Apextalk Holdings Inc - FORM 10-Q

Attached files

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EX-32.1 - CERTIFICATION PURSUANT TO SECTION 906 OF SARBANES OXLEY ACT OF 2002 - Apextalk Holdings Inc	f10q091ex32i_apextalk.htm
EX-31.1 - CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES OXLEY ACT OF 2002 - Apextalk Holdings Inc	f10q0910ex31i_apextalk.htm
EX-32.2 - CERTIFICATION PURSUANT TO SECTION 906 OF SARBANES OXLEY ACT OF 2002 - Apextalk Holdings Inc	f10q0910ex32ii_apextalk.htm
EX-31.2 - CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES OXLEY ACT OF 2002 - Apextalk Holdings Inc	f10q0910ex31ii_apextalk.htm

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 September 30, 2010

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

For the transition period from ______to______.

APEXTALK HOLDINGS, INC.

Exact name of registrant as specified in Charter

Delaware		333-153838		26-1402471
(State or other jurisdiction of incorporation or organization)		(Commission File No.)		(IRS Employee Identification No.)

637 Howard Street

San Francisco, CA 94105

(Address of Principal Executive Offices)

_______________

(888) 228 2829

(Issuer Telephone number)

_______________

(Former Name or Former Address if Changed Since Last Report)

Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 o

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 o No o

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

Large Accelerated Filer o Accelerated Filer o Non-Accelerated Filer o 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 o No x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of November 23, 2010: 3,063,874 shares of common stock.

APEXTALK HOLDINGS, INC.

FORM 10-Q

September 30, 2010

INDEX

PART I-- FINANCIAL INFORMATION

Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4T.	Control and Procedures	26

PART II-- OTHER INFORMATION

Item 1	Legal Proceedings	27
Item 1A	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	(Removed and Reserved)	27
Item 5.	Other Information	27
Item 6.	Exhibits	27

PART I-- FINANCIAL INFORMATION

Item 1. Financial Information

APEXTALK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS



	September 30, 2010 (UNAUDITED)		December 31, 2009
ASSETS
Current Assets
Cash and cash equivalents	$	4,180,387	$	-
Accounts receivable from a related company		929,360		-
Other receivables, net		1,112,803		1,871
Short term note receivable from a related company		8,390,439		-
Short term note receivable		3,807,050		-
Current assets of discontinued operations		9,089		24,795
Total Currents Assets		18,429,128		26,666
Other asset		120,000		-
Property and equipment, net		352,794		539
Patent, net		8,969		8,969
Noncurrent assets of discontinued operations		30,733		41,404
Total Assets	$	18,941,624	$	77,578

LIABILITIES AND EQUITY (DEFICIENCY)

Current Liabilities
Accounts payable	$	127,293	$	7,111
Accrued expenses		15,439		6,350
Advance from customers		667,562		-
Short term note payable		2,487,273		-
Income tax payable		1,151,369		-
Other taxes payable		101,767		-
Shareholders' loan		49,294		30,716
Current liabilities of discontinued operations		80,479		90,514
Total Liabilities		4,680,476		134,691

Commitments and Contingencies		-		-

Apextalk Stockholders' Equity (Deficiency)
Common stock, authorized 1,000,000,000 shares, par value $0.001, 3,063,874 shares and 459,706 shares issued and outstanding on September 30, 2010 and December 31, 2009, respectively		3,064		459
Additional paid-in-capital		6,634,478		358,383
Accumulated earnings (deficit)		1,330,290		(415,955	)
Accumulated other comprehensive income		131,051		-
Total Apextalk's Stockholders' Equity (Deficiency)		8,098,883		(57,113	)
Noncontrolling interests		6,162,265		-
Total Equity (Deficiency)		14,261,148		(57,113	)

Total Liabilities and Equity (Deficiency)	$	18,941,624	$	77,578

See accompanying notes to unaudited condensed consolidated financial statements

APEXTALK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME
(Unaudited)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009

Consultancy fees earned - from a related company	$	518,020		$	-		$	845,745		$	-
Consultancy fees earned		4,649,377			-			4,665,305			-
Total Revenue		5,167,397			-			5,511,050			-

Operating Expenses
Payroll expenses		148,676			11,925			225,270			40,275
Rent and utilities		84,066			-			105,126			-
General and administrative		506,334			56			580,040			3,097
Legal and professional fees		53,461			18,752			183,842			74,029
Total Operating Expenses		792,537			30,733			1,094,278			117,401

Operating Income (Loss)		4,374,860			(30,733	)		4,416,772			(117,401	)

