New Asia Holdings, Inc. - Quarter Report: 2011 June (Form 10-Q)

---

---

 

Nevada	45-0460095
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

P.O. Box 2458 Walnut Creek, CA

(Address of principal executive offices)

925-943-2090

(Registrant’s telephone number)

_______________________________________________________________

(Former name, former address and former fiscal year, if changed since last report)

[ ] Large accelerated filer Accelerated filer	[ ] Non-accelerated filer
[X] Smaller reporting company

 

 

Our financial statements included in this Form 10-Q are as follows:
F-1	Consolidated Balance Sheets as of June 30, 2011 and December 31, 2010 (unaudited);
F-2	Consolidated Statements of Operations for the three and six months ended June 30, 2011and 2010 (unaudited);
F-3	Consolidated Statement of Stockholders’ Equity (Deficit) as of June 30, 2011 (unaudited);
F-4	Consolidated Statements of Cash Flows for the six months ended June 30-, 2011 and 2010 (unaudited); and
F-5	Notes to Consolidated Financial Statements.

 

 

DM Products, Inc. And Subsidiaries
Consolidated Balance Sheets
(Unaudited)
		June 30, 2011				December 31, 2010
ASSETS
Current Assets
Cash and cash equivalents			3,986				2,714
Royalties Receivable			35,593				39,248
Employee Advances			5,000				5,000
Prepaid Expense			1,766				10,656
Total Current Assets			46,345				57,618
Property and Equipment - net			1,015				1,215
TOTAL ASSETS			47,360				58,833
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities
Accounts Payable			70,564				54,970
Accrued Expenses			105,653				45,653
Sales Tax Payable			2,424				2,424
Loan From Shareholder			2,875				-
Credit Cards Payable - current portion			14,718				8,531
Total Current Liabilities			196,233				111,578
Long Term Liabilities
Credit Cards Payable - net of current portion			26,592				26,592
Total Liabilities			222,826				138,170
Stockholders' Equity (Deficit)
Common Stock, $0.001 par value, 300,000,000 shares authorized, 239,937,352 shares issued and outstanding (239,937,352 - 2010)			239,938				239,938
Additional Paid In Capital			611,571				611,571
Accumulated Deficit			(1,262,659	)			(1,154,412	)
Total DM Products, Inc. Stockholders' Equity (Deficit)			(411,150	)			(302,903	)
Non-Controlling Interest			235,685				223,566
Total Stockholders' Equity (Deficit)			(175,465	)			(79,337	)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)			47,360				58,833

 

DM Products, Inc. And Subsidiaries
Consolidated Statements of Operations
(Unaudited)
		For the 3 months ended				For the 3 months ended				For the 6 months ended				For the 6 months ended
		June 30, 2011				June 30, 2010				June 30, 2011				June 30, 2010
Revenues
Royalty income			44,405				201,644				52,458				207,139
Total revenues			44,405				201,644				52,458				207,139
Operating expenses
Professional Fees			14,396				35,045				39,237				68,171
Salary & Wages			31,500				34,500				65,663				69,000
Consulting			125				250				9,229				434
General & Administrative expenses			15,209				31,869				34,458				46,525
Total operating expense			61,230				101,664				148,586				184,130
Income (Loss) from operations and before non-controlling Interest			(16,825	)			99,980				(96,128	)			23,009
Less: Income Attributable to non-controlling interest			10,412				50,266				12,119				51,414
Income (Loss) before income taxes			(27,237	)			49,714				(108,247	)			(28,405	)
Provision for income taxes			-				-				-				-
Net Income (Loss)		$	(27,237	)			49,714				(108,247	)			(28,405	)
Net Income (Loss) per common share-basic and fully diluted		$	(0.0001	)			0.0002			$	(0.0005	)			(0.0001	)
Weighted average common shares outstanding-basic and diluted			239,937,352				239,907,352				239,937,352				239,907,352

 

 

 

DM Products, Inc. And Subsidiaries
Consolidated Statements of Shareholders' Equity
(Unaudited)
		Common Stock								Additional Paid In Capital				Non-Controlling Interest				Accumulated Deficit				Total Shareholders' Equity
		Shares				Amount
Balance, December 31, 2010			239,937,352			$	239,938			$	611,571			$	223,566			$	(1,154,412	)		$	(79,337	)
Net income (loss) for the period ended June 30, 2011			-				-				-				12,119				(108,247	)			(96,128	)
																			-
Balance, June 30, 2011			239,937,352			$	239,938			$	611,571			$	235,685			$	(1,262,659	)		$	(175,466	)

 

 

 

