AFF Holding Group Inc. - FORM 10-Q

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EX-32.2 - CERTIFICATION - AFF Holding Group Inc.	dnme_10q-ex3202.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934:

For the Quarterly Period ended June 30, 2011

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT

For the transition period from __________________ to __________________

Commission File Number: 000-50029

DOMAIN EXTREMES, INC.

(Exact Name of Registrant as Specified in its Charter)

Nevada	98-0632051
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

602 Nan Fung Tower, Suite 6/F

173 Des Voeux Road Central

Central District, Hong Kong

(Address of Principal Executive Offices)

+(852) 2868-0668

(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) 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 x No o

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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes S No o

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 o	Accelerated filer o

Non-accelerated filer o	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 o No x

Number of shares outstanding of each of the issuer’s classes of

common equity, as of August 1, 2011: 122,315,271 shares of Common Stock, par value US $0.001

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION

The discussion contained in this 10-Q under the Securities Exchange Act of 1934, as amended, contains forward-looking statements that involve risks and uncertainties. The issuer’s actual results could differ significantly from those discussed herein. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as “anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,” “the Company believes,” “management believes” and similar language, including those set forth in the discussions under “Notes to Financial Statements” and “Management’s Discussion and Analysis or Plan of Operation” as well as those discussed elsewhere in this Form 10-Q. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. Statements contained in this Form 10-Q that are not historical facts are forward-looking statements that are subject to the “safe harbor” created by the Private Securities Litigation Reform Act of 1995.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)			1
Balance Sheets			2
Statements of Operations			3
Statements of Cash Flows			4
Statement of Stockholders’ Equity and Comprehensive Income			5
Notes to Financial Statements			7

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS			16

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			25

ITEM 4T. CONTROLS AND PROCEDURES			25

PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS			25

ITEM 1A. RISK FACTORS AFFECTING FUTURE RESULTS			25

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			26

ITEM 3. DEFAULTS UPON SENIOR SECURITIES			26

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			26

ITEM 5. OTHER INFORMATION			26

ITEM 6. EXHIBITS			26

SIGNATURES			27

INDEX TO EXHIBITS			28

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Index to Financial Statements			1
Balance Sheets			2
Statements of Operations			3
Statements of Cash Flows			4
Statement of Stockholders’ Equity and Comprehensive Income			5
Notes to Financial Statements			7

Domain Extremes, Inc.

(A Development Stage Company)

Unaudited Balance Sheets

(Stated in US Dollars)

		At June 30,			At December 31,
		2011			2010
	Notes	$			$

ASSETS
Current Assets :
Cash and cash equivalents			404			2,779
Prepaid expenses and other receivables	6		34,770			26,309

Total Current Assets			35,174			29,088
Non-Current Assets :
Plant and equipment			957			957

Total Non-Current Assets			957			957

TOTAL ASSETS			36,131			30,045

LIABILITIES AND STOCKHOLDERS’ DEFICIT

LIABILITIES
Current Liabilities :
Accrued expenses and other payables	7		24,735			29,083
Advance from related parties	8		31,875			15,641

Total Current Liabilities			56,610			44,724

TOTAL LIABILITIES			56,610			44,724

STOCKHOLDERS’ DEFICIT
Common stock Par value: US$0.001 Authorized: 2011 – 200,000,000 shares (2010 – 200,000,000 shares) Issued and outstanding: 2011 –122,315,271 shares (2010 – 122,315,271 shares)	5		122,315			122,315
Additional paid-in capital			45,679			45,679
Deficit accumulated during the development stage			(188,473	)		(182,673	)

TOTAL STOCKHOLDERS’ DEFICIT			(20,479	)		(14,679	)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT			36,131			30,045

The accompanying notes are an integral part of these financial statements.

Domain Extremes, Inc.

(A Development Stage Company)

Unaudited Statements of Operations

(Stated in US Dollars)

		For the Three months ended June 30,						For the Six months ended June 30,						For the period January 23, 2006 (inception) through June 30,
		2011			2010			2011			2010			2011
	Notes	$			$			$			$			$

Net sales			4,307			5,038			8,615			11,192			34,730
Cost of sales			-			-			-			-			-

Gross Profit			4,307			5,038			8,615			11,192			34,730
Other operating income	3		-			9			-			52			5,018
Impairment loss of long-term investment			-			-			-			-			(10,000	)
Impairment loss of intangible assets			-			-			-			-			(3,910	)
Administrative and other operating expenses, including share based compensation			(7,780	)		(25,080	)		(14,415	)		(37,670	)		(214,311	)

Operating loss before income taxes			(3,473	)		(20,033	)		(5,800	)		(26,426	)		(188,473	)
Income taxes	4		-			-			-			-			-

Net loss			(3,473	)		(20,033	)		(5,800	)		(26,426	)		(188,473	)

Loss per share of common stock - Basic and diluted		(0.00		)	(0.00		)	(0.00		)	(0.00		)

Weighted average shares of common stock -Basic and diluted			122,315,271			108,283,791			122,315,271			105,288,685

The accompanying notes are an integral part of these financial statements.