Other Income
Gain on bargain purchase of Yi An		-			-			306,005			-
Interest income		1,956			-			2,136			-
Total Other Income		1,956			-			308,141			-

Income (Loss) from Continuing Operations before Income Taxes and Discontinued Operations		4,376,816			(30,733	)		4,724,913			(117,401	)

Provision for Income Taxes		(1,136,863	)		(1,219	)		(1,191,790	)		(4,457	)

Income (Loss) from Continuing Operations		3,239,953			(31,952	)		3,533,123			(121,858	)

Less: Income attributable to noncontrolling interests		1,647,739			-			1,757,807			-

Income (Loss) attributable to Controlling Interest		1,592,214			(31,952	)		1,775,316			(121,858	)

Discontinued Operations, Net of Taxes
Loss from discontinued operations, net of taxes		(4,418	)		(19,815	)		(28,030	)		(59,138	)
Loss on disposal of assets, net of taxes		(1,041	)		-			(1,041	)		-
Loss from Discontinued Operations		(5,459	)		(19,815	)		(29,071	)		(59,138	)

Net Income (Loss)		1,586,755			(51,767	)		1,746,245			(180,996	)

Amounts attributable to Apextalk Stockholders
Income from continuing operations		1,592,214			(31,952	)		1,775,316			(121,858	)
Discontinued operations, net of taxes		(5,459	)		(19,815	)		(29,071	)		(59,138	)
Net income (loss)		1,586,755			(51,767	)		1,746,245			(180,996	)

Other Comprehensive Income
Total foreign currency translation gain		220,254			-			256,963			-
Less: foreign currency translation gain attributable to noncontrolling interests		(107,925	)		-			(125,912	)		-
Foreign currency translation gain attributable to Apextalk stockholders		112,329			-			131,051			-

Comprehensive Income (Loss)	$	1,699,084		$	(51,767	)	$	1,877,296		$	(180,996	)


Basic and Diluted Net Income (Loss) per Share attributable to Apextalk's stockholders
Net income (loss) per share from continuing operations	$	0.68		$	(0.07	)	$	1.08		$	(0.27	)
Discontinued operations		(0.00	)		(0.04	)		(0.02	)		(0.13	)
Net income (loss) per share	$	0.68		$	(0.11	)	$	1.06		$	(0.40	)

Weighted average number of common shares outstanding
during the period - Basic and Diluted		2,312,063			459,706			1,645,223			447,190

See accompanying notes to unaudited condensed consolidated financial statements

APEXTALK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY / (DEFICIENCY)
(Unaudited)
												Total
										Accumulated		Apextalk
							Accumulated			Other		Stockholders'
	Common Stock				Paid in		Earnings			Comprehensive		Equity			Noncontrolling			Total Equity
	Shares		Amount		Capital		(Deficit)			Income		(Deficiency)			Interest			(Deficiency)

Balance, December 31, 2009		459,706	$	459	$	358,383	$	(415,955	)	$	-	$	(57,113	)	$	-		$	(57,113	)

Common stock issued for cash		2,604,168		2,605		6,247,395		-			-		6,250,000			-			6,250,000

Noncontrolling interests		-		-		-		-			-		-			4,451,015			4,451,015

In kind contribution for services		-		-		28,700		-			-		28,700			-			28,700

Net income for the nine months period ended September 30, 2010		-		-		-		1,746,245			-		1,746,245			1,757,807			3,504,052

Yi An's dividend paid to noncontrolling interest		-		-		-		-			-		-			(172,469	)		(172,469	)

Foreign currency translation gain		-		-		-		-			131,051		131,051			125,912			256,963

Balance, September 30, 2010		3,063,874	$	3,064	$	6,634,478	$	1,330,290		$	131,051	$	8,098,883		$	6,162,265		$	14,261,148

See accompanying notes to unaudited condensed consolidated financial statements

APEXTALK HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

		For the Nine Months			For the Nine Months
		Ended			Ended
		September 30, 2010			September 30, 2009

