PETRO USA, INC. - Quarter Report: 2008 December (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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ALL STATE PROPERIES HOLDINGS, INC.

 (Exact name of registrant as specified in its charter)

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360 Main Street Washington, VA 22747

(Address of Principal Executive Office) (Zip Code)

540-675-3149

(Registrant’s telephone number, including area code)

P.O. Box 5524 Fort Lauderdale, FL 33310-5524

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

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Securities registered pursuant to Section 12(b) of the Act:  8,809,065

Title of Class: Common Stock, $.0001 par value per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES x    NO

Indicate by a check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. YES    NO x

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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES x   NO

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K (229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. YES x     NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) YES x   NO

 The aggregate market value of the common stock held by non- affiliates of Registrant was $331,045, as of February 10, 2009, based on the last sale price of $0.08 for each share of common stock on such date.

ALL STATE PROPERTIES HOLDINGS, INC.

FORM 10-Q QUARTERLY REPORT

DECEMBER 31, 2008

INDEX

ALL STATE PROPERTIES HOLDINGS, INC.

PART I. – FINANCIAL INFORMATION

ALL-STATE PROPERTIES HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTER ENDED DECEMBER 31, 2008 AND 2007

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization and Operations

All-State Properties Holding, Inc., a corporation (the “Company”) was organized under the state of Nevada on April 24, 2008 to conduct business formerly carried on by its predecessor partnership, All-State Properties L.P. (the “Partnership”). The Partnership merged with the Company on May 29, 2008. The Company acquired all of the assets and assumed all of the liabilities and obligations of the Partnership. At May 29, 2008 each unit, par value $0.001 per share of the Partnership was converted into one issued and outstanding share of par value $0.0001 common stock of the Corporation.

All-State Properties L.P., a limited partnership (the “Partnership”) was organized under the Revised Uniform Limited Partnership Act of Delaware on April 27, 1984 to conduct the business formerly carried on by its predecessor corporation, All-State Properties, Inc. (the “Corporation”). In March 2007 Hubei Longdan (Delaware), Inc. (“Longdan Delaware” and “Subsidiary”) was organized under the laws of the State of Delaware as a wholly-owned subsidiary of the Corporation. Longdan Delaware has only nominal assets and no liabilities and has conducted no activities except in connection with the transactions contemplated by the Acquisition Agreement. The Corporation together with Longdan Delaware referred to herein as the “Registrant”. Pursuant to a Plan of Liquidation adopted by shareholders of the Corporation on December 31, 1984, the Corporation transferred substantially all of its assets to the Partnership, and the Corporation distributed such limited partnership interests to its shareholders. The Registrant was engaged since inception in land development and the construction and sale of residential housing in various parts of the eastern United States and in Argentina with its most recent transactions being in Florida.

On December 20, 2007, Belmont Partners, LLC (“Belmont”), a Virginia limited liability company, entered into an agreement (the “Agreement”) with the Company and Stanley R. Rosenthal, an individual resident of the State of Florida ("Rosenthal").

Under the terms of the Agreement, Belmont has agreed to pay to the Company the sum of Twenty Two Thousand Dollars ($22,000.00) (the “Loan”).  As consideration for the Loan, the Company and Rosenthal have agreed to grant Belmont a promissory note to repay the Loan, Rosenthal has agreed to resign as the General Partner of the Company and Joseph Meuse will be appointed the General Partner. In addition, Belmont shall pay for the reasonable legal costs and expenses incurred by the Company and Rosenthal in connection with this Agreement and all related agreements and transactions contemplated by the Agreement up to an amount not to exceed Ten Thousand Dollars ($10,000) in the aggregate (the “Legal Expenses”). To the extent Belmont pays any Legal Expenses in accordance with the above, the Company agrees that any such amount shall be added to the Loan as additional principal thereunder. Immediately upon execution of this Agreement, Belmont loaned to the Company four thousand dollars ($4,000.00) to be applied against the Legal Expenses.

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 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

B. Basis of Presentation

In the opinion of management, the accompanying unaudited financial information reflects all adjustments, consisting of normal recurring accruals, necessary for a fair presentation in all material respects, of the information contained therein. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to instructions, rules and regulations prescribed by the Securities and Exchange Commission. The preparations of the financial statements are in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions, including estimates of future contract costs and earnings. Such estimates and assumptions affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and earnings during the current reporting period. Management periodically assesses and evaluates the adequacy and/or deficiency of estimated liabilities recorded for various reserves, liabilities, contract risks and uncertainties. Actual results could differ from these estimates.

