Asia SuperNet Corporation
(Exact Name of Registrant as Specified in its Charter)
Colorado 93-0636333
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1888 Sherman Street, Suite 500, Denver, CO 80203
(Address of Principal Executive Offices) (Zip Code)
1700 Lincoln Street, Suite 3100, Denver, CO 80203
(Former address of principal executive offices)
Registrant's telephone number, including area code: (303) 894-7971
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [X]
The number of shares of the registrant’s common stock as of June 30, 2001: 110,494,293 shares.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
(a) Consolidated Balance Sheets 3
(b) Consolidated Statements of Operations 4
(c) Consolidated Statements of Cash Flows 5
(d) Consolidated Statements of Shareholders' Equity 6
(e) Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 15
Item 3. Risks 15
PART II. OTHER INFORMATION 16
Item 1. Legal Proceedings 16
Item 2. Changes in Securities and Use of Proceeds 16
Item 3. Defaults On Senior Securities 16
Item 4. Submission of Items to a Vote 16
Item 5. Other Information 16
Item 6.
(a) Exhibits 16
(b) Reports on Form 8K 16
SIGNATURES 17
ASIA SUPERNET CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2001 AND DECEMBER 31, 2000
(UNAUDITED)
June 30, December 31,
2001 2000
------- -----------
ASSETS
Current assets
Cash ..................................................... $ 19,076 $ 31,948
Prepayments and deposits ................................. 14,440 21,392
--------- ---------
Total current assets ............................... 33,516 53,340
Property and equipment
Office furniture and equipment ..................... 95,958 92,413
Less-Reserve for depreciation ...................... 32,627 23,200
--------- ---------
Net office furniture and equipment ................ 63,331 69,213
Intangible assets
Research and development ........................... 126,996 126,996
Less-Amortization .................................. 1,754 --
--------- ---------
Net research and development ...................... 125,242 126,996
--------- ---------
Total assets ....................................... $ 222,089 $ 249,549
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable ......................................... $ 111,972 $ 102,107
Accrued expenses ......................................... 97,678 103,525
Deferred income .......................................... 53,217 42,332
Loans from director, shareholders and related parties
659,861 557,195
--------- ---------
Total current liabilities ......................... 922,728 805,159
Shareholders' equity
Preferred stock (par value $0.001)
300,000,000 shares authorized, none issued
Common stock (par value $0.001) 900,000,000
shares authorized; 109,494,293 at December
31, 2000 and 110,494,293 at March 31, 2001
issued and outstanding ................................... 110,494 109,494
Discount from par value .................................. (25,058) (42,530)
Cumulative comprehensive income .......................... 16,652 16,652
Deficit accumulated during development stage
(802,727) (639,226)
--------- ---------
Total shareholders' deficit ......................... (700,639) (555,610)
--------- ---------
Total liabilities and shareholders' equity .......... $ 222,089 $ 249,549
========= =========
The accompanying notes to financial statements are an integral part of this statement.
