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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, 2015


[] 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)

 

Suite 823-825, 8/F Ocean Center,

Harbour City, 5 Canton Road

Tsim Sha Tsui

Kowloon, Hong Kong

(Address of principal executive offices)

(852) 31523168

(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 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 [ X ] 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 ]





1







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 March 31, 2015 the Issuer had 63,640,599 shares of common stock issued and outstanding.






2






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, 2014.






FIRST ASIA HOLDINGS LIMITED

FINANCIAL STATEMENTS

PERIOD ENDED MARCH 31, 2015



INDEX TO FINANCIAL STATEMENTS:

Page

 

 

Balance Sheet

4

 

 

Statements of Operations

5

 

 

Statements of Cash Flows

6

 

 

Notes to Unaudited Financial Statements   

7-13





















3






First Asia Holdings Limited

Condensed Balance Sheets

(Stated in Canadian Dollars)

As of March 31, 2015 and September 30, 2014


 

 

March 31

 

September 30

 

 

 

2015

 

2014

 

 

 

(Unaudited)

 

(Audited)

 

ASSETS

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalent

$

539,630

$

154,796

 

Loan receivable

 

15,891,876

 

9,793,881

 

      Prepayment, deposits and other receivable

 

499,451

 

473,107

 

Total current assets

 

16,930,957

 

10,421,784

 

   Goodwill

 

4,200,376

 

4,200,376

 

Property, plant and equipment

 

17,121,502

 

17,389,257

 

 

 

 

 

 

 

TOTAL ASSETS

$

38,252,835

$

32,011,417

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

Current liabilities

 

 

 

 

 

      Bank overdraft – secured

$

-

$

980,884

 

      Mortgage payable – secured

 

6,111,465

 

6,398,099

 

Accounts payable, other payable and accrued liabilities

 

3,602,980

 

1,293,922

 

Accounts payable, related parties

 

7,603,593

 

2,984,260

 

      Income taxes payable

 

318,320

 

293,320

 


 

 

 

 

 

Total current liabilities

 

17,636,358

 

11,950,485

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

17,636,358

 

11,950,485

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

  First preference shares without par value, authorized -

 

 

 

 

 

    Unlimited; issued and outstanding – Nil

 

24,394,397

 

23,950,085

 

  Common shares without par value, authorized – unlimited;

 

 

 

 

 

    Issued and outstanding: 63,640,599  at March 31, 2015

    62,351,282 at September 30, 2014)

 

 

 

 

 

 

 

 

 

 

 

Deficits

 

(3,796,053)

 

(3,907,286)

 

 

 

 

 

 

 

TOTAL STOCKHOLDERS’ SURPLUS – First Asia Holdings Ltd.

 

20,598,344

 

20,042,799

 

 

 

 

 

 

 

Non-controlling interests

 

18,133

 

18,133

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

38,252,835

$

32,011,417

 


 


See Notes to Consolidated Financial Statements





4






First Asia Holdings Limited

Condensed Statements of Operations

(Stated in Canadian Dollars)

For the Three Months Ended March 31, 2015

And For the Three Months Ended March 31, 2014


 

 

6 months ended March 31

 

3 months ended March 31

 

 

2015

 

2014

 

2015

 

2014

 

 

 

 

 

 

 

 

 

REVENUE

$

1,803,090

 

1,925,435

 

897,532

 

1,414,733

 

 

 

 

 

 

 

 

 

DIRECT COST

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

1,803,090

 

1,925,435

 

897,532

 

1,414,733

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 Selling and distribution

 

51,348

 

42,676

 

30,118

 

14,347

 General and administrative

 

1,611,053

 

937,236

 

758,599

 

506,576


PROFIT FROM OPERATIONS

 

140,689

 

945,523

 

108,815

 

893,810

 

 

 

 

 

 

 

 

 

Other income/(loss)

 

(4,456)

 

(38,234)

 

7,160

 

137

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

136,233

 

907,289

 

115,975

 

893,947

 

 

 

 

 

 

 

 

 

Taxation

 

(25,000)

 

(140,000)

 

(10,000)

 

(140,000)

 

 

 

 

 

 

 

 

 

 

 

111,233

 

767,289

 

105,975

 

753,947

 

 

 

 

 

 

 

 

 

Attributable to non-controlling

 

-

 

-

 

-

 

