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EX-31 - FIRST ASIA HOLDINGS LTDexh312.htm
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EX-31 - FIRST ASIA HOLDINGS LTDexh311.htm



UNITED STATES

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, 2011


[] 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: 000-30801   


FIRST ASIA HOLDINGS LIMITED

(Exact name of registrant as specified in its charter)



Canada

 


N/A

(State or other jurisdiction of incorporation)

 

(IRS Employer Identification Number)

 

Room A, 1/F, Tontex Building

2 Sheung Hei Street, Kowloon, Hong Kong

(Address of principal executive offices)

(852) 2581 0708

(Registrant’s telephone number, including area code)


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 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.  [ X ] Yes   [ ] No


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer [ ]

Accelerated filer [ ]

Non-accelerated filer [ ]  (Do not check if a smaller reporting company)

Smaller reporting company [ X ]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     [  ] Yes   [ x ] No


As of May 20, 2011 the Issuer had 58,807,634shares of common stock issued and outstanding.








1






PART I-FINANCIAL INFORMATION


ITEM 1.

FINANCIAL STATEMENTS.


The financial statements of First Asia Holdings Limited a Canadian corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission.  Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company in the Company's Form 10-K, and all amendments thereto, for the fiscal year ended September 30, 2010.






FIRST ASIA HOLDINGS LIMITED

FINANCIAL STATEMENTS

PERIOD ENDED MARCH 31, 2011



INDEX TO FINANCIAL STATEMENTS:

Page

 

 

Balance Sheet

3

 

 

Statements of Operations

4

 

 

Statements of Cash Flows

5

 

 

Notes to Unaudited Financial Statements   

6-10























2





First Asia Holdings Limited

Condensed Consolidated Balance Sheets

(Stated in Canadian Dollars)

As of March 31, 2011 and September 30, 2010


 

March 31

 

September 30

 

 

2011

 

2010

 

 

(unaudited)

 

(audited)

 

ASSETS

 

 

 

 

   Real Estate Investment

 

 

 

 

      Land and leasehold interests

2,821,500

 

-

 

      Building and improvement

10,257,814

 

-

 

      Furniture and equipment

22,360

 

96,802

 

 

 

 

 

 

      Less: Accumulated depreciation

(22,172)

 

(82,687)

 

 

13,079,502

 

14,115

 

 

 

 

 

 

      Goodwill

10,080,619

 

-

 

 

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalent

65,943

 

399,298

 

Accounts and other receivables

2,028,145

 

2,147

 

      Deposit, prepayment and other receivable

21,612

 

1,410,323

 

      Loan receivables

692,373

 

-

 

Total current assets

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

25,968,194

 

1,825,883

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

      Mortgage payable

9,360,000

 

-

 

Accounts payables and accrued liabilities

214,667

 

14,945

 

      Due to shareholder

3,182,675

 

-

 

      Income taxes payable

0

 

241,000

 

Total current liabilities

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

12,757,342

 

255,945

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

  First preference shares without par value, authorized -

 

 

 

 

    Unlimited; issued and outstanding – Nil

 

 

 

 

  Common shares without par value, authorized – unlimited;

17,982,239

 

6,095,318

 

    Issued and outstanding 53,091,650 at March 31, 2011

 

 

 

 

    (23,364,134 at September 30, 2010)

 

 

 

 

 

 

 

 

 

Deficits

(4,785,219)

 

(4,525,380)

 

 

 

 

 

 

Total stockholders’ equity – First Asia Holdings Limited

13,197,020

 

1,569,938

 

 

 

 

 

 

Non-controlling interest

13,832

 

-

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

25,968,194

 

1,825,883

 


See Notes to Financial Statements




3






First Asia Holdings Limited

Condensed Consolidated Statements of Operations

(Stated in Canadian Dollars)

For the Three Months Ended March 31, 2011

And For the Three Months Ended March 31, 2010



 

 

6 months ended March 31

 