C. Cash and Cash Equivalents

For the purposes of the statements of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

D. Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company maintains its cash balances in one financial institution. The balances are insured by the Federally Deposit Insurance Corporation up to $250,000 and $100,000 for the years ended December 31, 2008 and 2007, respectively .

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

E. Income (Loss) Per Partnership Unit

Income (loss) per partnership unit is computed by dividing the net income (loss) by the weighted average number of units outstanding.

F. Income (Loss) Per Common Share

Income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares outstanding.

G. Fair Value of Financial Instruments

Management estimates that the fair market value of cash, receivables, accounts payable, accrued expenses and short-term borrowings are not materially different from their respective carrying values due to the short-term nature of these instruments. Disclosures about the fair value of financial instruments are based on pertinent information available to management as of December 31, 2008.

H. Income Taxes

The Company provides for income taxes under Statement of Financial Accounting Standards NO. 109, “Accounting for Income Taxes.” SFAS No. 109 requires the use of an asset and liability approach in accounting for income taxes.

SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.  

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I. Use of Estimates

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

J. Going Concern

The Company's financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses, and (2) seeking out and completing a merger with an existing operating company. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

J. Going Concern (Continued)

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations.  The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 K. Recent Accounting Pronouncements

Below is a listing of the most recent accounting standards SFAS 150-154 and their effect on the Company.

Statement No. 150

Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity (Issued 5/03)

This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.

Statement No. 151

Inventory Costs-an amendment of ARB No. 43, Chapter 4 (Issued 11/04)

This statement amends the guidance in ARB No. 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage).  Paragraph 5 of ARB 43, Chapter 4, previously stated that “…under some circumstances, items such as idle facility expense, excessive spoilage, double freight and re-handling costs may be so abnormal ass to require treatment as current period charges….”  This Statement requires that those items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.”  In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities.

Statement No. 152

Accounting for Real Estate Time-Sharing Transactions (an amendment of FASB Statements No. 66 and 67)

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This Statement amends FASB Statement No. 66, Accounting for Sales of Real Estate, to reference the financial accounting and reporting guidance for real estate time-sharing transactions that is provided in AICPA Statement of Position (SOP) 04-2, Accounting for Real Estate Time-Sharing Transactions.

This Statement also amends FASB Statement No. 67, Accounting for Costs and Initial Rental Operations of Real Estate Projects, states that the guidance for (a) incidental operations and (b) costs incurred to sell real estate projects does not apply to real estate time-sharing transactions.  The accounting for those operations and costs is subject to the guidance in SOP 04-2.

Statement No. 153

Exchanges of Non-monetary Assets (an amendment of APB Opinion No. 29)

The guidance in APB Opinion No. 29, Accounting for Non-monetary Transactions, is based on the principle that exchanges of non-monetary assets should be measured based on the fair value of the assets exchanged.  The guidance in that Opinion, however, includes certain exceptions to the principle.  This Statement amends Opinion 29 to eliminate the exception for non-monetary exchanges of similar productive assts and replaces it with a general exception for exchanges of non-monetary assets that do not have commercial substance.  A non-monetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a result of the exchange.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

K. Recent Accounting Pronouncements (Continued)

Statement No. 154 – Accounting Changes and Error Corrections (a replacement of APB Opinion No. 20 and FASB Statement No. 3)

This Statement replaces APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements, and changes the requirements for the accounting for and reporting of a change in accounting principle. This Statement applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. When a pronouncement includes specific transition provisions, those provisions should be followed.

The adoption of these new Statements is not expected to have a material effect on the Company’s current financial position, results or operations, or cash flows.

NOTE 2 – NOTE PAYABLE

Former General Partner, Stanley Rosenthal, advanced $1,600 to the Company in February 2008, this note was paid off September 25, 2008.

Belmont Partners, LLC advanced $22,000 to the Company on December 20, 2007 which was secured with a promissory note. On October 1, 2008 Belmont agreed to cancel the note in return for the issuance of 800,000 restricted units/shares.