ASIA SUPERNET CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 AND
THE THREE MONTHS JUNE 30, 2001 AND 2000 AND
CUMULATIVE FROM INCEPTION TO JUNE 30, 2001
(UNAUDITED)
Six months Six months Three months Three months From inception
ended June ended June ended June ended June May 12, 1999 to
30, 2001 30, 2000 30, 2001 30, 2000 June 30, 2001
---------- ---------- ----------- ------------ ---------------
SALES .................................. $ 17,537 $ -- $ 11,490 $ -- $ 17,537
COST OF SALES .......................... 11,119 -- 8,555 -- 11,119
------------- ------------- ------------- ------------- -------------
6,418 2,935 -- 6,418
EXPENSES
Salaries and related costs ........... 74,882 30,281 42,165 23,732 233,745
Rent ................................. 29,253 7,609 19,782 4,845 54,227
Research and development ............. -- 33,597 -- -- 35,947
Office ............................... 21,354 9,770 17,390 5,401 45,234
Travel and entertainment ............. 13,185 17,698 10,959 16,349 55,430
Depreciation ......................... 9,427 6,696 4,802 3,864 26,640
Audit ................................ -- 7,500 -- 7,500 17,024
Legal and professional fees .......... 16,531 18,621 4,382 18,333 42,955
Telephone ............................ 5,277 4,453 2,008 3,244 17,257
------------- ------------- ------------- ------------- -------------
Total expenses ......................... 169,919 136,225 101,488 83,268 528,459
------------- ------------- ------------- ------------- -------------
Loss from operations ................... (163,501) (136,225) (98,553) (83,268) (539,578)
Income tax ............................. -- -- -- -- --
------------- ------------- ------------- ------------- -------------
Loss before acquisition ................ (163,501) (136,225) (98,553) (83,268) (539,578)
Loss from acquisition October 13,
2000-net liabilities acquired .......... -- -- -- -- (280,686)
------------- ------------- ------------- ------------- -------------
Net loss ............................... (163,501) (136,255) (98,553) (83,268) (820,264)
Comprehensive income-foreign currency
adjustment ............................. -- -- -- -- 16,652
------------- ------------- ------------- ------------- -------------
Comprehensive loss ..................... $ (163,501) $ (136,255) $ (98,553) $ (83,268) $ (803,612)
============= ============= ============= ============= =============
Net loss per share-basic and diluted ... $ (0.001) $ (0.001) $ (0.001) $ (0.000) $ (0.007)
============= ============= ============= ============= =============
Weighted average number of common
shares outstanding ..................... 109,994,293 106,683,429 109,994,293 106,683,429 109,994,293
============= ============= ============= ============= =============
The accompanying notes to financial statements are an integral part of this statement.
ASIA SUPERNET CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000 AND
CUMULATIVE FROM INCEPTION TO JUNE 30, 2001
(UNAUDITED)
For the six For the six From inception
months ended months ended May 12, 1999 to
June 30, 2001 June 30, 2000 June 30, 2001
-------------- --------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss ................................... $(163,501) $(136,225) $(802,727)
Adjustment to reconcile net
(loss) to net cash
Loss on acquisition October
13, 2000 net liabilities
acquired ................................ -- -- 280,686
Depreciation and amortization ........... 11,181 6,696 28,394
Shares issued for services .............. 8,472 -- 10,567
(Increase) decrease in operating assets
Prepaid and deposits ..................... 6,952 (42,922) (14,440)
Increase (decrease) in operating liabilities
Accounts payable ......................... 9,865 3,302 25,113
Deferred income .......................... 10,885 -- 53,217
Accrued expenses ......................... (5,847) 1,923 24,309
--------- --------- ---------
Cash flows used in operating activities ......... (121,993) (167,226) (394,881)
CASH FLOWS USED IN INVESTING ACTIVITIES
Purchase of furniture and
equipment ................................ (3,545) (56,362) (87,974)
Purchase of research and
development .............................. -- (114,901) (126,996)
--------- --------- ---------
Cash flows used in investing activities ......... (3,545) (171,263) (214,970)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in loan from director ............. 112,666 152,892 587,196
Shares issued for cash ..................... -- -- 17
Cash from acquisition ...................... -- -- 25,062
--------- --------- ---------
Cash flows from financing activities ............ 112,666 152,892 612,275
Effect of cumulative translation adjustment ..... -- 268 16,652
--------- --------- ---------
Cash flows (used) from all activities ........... (12,872) (185,329) 19,076
Cash balance at beginning of period ............. 31,948 267,702 --
--------- --------- ---------
Cash balance at end of period ................... $ 19,076 $ 82,373 $ 19,076
========= ========= =========
Cash paid for:
Interest expense ........................... -- -- --
Taxes ...................................... -- -- --
Supplemental disclosure of non-cash
investing and financing activities:
Stock issued for reduction of loan
from shareholder ............................ $ 10,000 $ -- $ 10,000
The accompanying notes to financial statements are an integral part of this statement.
