SQCC Square Chain Corporation (CE)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

Commission File Number: 000-21909

Unit 1202, Level 12, One Peking,

1 Peking Road, Tsim Sha Tsui,

Kowloon, Hong Kong

(Address of principal executive office)

+852 39809369

(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]   No [   ]

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).  Yes [X]  No  [  ]

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

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [  ]  No [X]

Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 177,748,501 shares of common stock, par value $0.001,as of August 19, 2016.

1

TABLE OF CONTENTS

2

See notes to unaudited condensed consolidated financial statements

3

See notes to unaudited condensed consolidated financial statements

4

See notes to unaudited condensed consolidated financial statements

5

ASIA TRAVEL CORPORATION

The carrying amounts reported in the balance sheets for cash, due from related parties, other assets, accrued expenses, other payables, and due to related parties approximate their fair market value based on the short-term maturity of these instruments. The Company did not have any non-financial assets or liabilities that are measured at fair value on a recurring basis as of June 30, 2016 and March 31, 2016.

7

ASC 825-10 “Financial Instruments”, allows entities to voluntarily choose to measure certain financial assets and liabilities at fair value (fair value option). The fair value option may be elected on an instrument-by-instrument basis and is irrevocable, unless a new election date occurs. If the fair value option is elected for an instrument, unrealized gains and losses for that instrument should be reported in earnings at each subsequent reporting date. The Company did not elect to apply the fair value option to any outstanding instruments.

Cash and Cash Equivalents

For purposes of reporting cash flows, the Company considers all highly-liquid debt instruments purchased with an original maturity ofthree months or less to be cash equivalents. Management believes that Company’s cash and cash equivalents held by major bankslocated in the PRC are of high credit quality as of June 30. 2016 and March 31, 2016.

Credit risk

The Company may be exposed to credit risk from its cash and fixed deposits at banks. No allowance has been made for estimatedirrecoverable amounts determined by reference to past default experience and the current economic environment.

Property and equipment

Property and equipment are carried at cost and are depreciated on a straight-line basis (after taking into account their respective estimated residual value) over the estimated useful lives of the assets. The cost of repairs and maintenance is expensed as incurred; major replacements and improvements are capitalized. When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in income in the year of disposition. The Company examines the possibility of decreases in the value of fixed assets when events or changes in circumstances reflect the fact that their recorded value may not be recoverable.

The estimated useful lives are as follows:

Impairment of long-lived assets

In accordance with ASC Topic 360, the Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable, or at least annually. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. The Company did not record any impairment charges for the three months ended June 30, 2016 and year ended March 31, 2016.

Revenue Recognition

Revenue derived from hotel services is recognized when the rooms are occupied and the services are performed. Travel agencyservices revenues are recognized when the travel-related service, golf package service or transportation is provided, or when theorganization service of corporate conferences, exhibitions and show events is commenced. Deferred revenue consisting of depositspaid in advance is recognized as revenue when the services are performed for hotels and upon commencement of travel agencyservices.

Employment benefits

The Company contributes to a state pension plan in respect of its PRC employees. Other than the above, the Company does notprovide any other post-retirement or post-employment benefits.

Income Taxes

The Company is governed by the Income Tax Law of US, Hong Kong and PRC. The Company accounts for income tax using the liability method prescribed by ASC 740, “Income Taxes”. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the year in which the differences are expected to reverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized as income or loss in the period that includes the enactment date.

The Company applied the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. Audit periods remain open for review until the statute of limitations has passed. The

8

completion of review or the expiration of the statute of limitations for a given audit period could result in an adjustment to the Company’s liability for income taxes. Any such adjustment could be material to the Company’s results of operations for any given quarterly or annual period based, in part, upon the results of operations for the given period. As of June 30, 2016 and March 31, 2016, the Company had no uncertain tax positions, and will continue to evaluate for uncertain positions in the future.

Foreign currency translation

The accompanying consolidated financial statements are presented in U.S. dollars (“USD”). The reporting currency of the Company is the USD. The functional currency of EETA is Renminbi dollars (“RMB”). For the subsidiaries whose functional currencies are the USD or RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. As a result, amounts relating to assets and liabilities reported on the statements of cash flows may not necessarily agree with the changes in the corresponding balances on the balance sheets. Translation adjustments resulting from the process of translating the local currency financial statements into U.S. dollars are included in determining comprehensive income. 

