10-Q 1 asiapacific-form10qq1march31.htm ASIA PACIFIC BOILER CORP. - QUARTERLY REPORT FOR THE PERIOD ENDED MARCH 31, 2015 asiapacific-form10qq1march31.htm - Generated by SEC Publisher for SEC Filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

 

(Mark One)

[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

 

or

[  ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

 

to

 

Commission File Number

333-176312

ASIA PACIFIC BOILER CORPORATION

(Exact name of registrant as specified in its charter)

Nevada

 

N/A

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification No.)

Unit 10 & 11, 26th Floor, Lippo Centre, Tower 2, 89 Queensway Admiralty, Hong Kong

N/A

(Address of principal executive offices)

(Zip Code)

+852-3875-3362

(Registrant’s telephone number, including area code)

N/A

(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.

[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).

 

[X]

YES

[  ]

NO

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

Large accelerated filer

[  ]

Accelerated filer

[  ]

Non-accelerated filer

[  ]

(Do not check if a smaller reporting company)

Smaller reporting company

[X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

 

[  ]

YES

[X]

NO

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

 

[  ]

YES

[  ]

NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

39,300,000 common shares issued and outstanding as of May 14, 2015.

                                         

 

ASIA PACIFIC BOILER CORPORATION

FORM 10-Q
March 31, 2015

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION 3
Item 1.       Financial Statements 3
Item 2.       Management's Discussion and Analysis of Financial Condition and Results of Operations 5
Item 3.       Quantitative and Qualitative Disclosures about Market Risk. 13
Item 4.       Controls and Procedures. 13
PART II – OTHER INFORMATION 13
Item 1.       Legal Proceedings 13
Item 1A.    Risk Factors 14
Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds. 14
Item 3.       Defaults Upon Senior Securities 14
Item 4.       Mine Safety Disclosures 14
Item 5.       Other Information 14
Item 6.       Exhibits 14
SIGNATURES. 16

 

 

 

 

 

 

 

 

 

 

 

 

 

2


 

PART I – FINANCIAL INFORMATION

Item 1.           Financial Statements
   

Our unaudited consolidated interim financial statements for the three month period ended March 31, 2015 form part of this quarterly report. They are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3


 

 

Asia Pacific Boiler Corp.

(fka Panama Dreaming Inc.)

Consolidateed Balance Sheets

           

March 31,

2015

December 31,

2014

   

(Unaudited)

 

(Audited)

ASSETS

   
         

Current Assets

       
 

Cash

$

4,316

$

6,946

 

Total Current Assets

 

4,316

 

6,946

TOTAL ASSETS

$

4,316

$

6,946

         

LIABILITIES AND STOCKHOLDERS’ DEFICIT

       

Current Liabilities

       
 

Accounts payable

$

46,564

$

18,103

 

Shares to be issued

 

1,494,500

 

1,494,500

 

Accounts payable to a related party

 

553,200

 

504,532

 

Advanced from a related party

 

67,797

 

61,239

TOTAL LIABILITIES

 

2,162,061

 

2,078,374

         

Stockholders’ Deficit

       
 

Preferred stock, 100,000,000 shares authorized, $0.00001 par value; 
   0 shares issued and outstanding

 

-

 

-

 

Common Stock, $0.00001 par value, 400,000,000 shares authorized, 39,300,000 and 39,300,000 shares issued
  and outstanding as of March 31, 2015 and December 31, 2014, respectively

 

393

 

393

 

Additional paid in capital

 

2,282,970

 

2,282,970

 

Deficit accumulated

 

($4,441,108)

 

($4,354,791)

 

Total Stockholders’Deficit

 

($2,157,745)

 

($2,071,428)

         

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT

$

4,316

$

6,946

           

 

 

The accompanying notes are an integral part of the consolidated financial statements.
F-1

 

 


 

 

 

Asia Pacific Boiler Corp.

(fka Panama Dreaming Inc.)

Consolidated Statement of Operations

(Unaudited)

                 
         

Three Months Ended

         

March 31,

           

2015

 

2014

                 

COSTS AND EXPENSES

           
             
 

Consulting fees

   

$

6,000

$

3,559

 

Management fees

     

48,667

 

90,391

 

Legal & accounting

     

29,019

 

7,228

 

General & administrative

     

2,631

 

878

Total operating expenses

     

86,317

 

102,056

                 

LOSS FROM OPERATIONS

       

(86,317)

 

(102,056)

                 

Losses from equity investment

       

-

 

(3,066)

                 

NET LOSS

   

$

(86,317)

$

(105,122)

       

 

 

 

                 

NET LOSS PER COMMON SHARE - BASIC AND DILUTED

   

$

(0.00)

$

(0.00)

       

 

 

 

WEIGHTED AVERAGE

COMMON SHARES OUTSTANDING- BASIC AND DILUTED

     

39,300,000

 

31,800,000

                 

 

 

 

 

 

 

 

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.
F-2

 

 


 

 

Asia Pacific Boiler Corp.

(fka Panama Dreaming Inc.)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

         
   

Three Months Ended

March 31,

 

   

2015

 

2014

         

OPERATING ACTIVITIES

       

Net loss

$

(86,317)

$

(105,122)

Add: Loss from equity investment

 

-

 

3,066

Changes in operating assets and liabilities:

       

Accounts Payable

 

28,461

 

(19,421)

  NET CASH USED IN OPERATING ACTIVITIES

(57,856)

(121,477)

         

FINANCING ACTIVITIES

       
         

Procceds from accounts payable to a related party

 

48,668

 

106,611

Proceeds from advances from related parties

 

6,558

 

14,866

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

55,226

 

121,477

         

NET CHANGE IN CASH

 

(2,630)

 

-

CASH AT BEGINNING OF PERIOD

 

6,946

 

-

         

CASH AT END OF PERIOD

$

4,316

$

-

         

 

 

 

The accompanying notes are an integral part of the consolidated financial statements.
F-3

 

 

 

 

 

 

 

 

 


 

Asia Pacific Boiler Corp. 
(fka Panama Dreaming Inc.)  
Notes to the Unaudited Consolidated Financial Statements

NOTE 1.  BASIS OF PRESENTATION

 

Asia Pacific Boiler Corp. (fka Panama Dreaming Inc.) (“Asia Pacific” or the “Company” or “we” or “us”), have been prepared in accordance with accounting principles generally accepted in the United States of America. Asia Pacific was incorporated in Nevada on June 23, 2011 for the purpose of offering real estate consulting services to persons located in North America who are interested in investing in real estate located in Panama. 

 

On November 5, 2012, the Company filed Articles of Merger with the Nevada Secretary of State to change its name from “Panama Dreaming Inc.” to “Asia Pacific Boiler Corporation”, to be effected by way of a merger with its wholly-owned subsidiary Asia Pacific Boiler Corporation, which was created solely for the name change.