Domain Extremes, Inc.

(A Development Stage Company)

Unaudited Statements of Cash Flows

(Stated in US Dollars)

	For the Six months ended June 30, 2011			For the Six months ended June 30, 2010			For the period January 23, 2006 (inception) through June 30, 2011
	$			$			$

Cash flows from operating activities:
Net loss		(5,800	)		(26,426	)		(188,473	)
Depreciation		-			-			646
Share based compensation		-			6,154			61,590
Changes in current assets and liabilities
Prepaid expenses and other receivables		(8,461	)		(12,821	)		(34,770	)
Amount due to related parties		16,234			(10,448	)		31,875
Accrued expenses and other liabilities		(4,348	)		5,054			24,735

Net cash used in operating activities		(2,375	)		(38,487	)		(104,397	)

Cash flows from financing activities:
Issuance of share capital		-			44,551			106,404

Net cash provided by financing activities		-			44,551			106,404

Cash flows from investing activity:
Purchase of property, plant and equipment		-			-			(1,603	)

Net cash used in investing activity		-			-			(1,603	)

Net (decrease) / increase in cash and cash equivalents		(2,375	)		6,064			404
Cash and cash equivalents at beginning of the period		2,779			3,583			-

Cash and cash equivalents at end of the period		404			9,647			404

Supplementary disclosures of cash flow information:
Interest paid		-			-			-

Income taxes paid		-			-			-

The accompanying notes are an integral part of these financial statements.

Domain Extremes, Inc.

(A Development Stage Company)

Unaudited Statements of Stockholders’ Equity and Comprehensive Income

(Stated in US Dollars)

					Additional
	Common Stock				Paid-In		Deficit
	Shares		Amount		Capital		Accumulated			Total
				$		$		$			$
Balance, January 23, 2006 (Inception)		-		-		-		-			-

Common stock issued for cash on March 29, 2006		3,000,000		3,000		-		-			3,000

Common stock issued for cash on June 30, 2006		13,910,256		13,910		-		-			13,910

Compensatory portion of stock issuance on June 30, 2006		3,846,155		3,846		-		-			3,846

Compensatory portion of stock issuance on September 30, 2006		371,790		372		-		-			372

Compensatory portion of stock issuance on December 31, 2006		4,115,379		4,115		-		-			4,115

Net loss and comprehensive loss		-		-		-		(24,845	)		(24,845	)

Balance, December 31, 2006		25,243,580		25,243		-		(24,845	)		398

Compensatory portion of stock issuance on March 31, 2007		25,640		26		-		-			26

Compensatory portion of stock issuance on June 30, 2007		3,987,200		3,987		-		-			3,987

Compensatory portion of stock issuance on September 30, 2007		25,640		26		-		-			26

Compensatory portion of stock issuance on December 31, 2007		3,846,180		3,846		-		-			3,846

Net loss and comprehensive loss		-		-		-		(12,549	)		(12,549	)

Balance, December 31, 2007		33,128,240		33,128		-		(37,394	)		(4,266	)

Compensatory portion of stock issuance on June 30, 2008		3,897,460		3,898		-		-			3,898

Compensatory portion of stock issuance on September 30, 2008		2,076,930		2,077		-		-			2,077

Compensatory portion of stock issuance on December 31, 2008		2,051,290		2,051		-		-			2,051

Net loss and comprehensive loss		-		-		-		(33,429	)		(33,429	)

Balance, December 31, 2008 and Balance forward		41,153,920		41,154		-		(70,823	)		(29,669	)

Domain Extremes, Inc.

(A Development Stage Company)

Unaudited Statements of Stockholders’ Equity and Comprehensive Income

(Stated in US Dollars)

(continued)

					Additional
	Common Stock				Paid-In		Deficit
	Shares		Amount		Capital		Accumulated			Total
				$		$		$			$
Balance forward		41,153,920		41,154		-		(70,823	)		(29,669	)

Common stock issued for cash on March 27, 2009		28,520,301		28,520		1,283		-			29,803

Common stock issued for cash on May 15, 2009		9,615,382		9,615		9,615		-			19,230

Common stock issued for cash on May 18, 2009		6,410,255		6,410		6,410		-			12,820

Compensatory portion of stock issuance on March 31, 2009		1,961,550		1,962		-		-			1,962

Compensatory portion of stock issuance on June 30, 2009		2,000,010		2,000		-		-			2,000

Compensatory portion of stock issuance on September 30, 2009		2,179,500		2,180		-		-			2,180

Compensatory portion of stock issuance on December 31, 2009		2,102,580		2,102		-		-			2,102

Net loss and comprehensive loss		-		-		-		(57,510	)		(57,510	)

Balance, December 31, 2009		93,943,498		93,943		17,308		(128,333	)		(17,082	)

Common stock issued for cash on February 1, 2010		12,660,245		12,661		12,660		-			25,321

Common stock issued for cash on June 30, 2010		9,615,378		9,615		9,615		-			19,230