All of the Company’s revenue transactions are transacted in the functional currency. The Company does not enter any material transaction in foreign currencies and, accordingly, transaction gains or losses have not had, and are not expected to have, a material effect on the results of operations of the Company.

The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the consolidated financial statements were as follows: 

The exchange rates used to translate amounts in HKD into USD for the purposes of preparing the consolidated financial statements were as follows:

Earnings per share

ASC 260 “Earnings per Share,” requires dual presentation of basic and diluted earnings per share (“EPS”) with a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

Basic net income per share is computed by dividing net income available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Diluted income per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.

Accumulated other comprehensive loss

Comprehensive loss is comprised of net loss and all changes to the statements of stockholders’ deficit, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders. For the Company, comprehensive loss for the three months ended June 30, 2016 and 2015 included net loss and unrealized loss from foreign currency translation adjustments.

Related party transactions

A related party is generally defined as (i) any person that holds 10% or more of the Company’s securities including such person’s immediate families, (ii) the Company’s management, (iii) someone that directly or

9

indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties.

Recently issued accounting pronouncements

The Company has considered all new accounting pronouncements and has concluded that there are no new pronouncements that may have a material impact on results of operations, financial condition, or cash flows, based on current information.

The depreciation expenses for the three months ended June 30, 2016 and 2015 were $20,260 and $27,634, respectively.

The aggregate maturities of loans payable of each of years subsequent to June 30, 2016 are as follows:

As of June 30, 2016 and March 31, 2016, mortgage loans have maturity terms more than 1 year. Interest expenses incurred on mortgage loans for the three months ended June 30, 2016 and 2015 was $27,084 and $44,335, respectively.

10

Buildings with net book value of approximately $2,007,183 and $2,081,211 were used as collateral of bank borrowings as at June 30, 2016 and March 31, 2016, respectively.

Note 4: Capital Stock

Preferred stock

The Company has 10,000,000 shares of authorized preferred stock at $0.001 par value. As of June 30, 2016 and March 31, 2016, theCompany has 20,000 and 20,000 shares of preferred stock issued and outstanding, respectively.

Accounting for the Series A Preferred Stock

The Series A Preferred Stock has been classified as permanent equity as there was no redemption provision at the option of theholders. The Company evaluated the embedded conversion feature in its Series A Preferred Stock to determine if there was anembedded derivative requiring bifurcation. The Company concluded that the embedded conversion feature of the Series A PreferredStock is not required to be bifurcated because the conversion feature is clearly and closely related to the host instrument. TheCompany believes the economic risks and characteristics of the Series A Preferred Stock itself and the common stock the embeddedconversion feature allows the Investor to convert into have similar economic risks and characteristics.

Stock-Based Compensation

The Company accounts for stock-based compensation under FASB ASC subtopic 718-10, Compensation – Stock Compensation:Overall. Under FASB Subtopic 718-10, the Company measures the cost of the employee services received in exchange for an award ofequity instruments based on the grant-date fair value of the award and recognizes the cost over the requisite service periods.

Common Stock

On July 22, 2013 the Company entered into a Regulation S Stock Purchase Agreement (“Agreement”) with a group of 34 non-US individual purchasers (“Purchasers”). Under the Agreement, the Company will issue a total of 125,788,400 shares of common stock to Purchasers for a total price of $628,943 ($0.005 per share). The issuance of the 125,788,400 shares is pursuant to the exemption provided by Regulation S. None of the Purchasers is a US person and the transactions underlying the Agreement are carried out outside US. Accordingly, July 29,2013, 125,788,400 shares of common stock have been issued.

Note 5: Income Taxes

Asia Travel Corporation is incorporated in the United States and subject to income taxes on an entity basis on income arising in, or derived from, the tax jurisdiction in which they operate. As the Company had no income generated in the United States, there was no tax expense or tax liability for the three months ended June 30, 2016 and 2015.

Asia Travel (Hong Kong) Limited was incorporated in Hong Kong and is subject to Hong Kong profits tax at 16.5%. No provision for Hong Kong income or profit tax has been made as the Company has no assessable profit for the three months ended June 30, 2016 and 2015.

Tengda Hotel was incorporated in the PRC. Tengda Hotel did not generate taxable income in the PRC for the three months ended June 30, 2016 and 2015.

Tengfei was incorporated in the PRC. Tengfei did not generate taxable income in the PRC for the three months ended June 30, 2016 and 2015.