 

Also on November 5, 2012, the Company filed a Certificate of Change with the Nevada Secretary of State to give effect to a forward split of its authorized, issued and outstanding shares of common stock on a 4 new for 1 old basis and, consequently, the Company’s authorized common stock increased from 100,000,000 to 400,000,000 shares, and the Company’s issued and outstanding common shares increased from 7,950,000 to 31,800,000, all with a par value of $0.00001. The Company’s preferred stock remained unchanged with 100,000,000 preferred shares authorized, par value $0.00001, and no preferred shares issued or outstanding.

 

The forward split and name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on November 9, 2012.

 

On November 6, 2014, the Company changed the fiscal year end to December 31 from June 30. This Form and the 10-K for the period ended December 31, 2014 will cover the transition period.

 

Merge with Million Place Investments Ltd.

 

On August 5, 2014, we entered into and closed a share exchange agreement with Million Place Investments Ltd. (“Million Place”) and the shareholders of Million Place.  Pursuant to the terms of the share exchange agreement, we agreed to acquire all 10,000 of the issued and outstanding shares of Million Place’s common stock in exchange for the issuance by our company of 7,500,000 shares of our common stock to the shareholders of Million Place. As a result of these transactions, Million Place has become our wholly owned subsidiary. We would have 39,300,000 issued and outstanding common shares upon issuance of the 7,500,000 shares of common stock. On November 19, 2014, we authorized and issued the 7,500,000 shares of common stock.

 

Business of Million Place Investments Ltd.

 

Million Place was incorporated on April 30, 2012 under the laws of the British Virgin Island (BVI) to engage in any lawful corporate undertaking, including but not limited to mergers and acquisitions. 

 

Pursuant to a Share Tranfer Agreement dated December 3, 2012, Million Place purchased from John Gong, 14.7 million shares at Renminbi (RMB) 1.00 per ordinary share (approximately $2,227,273 in the aggregate) in the share capital of Inner Mongolia Yulong Pump Production Company Limited (Yulong Pump) thereby acquiring an equity interest of 49% in Yulong Pump.  Yulong Pump is a China foreign joint venture corporation engaged in the sale and manufacture of industrial equipment, and in the acquisition, development and exploitation of residential, commercial, and industrial real estate assets.  The business of Yulong Pump is further described below.  In acquiring

 

F-4


 

a 49% interest in Yulong Pump, Million Place became the deemed cooperative foreign joint venture partner of Yulong Pump.

 

Pursuant to PRC law, the partners in a cooperative foreign joint venture are permitted to share profits on an agreed basis and not necessarily in proportion to capital contribution.  The joint venture is not required to be a distinct legal entity from its partners and management and financial control of the foreign joint venture may be determined at the discretion of the partners by mutual agreement provided that, upon termination of the joint venture, all fixed assets will become the property of the Chinese participant in the joint venture. Pursuant to the December 3, 2012 Share Transfer Agreement. Million Place was entitled to appoint the board of directors of Yulong Pump. Further, absent an agreement between Million Place and Yulong Pump, the articles of association of Yulong Pump provide for distribution of dividends amongst its shareholder in proportion to the number of shares held by them.  

 

On April 25, 2014 Million Place entered into a Share Sale & Purchase Agreement with Qin Xiu Shan, our President,Chief Executive Officer and (now) Director, whereby Mr. Qin, who is the beneficial owner of a 51% interest in Yulong Pump, granted to Million Place the option to purchase an additional 2% equity interest in Yulong Pump (being 600,000 shares) for the aggregate purchase price of RMB 1.00 per share or approximately $96,278 in the aggregate.  The option is perpetual and without provision for termination.  With its acquisition of a 49% equity interest together with an option to purchase an aggregate 51% equity interest, Million Place is seeking to establish a majority equity stake in Yulong Pump. 

 

On May 22, 2014 Million Place entered into a Joint Venture Contract with Yulong Pump pursuant to which the companies intend to jointly engage in the manufacture of industrial boilers, the provision of consultancy services for the design of boiler systems, the manufacture of industrial water pumps and accessories, and the acquisition and development of real estate.  Pursuant to the Joint Venture Contract, Million Place will be solely responsible all operations and management of the joint venture and shall have exclusive authority to enter into agreements on behalf of the joint venture.  Million Place will in turn receive compensation for services it provides to the joint venture and shall be entitled to a 49% share of profit generated by the joint venture.  Both Million Place and Yulong Pump shall be entitled to engage in business that is competitive with the joint venture.  Pursuant to the Joint Venture Contract, Yulong Pump has allocated its 143,106 square foot commercial property located in Wulateqianqi, Mongolia to the joint venture operation. That property is currently under construction and is further described below. Additional assets or operations may be allocated to the joint venture on an ongoing basis. 

 

Business of Inner Mongolia Yulong Pump Production Company Limited

 

Inner Mongolia Yulong Pump Production Company Limited (“Yulong Pump”) was incorporated on October 6, 1998 under the laws of the Peoples Republic of China to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.  

 

In 1998, Yulong Pump acquired land use rights in Wuchuan, Inner Mongolia, for a total of RMB 799,000 ($131,985) for the purposes of establishing a manufacturing facility where, from 1998 until 2008, Yulong Pump was engaged in the manufacture of industrial water pumps for a variety of applications.  In 2008, Yulong Pump ceased its water pump manufacturing activities due to a decrease in demand for its products and increasing obsolescence of its manufacturing infrastructure.  The land use rights for the Wuchuan property expire in 2046 and are eligble for renewal subject to additional costs.  The Wuchuan property, is located in the city centre of Wuchuan, a suburb of Hohhot.  Yulong pump intends to explore the potential for commercial development of these lands. 

 

Since the termination of its water pump manufacturing operations, Yulong Pump has engaged in the identification and acquisition of other industrial manufacturing assets, and in the acquisition, development and exploitation of residential, commercial, and industrial real estate assets.

 

 

F-5

 


 

In 2008, Yulong Pump transformed itself from a local resident China company to a foreign joint venture company. As a result, the Company has become an entity with the status of a foreign joint venture company with registered capital of RMB 30 million (approximately USD$4,839,181), which consists of 30 million shares of authorized, issued and outstanding voting common stock with a par value of RMB 1.0 per share (USD$0.16).

 

In 2013, Yulong Pump applied to the Foreign Investment Committee of Inner Mongolia Autonomous Region to raise the registered capital from RMB 30 million to RMB 600 million.(approximately USD$96,783,624).  This was approved in November 2013. 

 

During the year 2013, Yulong Pump raised RMB 188,355,325 (USD$31,114,083) as a contribution from its president and CEO, Qin Xiu San.