3 months ended March 31

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

REVENUE

$

59,002

 

50,649

 

53,576

 

20,364

 

 

 

 

 

 

 

 

 

COST OF SALES

 

(4,683)

 

(23,706)

 

(2,136)

 

(9,775)

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

54,319

 

26,943

 

51,440

 

10,589

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 Selling and distribution

 

4,150

 

32,509

 

3,602

 

13,298

 General and administrative

 

252,210

 

141,435

 

173,989

 

59,681

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

(202,041)

 

(147,001)

 

(126,151)

 

(62,390)

 

 

 

 

 

 

 

 

 

Other income

 

1,559

 

371

 

1,547

 

262

Loss on disposal of subsidiaries

 

(72,840)

 

-

 

(72,840)

 

-

 

 

(273,322)

 

(146,630)

 

(197,444)

 

(62,128)

 

 

 

 

 

 

 

 

 

PROVISION FOR TAXATION

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

NET LOSS

$

(273,322)

 

(146,630)

 

(197,444)

 

(62,128)

 

 

 

 

 

 

 

 

 

Attributable to non-controlling

 

13,483

 

-

 

13,483

 

-

  interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive loss

 

(259,839)

 

(146,630)

 

(183,961)

 

(62,128)

 

 

 

 

 

 

 

 

 

NET LOSS PER SHARE:

 

 

 

 

 

 

 

 

BASIC AND DILUTED

$

(0.005)

 

(0.003)

 

(0.003)

 

(0.001)

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARE

OUTSTANDING

 

 

 

 

 

 

 

 

BASIC AND DILUTED

 

53,091,650

 

53,091,650

 

53,091,650

 

53,091,650

 

 

 

 

 

 

 

 

 




See Notes to Financial Statements








4





First Asia Holdings Limited

Condensed Statement of Cash Flows

(Stated in Canadian Dollars)

For the Three Months Ended March 31, 2011

And For the Three Months Ended March 31, 2010




 

3 months ended

 

3 months ended

 

 

March 31, 2011

 

March 31, 2010

 

 

(unaudited)

 

(unaudited)

 

Cash flows from operating activities

 

 

 

 

Loss for the period

(197,444)

 

(62,128)

 

Adjustments to reconcile net income to net

 

 

 

 

Cash (used in) provided by operating activities:

 

 

 

 

Amortization and depreciation

-

 

4,769

 

             Net changes by way of purchases and disposal

 

 

 

 

                 Of subsidiaries

(71,210)

 

 

 

 Cash effect of changes in:

 

 

 

 

   Accounts receivable

-

 

828

 

     Deposit, prepayment and other receivable

-

 

(61,282)

 

   Accounts payables and accrued liabilities

-

 

(3,444)

 

 

 

 

 

 

Net cash (outflow)/inflows from operating activities

(268,654)

 

(121,257)

 

 

 

 

 

 

Net (decrease)/increase in cash and cash equivalents

(268,654)

 

(121,257)

 

 

 

 

 

 

Cash and cash equivalents - beginning of period

334,597

 

537,716

 

 

 

 

 

 

Cash and cash equivalents - end of period

65,943

 

416,459

 

 

 

 

 

 







See Notes to Financial Statements
























5






First Asia Holdings Limited

Notes to the Interim Consolidated Financial Statements

March 31, 2011 (unaudited)


1.  BASIS OF PRESENTATION


The accompanying interim consolidated financial statements of First Asia Holdings Limited (the "Company") are unaudited and have been prepared in accordance with Canadian generally accepted accounting principles ("GAAP") for interim financial statements. Accordingly, they do not include certain disclosures normally included in annual financial statements prepared in accordance with such principles.


These interim consolidated financial statements do not materially differ from United States generally accepted accounting principles ("US GAAP") for interim financial statements.