ASIA SUPERNET CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
FROM INCEPTION TO JUNE 30, 2001
(UNAUDITED)
Common stock (Deficit)
--------------------------------------- accumulated
Discount Compre- during
Number of Par value From par hensive development
shares $(0.001) value income stage
--------- --------- -------- ------- -----------
Common stock issued for
acquisition of Chinanet
Group at par value as
of May 12, 1999 ................... 106,683,429 $ 106,683 $ (106,666) $ 0 $ 0
Translation adjustment ............ -- -- -- 11,164 -- --
Net (loss) during period .......... -- -- -- -- -- (1,879)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 1999 ...... 106,683,429 106,683 (106,666) 11,164 (1,879)
Effect of exchange
reorganization October 13, 2000 ... 2,660,864 2,661 (2,661) -- --
Common stock issued for
services provided and
billed and for future
services in the amount
of $150,000 ....................... 150,000 150 149,850 -- --
Deduct deferred services expense .. -- -- (83,053) -- --
Translation adjustment ............ -- -- -- 5,488 --
Net (loss) ........................ -- -- -- -- (637,347)
----------- ----------- ----------- ----------- -----------
Balance at December 31, 2000 ...... 109,494,293 109,494 (42,530) 16,652 (639,226)
Shares issued in payment
of shareholder loan ............... 1,000,000 1,000 9,000 -- --
Services received for
shares issued in prior period ..... -- -- 8,472 -- --
Net loss for the period ........... -- -- -- -- (163,501)
----------- ----------- ----------- ----------- -----------
Balance at June 30, 2001 .......... 110,494,293 $ 110,494 $ (25,058) $ 16,652 $ (802,727)
=========== =========== =========== =========== ===========
The accompanying notes to financial statements are an integral part of this statement.
ASIA SUPERNET CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2001 AND 2000
(UNAUDITED)
ORGANIZATION AND PRINCIPLE ACTIVITY
Asia SuperNet Corporation (“the Company”), formerly known as Powersoft Technologies Inc. (“Powersoft”) was originally organized in California on March 24, 1958 as Time Save Markets, Inc. From 1958 to 1994, the Company effected numerous name changes and engaged in businesses other than one it is presently engaged. In August 1994, the Company changed its corporate domicile to Delaware. In November 1994, the Company, then known as Alpine International Corp. changed its name to Heng Fai China Industries, Inc. On March 31, 1998, Heng Fai China Industries, Inc. changed its name to Powersoft Technologies Inc.
On November 10, 1999, the shareholders of Powersoft approved the reincorporation of Powersoft by changing the state of incorporation from Delaware to Colorado by adoption of an Agreement and Plan of Merger pursuant to which Powersoft has merged with and into Asia SuperNet Corporation, a Colorado Corporation. The shareholders of the Company approved the Agreement and Plan of Merger on October 1, 1999 (the Reincorporation Merger). The Reincorporation Merger was effective as of December 22, 1999 when 15,559,542 outstanding shares of Powersoft common stock were converted into 522,338 shares of the Company’s common stock. The number of shares converted into the Company’s stock were rounded up to the next whole share.
On January 18, 1999, the Company entered into an agreement with SAR Trading Limited (“SAR”), 100% owned by Fai H. Chan who beneficially owned 79% of the Company, wherein SAR agreed to buy and the Company agreed to sell all of its interests in all of its subsidiaries. In consideration of the assumption of the liabilities by SAR, the Company issued two notes payable to SAR in the amounts of $1,000,000 and $3,838,000. The $1,000,000 note was immediately convertible into 20,000,000 common shares (reduced to 667,000 when the Reincorporation Merger took place) of the Company at a fixed rate of $0.05 per share. The $3,838,000 note was reduced to $2,472,722 with assignment of an amount due from a related party of $1,365,278.
In June 2000 the promissory note payable to SAR in the amount of $2,472,722 was converted into 1,471,859 shares of the Company’s common stock.
Due to the above-mentioned sale of all of the investments, the Company was an inactive shell at December 31, 1999.
On October 13, 2000, the Company acquired all of the issued and outstanding common stock of ChinaNet Communications, Ltd., a British Virgin Island corporation (“ChinaNet”), that owns 100% of Beijing Star Gain Data Communication Systems Co. Limited (“Beijing Star”) a Peoples Republic of China (“PRC”) company, in exchange for 106,683,429 shares of its common stock under the terms of an agreement dated August 1, 2000.
The details of the Company’s holdings and their principal activities at June 30, 2001 are summarized below.