 

On August 5, 2013 Yulong Pump entered into Real Estate Sales Contracts (Lease Agreements) with WulateqianqiHua Yuan Real Estate Limited Company pursuant to which Yulong Pump acquired the land use rights, expiring on September 15, 2080, to the third, fourth and fifth floors of a 6 story commercial building under development and located in Wulanteqianqi, Mongolia, China.  The leasehold area of the property is approximately 143,106 square feet.  Yulong pump paid RMB 188,355,325 (approximately USD $31,114,000) in consideration of the land use rights.  The property is under construction with completion anticipated by Fall of 2015. The Wulateqianqi property was subsequently allocated to the joint venture between Million Place and Yulong Pump pursuant to the Joint Venture Agreement dated May 22, 2014.  Million Place is therefore responsible for the administration and management of the property and entitled to receive 49% of the joint venture proceeds.  The parties intend to lease the facility upon completion of construction and a potential tenant has been identified. 

 

On February 1, 2014, Yulong Pump entered into a Warranty Deed Agreement with Qin Xiu San, a former officer and former director of the Company, pursuant to which Mr. Qin has agreed to transfer to Yulong Pump by July 31, 2014 all outstanding securities of Hohhot Devotion Boiler General Company Private Limited (“Hohhot Devotion Boiler”).  The Warranty Deed Agreement does not provide for financial consideration.  Hohhot Devotion Boiler is a PRC company with approximately 300 employees engaged in the manufacture and sale of industrial boilers, and in real estate development in the Hohhot region of Inner Mongolia, China.  It is the largest manufacturer of boilers in Inner Mongolia.  Together, Devotion Boiler and Yulong Pump are concurrently planning to begin construction in March 2014 of a new state of the art boiler manufacturing factory with a planned investment of approximately USD$250 million. The companies intend to commence staffing and training of the new boiler plant employees concurrently with the start of construction. Yulong Pump and Devotion Boiler also intend to rezone for commercial and residential use industrial land owned by Devotion Boiler in Inner Mongolia.  As at the date of this report, the acquisition of Devotion Boiler by Yulong Pump remains incomplete, and there is no guarantee that any such acquisition will be completed.  Further, there is no guarantee that Yulong Pump or Devotion Boiler will successfully financing the construction of their planned boiler facility. On August 5, 2014, the warranty deed was extended to October 31, 2014.  On March 31, 2015, the warrant deed was further extended to June 30, 2015.  As at the date of this report, the acquisition has not been completed. There is no guarantee that the transfer will be completed or that it will be completed on terms favorable to Yulong Pump.

 

Through our wholly owned subsidiary, Million Place, together with its joint venture partner, Yulong Pump, we adopted a multi-pronged business plan involving the acquisition, development and exploitation of residential, commercial, and industrial real estate assets, the manufacture and sale of industrial water pumps and accessories and industrial boilers, and the provision of consultancy services for the design of industrial boiler systems. 

 

The accompanying unaudited consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information required to be included in a complete set of financial statements in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a

 

F-6


 

fair presentation have been included. Operating results for the three months ended March 31, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015. The accompanying unaudited consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company’s 2014 Annual Report filed with the SEC.

 

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

 

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

 

Business Combinations

 

We evaluate each investment in a business to determine if we should account for the investment as a cost-basis investment, an equity investment, a business combination or a common control transaction. An investment in which we do not have a controlling interest and which we are not the primary beneficiary but where we have the ability to exert significant influence is accounted for under the equity method of accounting. For those investments that we account for in accordance ASC 805,  Business Combinations , we record the assets acquired and liabilities assumed at our estimate of their fair values on the date of the business combination. Our assessment of the estimated fair value of each of these can have a material effect on our reported results as intangible assets are amortized over various lives. Furthermore, a change in the estimated fair value of an asset or liability often has a direct impact on the amount to recognize as goodwill, which is not amortized. Often determining the fair value of these assets and liabilities assumed requires an assessment of the expected use of the asset, the expected cost to extinguish a liability or our expectations related to the timing and the successful completion of the integration of the business. Such estimates are inherently difficult and subjective and can have a material impact on our financial statements. We account for business combinations under a method similar to the pooling-of-interest method ("Pooling-of-Interest") when the combination is with a business under common control with us by our majority shareholder.

 

Basic and Diluted Earnings (Loss) Per Share.       

 

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the three months ended March 31, 2015, there were no potentially dilutive securities outstanding.

 

Cash    

 

Asia Pacific considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of March 31, 2015, there were no cash equivalents. We maintain a bank account in Hong Kong that principally consists of cash.

 

Income Taxes. 

 

The Company accounts for income taxes under the Financial Accounting Standards Board of Financial Accounting Standard ASC 740, "Accounting for Income Taxes." Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. There was no current or deferred income tax expense or benefits for the periods ending March 31, 2015 and 2014.

 

F-7


 

 

Recently Issued Accounting Pronouncements.       

 

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will effective prospectively for annual reporting periods begin after December 15, 2014, and interim periods within those annual periods. However, early adoption is permitted. The Company adopted ASU 2014-10 during the three months ended March 31, 2015, thereby no longer presenting or disclosing any information required by Topic 915.

 

In August 2014, the FASB issued the FASB Accounting Standards Update No. 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).

 

In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.

 

When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

 

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):

 

a.     Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans)

b.     Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c.     Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

 

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:

 

a.     Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern

 

F-8


 

b.     Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations

c.     Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

 

The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

 

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.

 

NOTE 3.  GOING CONCERN

 

These financial statements have been prepared on a going concern basis, which implies Asia Pacific will continue to meet its obligations and continue its operations for the next fiscal year. Realization value may be substantially different from carrying values as shown and these financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should Asian Pacific be unable to continue as a going concern. As of March 31, 2015, Asia Pacific   has not generated revenues and has accumulated losses of $4,441,108 since inception. The continuation of Asia Pacific as a going concern is dependent upon the continued financial support from its shareholders, the ability of Asia Pacific to obtain necessary equity financing to continue operations, and the attainment of profitable operations. These factors raise substantial doubt regarding the Asia Pacific’s ability to continue as a going concern.

 

NOTE 4.  INVESTMENT

 

The Company, through Million Place, has a 49% interest in Yulong Pump, a pump and boiler production company in Inner Mongolia since December 1, 2012. We use the equity method to account for investments in Yulong Pump; accordingly, our results of operations include the Company’s proportionate share of the net income or loss of Yulong Pump. Our judgment regarding the level of influence over each equity method investment includes considering key factors such as our ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions. Since the investment loss exceeded the carrying amount of an investment accounted for the equity method, the investment is reduced to zero as of March 31, 2015. The Company will resume applying the equity method only after its share of that net income equals the share of net losses not recognized during the period the equity method was suspended.

 

As of March 31, 2015 and December 31, 2014, the carrying value of the Company’s investment in Yulong Pump amounted to $0 and $0, respectively. Investment loss from Yulong Pump amounted $0 and $3,066 for the three months ended March 31, 2015 and 2014, respectively.