In preparing these interim financial statements, management was required to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. In the opinion of management, these interim financial statements reflect all adjustments (which include only normal, recurring adjustments) necessary to state fairly the results for the periods presented. Actual results could differ from these estimates and the operating results for the interim period presented is not necessarily indicative of the results expected for the full year.


For quarter ended and as of March 31, 2011, the unaudited consolidated financial statements include the accounts of the Company and the following wholly-owned subsidiaries:


1.

Vagas Lane Limited

2.

First Asia Finance Limited

3.

First Asia Estate Limited

4.

Hung Lee Development Limited

5.

Paris Sky Limited

6.

Galaxy Garment Limited


All significant inter-company balances and transactions have been eliminated.



2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


(a)

Plant and Equipment


Plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method.


The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statement of income. The cost of maintenance and repairs is charged to income as incurred, whereas significant renewals and betterments are capitalized.


(b)  Investments in Real Estate – Carrying Value of Assets


Real estate assets are stated at cost less accumulated depreciation. All costs related to planning, development and construction of buildings prior to the date they become operational, including interest and real estate taxes during the construction period, are capitalized for financial reporting purposes and recorded as “Property under development” until construction has been completed.





6





Subsequent to completion of construction, expenditures for property maintenance are charged to operations as incurred, while significant renovations are capitalized.


(c)   Investments in Real Estate - Depreciation and Amortization


Depreciation expense is computed using a straight-line method and estimated useful lives for buildings and improvements of 50 years and equipment and fixtures of 5 years.


(d)

Purchase Accounting for Acquisitions of Real Estate


Acquired real estate assets have been accounted for using the purchase method of accounting and accordingly, the results of operations are included in the consolidated statements of income from the respective dates of acquisition. The Company allocates the purchase price to (i) land and buildings based on management’s internally prepared estimates and (ii) identifiable intangible assets or liabilities generally consisting of above-market and below-market in-place leases and in-place leases. The Company uses estimates of fair value based on estimated cash flows, using appropriate discount rates, and other valuation techniques, including management’s analysis of comparable properties in the existing portfolio, to allocate the purchase price to acquired tangible and intangible assets.


The estimated fair value of above-market and below-market in-place leases for acquired properties is recorded based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining non-cancelable term of the lease.

 

During the quarter ended March 31, 2011, there were no above market leases and other intangible assets.

  

The aggregate fair value of other intangible assets consisting of in-place, at market leases, is estimated based on internally developed methods to determine the respective property values and are included in lease intangibles cost in the consolidated balance sheets. Factors considered by management in their analysis include an estimate of costs to execute similar leases and operating costs saved.

 

The fair value of intangible assets acquired is amortized to depreciation and amortization on the consolidated statements of income over the remaining term of the respective leases.  The weighted average amortization period for the lease intangible costs is 50 years.


(e)  Investment in Real Estate – Impairment evaluation


Management periodically assesses its Real Estate Investments for possible impairment indicating that the carrying value of the asset, including accrued rental income, may not be recoverable through operations.  Events or circumstances that may occur include significant changes in real estate market conditions and the ability of the Company to re-lease or sell properties that are currently vacant or become vacant.  Management determines whether an impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), including the residual value of the real estate, with the carrying cost of the individual asset.  If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds fair value.



(f)

Accounting for the Impairment of Long-Lived Assets





7





The long-lived assets held and used by the Company are reviewed for the impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. It is reasonably possible that these assets could become impaired as a result of technology or other industry changes. Determination of recoverability of assts to be held and used is done by comparing the carrying amount of an asset to future net undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. There were no impairments of long-lived assets for the quarter ended March 31, 2009.


(g)

Cash and Cash Equivalents


The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company does not maintain any bank accounts in the United States of America.


(h) Fair value of financial instruments


The Company’s financial instruments include cash and cash equivalents, accounts receivables, accounts payable, accrued liabilities, taxes payable and due to stockholder. Management has estimated that the carrying amounts approximate their fair values due to their intended short-term nature.