Compensatory portion of stock issuance on March 31, 2010		1,557,690		1,558		1,558		-			3,116

Compensatory portion of stock issuance on June 30, 2010		1,519,230		1,519		1,519		-			3,038

Compensatory portion of stock issuance on September 30, 2010		1,538,460		1,538		1,538		-			3,076

Compensatory portion of stock issuance on December 31, 2010		1,480,770		1,481		1,481		-			2,962

Net loss and comprehensive loss		-		-		-		(54,340	)		(54,340	)

Balance, December 31, 2010		122,315,271		122,315		45,679		(182,673	)		(14,679	)

Net loss and comprehensive loss		-		-		-		(5,800	)		(5,800	)

Balance, June 30, 2011		122,315,271		122,315		45,679		(188,473	)		(20,479	)

DOMAIN EXTREMES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

(Stated in US Dollars)

1. Organization and nature of operations

Domain Extremes Inc (“the Company”), a development stage company, was organized under the laws of the State of Nevada on January 23, 2006. The Company is in the development stage as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915. Among the disclosures required by FASB ASC 915 are that the Company’s financial statements be identified as those of a development stage company, and that the statements of earnings, retained earnings and stockholders’ equity and cash flows disclose activity since the date of the Company’s inception. The fiscal year end is December 31.

The Company's financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is in the development stage. These conditions raise substantial doubt about its ability to continue as a going concern.

The Company is currently devoting its efforts to develop websites on the Internet and through which to generate advertising income. The Company’s ability to continue as a going concern is dependent upon its ability to develop additional sources of capital, develop websites, generate advertising income, and ultimately, achieve profitable operations. The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties

2. Summary of principal accounting policies

On June 29, 2009, the Financial Accounting Standards Board (FASB) established the FASB Accounting Standards Codification (Codification) as the single source of authoritative U.S. generally accepted accounting principles (GAAP) for all nongovernmental entities. Rules and interpretive releases of the Securities and Exchange Commission (SEC) are also sources of authoritative U.S. GAAP for SEC registrants. The Codification does not change U.S. GAAP but takes previously issued FASB standards and other U.S. GAAP authoritative pronouncements, changes the way the standards are referred to, and includes them in specific topic areas. The Codification is effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of the Codification did not have any impact on the Company’s financial statements.

Basis of presentation

The accompanying financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.

Use of estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less to be cash equivalents.

DOMAIN EXTREMES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

(Stated in US Dollars)

2. Summary of principal accounting policies (continued)

Impairment of long-lived assets

The Company accounts for the impairment of long-lived assets, such as plant and equipment, leasehold land and intangible assets, under the provisions of FASB Accounting Standard Codification Topic 360 ASC 360) “Property, Plant and Equipment – Overall” (Formerly known as SFAS No. 144, “Accounting for the Impairment of Long-Lived Assets (“SFAS 144”)”.) ASC 360 establishes the accounting for impairment of long-lived tangible and intangible assets other than goodwill and for the disposal of a business. Pursuant to ASC 360, the Company periodically evaluates, at least annually, whether facts or circumstances indicate that the carrying value of its depreciable assets to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. In the event that the carrying amount of long-lived assets exceeds the undiscounted future cash flows, then the carrying amount of such assets is adjusted to their fair value. The Company reports an impairment cost as a charge to operations at the time it is recognized.

Income taxes

The Company utilizes FASB Accounting Standard Codification Topic 740 (ASC 740) “Income taxes”, (Formerly known as SFAS No. 109, "Accounting for Income Taxes,") which requires the 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. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

ASC 740 “Income taxes”, (Formerly known as Interpretation No. 48, Accounting for Uncertainty in Income Taxes, an interpretation of Statement of Financial Accounting Standards No. 109 (“FIN 48”)). ASC 740 clarifies the accounting for uncertainty in tax positions. This interpretation requires that an entity recognizes in the financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgement occurs. The Company has elected to classify interest and penalties related to unrecognized tax benefits, if and when required, as part of income tax expense in the statements of operations. The adoption of ASC 740 did not have a significant effect on the financial statements.

Comprehensive income

The Company has adopted FASB Accounting Standard Codification Topic 220 (ASC 220) “Comprehensive income” (Formerly known as SFAS No. 130, “Reporting Comprehensive Income”), which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Accumulated other comprehensive income represents the accumulated balance of foreign currency translation adjustments of the Company.

DOMAIN EXTREMES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

(Stated in US Dollars)

2. Summary of principal accounting policies (continued)

Stock-based compensation

The Company has adopted FASB Accounting Standard Codification Topic 718 (ASC 718), ”Stock Compensation”, (Formerly known as SFAS 123(R), Share-Based Payment), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors including stock option grants based on estimated fair values. ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the award’s portion that is ultimately expected to vest is recognized as expense over the requisite service periods. Prior to the adoption of ASC 718, we accounted for share-based awards to employees and directors using the intrinsic value method. Under the intrinsic value method, share-based compensation expense was only recognized by us if the exercise price of the stock option was less than the fair market value of the underlying stock at the date of grant.