Tengda Travel was incorporated in the PRC. Tengda Travel did not generate taxable income in the PRC for the three months ended June 30, 2016 and 2015.

The Company evaluates the level of authority for each uncertain tax position (including the potential application of interest and penalties) based on the technical merits, and measures the unrecognized benefits associated with the tax positions. For the three months ended June 30, 2016 and 2015, the Company had no unrecognized tax benefits.

11

The Company does not anticipate any significant increase to its liability for unrecognized tax benefit within the next 12 months. The Company will classify interest and penalties related to income tax matters, if any, in income tax expense.

Deferred income taxes are recognized for tax consequences in future years of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carryforwards. Deferred income tax was measured using the enacted income tax rates for the periods in which they are expected to be reversed. The tax effects of temporary differences that give rise to the following approximate deferred tax assets and liabilities as of June 30, 2016 and March 31, 2016 are presented below:

7.2 Related party balances

The Company had the following related party balances at June 30, 2016 and March 31, 2016:

The related party payables are non­interest bearing and have no specified maturity date. The Company obtained these loans to fund operations when the Company or one of the subsidiaries was in need of cash. For the three months ended June 30, 2016 and years ended March 31, 2016, the Company loan from Mr. Tan Lung Lai $nil and $1,250,779, and made payments of $nil and $nil back to him, respectively.

For the three months ended June 30, 2016 and years ended March 31, 2016, the Company loan from Mr. Li Guo Hua $nil and $88,972, and made payments of $31,581 and $152,255 back to him, respectively.

For the three months ended June 30, 2016 and years ended March 31, 2016, the Company loan from Ms. Zhou Hui Juan $20,965 and $766,598, and made payments of $nil and $653,491 back to him, respectively.

For the three months ended June 30, 2016 and years ended March 31, 2016, the Company loan from Ms. Yu Li Ying $nil and $nil, and made payments of $17,735 and $355,022 back to him, respectively.

Total rental expense on the operating lease were $26,024 and $27,424 for the three months ended June 30, 2016 and 2015, respectively.

Legal Proceeding

There has been no legal proceeding in which the Company is a party as of June 30, 2016.

Non-current assets were $2,705,542 as of June 30, 2016, a decrease of 3.78% from $2,811,756 as of March 31, 2015. The decrease was primarily from the depreciation during three months ended June 30, 2016.

16

Non-current liabilities were $1,204,856 as of June 30, 2016, a decrease of 6.23% from $1,284,881 as of March 31, 2015. The decrease was primarily from the repayment of loan during three months ended June 30, 2016.

Critical Accounting Policies and Estimates

Management's Discussion and Analysis of Financial Condition and Results of Operations is based upon our condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Our significant accounting policies are discussed in Note 2 "Summary of Significant Accounting Policies" in the notes to the consolidated financial statements included in our 2016Annual Report on Form 10-K for the year ended March 31, 2016, as filed with the U.S. Securities and Exchange Commission (“SEC”) on July 4, 2016.  During the three months ended June 30, 2016 the Company did not change any of its critical accounting policies or estimates.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

N/A-Smaller Reporting Company

Item 4.Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, consisting of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures as of the end of the period covered by this report were not effective such that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure. A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

We may have inadvertently violated Section 402 of the Sarbanes-Oxley and Section 13(k) of the Exchange Act and may be subject to sanctions for such violations.

Section 13(k) of the Exchange Act provides that it is unlawful for a company such as ours, which has a class of securities registered under Section 12(g) of the Exchange Act, to directly or indirectly, including through any subsidiary, extend or maintain credit in the form of a personal loan to or for any director or executive officer of the company. Issuers violating Section 13(k) of the Exchange Act may be subject to civil sanctions, including injunctive remedies and monetary penalties, as well as criminal sanctions. The imposition of any of such sanctions on the Company may have a material adverse effect on our business, financial position, results of operations or cash flows.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

Changes in internal control over financial reporting

17

There have been no changes in internal control over financial reporting.

18

PART II - OTHER INFORMATION

* Incorporated by reference from the Company's registration statement on Form 10-SB filed with the Commission, SEC File No. 000-21909.

19

SIGNATURES

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

Asia Travel Corporation

(Registrant)

Dated: August 19, 2016

By:  /s/ Tan Lung Lai

     Tan Lung Lai

Chief Executive Officer

Chief Financial Officer

20