(i)

Revenue Recognition


Revenues represent the invoiced value of goods sold, recognized upon the delivery of goods to customers, less any sales discounts and allowances.


(j)  Use of Estimates


The presentation of financial statements in conformity with generally accepted accounting principles in the United States of America 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 financial statements and reported amounts of revenues and expenses using the best information available at the time the estimates are made; however, actual results could differ materially from those estimates.


(k)  Income Taxes


The Company accounts for income tax using an asset and liability approach and allows for recognition of deferred tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that future realization is uncertain.


In accordance with the relevant tax laws and regulations of Hong Kong Special Administrative Region of the Peoples’ Republic of China (“Hong Kong”), the corporation income tax rate is 16.5%. of net income (profits) before income taxes. At times generally accepted accounting principles in the United States of America requires the Company to recognize certain incomes and expenses that do not conform to the timing and conditions allowed by Hong Kong. The Company had no timing differences that would benefit a future period; therefore, no income tax benefits are recognized in the financial statements.





8





(l)

Related Parties


Parties are considered to be related to the company if the company has the ability, directly or indirectly, to control the party, or exercise significant influence over the party in making financial and operating decisions, or vice versa; or where the company and the party are subject to common control or common significance. Related parties may be individuals (being members of key management personnel, significant shareholders and/or their close family members) or other entities which are under the significant influence of related parties of the company where those parties are individuals, and post-employment benefit plans which are for the benefits of employees of the company or of any entity that is a related party of the company.


(m)   New Accounting Pronouncements


The Company does not expect any recent accounting pronouncements to have a material effect on the Company’s financial position, results of operations, or cash flows.



3.  GOING CONCERN


These interim financial statements have been prepared on a going concern basis, which assume that the Company will continue in operation for the foreseeable future and accordingly will be able to realize its assets and discharge its liabilities in the normal course of operations.



4.  CONCENTRATION OF CREDIT RISK OF ACCOUNTS RECEIVABLES


The Company has no significant off-balance sheet concentration of credit risk such as foreign exchange contracts, options contracts or other foreign currency hedging arrangements. Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of accounts receivable. Concentration of credit risk with respect to accounts receivable is limited to certain customer to whom the Company makes sales or provide services with credit period of 60 days. The Company regularly monitors the creditworthiness of these customers and believes that it has adequately provided for exposure to potential credit losses.


5.   PLANT AND EQUIPMENT



 

 

 

 

 

March 31

 

September 30

 

 

 

Accumulated

 

2011

 

2010

 

Cost

 

Depreciation

 

Net

 

Net

 

 

 

 

 

 

 

 

Leasehold improvement

8,658

 

144

 

8,514

 

6,603

 

 

 

 

 

 

 

 

Furniture

10,781

 

180

 

10,601

 

2,426

 

 

 

 

 

 

 

 

Office equipment

2,921

 

49

 

2,872

 

5,086

 

 

 

 

 

 

 

 

 

22,360

 

373

 

21,987

 

14,115



All the office and computer equipment have useful lives of 4 years.



6.  ACCOUNTS PAYABLES AND ACCRUED LIABILITIES


The balances represent mainly trade payables and accrued professional fees which are all current.





9






7.

COMMON SHARES


During the six months ended March 31, 2011, 29,727,516 common shares were issued.



8.

SUBSEQUENT EVENTS


On April 15, 2011, the Company completed a private placement offering, pursuant to which the Company raised a total of $526,215 through the sale of 1,052,431 shares of restricted common stock of the Company at a purchase price of $.50 per share.


On April 21, 2011, the Company completed a private placement offering, pursuant to which the Company raised a total of $1,101,505 through the sale of 2,203,010 shares of restricted common stock of the Company at a purchase price of $0.50 per share.


On April 29, 2011, the Company completed a private placement offering, pursuant to which the Company raised a total of $727,469 through the sale of 1,454,938 shares of restricted common stock of the Company at a purchase price of $0.50 per share.