Date of
acquisition or Place of Equity Interest
Name formation incorporation Direct Indirect Activity
- ------------------------------- -------------- ------------- ---------------- --------
Chinanet Communication Limited May 18, 2000 British Virgin 100% Inactive
(Chinanet) Islands
Chinanet Communication Limited May 12, 1999 Hong Kong 26% 74% Inactive
(Chinanet HK)
Mobilnet Communication Limited June 7, 2000 Hong Kong 100% Inactive
(Mobil)
Chinanet Communication Limited October 12, Western Samoa 100% Inactive
(Chinanet Samoa) 2000
Beijing Star Gain Data December 7, Peoples 100% Communication
Communication System Co. 1999 Republic of equipment
Limited (Beijing Star) China
Mobilenet Communication Limited May 2001 British Virgin 100 Inactive
Islands
China-Antiflooding System June 2001 Samoa 100 Inactive
Monitor Limited
China Environment System Monitor June 2001 Samoa 100 Inactive
Beijing Star, the operating company, is researching, developing and intends to manufacture and market a handheld personal digital assistant (PDA), which has been designed to function through China’s existing paper network infrastructure. Beijing Star’s goal is to convert a market of approximately 80 million traditional pager customers in China to its system. A base station receives messages from the PDA and sends the messages to the Management Control Center (MCC) through a local digital data network. The MCC is interconnected with the base station, paging operators and content providers. The information requested by the PDA owner is broadcast through the paging network. The processing of each command is accomplished through the use of proprietary software, which receives the requests and responds as needed. Beijing Star has developed a unique system to manage and process this data. Patents for the PDA and base station technology in China and a copyright for the MCC software in China have been issued.
The Company’s business is characterized by rapid technological change, new products and service development and evolving industry standards. Inherent in the Company’s business are various risks and uncertainties, including limited operating history, uncertain profitability, history of losses and risks associated with the ability to raise additional capital.
The Company has its only active operation in the Peoples Republic of China (“PRC”) that maybe subject to significant risks not typically associated with companies in North America. The Company’s operations could be adversely affected by changes in the political and social conditions, changes in government policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittance abroad and rates and methods of taxation.
On October 13, 2000, the Company acquired all of the issued and outstanding common stock of ChinaNet that owns 100% of Beijing Star in exchange for 106,683,429 shares of its common stock under the terms of an agreement dated August 1, 2000. Prior to the issuance of the shares, the Company had 2,660,864 shares of common stock outstanding. As a result of the exchange, the shareholders of ChinaNet own 97.6% of the common stock outstanding of the Company after the issuance of the 106,683,429 shares.
The acquisition of ChinaNet by the Company on October 13, 2000 has been accounted for as a purchase and treated as a reverse acquisition since the former owners of ChinaNet controlled over 97% of the total shares of Common Stock of the company outstanding immediately following the acquisition.
On this basis, the historical financial statements prior to October 13, 2000 have been restated to be those of the accounting acquirer ChinaNet. The historical stockholders’ equity prior to the reverse acquisition has been retroactively restated (a recapitalization) for the equivalent number of shares received in the acquisition after giving effect to any difference in par value of the issuer’s and acquirer’s stock with an offset to “discount from par value”. The original 2,660,864 shares of common stock outstanding prior to the exchange reorganization have been reflected as an addition in the stockholders’ equity account of the Company on October 13, 2000.
The financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America. This basis of accounting differs from that used in the statutory financial statements of the British Virgin Islands and Hong Kong and the PRC, which were prepared in accordance with generally accepted accounting principles in Hong Kong and the accounting principles and the relevant financial regulations applicable to enterprises with foreign investments as established by the Ministry of Finance of China respectively.