-

  Interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET PROFIT

 

111,233

 

767,289

 

105,975

 

753,947

 

 

 

 

 

 

 

 

 

NET PROFIT PER SHARE

 

 

 

 

 

 

 

 

 - BASIC AND DILUTED

$

0.002

 

0.012

 

0.002

 

0.012

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARE

OUTSTANDING

 

 

 

 

 

 

 

 

BASIC AND DILUTED

 

63,640,599

 

62,351,282

 

63,640,599

 

62,351,282

 

 

 

 

 

 

 

 

 



See Notes to Consolidated Financial Statements






5






First Asia Holdings Limited

Condensed Statement of Cash Flows

(Stated in Canadian Dollars)

For the Six Months Ended March 31, 2015

And For the Six Months Ended March 31, 2014



 

6 months ended

 

6 months ended

 

 

March 31

 

March 31

 

 

2015

 

2014

 

 

(unaudited)

 

(unaudited)


Cash flows from operating activities

 

 

 

 

Net income for the period after tax

111,233

 

767,289

 

Adjustments to reconcile net income to net

 

 

 

 

Cash (used in) provided by operating activities:

 

 

 

 

Depreciation

267,755

 

243,195

 

Cash effect of changes in:

 

 

 

 

           Deposit, prepayment and other receivable

(26,344)

 

(92,531)

 

           Loan receivable

(6,097,995)

 

(1,411,420)

 

     Accounts payables and accrued liabilities

2,309,058

 

60,819

 

           Income tax payable

25,000

 

140,000

 

 

 

 

 

 

Net cash inflow used in operating activities

(3,411,293)

 

(292,648)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

      Issue of shares

444,312

 

6,000

 

      Repayment of bank overdraft

(980,884)

 

(840,692)

 

      Advance from related parties

4,619,333

 

781,445

 

      Repayment of mortgage loan

(286,634)

 

(170,436)

 

 

 

 

 

 

Net cash inflows from/(used in) financing activities

3,796,127

 

(223,683)

 

 

 

 

 

 

 

 

 

 

 

Net increase/(decrease) in cash and cash equivalents

384,834

 

(516,331)

 

 

 

 

 

 

Cash and cash equivalents - beginning of period

154,796

 

740,368

 

 

 

 

 

 

Cash and cash equivalents - end of period

539,630

 

224,037

 

 

 

 

 

 






See Notes to Consolidated Financial Statements










6






First Asia Holdings Limited

Notes to the Interim Financial Statements

March 31, 2015 (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 United States generally accepted accounting principles ("US GAAP") for interim financial statements. Accordingly, they do not include certain disclosures normally included in annual financial statements prepared in accordance with such principles.


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.


2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



(a) Principles of consolidation


In preparing these consolidated 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 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/period.


For the quarter ended and as of March 31, 2015, the consolidated financial statements include the accounts of the Company and the following subsidiaries:


A) Wholly-owned subsidiaries


a) Hong Kong Companies


1.

First Asia Finance Limited

2.

Hung Lee Development Limited

3.

First Asia Tower Limited (Formerly known as Galaxy Garment Limited)

4.

Giant Management Corporation Limited


b) Marshall Islands Companies


1.

Vagas Lane Limited

2.

Paris Sky Limited


c) Cayman Islands Company


1.  Real Estate and Finance Fund (Formerly Hotel Fund Limited)





7






B) Non-wholly-owned subsidiary (Hong Kong Company)


1.

First Asia Estate Limited (60% owned)


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


(b) Economic and Political Risk


All the Company’s operations are conducted in Hong Kong. Accordingly, the political, economic, and legal environments in Hong Kong, as well as the general state of Hong Kong’s economy may influence the Company’s business, financial condition, and results of operations.


The Company’s major operations in Hong Kong are subject to considerations and significant risks typically associated with economies in North America and Western Europe. These include risks associated with, among others, the political, economic, and legal environment. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, and rates and methods of taxation, among other things.


(c)

Cash and Cash Equivalents


The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.


(d)

Accounts Receivable


Trade receivables are recognized and carried at the original invoice amount less allowance for any uncollectible amounts. An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. No bad debt was incurred during the quarter ended March 31, 2015.