NOTE 3 - NOTES PAYABLE - RELATED PARTY

As of December 31, 2008, the Company has five unsecured demand notes with Joseph Passalaqua totaling $31,220.  Interest on the notes accrues at 18% per annum. Accrued interest at December 31, 2008 was $2,491.

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NOTE 4. - INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will to be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net deferred tax assets consist of the following components as of June 30, 2008

NOTE 4. - INCOME TAXES - CONTINUED

Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carryforwards may be limited as to use in future years.

NOTE 5 - ACQUISITION AGREEMENT

The Company had been negotiating a definitive agreement with Hubei Longdan Biological Medicine Technology Co., Ltd. (“Longdan”), a company organized under the laws of the People’s Republic of China (the “PRC”), pursuant to which the Company would issue approximately eighty nine percent (89%) of its capital stock to Longdan’s shareholders in return for acquisition of the business of Longdan (the “Acquisition”). Longdan is engaged in the marketing and sale of pharmaceutical products in the PRC.

On March 14, 2007, the Company, Longdan Delaware, Longdan and Longdan International Inc., a corporation formed under the laws of Nevis (“Longdan International”), entered into an Acquisition Agreement (the “Acquisition Agreement”) pursuant to which the Company will acquire Longdan International and an indirect interest in Longdan and the shareholders of Longdan International will acquire a controlling interest in the Company. The Company will account for the transaction as a reverse merger.

Under the terms of the Acquisition Agreement, it is contemplated that the Company will convert from a Delaware limited partnership to a newly-formed Delaware corporation to be called Longdan International Holdings, Inc. (“LIH”) and Longdan International will merge with and into Longdan Delaware. At the Merger Effective Time (as defined in the Acquisition Agreement), the shareholders of Longdan will be issued shares representing approximately eighty nine percent (89%) of the capital stock of the Company and the Company’s shareholders will hold shares representing approximately eleven percent (11%) of the capital stock of the Company, in each case, on an “as if converted basis”.

Longdan had agreed to pay all costs associated with the Acquisition, including legal fees incurred in connection with the related corporate law transactions and required filings under the securities laws, and had also agreed to pay for any costs incurred by the Company in connection with maintaining its registration under the Securities Exchange Act of 1934, as amended, after June 30, 2007.

On October 31, 2007 Longdan advised the Company that it will not fulfill its contractual commitment to pay these expenses. Accordingly, by its letter to Longdan dated November 2, 2007, All-State terminated the Acquisition Agreement based on this breach.

On November 2, 2007, the Company terminated the Acquisition Agreement based on the breach of its terms by Longdan.

NOTE 5 - ACQUISITION AGREEMENT - CONTINUED

On March 2, 2008 the General Partners authorized the issuance of five million eight hundred twenty one thousand units of the Partnership to Belmont Partners, LLC (a Virginia limited liability company hereinafter referred to as “Belmont”) as compensation and reimbursement for management services rendered by Belmont as well as for expenditures previously paid and to be paid by Belmont as well as other services rendered by Belmont. Including but not limited to Belmont’s negotiation and ultimate settlement with American Stock Transfer of the Company’s outstanding invoices for $12,938.42 which Belmont ultimately paid on July 21, 2008. In light of ongoing negations to settle certain outstanding debts of the Partnership, the General Partners further recognized that it may take some time to effectuate the issuance of the units, and the General Partners authorized Belmont to transfer the right to receive the units.

On March 3, 2008 the Company, entered into a purchase agreement (the “Purchase Agreement”) with Greenwich Holdings, LLC (Greenwich), a New York limited liability company, and Belmont whereby Belmont which then held a controlling interest in the Company sold fifty and one – one-thousandth percent (50.001%) of the issued and outstanding partnership units (“Units”) to Greenwich for one hundred and eighty eight thousand U.S. dollars ($188,000). In conjunction with the Purchase Agreement the Company issued 200,000 units to Gary McHenry as compensation as the new General Partner and approved the transfer of units under the purchase agreement.

On February 5, 2009 Joseph Meuse was appointed by the Board of Directors to serve as a Director. The Board also appointed Mr. Meuse as the President and Secretary of the Company.   As well, Garry McHenry resigned from his position as Director, President and Secretary of the Company on February 5, 2009 and his resignation was accepted by the Board.    