 

NOTE 5.  RELATED PARTY TRANSACTIONS     

 

As of March 31, 2015 and December 31, 2014, other receivable from a related party amounted to $0 and $0, respectively. During the year ended December 31, 2014, the Company lent $1,425,000 to Hohhot Devotion Boiler and is interest free, due on demand, and with no collateral. Full amount was written off to bad debt expenses due to uncertainty of collectability.

 

As of March 31, 2015 and December 31, 2014, advances from the Company’s chairman, chief executive officer and director, John Gong, amounted to $67,797 and $61,239, respectively. The advances are payments made by John Gong to cover expenses related to its operations. The advance is non-interest bearing, and payable on demand.

 

 

F-9


 

As of March 31, 2015 and December 31, 2014, accounts payable to a related party, G Capital Limited, amounted $553,200 and $504,532, respectively. The payable is for providing management services to the Company. John Gong is the CEO and a shareholder of G Capital Limited.

 

On August 5, 2014, the company acquired Million Place, a related party under common control. Accordingly, in accordance with ASC Topic 805, with respect to business combination for transactions between entities ender common control, the merger has been accounted for using Pooling-of-Interest with no adjustment to the historical basis of the Million Place or the company. The Balance sheets, statement of operations and statement of cash flows for Million Place have therefore been included in all period presented as if we had been combined at all times the entities were under common control.

 

NOTE 6. – SHARES TO BE ISSUED

  

On April 2, 2014, the Company received $230,000 and agreed to issue shares pursuant to Regulation S of the Securities Act for $1.50 per share.

 

On April 4, 2014, the Company received $130,000 and agreed to issue shares pursuant to Regulation S of the Securities Act for $1.50 per share.

 

On April 4, 2014, the Company received $876,311 and agreed to issue shares pursuant to Regulation S of the Securities Act for $1.50 per share. $311 of the proceeds was booked as shareholder’s contribution and $876,000 was booked as shares to be issued as of June 30, 2014.

 

On April 7, 2014, the Company received $15,000 and agreed to issue shares pursuant to Regulation S of the Securities Act for $1.50 per share.

 

On April 7, 2014, the Company received $144,000 and agreed to issue shares pursuant to Regulation S of the Securities Act for $1.50 per share.

 

On April 17, 2014, the Company received $60,000 and agreed to issue shares pursuant to Regulation S of the Securities Act for $1.50 per share.

 

On May 2, 2014, the Company received $15,000 and agreed to issue shares pursuant to Regulation S of the Securities Act for $1.50 per share.

 

On May 19, 2014, the Company received $15,000 and agreed to issue shares pursuant to Regulation S of the Securities Act for $1.50 per share.

 

On May 21, 2014, the Company received $19,500 and agreed to issue shares pursuant to Regulation S of the Securities Act for $1.50 per share.

 

On May 21, 2014, the Company received $60,000 and agreed to issue shares pursuant to Regulation S of the Securities Act for $1.50 per share.

 

Shares issuance commission of $70,000 in relates to the above share issuance was booked against shares to be issued.

 

NOTE 7. - STOCKHOLDER’S EQUITY

  

On November 5, 2012, we filed a Certificate of Change with the Nevada Secretary of State to increase our authorized capital from 100,000,000 common shares to 400,000,000 common shares. On the same date, we affected

 

 

 

F-10


 

a forward split of our authorized, issued and outstanding shares of common stock on a four for one (4:1) basis. All prior share amounts have been restated retroactively.

 

On April 4, 2014, the Company received $876,311 and agreed to issue shares pursuant to Regulation S of the Securities Act for $1.50 per share. $311 of the proceeds were booked as shareholder’s contribution and $876,000 were booked as shares to be issued as of June 30, 2014.

 

On August 5, 2014, the Company entered into and closed a share exchange agreement with Million Place and the shareholders of Million Place.  Pursuant to the terms of the share exchange agreement, the company agreed to acquire all 10,000 of the issued and outstanding shares of Million Place’s common stock in exchange for the issuance by the company of 7,500,000 shares of common stock to the shareholders of Million Place. As a result of these transactions, Million Place has become our wholly owned subsidiary.  Because the company and Million Place are under common control, it is required under GAAP to account for the acquisition in a manner similar to the pooling of interest method of accounting. Under this method of accounting, the Company reflected in its balance sheet the assets of Million Place at the company’s historical carryover basis instead of reflecting the fair market value of assets and liabilities. The Company also retrospectively recast its financial statements to include the operating results of Million Place from the date these assets were originally acquired by the company (the dates upon which common control began). On November 19, 2014, the Company authorized and issued the 7,500,000 shares.

 

On April 25, 2014, Million Place entered into a share sale and purchase agreement with Qin Xiu Shan, our former president, chief executive officer and director, whereby Qin Xiu Shan, who is the beneficial owner of a 51% interest in Yulong Pump, granted to Million Place the option to purchase an additional 2% equity interest in Yulong Pump (being 600,000 shares) for the aggregate purchase price of RMB 1.00 per share or approximately $96,278 in the aggregate. The option is perpetual and without provision for termination. With its acquisition of a 49% equity interest together with an option to purchase an aggregate 51% equity interest, Million Place is seeking to establish a majority equity stake in Yulong Pump. As of the report date, Million Place has not executed this option.

 

NOTE 8. - INCOME TAXES

     
The income tax expense in the consolidated statements of operations consisted of:

  

 

 

For the three months ended March 31,

 

 

2015

 

2014

 

 

 

 

 

 

 

 

Unites States Enterprise Income Tax

 

$

 

 

$

-  

BVI Enterprise Income Tax

 

 

-

 

 

 

-

Income taxes, net

 

$

-

 

 

$

-

 

United States

 

Asia Pacific is incorporated in United States, and is subject to corporate income tax rate of 34%.

 

As of March 31, 2015, the company has net operating losses of approximately $4,441,108 that begin expiring in 2031. The potential benefit of the company’s net operating losses has not been recognized in these financial statements because the company cannot be assured it is more likely-than-not it will utilize the net operating losses carried forward.

 

 

 

 

 

 

F-11

 


 

 

March 31, 2015

 

December 31, 2014

Deferred Tax Assets and Liabilities:

 

 

 

 

 

Net operating loss carryforwards

 $

266,038

 

 $

237,578

Valuation allowance

 

(266,038)

 

 

(237,578)

Net deferred tax assets

$

-

 

$

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

F-12

 


 

Item 2.           Management's Discussion and Analysis of Financial Condition and Results of Operations

FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to shares of our common stock.

As used in this quarterly report, the terms “we”, “us”, “our”, and “our company” mean Asia Pacific Boiler Corporationand our wholly owned subsidiary, Million Place Investments Limited, a British Virgin Islands corporation, unless otherwise indicated.