(e)

Loans receivables


Interest income is recorded on an accrual basis to the extent that such amounts are expected to be collected. Origination and/or closing fees associated with investments in portfolio companies are accreted into income over the respective terms of the applicable loans. Upon the prepayment of a loan or debt security, any prepayment penalties and unamortized loan origination, closing and commitment fees are recorded as income. Prepayment premiums are recorded on loans when received.


For loans with contractual payment-in-kind interest or dividends, which represent contractual interest/dividends accrued and added to the loan balance or liquidation preference


An estimate for doubtful accounts is made when collection of the full amount is no longer probable. Bad debts are written off as incurred. No bad debt was incurred during the quarter ended March 31, 2015.


(f)

Property, Plant and Equipment


Property, Plant and equipment are carried at cost less accumulated depreciation. The cost of maintenance and repairs is charged to the statement of operations as incurred, whereas significant renewals and betterments are capitalized. The cost and the 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 operations.





8






(g)

Depreciation and Amortization


The Company provides for depreciation of property, plant and equipment principally by use of the straight-line method for financial reporting purposes. Property, Plant and Equipment are depreciated over the following estimated useful lives:


Leasehold land and building

50 years

Leasehold improvement

5 years

Office equipment

4 years

Computer equipment

4 years


(h)

Accounting for the Impairment of Goodwill


ASC 350 (“Intangibles-Goodwill and Other”) requires that goodwill and intangible assets that have indefinite lives not be amortized but, instead, tested at least annually for impairment. Management uses a discounted cash flow analysis, which requires that certain assumptions and estimates be made regarding industry economic factors and future profitability of acquired businesses to assess the need for an impairment charge. The Company has elected the fourth quarter to complete its annual goodwill impairment test.


The book values of goodwill are tested annually for impairment, or more frequently, if facts and circumstances indicate the need. Fair value measurement techniques, such as the discounted cash flow methodology, are utilized to assess potential impairments. The testing is performed at the reporting unit level, which can be either an operating segment or one level below operating segment. In the discounted cash flow method, the Company discounts forecasted performance plans to their present value. The discount rate utilized is the weighted average cost of capital for the reporting unit, calculated as the opportunity cost to all capital providers weighted by their relative contribution to the reporting unit’s total capital and the risk associated with the cash flows and the timing of the cash flows. Comparison methods (e.g., peer comparables) and other estimation techniques are used to verify the reasonableness of the fair values derived from the discounted cash flow assessments.


The impairment test is performed in two stages. If the first stage does not indicate that the carrying values of the reporting units exceed the fair values, the second stage is not required. When the first stage indicates potential impairment, the company has to complete the second stage of the impairment test and compare the implied fair value of the reporting units’ goodwill to the corresponding carrying value of goodwill.


Subsequent to the annual impairment test, the Company undertook a review of its current strategy and determined that there was both a decrease in its future projected income based on the current environment and a need for a new management strategy. For the quarter ended March 31, 2015 and the year ended September 30, 2014, there was no impairment charge recognized.


(i) Income Tax


The Company has adopted the provisions of statements of Financial Accounting Standards No. 109, "Accounting for Income Taxes," which incorporates the use of the asset and liability approach of accounting for income taxes. The Company 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.




9







The Company's estimated income tax expense for quarter ended March 31, 2015 was CAD$10,000.


(j) Fair Value of Financial Instruments


The carrying amounts of the Company's cash, accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of these items. Term debt secured by various properties have interest rates attached to them commensurate with the finance market at the time and management believes approximate fair values in the short as well as the long term. It is currently not practicable to estimate the fair value of the other debt obligations because these note agreements contain unique terms, conditions, covenants and restrictions which were negotiated at arm's length with the Company's lenders, and there is no readily determinable similar instrument on which to base an estimate of fair value. Accordingly, no computation or adjustment to fair value has been determined.


(k) Valuation of Long-Lived Assets


Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses an estimate of undiscounted future net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the expected future cash flows of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their estimated fair values.


Impairment of long-lived assets is assessed at the lowest levels for which there are identifiable cash flows that are independent from other groups of assets. The evaluation of long-lived assets requires the Company to use estimates of future cash flows. However, actual cash flows may differ from the estimated future cash flows used in these impairment tests. As of March 31, 2015 management does not believe any of the Company’s assets were impaired.