a) BASIS OF CONSOLIDATION
| The consolidated financial statements include the accounts of the Company and its subsidiaries. All material intra-group balances and transactions have been eliminated on consolidation. |
b) PREPARATION OF FINANCIAL STATEMENTS
| The Company has a negative working capital of as of June 30, 2001. These conditions raise doubt about the Company’s ability to continue as a going concern. |
| Continuation of the Company as a going concern is dependent upon obtaining additional working capital and attaining profitable operations in the future. The principal stockholder has undertaken to make available adequate funds to the Company as and when required to maintain the Company as a going concern. As a result, the financial statements have been prepared in conformity with the principles applicable to a going concern. |
| The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates |
c) INVENTORIES
| Inventories will be stated at the lower of cost, on a first-in first-out basis, or market value. |
d) PROPERTY AND EQUIPMENT
| Fixed assets are recorded at cost. Gains or losses on disposals are reflected in current operations. Major expenditures for betterments and renewals are capitalized. All ordinary repair and maintenance costs are expensed as incurred. |
| Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of the assets as follows: furniture and office equipment – 5 years. |
e) INCOME TAXES
| The Company accounts for income tax under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 109, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred income taxes are provided using the liability method. Under the liability method, deferred income taxes are recognized for all significant temporary differences between the tax and financial statement bases of assets and liabilities. |
f) OPERATING LEASES
| Operating leases represent those leases under which substantially all the risks and rewards of ownership of the leased assets remain with the lessors. Rental payments under operating leases are charged to expense on the straight-line basis over the period of the relevant leases. |
g) COMPREHENSIVE INCOME
| The Company has adopted SFAS No. 130, which established guidance for the reporting and disclosure of comprehensive income and its components. The purpose of reporting comprehensive income is to report a measure of all changes in equity that resulted from recognized transactions and other economic events of the period other than transactions with shareholders. Adoption of the standard had no economic impact on the Company’s consolidated financial position, results of operations or cash flows. The Company reports comprehensive income in the Consolidated Statements of Operations. |
h) FOREIGN CURRENCY TRANSLATION
| The translation of the financial statements of subsidiaries into United States dollars is performed for balance sheet accounts using the closing exchange rate in effect at the balance sheet dates and for revenue and expense accounts using an average exchange rate during each reporting period. The resulting foreign currency translation gain or loss is included in Stockholders’ Equity as Comprehensive Income. |
i) EARNINGS PER COMMON SHARE
| Basic earnings per common share is computed in accordance with SFAS No. 128 by dividing net income for each year by the weighted average number of shares of common stock outstanding during the year. |
| The computation of diluted earnings per common share is similar to basic earnings per common share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if all dilutive securities outstanding during the years were exercised. |
| The basic and diluted earnings per common share were the same for the periods presented because no dilutive securities were outstanding or exercisable as of June 30, 2001 and 2000. |
j) RESEARCH AND DEVELOPMENT COSTS
| Expenditures related to the research and development of new products and processes are expensed as incurred, unless they are required to be capitalized. Research and development costs are required to be capitalized when a product’s technological feasibility has been established by completion of a detailed program design or working model of the product, and ending when a product is available for release to customers. For the year ended December 31, 2000 the Company capitalized $126,996 of costs related to the purchase of technology from the University of Beijing that provided new functionality for the Company’s existing detailed program design and working model. The Company will amortize capitalized research and development against sales at a rate of ten percent or over a four-year period, which approximates the period to be benefited, whichever is shorter. |
k) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
| In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin (“SAB”) 101, “Revenue Recognition In Financial Statements”, which provides guidance on applying generally accepted accounting principles for recognizing revenue. SAB 101 is effective for fiscal years beginning after December 15, 1999. The adoption of SAB 101 has no material impact on the Company’s consolidated financial position, results of operations and cash flows. |
| In June 1999, the Financial Accounting Standards Board issued SFAS No. 137, “Accounting for Derivation Instruments and Hedging Activities” which delayed the effective date of SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” for one year. SFAS No. 133 provides guidance for the recognition and measurement of derivatives and hedging activities. It requires an entity to record, at fair value, all derivatives as either assets or liabilities in the balance sheet, and it establishes specific accounting rules for certain types of hedges. SFAS No. 133 is now effective for fiscal years beginning after June 15, 2000 and will be adopted by the Company when required, if not earlier. The adoption of SAB 101 has no material impact on the Company’s consolidated financial position, results of operations and cash flows. |
| In March 2000, the Financial Accounting Standards Board issued FIN No. 44, “Accounting for Certain Transactions Involving Stock Compensation”. FIN No. 44 provides guidance for applying APB Opinion No. 25, “Accounting for Stock Issued to Employees”. With certain exceptions, FIN No. 44 applies prospectively to new awards, exchange of awards in a business combination, after July 1, 2000. The implementation of FIN No. 44 did not have a material effect on the Company’s results of operations. |
RELATED PARTY TRANSACTIONS
Loans from directors, shareholders and other related parties of $659,861 and $557,195 at June 30, 2001 and December 31, 2000, respectively, are non-interest bearing, currently payable and not evidenced by any notes.