On May 16, 2011, the Company completed a private placement offering, pursuant to which the Company raised a total of $502,802 through the sale of 1,005,605 shares of restricted common stock of the Company at a purchase price of $0.50 per share.


All the proceeds from the above five placements are used to repay the mortgage loan.




























ITEM 2.

 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS.





10





SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS


CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-Q AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.


Overview and Recent Developments


First Asia Holdings Limited (fka “Melo Biotechnology Holdings Inc.”) (hereinafter referred to as “We,” “Us,”  “FAHLF” or the “Company”) is a publicly traded company whose shares trade on the OTC market  (the “OTCQB”) under the trading symbol “FAHLF”.   The Company was organized under the laws of Ontario, in March 1993.   The Company is located at Room A, 1/F, 2 Sheung Hei Street, Kowloon Hong Kong.  Currently, the Company’ business operations are exclusively focused on the ownership and leasing of real estate in Hong Kong.  The Company conducts its business operations through its wholly owned subsidiary, Vagas Lane Limited, a Marshall Islands corporation (“Vagas”), and various subsidiaries that are owned by Vagas.  


As discussed in detail below, during the fiscal period ended March 31, 2011, the Company shifted its business operations from the sales of health products in Hong Kong to the ownership and leasing of real estate in Hong Kong.  On February 23, 2011, the Company acquired all of the capital stock in Vagas.  Through Vagas, the Company conducts its real estate operations.  Subsequent to the Company’s acquisition of Vagas, on March 31, 2011, the Company sold all of the capital stock of the Company’s wholly owned subsidiary, Melo Biotechnology Limited (“Melo Limited”), a British Virgin Islands corporation through which the Company conducted its health products sales business.  With the sale of Melo Limited the Company ceased its business operations relating to the sale of health products.


The Chart below depicts the corporate structure of the Company as of the date of this 10-Q.  Except for First Asia Estate which is a 60% subsidiary, the Company, through Vagas, effectively owns 100% of the capital stock of all subsidiaries.  





11





[f10q_mar312011final001.jpg]


During the period ended March 31, 2011, as disclosed on a Forms 8-K filed with the Securities and Exchange Commission, the following events occurred with respect to the Company’s business operations:


On February 17, 2011, the Company entered into an Agreement for Share Exchange (the “Exchange Agreement”) with Vagas, and First Asia Strategy Limited, a Marshall Islands corporation, (“FASL”) which is the sole shareholder of Vagas; the transaction closed on February 23, 2011.  Pursuant to the terms of the Exchange Agreement, the Company issued a total of 18,000,000 shares of its restricted common stock to FASL in exchange for the transfer by FASL of all of the issued and outstanding common stock of Vagas to the Company, thereby making Vagas a wholly-owned subsidiary of the Company.  As a result of the closing of the Exchange Agreement the Company now carries on the business operations of Vagas.


Prior to the closing of the Exchange Agreement, Vagas entered into an agreement with the shareholders of Galaxy Garment Limited (“Galaxy”), a Hong Kong corporation pursuant to which Vagas agreed to purchase all of the issued and outstanding capital stock of Galaxy for a total of HK $140,000,000.  Galaxy’s primary asset is a block consisting of a 19-story industrial/commercial building located in Hong Kong valued at a price of $140,000,000.  Pursuant to the terms of the purchase agreement, on February 24, 2011, the Board of Directors of the Company authorized the issuance of a total of 10,283,000 shares of restricted common stock (the “Shares”), valued at a price of US$0.50 per share, to two separate entities as partial consideration for the acquisition of the outstanding capital stock of Galaxy.  A total of 7,712,000 shares of restricted common stock were issued to Sunford Limited, a Marshall Islands corporation, and a total of 2,571,000 shares of restricted common stock were issued to Golden Tree Limited, a Marshall Islands corporation. On February 28, 2011, Vagas completed the acquisition of the outstanding share capital of Galaxy. On February 28, 2011, Vagas delivered an additional cash payment of HK$10,012,741.10 (approximately US $1,285,825) to the shareholders of Galaxy and assumed the outstanding balance of HK$75,987,258.9 (approximately US $9,758,430) on the mortgage loan




12





encumbering the property owned by Galaxy.