(l)

Revenue Recognition


1) Revenue from invoiced value of goods sold is recognized upon the delivery of goods to customers. Pursuant to the guidance of ASC Topic 605 and ASC Topic 36, revenue is recognized when all of the following criteria are met:

 


a)

Persuasive evidence of an arrangement exists,

b)

Delivery has occurred or services have been rendered,

c)

The seller's price to the buyer is fixed or determinable, and

d)

Collectibility is reasonably assured.


2) Interest income on loans is recognized using the effective interest method.

3) Service income is recognized when the services are rendered.

4) License fee income is recognized in accordance with the license terms.


(m)

Earnings Per Share


Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the year. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the




10






number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.  As of March 31, 2015, there was no common share equivalents outstanding.


(n)

Use of Estimates


The preparation of the condensed consolidated financial statements in conformity with GAAP 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made; however, actual results could differ materially from those results.


Significant estimates and assumptions include allocating purchase consideration issued in business combinations and valuing equity securities issued in financing transactions and the carrying amounts of intangible assets. Certain estimates, including accounts receivable and the carrying amounts of intangible assets (including present value of future cash flow estimates) could be affected by external conditions including those unique to our industry and general economic conditions. It is reasonably possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates.

 

We re-evaluate all of our accounting estimates at least quarterly based on these conditions and record adjustments, when necessary.


(o)

 Retirement Benefits


Hong Kong mandates companies to operate a mandatory provident fund scheme, which is available to all employees in Hong Kong. Both the Company and the employees are required to contribute 5% per month of the employees’ relevant income.  Contributions from the Company are 100% vested in the employees as soon as they are paid to the scheme.  Contributions to the scheme are expensed in the statement of operations as they become payable in accordance with the rules of the scheme.  The assets of the scheme are held separately from those of the Company and managed by independent professional fund managers.  The Company provides no other retirement benefits to its employees.


(p)

Comprehensive Income


Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, all items that are required to be recognized under current accounting standards as components of comprehensive income are required to be reported in a financial statement that is presented with the same prominence as other financial statements.  Comprehensive income includes net income and the foreign currency translation gain, net of tax.


(q) Foreign Currency Translation


Our reporting currency is the Canadian dollar.  The functional currency of the Company’s operating business based in Hong Kong is Hong Kong dollar. For our subsidiaries whose functional currencies are Hong Kong dollar, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the exchange rate in effect as of the end of the period, and equity is translated at historical exchange rates. Translation adjustments resulting from the process of translating the functional currency financial statements into Canadian dollars are included in comprehensive income. 




11






 

Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods. All of our revenue transactions are transacted in the functional currency. We have not entered into any material transactions that are either originated, or to be settled, in currencies other than Hong Kong dollar. Accordingly, transaction gains or losses have not had, and are not expected to have a material effect on our results of operations.

 

Period end exchange rates used to translate assets and liabilities and average exchange rates used to translate results of operations in each of the reporting periods are as follows:

 

 

 

Quarter ended 
 March 31, 2015

 

Quarter ended
March 31, 2014

 

Period end CAD$: HK$ exchange rate

 

 

6.135

 

 

7.012

 

Average periodic CAD$: HK$ exchange rate

 

 

6.260

 

 

7.039

 

 

(r)

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.


(s)

Operating leases


Leases where substantially all the rewards and risks of ownership of assets remain with the lesser are accounted for as operating leases. Payments made under operating leases are charged to the consolidated statements of operations on a straight-line basis over the lease periods.


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 AND ANALYSIS OF LOANS 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 loans receivable. Concentration of credit risk with respect to loans receivable is limited.  A majority of the loans receivable are sufficiently secured by collaterals. In addition, the Company regularly monitors the creditworthiness of these borrowers and believes that it has adequately provided for exposure to potential credit losses. No bad debt was incurred during the quarter ended March 31, 2015.








12






The following table presents analysis of loans receivable by nature:


 

 

March  31

 

September 30

Types of loans

 

2015

 

2014

 

 

 

 

 

Mortgage loans

$

14,148,777

$

8,517,336

Personal loans

 

1,612,010

 

1,202,439

Accrued interests

 

131,089

 

74,106

 

 

15,891,876

 

9,793,881


Mortgage loans are bearing annual interest ranging from 6% to 30% with loan period ranging from 24 to 84 months. All mortgage loans are secured by collaterals in form of interest in real estate. Personal loans are bearing interest ranging from 24% to 48% with loan period up to 12 months. All personal loans are unsecured.