COMMON STOCK
Total shares restricted as to trading were 107,833,429 at June 30, 2001.
The stated par value of common stock is $0.001 per share. Since the shares issued in the reverse acquisition of Chinanet were valued at less than par the Company has recorded a “discount from par value”. Proceeds in excess of par from stock sales and stocks issued for services will be credited to the “discount from par value” account until the total par value is equivalent to $0.001.
The Company issued 150,000 shares of common stock for services in October of 2000, of which, $83,053 at December 31, 2000 was for services to be provided in future periods. During the six months ended June 30, 2001, $8,472 of such services were provided.
The Company issued 1,000,000 shares of common stock in cancellation of a shareholder’s loan in the amount of $10,000.
LEASES
The Company leased office space on a month-to-month basis.
INCOME TAXES
The Peoples Republic of China (PRC) income tax laws covering Foreign Investment Enterprises and Foreign Enterprises govern the Company. Foreign investment enterprises are generally subject to income tax at a rate of 33% (30% country and 3% local).
Foreign enterprises that are approved as high-tech or new technology enterprises that are established in the Beijing New Technology Industry Development Zone are subject to a reduced tax rate of 15%. New technology enterprises also receive a three-year exemption from taxation and an additional three years at one half the 15% rate (7.5%)
The Company’s operations in the PRC have been approved as a new technology enterprise.
The components of the deferred tax asset is as follows:
June 30, June 30,
2001 2000
------- -------
Deferred tax asset net operating
loss carry-forward $ 39,000 $ 10,000
Valuation allowance 39,000 10,000
--------- ---------
Net deferred tax assets $ -- $ --
========= =========
SFAS No. 109 requires a valuation allowance to be recorded when it is more likely than not that some or all of the deferred tax assets will not be realized.
Reconciliation of the differences between the statutory tax rate and the effective income tax rate is as follows:
June 30, June 30,
2001 2000
------- -------
Effective statutory federal tax
(benefit) rate (7.5)% (7.5)%
Variance allowance 7.5% 7.5%
--------- ---------
Effective tax rate 0% 0%
========= =========
Subsidiaries are subject to income taxes on an entity basis on income arising in or derived from the tax jurisdiction in which they are domiciled and operate. Since they are non-operating no income tax expense has been recorded.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS ANALYSIS CONTAINS FORWARD-LOOKING COMMENTS, WHICH ARE BASED ON CURRENT INFORMATION. ACTUAL RESULTS IN THE FUTURE MAY DIFFER MATERIALLY.
The following discussion should be read in conjunction with the Consolidated Financial Statements of the Company and related Notes thereto.
The Company’s major expense is salaries devoted to the research of technologies related to the development of the PDA.
The Company is generating some income by selling technical know-how and patents that has been developed as a by-product of the Company’s research and development.
The Company will require additional investment for research and development and later for marketing and selling the developed product. During the interim the Company is being financed by loans from a major stockholder.
Item 3. RISKS
The Company’s business is characterized by rapid technological change, new products and service development and evolving industry standards. Inherent in the Company’s business are various risks and uncertainties, including limited operating history, uncertain profitability, history of losses and risks associated with the ability to raise additional capital.
The Company has its only active operation in the Peoples Republic of China (“PRC”) that maybe subject to significant risks not typically associated with companies in North America. The Company’s operations could be adversely affected by changes in the political and social conditions, changes in government policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittance abroad and rates and methods of taxation.
Item 1. Legal Proceedings - None
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults on Senior Securities - None
Item 4. Submission of Items to a Vote - None
Item 5. Other Information - None
Item 6.
(a) Exhibits - None
(b) Reports on Form 8-K - None
SIGNATURES
In accordance with the requirements of the Securities and Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Dated: March 19, 2002 Asia SuperNet Corporation
By: /s/Lui Ming Hui
Lui Ming Hui
Director