Issuance of shares for service

The Company accounts for the issuance of equity instruments to acquire goods and services based on the fair value of the goods and services or the fair value of the equity instrument at the time of issuance, whichever is more reliably measurable.

Foreign currencies translation

The functional currency of the Company is Hong Kong dollars (“HK$”). The Company maintains its financial statements in the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

For financial reporting purposes, the financial statements of the Company which are prepared using the functional currency have been translated into United States dollars. Assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates and stockholders’ equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.

Fair value of financial instruments

The carrying values of the Company’s financial instruments, including cash and cash equivalents, trade and other receivables, deposits, trade and other payables approximate their fair values due to the short-term maturity of such instruments. The carrying amounts of borrowings approximate their fair values because the applicable interest rate approximate current market rates.

Earning per share

Basic earnings per share is based on the weighted average number of common shares outstanding during the period while the effects of potential common shares outstanding during the period are included in diluted earnings per share. The average market price during the year is used to compute equivalent shares.

FASB Accounting Standard Codification Topic 260 (ASC 260), “Earnings Per Share,” requires that employee equity share options, non-vested shares and similar equity instruments granted to employees be treated as potential common shares in computing diluted earnings per share. Diluted earnings per share should be based on the actual number of options or shares granted and not yet forfeited, unless doing so would be anti-dilutive. The Company uses the “treasury stock” method for equity instruments granted in share-based payment transactions provided in ASC 260 to determine diluted earnings per share.

DOMAIN EXTREMES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

(Stated in US Dollars)

2. Summary of principal accounting policies (continued)

Website Development Costs

The Company recognized the costs associated with developing a website in accordance with ASC 350-50 “Website Development Cost” that codified the American Institute of Certified Public Accountants (“AICPA”) Statement of Position (“SOP”) NO. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use”. Relating to website development costs the Company follows the guidance pursuant to the Emerging Issues Task Force (EITF) NO. 00-2, “Accounting for Website Development Costs”. The website development costs are divided into three stages, planning, development and production. The development stage can further be classified as application and infrastructure development, graphics development and content development. In short, website development cost for internal use should be capitalized except content input and data conversion costs in content development stage.

Costs associated with the website consist primarily of website development costs paid to third party and directors. These capitalized costs will be amortized based on their estimated useful life over three years upon the website becoming operational. Internal costs related to the development of website content will be charged to operations as incurred. Web-site development costs related to the customers are charged to cost of sales.

Revenue recognition

The Company recognized revenues from advertising insertion revenue in the period in which the advertisement is displayed, provided that evidence of an arrangement exists, the fees are fixed or determinable and collection of the resulting receivable is reasonably assured. If fixed-fee advertising is displayed over a term greater than one month, revenues are recognized ratably over the period as described below. The majority of insertion orders have terms that begin and end in a quarterly reporting period. In the cases where at the end of a quarterly reporting period the term of an insertion order is not complete, the Company recognizes revenue for the period by pro-rating the total arrangement fee to revenue and deferred revenue based on a measure of proportionate performance of its obligation under the insertion order. The Company measures proportionate performance by the number of placements delivered and undelivered as of the reporting date.

Recently issued accounting pronouncements

In January 2010, the FASB issued Accounting Standards Update (“ASU”) 2010-06 which is intended to improve disclosures about fair value measurements. The guidance requires entities to disclose significant transfers in and out of fair value hierarchy levels, the reasons for the transfers and to present information about purchases, sales, issuances and settlements separately in the reconciliation of fair value measurements using significant unobservable inputs (Level 3). Additionally, the guidance clarifies that a reporting entity should provide fair value measurements for each class of assets and liabilities and disclose the inputs and valuation techniques used for fair value measurements using significant other observable inputs (Level 2) and significant unobservable inputs (Level 3). The Company has applied the new disclosure requirements as of January 1, 2010, except for the disclosures about purchases, sales, issuances and settlements in the Level 3 reconciliation, which will be effective for interim and annual periods beginning after December 15, 2010. The adoption of this guidance has not had and is not expected to have a material impact on the Company’s financial statements.

In February 2010, the FASB issued ASU 2010-09 which requires that an SEC filer, as defined, evaluate subsequent events through the date that the financial statements are issued. The update also removed the requirement for an SEC filer to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. The adoption of this guidance on January 1, 2010 did not have a material effect on the Company’s financial statements.

DOMAIN EXTREMES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

(Stated in US Dollars)

2. Summary of principal accounting policies (continued)

Recently issued accounting pronouncements (Continued)

In April 2010, the FASB issued ASU 2010-13 which address the classification of an employee share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. FASB Accounting Standards Codification Topic 718, Compensation – Stock Compensation, provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment award that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. Under Topic 718, awards of equity share options granted to an employee of an entity’s foreign operation that provide a fixed exercise price denominated in (1) the foreign operation’s functional currency or (2) the currency in which the employee’s pay is denominated should not be considered to contain a condition that is not a market, performance, or service condition. However, U.S. generally accepted accounting principles (GAAP) do not specify whether a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades has a market, performance, or service condition. Diversity in practice has developed on the interpretation of whether such an award should be classified as a liability when the exercise price is not denominated in either the foreign operation’s functional currency or the currency in which the employee’s pay is denominated.