Corporate History

We were incorporated in Nevada on June 23, 2011, to engage in the business of real estate investment consulting with respect to properties located in Panama. We have not started operations. We have not generated revenues from operations, but must be considered a development stage business. Our statutory registered agent in Nevada is National Registered Agents Inc. of Nevada located at 1000 East William Street, Suite 204, Carson City, Nevada 89701. Our business office is Unit 10 & 11, 26th Floor, Lippo Center, Tower 2, 89 Queensway Admiralty, Hong Kong.

We are a company with no operations. As of the date hereof, we have not been successful in our real estate investment consulting operations. Historically, we have been able to raise a limited amount of capital through private placements of our equity stock, but we are uncertain about our continued ability to raise funds privately.

On November 5, 2012, we filed Articles of Merger with the Nevada Secretary of State to change our name from “Panama Dreaming Inc.” to “Asia Pacific Boiler Corporation”, to be effected by way of a merger with our wholly-owned subsidiary Asia Pacific Boiler Corporation, which was created solely for the name change.

Also on November 5, 2012, we filed a Certificate of Change with the Nevada Secretary of State to give effect to a forward split of our authorized, issued and outstanding shares of common stock on a 4 new for 1 old basis and, consequently, our authorized capital increased from 100,000,000 to 400,000,000 shares of common stock and our issued and outstanding shares of common stock increased from 7,950,000 to 31,800,000, all with a par value of $0.00001. Our preferred shares remained unchanged.

 

 

4


 

The forward split and name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on November 9, 2012. Our CUSIP number is 04521K 107.

Corporate Overview

Previously we intended to offer real estate consulting services through our website to persons located in North America and around the world, who were interested in investing in real estate located in Panama. We intended to cater to the newly located or inexperienced real estate investors who did not have a preexisting relationship with a real estate agent in Panama. Our plan was to assist the investor by locating qualified local real estate agents in Panama who would assist with the issues relating to the purchase of real property in Panama. For providing such service, we were to be paid a fee by our customer once the purchase was made.

Our management has been analyzing the various alternatives available to our company to ensure our survival and to preserve our shareholder's investment in our common shares. This analysis has included sourcing additional forms of financing to continue our business as is, or mergers and/or acquisitions. At this stage in our operations, we believe either course is acceptable, as our operations have not been profitable and our future prospects for our business are not good without further financing.

We are focusing our preliminary merger/acquisition activities on potential business opportunities with established business entities for the merger of a target business with our company. In certain instances, a target business may wish to become a subsidiary of our company or may wish to contribute assets to our company rather than merge. We anticipate that any new acquisition or business opportunities by our company will require additional financing. There can be no assurance, however, that we will be able to acquire the financing necessary to enable us to pursue our plan of operation. If our company requires additional financing and we are unable to acquire such funds, our business may fail.

In implementing a structure for a particular business acquisition or opportunity, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. Upon the consummation of a transaction, it is likely that our present management will no longer be in control of our company and our existing business will close down. In addition, it is likely that our officers and directors will, as part of the terms of the acquisition transaction, resign and be replaced by one or more new officers and directors.

We anticipate that the selection of a business opportunity in which to participate will be complex and without certainty of success. Management believes that there are numerous firms in various industries seeking the perceived benefits of being a publicly registered corporation. Business opportunities may be available in many different industries and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex.

We may seek a business opportunity with entities who have recently commenced operations, or entities who wish to utilize the public marketplace in order to raise additional capital in order to expand business development activities, to develop a new product or service, or for other corporate purposes. We may acquire assets and establish wholly-owned subsidiaries in various businesses or acquire existing businesses as subsidiaries.

At this stage, we can provide no assurance that we will be able to locate compatible business opportunities, what additional financing we will require to complete a combination or merger with another business opportunity or whether the opportunity's operations will be profitable.

If we are unable to secure adequate capital to continue our business or alternatively, complete a merger or acquisition, our shareholders will lose some or all of their investment and our business will likely fail.

On August 5, 2014, we entered into and closed a share exchange agreement with Million Place Investments Ltd. and the shareholders of Million Place. Pursuant to the terms of the share exchange agreement, we agreed to acquire all 10,000 of the issued and outstanding shares of Million Place’s common stock in exchange for the issuance by our company of 7,500,000 shares of our common stock to the shareholders of Million Place. As a result of these transactions, Million Place became our wholly owned subsidiary. The 7,500,000 shares were subsequently issued, increasing the number of our issued and outstanding common shares to 39,300,000.

 

5


 

Million Place was incorporated on April 30, 2012 under the laws of the British Virgin Islands (BVI) to engage in any lawful corporate undertaking, including but not limited to mergers and acquisitions.

Pursuant to a share transfer agreement dated December 3, 2012, Million Place purchased from John Gong, a director and officer of our company, 14,700,000 shares at Renminbi (“RMB”) 1.00 per ordinary share (approximately $2,227,273 in the aggregate) in the share capital of Inner Mongolia Yulong Pump Production Company Limited (Yulong Pump) thereby acquiring an equity interest of 49% in Yulong Pump. Yulong Pump is a China foreign joint venture corporation engaged in the sale and manufacture of industrial equipment, and in the acquisition, development and exploitation of residential, commercial, and industrial real estate assets. The business of Yulong Pump is further described below. In acquiring a 49% interest in Yulong Pump, Million Place became the deemed cooperative foreign joint venture partner of Yulong Pump.

Pursuant to People’s Republic of China (“PRC”) law, the partners in a cooperative foreign joint venture are permitted to share profits on an agreed basis and not necessarily in proportion to capital contribution. The joint venture is not required to be a distinct legal entity from its partners and management and financial control of the foreign joint venture may be determined at the discretion of the partners by mutual agreement provided that, upon termination of the joint venture, all fixed assets will become the property of the Chinese participant in the joint venture. Pursuant to the December 3, 2012 share transfer agreement, Million Place was entitled to appoint the board of directors of Yulong Pump. Further, absent an agreement between Million Place and Yulong Pump, the articles of association of Yulong Pump provide for distribution of dividends amongst its shareholders in proportion to the number of shares held by them.

On April 25, 2014, Million Place entered into a share sale and purchase agreement with Qin Xiu Shan, a former officer and director of our company, whereby Mr. Qin, who is the beneficial owner of a 51% interest in Yulong Pump, granted to Million Place the option to purchase an additional 2% equity interest in Yulong Pump (being 600,000 shares) for the aggregate purchase price of RMB 1.00 per share or approximately $96,278 in the aggregate. The option is perpetual and without provision for termination. With its acquisition of a 49% equity interest together with an option to purchase an aggregate 51% equity interest, Million Place is seeking to establish a majority equity stake in Yulong Pump.