ALL STATE PROPERTIES HOLDINGS, INC.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Result of Operations

The following discussion and analysis of our financial condition, results of operations, liquidity and capital resources should be read in conjunction with our financial statements and notes thereto.

THREE MONTHS ENDED DECEMBER 31, 2008 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2007

The Company had no operations for the six months ended December 31, 2008 and December 31, 2007. The net loss was $(14,535) and $(6,734) same period ending December 31, 2008 and 2007, respectively.

OPERATION AND ADMINISTATIVE EXPENSES

Operating expenses increased by $6,134 or approximately 91%, from $6,706 in the three months ended December 31, 2007 to $12,840 in the three months ended December 31, 2008. Operating expenses primarily consist of Professional fees that are paid to accountants and attorneys throughout the year for performing various tasks, and Office expenses. Professional fees increased by $5,891 or approximately 88%, from $6,706 in the three months ended December 31, 2007 to $12,597 in the three months ended December 31, 2008. Office expenses increased by $243 or approximately 100%, from $0 in the three months ended December 31, 2007 to $243 in the three months ended December 31, 2008.  The bulk of the increase in expense was due to an increase in professional fees when comparing the same three month period in 2007.

SIX MONTHS ENDED DECEMBER 31, 2008 COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2008

The Company had no operations for the six months ended December 31, 2008 and December 31, 2007. The net loss was $(23,725) and $(28,858) same period ending December 31, 2008 and 2007, respectively.

OPERATION AND ADMINISTATIVE EXPENSES

Operating expenses decreased by $7,885 or approximately 27%, from $29,052 in the six months ended December 31, 2007 to $21,167 in the six months ended December 31, 2008. Operating expenses primarily consist of Professional fees that are paid to accountants and attorneys throughout the year for performing various tasks, and Office expenses. Professional fees decreased by $8,190 or approximately 28%, from $29,052 in the six months ended December 31, 2007 to $20,862 in the three months ended December 31, 2008. Office expenses increased by $305 or approximately 100%, from $0 in the six months ended December 31, 2007 to $305 in the six months ended December 31, 2008.  The bulk of the decrease in expense was due to a decrease in professional fees in the when comparing the same six month period in 2007.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2008 and June 30, 2008, we had $136 and $100 cash on hand respectively. We believe that we will continue to need investing and financing activities to fund operations. Our primary liquidity and capital resource needs are to finance the costs of our operations. During the six months ended December 31, 2008 and December 31, 2007, cash used in operations was $45,765 and $15,776, respectively, primarily for the payment of accounting expenses. Since the Company has no operating revenues, funds were advanced from a related party.  The Company will actively seek alternative sources of funding to continue as a going concern.

 Net cash provided by investing activities was $0 during both three months periods ending December 31, 2008 and 2007.

Net cash provided by financial activities for the six month period ending December 31, 2008 was $15,812 compared with net cash used in operating activities of $26,000 for the six months ended December 31, 2007.

ALL STATE PROPERTIES HOLDINGS, INC.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk

None.

ITEM 4. Controls and Procedures

The Company's Chief Executive Officer, Joseph Meuse is responsible for establishing and maintaining disclosure controls and procedures for the Company.

An evaluation was performed under the supervision and with the participation of our management, including the general partner, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended) as of the end of period covered by this report. Based on that evaluation, the general partner concluded that these disclosure controls and procedures were effective. There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting

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ALL STATE PROPERTIES HOLDINGS, INC.

PART II. - OTHER INFORMATION

ITEM 1. Legal Proceedings

None

ITEM 1.A Risk Factors

There have been no material changes from the risk factors disclosed in All-State Properties Holdings, Inc. Form 10K for the year ended June 30, 2008.

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

There were no unregistered sales of equity securities during the quarter covered by this report.

ITEM 3. Defaults upon Senior Securities

There were no defaults by Registrant on its senior securities during the quarter covered by this report.

ITEM 4. Submission of Matters to Vote of Security Holders

No matters were submitted during the quarter covered by this report to a vote of limited partners.

ITEM 5. Other Information

None.

Exhibit

ITEM 6. s

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ALL STATE PROPERTIES HOLDINGS, INC.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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