In May 2011, the FASB issued ASU 2011-04 which is intended to consistent with the Memorandum of Understanding and the Boards’ commitment published in 2006 to achieving that goal, the amendments in this Update are the result of the work by the FASB and the IASB to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRSs). The Boards worked together to ensure that fair value has the same meaning in U.S. GAAP and in IFRSs and that their respective fair value measurement and disclosure requirements are the same (except for minor differences in wording and style). The Boards concluded that the amendments in this Update will improve the comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. GAAP and IFRSs. The amendments in this Update explain how to measure fair value. They do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting.

In June 2011, the FASB issued ASU 2011-05 which is intended to improve the comparability, consistency, and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income. To increase the prominence of items reported in other comprehensive income and to facilitate convergence of U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS), the FASB decided to eliminate the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity, among other amendments in this Update. The amendments require that all nonowner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present total other comprehensive income, the components of other comprehensive income, and the total of comprehensive income.

DOMAIN EXTREMES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

(Stated in US Dollars)

3. Other income


	For the Three months ended June 30,				For the Six months ended June 30				For the period January 23, 2006 (inception) through June 30,
	2011		2010		2011		2010		2011
	$		$		$		$		$

Bank interest income		-		-		-		-		26
Gain on exchange		-		9		-		52		383
Sundry income		-		-		-		-		4,609

Total		-		9		-		52		5,018

4. Income tax

As of period ended June 30, 2011 and 2010, the Company had net operating loss carry forward. The expenses for the two periods ended June 30, 2011 and 2010 will not be deducted for tax purposes and will represent a deferred tax asset. The Company will provide a valuation allowance in full amount of the deferred tax asset since there is no assurance of future taxable income.

5. Shareholder’s equity

Capitalization

The Company has the authority to issue 200,000,000 shares of common stock, $0.001 par value. The total number of shares of the Company’s common stock outstanding as of June 30, 2011 and December 31, 2010 are 122,315,271 and 122,315,271 respectively.

Equity transactions during the period

Following is the summary of equity transactions during the year December 31, 2010.

On February 1, 2010, we issued 12,660,245 shares of our common stock to Francis Bok, Ho Wai Ming, Fergus, Sum Wing Suzan, Tang Wai Leong and Leadersoft Asia Limited for a consideration of US$25,320.49.

On March 31, 2010, we issued 1,442,310 shares of our common stock to Francis Bok, Stephen Tang and Angel Lai valued at US$2,884.62 in lieu of cash compensation for director and secretary service from January 2010 to March 2010.

On March 31, 2010, we issued 115,380 shares of our common stock to Stephen Tang valued at US$230.76 in lieu of cash compensation for writer service at website www.drinkeat.com from January 2010 to March 2010.

On June 30, 2010, we issued 9,615,378 shares of our common stock to Francis Bok, Stephen Tang, Tang Wai Leong and Xue Xiao Han for a consideration of US$19,230.76.

DOMAIN EXTREMES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

(Stated in US Dollars)

5. Shareholder’s equity (continued)

Equity transactions during the period (continued)

On June 30, 2010, we issued 1,442,310 shares of our common stock to Francis Bok, Stephen Tang and Angel Lai valued at US$2,884.62 in lieu of cash compensation for director and secretary service from April 2010 to June 2010.

On June 30, 2010, we issued 76,920 shares of our common stock to Stephen Tang, Patience Lee and Sally Lui valued at US$153.84 in lieu of cash compensation for writer service at website www.drinkeat.com from April 2010 to June 2010.

On September 30, 2010, we issued 1,442,310 shares of our common stock to Francis Bok, Stephen Tang and Angel Lai valued at US$2,884.62 in lieu of cash compensation for director and secretary service from July 2010 to September 2010.

On September 30, 2010, we issued 96,150 shares of our common stock to Stephen Tang valued at US$192.30 in lieu of cash compensation for writer service at website www.drinkeat.com from July 2010 to September 2010.

On December 31, 2010, we issued 1,442,310 shares of our common stock to Francis Bok, Stephen Tang and Angel Lai valued at US$2,884.62 in lieu of cash compensation for director and secretary service from October 2010 to December 2010.

On December 31, 2010, we issued 38,460 shares of our common stock to Stephen Tang and Patience Lee valued at US$76.92 in lieu of cash compensation for writer service at website www.drinkeat.com from October 2010 to December 2010.

Following is the summary of equity transactions during the period from January 1, 2011 to June 30, 2011

There is no equity transactions during the period from January 1, 2011 to the period ended June 30, 2011.