On March 31, 2011, the Company entered into a Stock Purchase Agreement with a third party pursuant to which the Company agreed to sell all of the capital stock of the Company’s wholly-owned subsidiary, Melo Biotechnology Limited (“Melo Limited”), a British Virgin Islands corporation, to the buyer for a purchase price of $200,000, plus the assumption by the buyer of all liabilities of Melo Limited and Melo International; all other receivables of Melo Limited as of March 31, 2011 are assigned to the Company.  The parties closed the Stock Purchase Transaction on March 31, 2011.  At closing of the Stock Purchase Transaction the Company sold all of the outstanding capital stock of Melo to the buyer. As a result of the closing of the Stock Purchase Transaction, the Company, ceased its business operations relating to the sales of health products in Hong Kong through Melo Limited.  


As of the date of this 10-Q, the Company’s business operations are focused on the ownership and leasing of real estate in Hong Kong through Vagas.


Results of Operations


The following discussion and analysis provide information that we believe is relevant to an assessment and understanding of our results of operation and financial condition for the three and six moths ended March 31, 2011. The following discussion should be read in conjunction with the Financial Statements and related Notes appearing elsewhere in this Form 10-Q.


All figures stated herein are in Canadian dollars.


Results of Operations for the Three Months Ended March 31, 2011 Compared to Three Months Ended March 31, 2010.


Revenues.  During the three months ended March 31, 2011, the Company had operating revenues of CAD53,576, as compared to revenues of CAD$20,364 for the three months ended March 31, 2010, an increase of CAD $33,212, or approximately 163%. The increase in revenue is primarily attributable to the  revenue from First Asia Finance.


Costs of Revenue.  The cost of revenue for the three months ended March 31, 2011 was CAD$2,136, as compared to CAD$9,775 for the three months ended March 31, 2010, a decrease of CAD $7,639.  


Operating Expenses.  Operating expenses for the three months ended March 31, 2011 were CAD$177,591. Of this, CAD$3,602 was allocated to Selling and Distribution, CAD$177,591 was allocated to General and Administrative Expenses.  Operating expenses for the three months ended March 31, 2010 were CAD$72,979. Of this, CAD$13,298 was allocated to Selling and Distribution, CAD$59,681 was allocated to General and Administrative Expenses. The increase in operating expenses was primarily attributable to the expenses experienced by the Company as a result of the shift of its business operations.


Net Gain/Loss.   The Company had a net loss for the three months ended March 31, 2011 of CAD $197,444, as compared to a net loss of CAD $62,128 for the three months ended March 31, 2011.  The net loss experienced by the Company was attributable to the fact that the Company experienced a loss on the disposal of its subsidiaries.


Results of Operations for the Six Months Ended March 31, 2011 Compared to Six Months Ended March 31, 2010.

Revenues.  During the six months ended March 31, 2011, the Company had operating revenues of CAD$59,002, as compared to revenues of CAD$50,649 for the six months ended March 31, 2010, an



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increase of CAD $8,353.  The increase in revenue is primarily attributable to the revenue from First Asia Finance Limited.


Costs of Revenue.  The cost of revenue for the six months ended March 31, 2011 was CAD$4,683, as compared to CAD$23,706 for the six months ended March 31, 2010, a decrease of CAD $19,023.  The change was attributable to decrease in sales of health prodicts.