On May 22, 2014, Million Place entered into a joint venture contract with Yulong Pump pursuant to which the companies intend to jointly engage in the manufacture of industrial boilers, the provision of consultancy services for the design of boiler systems, the manufacture of industrial water pumps and accessories, and the acquisition and development of real estate. Pursuant to the joint venture contract, Million Place will be solely responsible all operations and management of the joint venture and shall have exclusive authority to enter into agreements on behalf of the joint venture. Million Place will in turn receive compensation for services it provides to the joint venture and shall be entitled to a 49% share of profit generated by the joint venture. Both Million Place and Yulong Pump shall be entitled to engage in business that is competitive with the joint venture. Pursuant to the joint venture contract, Yulong Pump has allocated its 143,106 square foot commercial property located in Wulateqianqi, Mongolia to the joint venture operation. That property is currently under construction and is further described below. Additional assets or operations may be allocated to the joint venture on an ongoing basis.

On February 1, 2014, Yulong Pump entered into a warranty deed agreement with Qin Xiu San, a former officer and director of our company, pursuant to which Mr. Qin agreed to transfer to Yulong Pump by July 31, 2014 all outstanding securities of Hohhot Devotion Boiler General Company Private Limited (“Hohhot Devotion Boiler”). On August 5, 2014, the warranty deed was extended to October 31, 2014. On March 31, 2015, the warranty deed was further extended until June 30, 2015. The warranty deed does not specify financial consideration for the transfer and, as at the date of this report, the acquisition has not been completed. There is no guarantee that the transfer will be completed or that it will be completed on terms favorable to Yulong Pump.

Hohhot Devotion Boiler is a PRC company with approximately 300 employees engaged in the manufacture and sale of industrial boilers, and in real estate development in the Hohhot region of Inner Mongolia, China. It is the largest manufacturer of boilers in Inner Mongolia. Together, Devotion Boiler and Yulong Pump are concurrently planning to begin construction of a new state of the art boiler manufacturing factory with a planned investment of approximately $250 million. The companies intend to commence staffing and training of the new boiler plant employees concurrently with the start of construction. Yulong Pump and Devotion Boiler also intend to rezone for commercial and residential use industrial land owned by Devotion Boiler in Inner Mongolia. As at the date of this

 

 

6


 

report, the acquisition of Devotion Boiler by Yulong Pump remains incomplete, and there is no guarantee that any such acquisition will be completed. Further, there is no guarantee that Yulong Pump or Devotion Boiler will successfully finance the construction of their planned boiler facility.

Through our wholly owned subsidiary, Million Place, together with its joint venture partner, Yulong Pump, we adopted a multi-pronged business plan involving the acquisition, development and exploitation of residential, commercial, and industrial real estate assets, the manufacture and sale of industrial water pumps and accessories and industrial boilers, and the provision of consultancy services for the design of industrial boiler systems.

On November 6, 2014, we changed our fiscal year end to December 31from June 30.

Our director and officer, John Gong Chin Ong, is the controlling shareholder, principal officer, and a director of Million Place. Mr. Qin XiuShan, a former officer and director of our company, is the majority shareholder, principal officer and a director of Hohhot Devotion Boiler. Both John Gong Chin Ong and Qin XiuShan are affiliated shareholders and principals of Yulong Pump.

Business of Inner Mongolia Yulong Pump Production Company Limited

Yulong Pump was incorporated on October 6, 1998 under the laws of the PRC to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions.

In 1998, Yulong Pump paid a total of RMB 799,000 or $131,985 to acquire land use rights in Wuchuan, Inner Mongolia, for the purposes of establishing a manufacturing facility. From 1998 until 2008, Yulong Pump was engaged in the manufacture of industrial water pumps for a variety of applications in Wuchuan, Inner Mongolia. In 2008, Yulong Pump ceased its water pump manufacturing activities due to a decrease in demand for its products and increasing obsolescence of its manufacturing infrastructure. The land use rights for the Wuchuan property expire in 2046 and are eligible for renewal subject to additional costs. The Wuchuan property is located in the city centre of Wuchuan, a suburb of Hohhot. Yulong Pump intends to explore the potential for commercial development of these lands. The land use right has not been transferred to Yulong Pump as of December 31, 2014. Yulong Pump wrote off the net amount of land use right as of December 31, 2014.

Since the termination of its water pump manufacturing operations, Yulong Pump has engaged in the identification and acquisition of other industrial manufacturing assets, and in the acquisition, development and exploitation of residential, commercial, and industrial real estate assets.

In 2008, Yulong Pump transformed itself from a local resident China company to a foreign joint venture company. As a result, the company has become an entity with the status of a foreign joint venture company with registered capital of RMB30 million (approximately $4,839,181), which consists of 30 million shares of authorized, issued and outstanding voting common stock with a par value of RMB1.0 per share ($0.16).

In 2013, Yulong Pump applied to the Foreign Investment Committee of Inner Mongolia Autonomous Region to raise the registered capital from RMB 30 million to RMB 600 million(approximately $96,783,624). This was approved in November 2013.

During the year 2013, Yulong Pump raised RMB 188,355,325 ($31,114,083) as a contribution from its president and chief executive officer, Qin Xiu Shan.

On August 5, 2013, Yulong Pump entered into real estate sales contracts with Wulanteqianqi Hua Yuan Real Estate Limited Company pursuant to which Yulong Pump acquired the land use rights, expiring on September 15, 2080, to the third, fourth and fifth floors of a 6 story commercial building under development and located in Wulanteqianqi, Mongolia, China. The leasehold area of the property is approximately 143,106 square feet. Yulong Pump paid RMB 188,355,325 (approximately $31,114,083) in consideration of the land use rights. The property is under construction with completion anticipated by fallof 2015. The Wulateqianqi property was subsequently allocated to the joint venture between Million Place and Yulong Pump pursuant to the joint venture agreement dated May 22, 2014. Million Place is therefore responsible for the administration and management of the property and entitled to receive

 

7


 

49% of the joint venture proceeds. The parties intend to lease the facility to tenants upon completion of construction and a potential tenant has been identified.

On February 1, 2014, Yulong Pump entered into a warranty deed agreement with Qin Xiu Shan pursuant to which Mr. Qin has agreed to transfer to Yulong Pump by July 31, 2014 all outstanding securities of Devotion Boiler. The warranty deed agreement does not provide for financial consideration. On August 5, 2014, the warranty deed was extended to October 31, 2014.  On March 31, 2015 the warranty deed was further extended to June 30, 2015.  As at the date of this report, the acquisition has not been completed and there is no guarantee that the transfer will be completed or that it will be completed on terms favorable to Yulong Pump. Hohhot Devotion Boiler is a PRC company with approximately 300 employees engaged in the manufacture and sale of industrial boilers, and in real estate development in the Hohhot region of Inner Mongolia, China. It is the largest manufacturer of boilers in Inner Mongolia. Together, Devotion Boiler and Yulong Pump are concurrently planning to begin construction by July 1, 2015 of a new state of the art boiler manufacturing factory with a planned investment of approximately $250 million. The companies intend to commence staffing and training of the new boiler plant employees concurrently with the start of construction. Yulong Pump and Devotion Boiler also intend to rezone for commercial and residential use industrial land owned by Devotion Boiler in Inner Mongolia. As at the date of this report, the acquisition of Devotion Boiler by Yulong Pump remains incomplete, and there is no guarantee that any such acquisition will be completed. Further, there is no guarantee that Yulong Pump or Devotion Boiler will successfully finance the construction of their planned boiler facility.