6. Prepaid expenses and other assets

Other debtors and prepaid expenses as of June 30, 2011 and December 31, 2010 are summarized as follows:

	At June 30,		At December 31,
	2011		2010
	$		$

Prepaid expenses		33,461		25,000
Other receivables		1,309		1,309

Total		34,770		26,309

DOMAIN EXTREMES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

(Stated in US Dollars)

7. Accrued expenses and other current liabilities

Accrued expenses and other current liabilities as of June 30, 2011 and December 31, 2010 are summarized as follows:

	At June 30,		At December 31,
	2011		2010
	$		$

Accrued audit fee		1,000		6,410
Accrued salaries		11,538		11,538
Other payable		12,197		11,135

Total		24,735		29,083

8.Advance from related parties

The amount due to related parties as of June 30, 2011 and December 31, 2010 represents advanced payment due to the Company’s directors. The amount due to directors is interest free without maturity date.

9. Related party transactions

	For the six months ended June 30,
	2011		2010
	$		$

Beyond IVR Limited		385		385
Mega Pacific Capital Inc		-		-
Leadersoft Asia Limited		-		3,205

The following is a summary of related party transactions during the period from April 1, 2011 to the period ended June 30, 2011:

Domain Extremes paid $384.61 to Beyond IVR Limited for computer server hosting service fee

The following is a summary of related party transactions for the period from April 1, 2010 to the period ended June 30, 2010:

During the period ended June 30, 2010, Domain Extremes issued 1,153,860 shares of common stock valued at $2,307.72 to its directors in lieu of cash compensation. The stocks were valued at US$2,307.72 for the period for which service were provided.

Domain Extremes issued 38,460 shares of common stock valued at $76.92 to its director in lieu of cash compensation for writer service at website www.drinkeat.com.

Francis Bok paid $6,410.25 to Domain Extremes for shares capital of 3,205,125 shares of common stock.

DOMAIN EXTREMES, INC.

(A Development Stage Company)

NOTES TO UNAUDITED FINANCIAL STATEMENTS

(Stated in US Dollars)

9. Related party transactions (continued)

Stephen Tang paid $2,564.10 to Domain Extremes for shares capital of 1,282,050 shares of common stock.

Domain Extremes paid $384.62 to Beyond IVR Limited for computer server hosting service fee.

10. Commitments and contingencies

There has been no legal proceedings in which the Company is a party during the period ended June 30, 2011 and December 31, 2010.

11. Current vulnerability due to certain concentrations

The Company's operations are carried out in Hong Kong, the PRC. Accordingly, the Company's business, financial condition and results of operations may be influenced by the political, economic and legal environments in Hong Kong, by the general state of the PRC's economy. The Company's business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

The following discussion should be read in conjunction with the Company’s unaudited consolidated financial statements and notes thereto included in Item 1 of this report and is qualified in its entirety by the foregoing.

Forward Looking Statements

Certain statements in this report, including statements of our expectations, intentions, plans and beliefs, including those contained in or implied by “Management's Discussion and Analysis of Financial Condition and Results of Operations” and the Notes to Consolidated Financial Statements, are “forward-looking statements”, within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are subject to certain events, risks and uncertainties that may be outside our control. The words “believe”, “expect”, “anticipate”, “optimistic”, “intend”, “will”, and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements. These forward-looking statements include statements of management's plans and objectives for our future operations and statements of future economic performance, information regarding our expansion and possible results from expansion, our expected growth, our capital budget and future capital requirements, the availability of funds and our ability to meet future capital needs, and the assumptions described in this report underlying such forward-looking statements. Actual results and developments could differ materially from those expressed in or implied by such statements due to a number of factors, including, without limitation, those described in the context of such forward-looking statements, our expansion and acquisition strategy, our ability to achieve operating efficiencies, our ability to successfully develop and market new websites in the greater Asian markets, the strength and financial resources of our competitors, our ability to raise sufficient capital in order to effectuate our business plan, our ability to find and retain skilled personnel and key executives, the political and economic climate in which we conduct operations and the risk factors described from time to time in our other documents and reports filed with the Securities and Exchange Commission (the “Commission”).

General

We are a development stage company organized under the laws of the State of Nevada in January 2006. Our business is to develop and operate Internet websites and applications on mobile platforms. We intend to earn revenues through advertisements sold on these websites and applications. Our goal is to become the largest network of consumer-based websites and applications targeting viewers in the Hong Kong and Greater China Basin with contents on travel, food, entertainment, activities and city life. As of the date of this Quarterly Report, we have launched the websites, www.drinkeat.com, which provides reviews of restaurants in Hong Kong and www.sowhat.asia (in beta version), which acts as a platform for members to upload photos and videos and comments on traffic, hygiene, environmental and similar issues in Hong Kong. These two websites are currently generating advertising income through banner and pay-per-click advertisements.

We plan to develop additional websites and solicit advertisement for those websites through third-party agents. Presently, we own the following domain names: www.domainextremes.com, www.drinkeat.com, www.sowhat.asia, www.channel.asia, www.winebusiness.asia, www.winebid.asia, www.wineauction.asia, www.whatnext.asia, www.greenpage.asia, www.pix100.com and www.nojunkcall.com.