Operating Expenses.  Operating expenses for the six months ended March 31, 2011 were CAD$256,360. Of this, CAD$4,150 was allocated to Selling and Distribution, CAD$252,210 was allocated to General and Administrative Expenses.  Operating expenses for the six months ended March 31, 2010 were CAD$173,944. Of this, CAD$32,509 was allocated to Selling and Distribution, CAD$141,435 was allocated to General and Administrative Expenses. The increase in operating expenses was primarily attributable to the expenses experienced by the Company as a result of the shift of its business operations.


Net Gain/Loss.   The Company had a net loss for the six months ended March 31, 2011 of CAD $273,322, as compared to a net loss of CAD $146,630 for the six months ended March 31, 2011.  The net loss experienced by the Company was attributable to the fact that the Company experienced a loss on the disposal of its subsidiaries.


Liquidity and Capital Resources.


The Company anticipates that the existing cash and cash equivalents on hand, together with the net cash flows generated from its business activities will be sufficient to meet the working capital requirements for the on-going projects and to sustain the business operations for the next twelve months.  


As of March 31, 2011, our unaudited balance sheet reflects that we have cash and cash equivalents of CAD $931,693, total current assets of CAD $2,090,927, total assets of CAD $7,049,146, total liabilities of CAD $249,436, and total stockholders’ equity of CAD $6,799,710.  The net cash outflow from operating activities for the quarter ended March 31, 2009 was CAD$505,521.  No cash was used in investing activities for the quarter ended March 31, 2009.


On March 22, 2011, the Company completed a private placement offering, pursuant to which the Company raised a total of $722,258 through the sale of 1,444,516 shares of restricted common stock of the Company at a purchase price of $.50 per share.  Subsequent to the period ended March 31, 2011, the Company raised a total of $2,857,991 through the sale of a total of 1,428,996 shares of restricted common stock of the Company in four separate private placement offerings. For the above share issuances, the shares were not registered under the Securities Act of 1933 (the “Securities Act”) in reliance upon the exemptions from registration contained in Regulation S of the Securities Act.  No underwriters were used, nor were any brokerage commissions paid in connection with the above share issuances.  All the proceeds from the above five private placement offerings are used to repay the mortgage loan encumbering real estate owned by the Company’s subsidiary, Galaxy.


Off Balance Sheet Arrangements


The Company does not have any off-balance sheet arrangements.


ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


Not Applicable.


ITEM 4.

CONTROLS AND PROCEDURES.





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Disclosure Controls and Procedures


The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.


As of the end of the period covered by this report, we 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.  Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported within the time periods specified.  Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.  


Changes in Internal Control over Financial Reporting


There was no change in the Company's internal control over financial reporting during the period ended March 31, 2011, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.


PART II-OTHER INFORMATION


ITEM 1.

LEGAL PROCEEDINGS.


We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting the Company, our common stock, any of our subsidiaries or of our Company's or our Company's subsidiaries' officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.


ITEM 1A.

 RISK FACTORS.


Not Applicable.


ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.




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As disclosed on a Form 8-K filed by the Company, on March 22, 2011, the Company completed a private placement offering, pursuant to which the Company raised a total of $722,258 through the sale of 1,444,516 shares of restricted common stock of the Company at a purchase price of $.50 per share. For the above share issuances, the shares were not registered under the Securities Act of 1933 (the “Securities Act”) in reliance upon the exemptions from registration contained in Regulation S of the Securities Act.  No underwriters were used, nor were any brokerage commissions paid in connection with the above share issuances.


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.


None.


ITEM 4.

(REMOVED AND RESERVED).


ITEM 5.    

OTHER INFORMATION.


None.


ITEM 6.

EXHIBITS.


(a)

The following exhibits are filed herewith:


31.1

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


31.2

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


32.1

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


32.2

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


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.


FIRST ASIA HOLDINGS LIMITED



By:  /S/ Luk Lai Ching Kimmy

Luk Lai Ching Kimmy, Chief Executive Officer


Date:   May 20, 2011


By:  /S/ Luk Lai Ching Kimmy

Luk Lai Ching Kimmy, Chief Financial Officer


Date:   May 20, 2011






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