5.

PROPERTY, PLANT AND EQUIPMENT


 

 

 

 

 

March 31

 

September 30

 

 

 

Accumulated

 

2015

 

2014

 

Cost

 

Depreciation

 

Net

 

Net

 

 

 

 

 

 

 

 

Leasehold land and building

18,822,222

 

1,700,720

 

17,121,502

 

17,370,918

 

 

 

 

 

 

 

 

Leasehold improvement

129,749

 

129,749

 

-

 

13,756

 

 

 

 

 

 

 

 

Office equipment and furniture

29,428

 

29,428

 

 

-

2,706

 

 

 

 

 

 

 

 

Computer equipment

16,786

 

16,786

 

 

-

1,877

 

 

 

 

 

 

 

 

 

18,998,185

 

1,876,683

 

17,121,502

 

17,389,257


The leasehold land and building were acquired in 2011 through the acquisition of the entire share capital of First Asia Tower Limited. The transaction was accounted for as an asset deal.


Depreciation for the 3 months ended March 31, 2015 amounted to CAD$138,674.


5.

GOODWILL


Goodwill arose from the acquisitions of the entire share capital of First Asia Finance Limited and Hung Lee Development Limited and the 60% share capital of First Asia Estate Limited in 2011. The Company has elected the fourth quarter to complete its annual goodwill impairment test. For the quarter ended March 31, 2015 and the year ended September 30, 2014, there was no impairment charge recognized.


6.

BANK OVERDRAFT - SECURED


The bank overdraft is secured by the leasehold land and building. It is repayable on demand and bearing interest at an annual rate of 5.25%.


7.

MORTGAGE LOAN - SECURED


The mortgage loan is secured by the leasehold land and building. It is repayable by 240 instalments up to May 2031 and bearing interest at an annual rate of approximately 2%.





13






8.

ACCOUNTS PAYABLES AND ACCRUED LIABILITIES


The balances represent mainly trade payables, non-interest bearing advance from third parties and accrued professional fees which are all current.


9.

DUE TO RELATED PARTIES - NET


The amounts are unsecured, interest-free and are repayable on demand.


10.

COMMON SHARES


During the quarter ended March 31, 2015, no restricted common shares were issued.


11.

OPERATING LEASES

 

The Group has entered into commercial leases for offices with a term expiring in February 2016. The lease may be cancelled by either party with 30-days prior written notice. Future minimum rental payments under this operating lease are as follows:

 

 

Office Rental

 

Year ending September 30, 2015

 

 

14,400

 

Year ending September 30, 2016

 

 

8,000

 

Total

 

$

22,400

 

 

12.

Segment Information


ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision making group, in deciding how to allocate resources and in assessing performance. The Group’s chief operating decision maker is the Chief Executive Officer, who reviews consolidated results of operations prepared in accordance with U.S. GAAP when making decisions about allocating resources and assessing performance of the Group. Accordingly, the Group has two operating segments: 1) Money-lending business, and 2) licensing out of property. 


The following table presents summarized information by segment for the three months ended March 31, 2015:

 

 

Money

Lending

 

Licensing

Of property

 

Revenue

 

 

585,924

 

 

311,608

 

Direct Cost

 

 

-

 

 

-

 

Gross profit

 

 

585,924

 

 

311,608

 

Selling expenses

 

 

30,118

 

 

-

 

General and administrative expenses

 

 

513,969

 

 

105,956

 

Income from operations

 

 

32,668

 

 

76,147

 

Income tax

 

 

10,000

 

 

-

 

Depreciation

 

 

9,169

 

 

129,505

 








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ITEM 2.

 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS.


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, (hereinafter referred to as “We,” “Us,”  “First Asia,” the “Company”, or the “Registrant”) is a publicly traded company whose shares trade on the OTCQB market (the “OTCQB”) under the trading symbol “FAHLF”.   The Company was organized under the laws of Ontario, in March 1993.   Currently, the Company, through its subsidiaries, is carrying on regulated money lending business. The Group also owns a 19-storey industrial/commercial building in Hong Kong which is licensed out for income. The Company is located at Hong Kong.




15






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




[f10q_mar3115v1001.jpg]





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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 fiscal period ended March 31, 2015 as compared to the fiscal period ended March 31, 2014.  The following discussion should be read in conjunction with the Financial Statements and related Notes appearing elsewhere in this Form 10-Q.  All figures herein are stated in Canadian dollars.