We have launched Junk Calls, an iPhone App for downloading by iPhone users in Hong Kong, to screen incoming phone calls which are considered junk calls. We plan to launch in the end of 2011, another iPhone application, BabyWorld, which is a photo uploading and display application for members. Members can also upload photos through our website www.baby.pix100.com.

Our Business

We are an active developer and operator of lifestyle-centered websites and mobile platform applications in the Hong Kong and Greater China Basin. We currently own a number of domain names and intend to build content centered on travel, food, city life and entertainment in the region.

Our content is delivered through internet-connected browser-based devices such as personal computers, laptops and mobile devices. As a result, our content is available globally and our distribution is potentially unlimited in breadth. Thus, while our primary market focus is Hong Kong and the Greater China Basin, we are able to reach those consumers and content providers around the world who have an interest in this region.

Our site www.drinkeat.com, also known as Hong Kong Restaurant Review, provides reviews on Hong Kong restaurants. We invite food critics to contribute review articles on restaurants in Hong Kong either for a small fee or by obtaining their consent to post a previously printed article without charge. Reviews are written in Chinese for the general public in Hong Kong and Chinese tourists who plan to visit Hong Kong. Contributors are paid a nominal fee on a per-article basis either in cash, if available, or through the issuance of shares in the Company. We rely on five active individual contributors to provide reviews, although we do not have formal agreements with any. There are several websites providing similar reviews on Hong Kong restaurants.

We believe that www.drinkeat.com is among the top three of such websites in terms of popularity and depth of the articles. According to Google’s PageRank®, www.drinkeat.com is one of three restaurant review websites in Hong Kong with a ranking of 5 or higher out of the maximum 10 as of the date of this Quarterly Report.

According to Google’s corporate website, its PageRank® system reflects its view of the importance of viewed web pages by considering more than 500 million variables and 2 billion terms. Pages that it believes are important pages receive a higher PageRank® and are more likely to appear at the top of the search results. Google assigns a numeric weighting from 0-10 for each webpage on the Internet, with the PageRank® denoting a site’s importance in the eyes of Google. The PageRank® of a particular page is roughly based upon the quantity of inbound links as well as the PageRank® of the pages providing the links. Other factors, such as the relevance of search words on the page and actual visits to the page reported by the Google toolbar, also influence the PageRank®. However, in order to prevent manipulation, Google provides no specific details about how such other factors influence the resulting PageRank®.

We launched our second website, www.sowhat.asia, in beta version, in the 4th quarter of 2009. This site provides a portal for members to post photos and videos focusing on areas in Hong Kong which they believe need improvement, including traffic, hygienic conditions, environmental issues and current affairs and others. The purpose of these postings is to attract the attention of government departments and concerned organizations with the ultimate objective that these issues will be rectified. Initial content has been provided by individuals known to the Company's management without compensation. Currently, there is no similar website in Hong Kong.

We will gradually develop other websites utilizing domain names we currently own or develop or acquire in the future. We plan to solicit advertisements through third party agents. Depending on the nature of the content of the websites, prospective advertisers include restaurants, hotels, travel agents, department stores and retail outlets. We also include pay-per-click advertisements in our websites. Our hope is that when our network of websites has increased to at least five, we will be able to attract and retain more traffic, redirecting users to other websites in our network.

We have contracted with programming firms in Hong Kong and China to develop websites for our network. Once a domain name and theme have been decided by our directors, we contact potential development firms for initial discussion regarding our proposal. Our directors maintain close contact with the programming firms during development of the website and conduct testing throughout the development process. Additionally, we intend to carry out enhancements on our websites from time to time based upon member feedback.

In the first quarter of 2010, we launched Junk Calls, an application on the iPhone platform. This is an extension of our strategy to develop application programs to the mobile network. We will continue to develop similar lifestyle applications on iPhone and other mobile platforms.

Critical Accounting Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.

Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain. As the number of variables and assumptions affecting the probable future resolution of the uncertainties increase, these judgments become even more subjective and complex. We have identified the following accounting policies, described below, as the most critical to an understanding of our current financial condition and results of operations.

Basic of Presentation

The accompanying financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America.

Use of Estimates

Cash and Cash Equivalents

The Company considers all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less to be cash equivalents.

Impairment of Long-Lived Assets

Income Taxes

Comprehensive Income

Stock-based Compensation

Issuance of shares for service

Foreign Currency Translations

Fair value of financial instruments

Earning per share

Website Development Costs

Revenue recognition

Recent Accounting Pronouncements

Results of Operations for the Three and Six Months Ended June 30, 2011 and 2010

Balance Sheet

Our total assets at June 30, 2011 were $36,131 compared to $30,045 at December 31, 2010. Our total liabilities were $56,610 at June 30, 2011 compared to $44,724 at December 31, 2010, principally due to the decrease of $4,348 in accrued expenses and the increase of $16,234 in advances from related parties. As a result, net assets for the period under review have decreased from ($14,679) at December 31, 2010 to ($20,479) at June 30, 2011.