Cash Requirements

Over the next 12 months, through our wholly owned subsidiary, Million Place, we intend to engage in the acquisition, development and management of commercial real estate assets in cooperation with our joint venture partner, Yulong Pump. Together with Yulong Pump, we are also seeking to engage in the manufacture and sale of industrial water pumps and accessories and industrial boilers for commercial buildings, and the provision of consultancy services for the design of boiler systems. We anticipate that we will incur the following operating expenses during this period:

Estimated Funding Required During the Next 12 Months

Expense

Amount

Exercise of Option to acquire 2% (51% in the aggregate) of Inner Mongolia Yulong Pump and Boiler Production Company Limited.

$97,000

Consulting Fees for Research and Development

100,000

Management Consulting Fees

400,000

Professional fees

400,000

Other general administrative expenses

200,000

Total

$1,197,000

 

We will require funds of approximately $1,197,000 over the next twelve months to execute our business plan. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. There is no assurance that we will secure any additional financing or maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable.

Future Financings

We anticipate continuing to rely on equity sales of our shares of common stock in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned activities.

 

8


 

Purchase of Significant Equipment

We do not anticipate the purchase or sale of any plant or significant equipment during the next 12 months.

Going Concern

There is significant doubt about our ability to continue as a going concern.

Our company has incurred a net loss of $86,317 for the period ended March 31, 2015 and have generated no revenues. The continuity of our future operations is dependent upon our ability to raise additional capital and to successfully execute our business plans in a timely manner. These conditions raise substantial doubt about our ability to continue as a going concern. We intend to continue relying upon the issuance of equity securities to finance our operations. However there can be no assurance we will be successful in raising the funds necessary to maintain operations, or that a self-supporting level of operations will ever be achieved. The likely outcome of these future events is indeterminable. The financial statement does not include any adjustment to reflect the possible future effect on the recoverability and classification of the assets or the amounts and classification of liabilities that may result should we cease to continue as a going concern.

Results of Operations

Three Months Ended March 31, 2015 and 2014

We have generated no revenues and have incurred $86,317 in operating expenses for the three month period ended March 31, 2015 and $102,056 in operating expenses for the three month period ended March 31, 2014. The primary reason for the decrease from the three months ended 2014 to 2015 is the decrease in management fees.

 

   

Three Months Ended

March 31,

 
   

2015

     

2014

 

Consulting fees

$

6,000

   

$

3,559

 

Management fees

$

48,667

   

$

90,391

 

Legal and accounting fees

$

29,019

   

$

7,228

 

General and administrative expenses

$

2,631

   

$

878

 

Losses from equity investment

$

-

   

$

3,066

 

Net Loss

$

(86,317

)

 

$

(105,122

)

 
 
 
 

 

9


 

Liquidity and Capital Resources

Working Capital

   

As at

March 31,
2015

   

As at

December 31, 2014

 

Total current assets

$

4,316

 

$

6,946

 

Total current liabilities

 

2,162,061

   

2,078,374

 

Working capital (deficit)

 

(2,157,745

)

 

(2,071,428

)

Cash Flows

   

Three Months

Ended

March 31,
2015

   

Three Months Ended

March 31, 2014




Net cash (used in) operating activities

$

(57,856

)

$

(121,477

)

Net cash (used in) investing activities

 

-

   

-

 

Net cash (used in) financing activities

 

55,226

   

121,477

 

Net change in cash

 

(2,630

)

 

-

 

  

As of the date of this report, we have yet to generate any revenues from our business operations.

As of March 31, 2015, our total current assets were $4,316 and our total current liabilities were $2,162,061. We had cash of $4,316 as of March 31, 2015 and a working capital deficit of $(2,157,745).

During the three months ended March 31, 2015 we spent $57,856 on operating activities, whereas we spent $121,477 on operating activities during the same period in fiscal 2014. The decrease in our expenditures on operating activities during the three months ended March 31, 2015 was primarily due more increase in accounts payable offset by increased net loss.

During the three months ended March 31, 2015 and 2014 we did not invest in investing activities.

During the three months ended March 31, 2015 $55,226 was provided by financing activities compared to $121,477 provided by financing activities during the three months ended March 31, 2014. The decrease is due to less proceeds from related parties.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

 

10


 

Critical Accounting Policies

Use of Estimates

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

Business Combinations

We have made strategic acquisitions to expand our footprint, establish strategic partnerships and/or to obtain technology that is complementary to our product offerings and strategy. We evaluate each investment in a business to determine if we should account for the investment as a cost-basis investment, an equity investment, a business combination or a common control transaction. An investment in which we do not have a controlling interest and which we are not the primary beneficiary but where we have the ability to exert significant influence is accounted for under the equity method of accounting. For those investments that we account for in accordance ASC 805, Business Combinations, we record the assets acquired and liabilities assumed at our estimate of their fair values on the date of the business combination. Our assessment of the estimated fair value of each of these can have a material effect on our reported results as intangible assets are amortized over various lives. Furthermore, a change in the estimated fair value of an asset or liability often has a direct impact on the amount to recognize as goodwill, which is not amortized. Often determining the fair value of these assets and liabilities assumed requires an assessment of the expected use of the asset, the expected cost to extinguish a liability or our expectations related to the timing and the successful completion of the integration of the business. Such estimates are inherently difficult and subjective and can have a material impact on our financial statements. We account for business combinations under a method similar to the pooling-of-interest method ("Pooling-of-Interest") when the combination is with a business under common control with us by our majority shareholder.

Basic and Diluted Earnings (Loss) Per Share

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an "as if converted" basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the three months ended March 31, 2015, there were no potentially dilutive securities outstanding.

Cash

Our company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. As of March 31, 2015, there were no cash equivalents.

Income Taxes

Our company accounts for income taxes under the Financial Accounting Standards Board of Financial Accounting Standard ASC 740, "Accounting for Income Taxes." Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. There was no current or deferred income tax expense or benefits for the three month periods ending March 31, 2015 and 2014.

 

 

11


 

Recently Issued Accounting Pronouncements

In June 2014, the FASB issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will effective prospectively for annual reporting periods begin after December 15, 2014, and interim periods within those annual periods.