Results of Operations for the Three Months Ended March 31, 2015 Compared to Three Months Ended March 31, 2014.


Revenues.  During the three months ended March 31, 2015, the Company had operating revenues of CAD$897,532  , as compared to revenues of CAD$1,414,733  for the three months ended March 31, 2014, a decrease of CAD$517,201, or approximately 36%. The decrease in revenue is primarily attributable to the one-off penalty interest of CAD$810,345 recognized in the quarter ended March 31, 2014. Excluding this effect, revenue increased by 48% which is generally in line with the fact that much more resources has been put into the money lending business.


Costs of Revenue.  The revenue represent interest income and service fee income from the money lending business of First Asia Finance Limited and the licence fee income from First Asia Tower Limited. The corresponding direct cost was considered to be insignificant.


Operating Expenses.  Operating expenses for the three months ended March 31, 2015 were CAD$788,717. Of this, CAD$30,118 was allocated to Selling and Distribution, CAD$758,599 was allocated to General and Administrative Expenses. Operating expenses for the three months ended March 31, 2014 were CAD$520,923. Of this, CAD$14,347 was allocated to Selling and Distribution, CAD$506,576 was allocated to General and Administrative Expenses. The increase in both expenses was primarily attributable to the increase in the volume of the money lending business.


Net Gain/Loss.   The Company had a net profit for the three months ended March 31, 2015 of CAD$105,975, as compared to a net gain of CAD$753,947 for the three months ended March 31, 2014.  The decrease in profit is primarily attributable to the one-off penalty interest of CAD$810,345 recognized in the quarter ended March 31, 2014.


Results of Operations for the Six Months Ended March 31, 2015 Compared to Six Months Ended March 31, 2014.

Revenues.  During the six months ended March 31, 2015, the Company had operating revenues of CAD$1,803,090, as compared to revenues of CAD$1,925,435 for the six months ended March 31, 2014.


Costs of Revenue.  The revenue represent interest income and service fee income from the money lending business of First Asia Finance Limited and the licence fee income from First Asia Tower Limited. The corresponding direct cost was considered to be insignificant.


Operating Expenses.  Operating expenses for the six months ended March 31, 2015 were CAD$1,662,401. Of this, CAD$51,348 was allocated to Selling and Distribution, CAD$1,611,053 was allocated to General and Administrative Expenses. Operating expenses for the six months ended March 31, 2014 were CAD$979,912. Of this, CAD$42,676 was allocated to Selling and Distribution, CAD$937,236 was allocated to General and Administrative Expenses.  Selling and Distribution expenses were relatively



17






comparable. The increase in General and Administrative expenses was primarily attributable to the increase in the volume of the money lending business.


Net Gain/Loss.   The Company had a net profit for the six months ended March 31, 2015 of CAD$111,233, as compared to a net profit of CAD$767,289 for the six months ended March 31, 2014. The decrease in profit is primarily attributable to the one-off penalty interest of CAD$810,345 recognized in the quarter ended March 31, 2014.


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, 2015, our balance sheet reflects that we have cash and cash equivalents of CAD$539,630, total current assets of CAD$16,930,957 and total assets of CAD$38,252,835, total liabilities of CAD$17,636,358, and total stockholders’ equity of CAD$20,598,344. The net cash inflow used in operating activities for the fiscal period ended March 31, 2015 was CAD$3,411,293.  The net cash inflow from investing activities for the fiscal period ended March 31, 2015 was Nil.


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.


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




18






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 December 31, 2014, 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.


Not Applicable.


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.


None.


ITEM 4.

MINE SAFETY DISCLOSURES


None.


ITEM 5.    

OTHER INFORMATION.


None.





19






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.


101

INS XBRL Instance Document.


101

SCH XBRL Schema Document.


101

CAL XBRL Taxonomy Extension Calculation Linkbase Document.


101

LAB XBRL Taxonomy Extension Label Linkbase Document.


101

PRE XBRL Taxonomy Extension Presentation Linkbase Document.


101

DEF XBRL Taxonomy Extension Definition Linkbase Document.


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, 2015



By: /s/   To Ka Man Carmen


To Ka Man Carmen, Chief Financial Officer


Date:    May 20, 2015





20