Net Sales

We generated revenues of $4,307 and $8,615 for the three and six months, respectively, ended June 30, 2011, compared to $5,038 and $11,192 for the three and six months, respectively, ended June 30, 2010. These revenues are attributable to the launch of our websites, resulting in advertising revenues in the form of banner and pay-per-click advertisements. We expect our revenues to increase proportionate to the growth in our site traffic. We also intend to generate future revenues from advertising and user fees related to our mobile phone applications.

Net Income (Loss)

We have incurred a net loss of $3,473 and $5,800 for the three and six months, respectively, ended June 30, 2011 and $20,033 and $26,426 for the three and six months, respectively, ended June 30, 2010, principally due to a substantial decrease in our administrative expenses.

We had other income of $0 for the three and six months ended June 30, 2011 and $9 and $52 for the three and six months, respectively, ended June 30, 2010, attributable to gain on exchange.

We incurred general, administrative and operating expenses of $7,780 and $14,415 for the three and six months, respectively, ended June 30, 2011 and $25,080 and $37,670 for the three and six months, respectively, ended June 30, 2010. Of these amounts, $2,308 and $4,615 related to the value of share-based compensation to our directors for the three and six months, respectively, ended June 30, 2011 and 2010 in lieu of cash compensation for services rendered. In addition, a substantial portion of our expenses for the three and six months ended June 30, 2011 related to audit fees and professional fees, and for the three and six months ended June 30, 2010 relates to legal fees, salaries and transfer agent fees.

Income Taxes

Due to our lack of significant revenues, we have not incurred any tax obligations for the three and six months ended June 30, 2011 and 2010. However, we would anticipate that income tax obligations as we begin to generate significant revenue in the future.

Liquidity and Capital Resources

At June 30, 2011, we had cash and cash equivalents of $404, compared to $2,779 at December 31, 2010, a decrease of $2,375.

Currently, we have limited operating capital. We expect that our current capital and our other existing resources will be sufficient only to provide a limited amount of working capital, and the revenues, if any, generated from our business operations alone may not be sufficient to fund our operations or planned growth. We will likely require additional capital to continue to operate our business, and to further expand our business.

We expect our cash flow needs over the next 12 months through July 2012 to be approximately $65,000. However, this amount may be materially increased if market conditions are favorable for a more rapid expansion of our business model or if we adjust our model to exploit strategic acquisition opportunities. In addition, we may require additional cash flow to support our public company reporting requirements in the United States. Although our average monthly expenditures to date have averaged less than $4,000, we expect this rate to increase exponentially as our business expands. To date, we have been financed principally by our two directors; however, we expect to secure third party financing or bank loans as necessary until we secure sufficient revenues, principally from advertisers on our websites, to sustain our ongoing operations.

Sources of additional capital through various financing transactions or arrangements with third parties may include equity or debt financing, bank loans or revolving credit facilities. We may not be successful in locating suitable financing transactions in the time period required or at all, and we may not obtain the capital we require by other means. Our inability to raise additional funds when required may have a negative impact on our operations, business development and financial results.

Off-Balance Sheet Arrangements

As of June 30, 2011, we did not have any off-balance sheet arrangements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information to be reported under this Item is not required of smaller reporting companies.

ITEM 4T. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the specified time periods. Our President (principal executive officer) and our Treasurer (principal financial officer) (collectively, the “Certifying Officers”) are responsible for maintaining our disclosure controls and procedures. The controls and procedures established by us are designed to provide reasonable assurance that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

During the second quarter of 2011, our Certifying Officers evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on the evaluation, the Certifying Officers concluded that our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that it is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We are aware that any system of controls, however well designed and operated, can only provide reasonable, and not absolute, assurance that the objectives of the system are met, and that maintenance of disclosure controls and procedures is an ongoing process that may change over time.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

The information to be reported under this Item is not required for smaller reporting companies.

ITEM 2. UNREGISTERED SALES OF EQUITY AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(1)	Exhibits: Exhibits required to be attached by Item 601 of Regulation S-K are listed in the Index to Exhibits following the signature page of this Form 10-Q, which is incorporated herein by reference.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DOMAIN EXTREMES, INC.

Dated: August 12, 2011		/s/ Francis Bok
		Francis Bok
		President and Director
		(Principal Executive Officer)


Dated: August 12, 2011	By:	/s/ Stephen Tang
		Stephen Tang
		Treasurer and Director
		(Principal Financial and Accounting Officer)

INDEX TO EXHIBITS

Exhibit No.		Description

31.1		Certification of President

31.2		Certification of Treasurer

32.1		Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

32.2		Statement required by 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document
101.SCH		XBRL Schema Document
101.CAL		XBRL Calculation Linkbase Document
101.LAB		XBRL Label Linkbase Document
101.PRE		XBRL Presentation Linkbase Document
101.DEF		XBRL Definition Linkbase Document

AFF Holding Group Inc. - FORM 10-Q - August 12, 2011

Attached files

AFF Holding Group Inc. Reports