DM Products, Inc. And Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note 1: Summary of Significant Accounting Policies
Nature of Operations
DM Products, Inc.(the Company) was incorporated on March 1, 2001 as Effective Sport Nutrition Corporation. Subsequently, on April 11, 2005, the Company changed its name to Midwest E.S.W.T Corp and on December 14, 2005, it changed its name again to DM Products, Inc.
On July 18, 2005, the Company acquired Direct Success, Inc. a California Corporation in exchange for 70 % of the Company's Common Stock, making Direct Success, Inc. a wholly owned subsidiary of the Company. Midwest E.S.W.T agreed that a total of 114,851,043 shares of Restricted Common Stock were to be issued to shareholders of Direct Success, Inc.
The Company operates from Walnut Creek, California and it wholly owns Direct Success, Inc., which owns 75% of Direct Success, LLC 3,  a limited liability company formed on or about August 16, 2002. Direct Success, Inc. entered into a joint venture with Buena Vista Infomercial Corporation which owns the remaining 25% of Direct Success, LLC 3. The purpose of Direct Success, Inc. is to market products through direct response television infomercials. The companies obtain the distribution, production and licensing rights to products in exchange for royalty agreements based on the sales of the products.  The Company sets up the production, marketing and the distribution of the products.
On July 14, 2010 the Company incorporated a wholly owned subsidiary corporation, Aliano, Inc., dba Aliano Westlake Village. The purpose of this fragrance and personal care division is to create, manufacture, distribute and sell prestige fragrances and beauty related products. Effective as of July 26, 2010, Aliano Inc. entered into an agreement with Portia Entertainment Group LLC for legal services described in the agreement. As per the agreement, Portia Entertainment Group LLC is entitled to receive a fee of 5% on the Net Income earned by Aliano Inc. for celebrity endorsees introduce by Portia.
On April 8, 2010, a Form S-1 Registration Statement was completed and submitted to the Securities and Exchange Commission. The registration filing was declared effective on October 15, 2010. On April 21, 2010, an Information Statement Form 211 was submitted to the Financial Industry Regulatory Authority (FINRA) for active trading on the Over the Counter Bulletin Board (OTCBB). The filing was approved on November 09, 2010.
Basis of Consolidation
The consolidated financial statements include the accounts of DM Products, Inc., Direct Success, Inc. and the accounts of its 75% owned subsidiary Direct Success LLC 3. All material inter-company transactions have been eliminated.
Basis of Presentation
Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. We believe that the disclosures are adequate to make the financial information presented not misleading. These condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2010. All adjustments were of a normal recurring nature, unless otherwise disclosed. In the opinion of management, all adjustments necessary for a fair statement of the financial position results of operations for the interim period have been included. The results of operations for such interim periods are not necessarily indicative of the results for the full year.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting).  The Company has adopted a December 31 fiscal year end.
Cash and Cash Equivalents
All highly liquid investments with maturities of three months or less are considered to be cash equivalents.  At June 30, 2011 and December 31, 2010, the Company had cash balances of $3,986 and $2,714, respectively.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, prepaid expense, accounts payable, sales tax payable, and other current liabilities. The carrying amount of these financial instruments approximates fair value due either to length of maturity or interest rates that approximate prevailing market rates, unless otherwise disclosed in these financial statements.

Income Taxes
Income taxes are computed using the asset and liability method.  Under the asset and liability method, deferred income tax, assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws.  A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized. It is the Company’s policy to classify interest and penalties on income taxes as interest expense or penalties expense. As of June 30, 2011, there have been no interest or penalties incurred on income taxes.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
Revenue Recognition
The Company records revenue in accordance with ASC Topic 605 - Revenue Recognition. During the period ended June 30, 2011 revenues came from royalties from the contract Banjo Minnow the fishing lure with TriStar Products, Inc. Revenues derived from the Company license sales are recognized when (1) there is evidence of an arrangement, (2) collection of our fee is considered probable, and (3) the fee is fixed and determinable.
Direct Success entered into a manufacturing, marketing and distribution agreement with Banjo Buddies, who is the inventor of Banjo Minnow, a fishing lure which Direct Success LLC 3 had a license agreement to market the product since Oct 2002. The Company entered into a modification of said agreement in April 2005.  On or about May 11, 2005,  Direct Success LLC 3, subcontracted the manufacturing and distribution rights to TriStar Products, Inc.  In March 2007, Direct Success granted back to Banjo, the right to license and privilege for internet sales and small parts sale of the product. Under the agreement, Banjo will pay Direct Success 4% royalty on all gross sales of product. As of date of settlement, effective January 1, 2010, Direct Success no longer receives the 4% royalty for internet and part sales from Banjo Buddies. The revenues are strictly based on the contractual obligation contained in the agreement with Tristar Products, Inc., which are the royalties received from the sales of the Banjo Minnow. These royalty arrangements with Tristar provide the Company with a flat $4.00 (for unit sales under $18) and $5.00 (for unit sales over $18), per unit sold domestically, and $2.50 per unit sold internationally. The present retail price for the Banjo Minnow is $19.95.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as of June 30, 2011.
Advertising Policy
The Company recognizes advertising expense as incurred. The advertising expense for the six months ended June 30, 2011 and June 30, 2010 are $150 and $0 respectively.
Concentration of Risk
The Company is earning (over 90%) the majority of the royalty income from Tristar Products, Inc. Since the Company is depending on Tristar Products, Inc., the inability of Tristar to perform in the future may have a material adverse effect on the Company’s financial condition.
Stock-Based Compensation
The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation, which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. There was no stock-based compensation granted during the six months ended June 30, 2011 and June 30, 2010.
The Company follows ASC Topic 505-50, formerly EITF 96-18, “Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services,” for stock options and warrants issued to consultants and other non-employees.  In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined.  The fair value of the equity instrument is charged directly to operating expense and additional paid-in capital over the period during which services are rendered. There was no stock-based compensation issued to non-employees during the six months ended June 30, 2011 and June 30, 2010.

Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
Note 2: Prepaid Expenses
Prepaid expenses consisted of the following at June 30, 2011 and December 31, 2010:

Note 3: Property & Equipment
Property and equipment are carried at cost. Major expenditures and those which substantially increase useful lives are capitalized. Maintenance, repairs and minor renewals are charged to operations when incurred. When property and equipment is sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operations. Once placed in service, depreciable assets are depreciated over their estimated useful lives using both accelerated and straight-line methods.
Depreciation expenses totaled $200 and $200 for the six months ended June 30, 2011 and June 30, 2010, respectively.
Note 4: Non-Controlling Interest
The Company has owned 75% of Direct Success LLC 3 (LLC 3) since 2002. The assets and liabilities of Direct Success LLC 3 have been included in these consolidated financial statements. The 25% of LLC 3 not owned by the Company has been presented as a non-controlling interest in these financial statements.
Note 5: Accrued Expenses
Accrued expenses consist of accrued wages under an employee agreement entered into on the 20th day of April, 2007 by and between the Company and its President. According to the agreement, employee's starting salary is $6,000 per month during the first 90 days following execution of the agreement or until $500,000 in capital is raised. After such period of time, employee's salary shall be increased to $10,000 per month. Should the company determine it in the best interest not to pay employee's entire monthly compensation, at any time, any such compensation shall be treated as deferred compensation and will accumulate on the books and provided to employee, at employee's sole discretion, taking into consideration the funds available and the best interest of the Company.
The accrued wages owed under the employment agreement as of June 30, 2011 and June 30, 2010, respectively, were $105,653 and $45,653.
Salary expense to the related party was $30,000 and $30,000 for the three months ended June 30, 2011 and June 30, 2010, respectively.
Note 6: Common Stock
The Company has 300,000,000 shares of $0.001 par value common stock authorized. The Company had 239,937,352 shares of common stock issued and outstanding as of June 30, 2011 and 239,937,352 shares issued and outstanding as of June 30, 2010.
In 2010, a share correction was made. 30,000 shares were issued to an investor who had paid for the shares in a prior year, but had never been issued the shares. There were no other share issuances in 2010.
Note 7: Related Party Transactions
The Company has entered into  a consulting contract with Michael DeBenon, Esq. for $6,000 per month on a month to month basis for general counsel. On February 1, 2011, the above contract was terminated. Legal expenses to the related party was $18,000 and $30,000 for the six months ended June 30, 2011 and June 30, 2010, respectively.

Note 8: Income Taxes
As of June 30, 2011, the Company had net operating loss carry forwards of approximately $1,235,422 that may be available to reduce future years’ taxable income through 2030. Future tax benefits, which may arise as a result of these losses, have not been recognized in these financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards.
The provision for federal income tax consists of the following:

The provision for federal income tax consists of the following: The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows:

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards of $1,235,422 for federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, the net operating loss carry forwards may be limited as to it's use in future years.
Note 9: Commitments and Contingencies
On October 18, 2010, the Company executed two Conditional Employment Agreements for the conditional hiring of a CEO and COO for Aliano, Inc., the wholly-owned subsidiary of DM Products, Inc. The Employment agreements are conditional upon the Company successfully procuring $3,000,000 of investment capital. Each agreement also contains a provision for the issuance of 15,000,000 stock options at date of hire.
The CEO and employees of the Company work from their homes. The fair market value of rents contributed by the related parties are estimated to be $50.00 per month, which is immaterial to the company's financial statements: therefore, an entry to record the value of rents contributed has not been recorded on the Company's books.
Note 10: Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has sustained substantial losses since inception, has a working capital deficit, and is in need of additional capital to grow its operations so that it can become profitable.
In view of these matters, the ability of the Company to continue as a going concern is dependent upon growth of revenues and the ability of the Company to raise additional capital.  Management believes that its successful ability to raise capital and increases in revenues will provide the opportunity for the Company to continue as a going concern.
Note 11: Subsequent Events
Management has evaluated subsequent events through August 9, 2011, the date these financial statements were issued, and has determined that it does not have any additional material subsequent events to disclose.

 

 

·	Complete Project Funding - The Company would obtain the exclusive licensing rights to products and pay a nominal royalty (2-5%) of gross sales to the product developer;

·	Joint Venture Projects - The Company would share costs of production, marketing and distribution and would share revenues with product developers; and

·	Straight Royalty Arrangements - The Company would partially finance the infomercials in exchange for a fixed royalty on gross sales.

 

 

  

 

 

Exhibit Number	Description of Exhibit
31.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

 

 

	DM Products, Inc.
Date:	August 15, 2011
	By:       /s/ Kurtis Cockrum                                                                               Kurtis Cockrum Title:    Chief Executive Officer and Director