However, early adoption is permitted. Our company adopted ASU 2014-10 during the nine months ended September 30, 2014, thereby no longer presenting or disclosing any information required by Topic 915.

In August 2014, the FASB issued the FASB Accounting Standards Update No. 2014-15 “Presentation of Financial Statements—Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”).

In connection with preparing financial statements for each annual and interim reporting period, an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or within one year after the date that the financial statements are available to be issued when applicable). Management’s evaluation should be based on relevant conditions and events that are known and reasonably knowable at the date that the financial statements are issued (or at the date that the financial statements are available to be issued when applicable). Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity will be unable to meet its obligations as they become due within one year after the date that the financial statements are issued (or available to be issued). The term probable is used consistently with its use in Topic 450, Contingencies.

When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events will alleviate the substantial doubt. The mitigating effect of management’s plans should be considered only to the extent that (1) it is probable that the plans will be effectively implemented and, if so, (2) it is probable that the plans will mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, but the substantial doubt is alleviated as a result of consideration of management’s plans, the entity should disclose information that enables users of the financial statements to understand all of the following (or refer to similar information disclosed elsewhere in the footnotes):

a.     Principal conditions or events that raised substantial doubt about the entity’s ability to continue as a going concern (before consideration of management’s plans).

b.     Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations.

c.     Management’s plans that alleviated substantial doubt about the entity’s ability to continue as a going concern.

If conditions or events raise substantial doubt about an entity’s ability to continue as a going concern, and substantial doubt is not alleviated after consideration of management’s plans, an entity should include a statement in the footnotes indicating that there is substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued (or available to be issued). Additionally, the entity should disclose information that enables users of the financial statements to understand all of the following:

 

 

12


 

a.     Principal conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

b.     Management’s evaluation of the significance of those conditions or events in relation to the entity’s ability to meet its obligations.

c.     Management’s plans that are intended to mitigate the conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.

The amendments in this Update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted.

Management does not believe that any recently issued, but not yet effective accounting pronouncements, when adopted, will have a material effect on the accompanying financial statements.

Item 3.           Quantitative and Qualitative Disclosures about Market Risk
    

As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 4.           Controls and Procedures
      

Management’s Report on Disclosure Controls and Procedures

We maintain disclosure controls and procedures, that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our president (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) to allow timely decisions regarding required disclosure.

As of the end of the quarter covered by this report, we conducted an evaluation under the supervision and with the participation of our president (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our president (our principal executive officer) and our chief financial officer (our principal financial officer and principal accounting officer) concluded that our disclosure controls were not effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during our last fiscal quarter that materially affected, or are reasonably likely to affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.           Legal Proceedings
    

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

13


 

Item 1A.        Risk Factors

  
As a “smaller reporting company”, we are not required to provide the information required by this Item.

Item 2.           Unregistered Sales of Equity Securities and Use of Proceeds

  
None.

Item 3.           Defaults Upon Senior Securities

  
None.

Item 4.           Mine Safety Disclosures

   
Not applicable.

Item 5.           Other Information

  
None.

Item 6.           Exhibits
     

Exhibit Number

Description

(2)

Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession

2.1

Share Exchange Agreement dated August 5, 2014 among Asia Pacific Boiler Corporation, Million Place Investments Limited, and the shareholders of Million Place Investments Limited (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)

(3)

(i) Articles of Incorporation; and (ii) Bylaws

3.1

Articles of Incorporation (incorporated by reference to our Registration Statement on Form S-1 filed on August 15, 2011)

3.2

Bylaws (incorporated by reference to our Registration Statement on Form S-1 filed on August 15, 2011)

3.3

Articles of Merger (incorporated by reference to our Current Report on Form 8-K filed on November 9, 2012)

3.4

Certificate of Change (incorporated by reference to our Current Report on Form 8-K filed on November 9, 2012)

3.5

Certificate of Incorporation of Million Place Investments Ltd. (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)

3.6

Articles of Association of Million Place Investments Ltd. (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)

(10)

Material Contracts

10.1

Letter of Intent dated February 14, 2014, with Million Place Investments Limited (incorporated by reference to our Current Report on Form 8-K filed on February 18, 2014)

 

14


 

Exhibit Number

Description

10.2

Share Transfer Agreement dated December 3, 2012 between Million Place Investments Limited, and Gong Chin Ong (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)

10.3

Share Sale and Purchase Agreement (Option Agreement) dated April 25, 2014 between Million Place Investments Limited and Qin Xiu Shan (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)

10.4

Joint Venture Agreement dated May 22, 2014 between Million Place Investments and Yulong Pump. (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)

10.5

Warranty Deed between Yulong Pump and Qin Xiu Shan (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)

10.6

Purchase Agreement dated August 5, 2013 between Yulong Pump and Wulateqianqi Hua Yuan Real Estate Limited Company (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)

10.7

Purchase Agreement dated August 5, 2013 between Yulong Pump and Wulateqianqi Hua Yuan Real Estate Limited Company. (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)

10.8

Purchase Agreement dated August 5, 2013 between Yulong Pump and Wulateqianqi Hua Yuan Real Estate Limited Company (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)

10.9

Extension of Warranty deed between Yulong Pump and Qin Xiu Shan dated August 5, 2014 (incorporated by reference to our Current Report on Form 8-K filed on August 12, 2014)

10.10

Extension of Warranty deed between Yulong Pump and Qin Xiu Shan dated March 31, 2015

(14)

Code of Ethics

14.1

Code of Ethics (incorporated by reference to our Annual Report on Form 10-K filed on September 12, 2012)

(21)

Subsidiaries of the Registrant

21.1

Million Place Investments Limited, a British Virgin Islands corporation (wholly owned)

(31)

Rule 13a-14(a)/15d-14(a) Certification

31.1*

Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer

31.2*

Section 302 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer

(32)

Section 1350 Certification

32.1*

Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer

32.2*

Section 906 Certification under the Sarbanes-Oxley Act of 2002 of the Principal Financial Officer and Principal Accounting Officer

(99)

Additional Exhibits

99.1

Audit Committee Charter (incorporated by reference to our Annual Report on Form 10-K filed on September 12, 2012)

99.2

Disclosure Committee Charter (incorporated by reference to our Annual Report on Form 10-K filed on September 12, 2012)

101*

Interactive Data File

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

*          Filed herewith.

 

15


 

SIGNATURES
    

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf of the undersigned thereunto duly authorized.

 

ASIA PACIFIC BOILER CORPORATION

 

(Registrant)

DATED: May 15, 2015

BY:

 

/s/ John Gong Chin Ong

   

John Gong Chin Ong

   

Chairman, Chief Executive Officer and Director

(Principal Executive Officer)

DATED: May 15, 2015

BY:

 

/s/ Yang Chin Leong

   

Yang Chin Leong

   

Chief Financial Officer, Treasurer and Director

   

(Principal Financial Officer and Principal Accounting Officer)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16