Cash Flows from Operating Activities
	Net income (loss)	$	3,504,052		$	(180,996	)
	Less discontinued operations, net of tax		(29,071	)		(59,138	)
	Net income (loss) from continuing operations		3,533,123			(121,858	)
Adjustment to reconcile net income (loss) to net cash provided by (used in) operating activities:
	Gain on bargain purchase of Yi An		(306,005	)		-
	Depreciation and amortization		32,122			64
	In kind contribution of services		28,700			40,275
Change in operating assets and liabilities net of effects from purchase of Subsidiary Yi An:
	(Increase) in accounts receivable		(11,033	)		-
	(Increase) in accounts receivable, other		(1,055,608	)		-
	(Increase) in other asset		(120,000	)		-
	(Decrease) in accounts payable		(360	)		(13,610	)
	Increase in accrued expenses		118,041			3,737
	Increase in advanced from customer		658,258			-
	Increase in income tax payable		1,052,069			-
	Increase in other tax payable		90,390			-
Net Cash Provided by (Used in) Operating Activities			4,019,697			(91,392	)

Cash Flows from Investing Activities
	Payment for purchase of Yi An, net of cash acquired		(3,782,192	)		-
	Deposit for purchase of Yi An		(2,000,000	)
	Purchase of equipment		(104,076	)		(635	)
	Decrease in notes receivable from a related company		3,683,475			-
	(Increase) in notes receivable		(3,753,991	)		-
Net Cash (Used in) Investing Activities			(5,956,784	)		(635	)

Cash Flows from Financing Activities:
	Proceeds from issuance of common stock		6,250,000			25,648
	Stock Subscription received		-			35,016
	Payments to note payable		(22,389	)		-
	Dividends paid to noncontrolling interest		(172,469	)		-
	Proceeds from stockholder loan		18,578			-
Net Cash Provided by Financing Activities			6,073,720			60,664

Effect of Exchange Rates on Cash			56,482			-

Cash Provided by (Used in) Continuing Operations			4,193,115			(31,363	)

Cash (Used in) Operating Activities from Discontinued Operations			(25,449	)		(16,040	)
Cash Provided by Financing Activities from Discontinued Operations			100			-
Effect of Change in Cash and Equivalents of Discontinued Operations			12,621			2,640
Cash Used in Discontinued Operations			(12,728	)		(13,400	)

Net Increase/ (Decrease) in Cash			4,180,387			(44,763	)

Cash and Cash Equivalents , Beginning of Period			-			45,366
Cash and Cash Equivalents, Ending of Period		$	4,180,387		$	603

Cash paid during the year for:
	Interest	$	-		$	-
	Income Taxes	$	169,926		$	1,600

See accompanying notes to unaudited condensed consolidated financial statements

APEXTALK HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2010

(UNAUDITED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION

Apextalk, Inc. was incorporated on November 7, 2007 under the laws of the state of Delaware. On November 12, 2007, Apextalk, Inc. changed its name to Apextalk Holdings, Inc. The company, located in San Francisco, California, is a holding company whose subsidiaries provide various telecom services (through September 1, 2010, see Note 5) and financial consulting services.

Apextalk Inc. was incorporated on June 8, 2004 under the laws of the state of California. The company has integrated VoIP and wireless technology to develop various market driven applications. Apextalk Holdings, Inc. completed the acquisition of Apextalk Inc. on November 16, 2007 where Apextalk Holdings, Inc. purchased all of the outstanding shares of Apextalk Inc.

Guangdong Yi An Investment Consulting Company Limited (“Yi An”) was incorporated in the People’s Republic of China (“PRC”) on September 7, 2009 as a limited liability company. Yi An engaged in financial consulting, investment advisory, management consulting, and business information consulting in the PRC. On February 1, 2010, Yi An established a 51% held subsidiary named Guangzhou Hua Ying Venture Capital Co., Ltd. (“Hua Ying”) which engaged in investment advisory services in the PRC. On June 1, 2010, Apextalk Holdings, Inc. completed the purchase of 51% ownership of Yi An with the last cash payment made on June 7, 2010.

On October 25, 2010, Apextalk Holdings, Inc. completed the purchase of additional 24.37% ownership of Yi An with the cash payment made on September 24, 2010.

Apextalk Holdings, Inc. and its wholly owned and majority owned subsidiaries are hereafter referred to as (the “Company”).

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES

Changes in Basis of Presentation

The 2009 financial information has been revised so that the basis of presentation is consistent with that of the 2010 financial information. This revision reflects the financial condition and results of operations of Apextalk Inc. (“API”) as discontinued operations for all periods presented. For a summary of discontinued operations see Note 5.

Basis of Accounting

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all the information necessary for a comprehensive presentation of financial position and results of operations.

The unaudited condensed consolidated financial statements for the nine months ended September 30, 2010 were not audited. It is management's opinion, however that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the full fiscal year. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States.

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2009.

Consolidation

The accompanying unaudited condensed consolidated financial statements include the parent company and its wholly owned subsidiary of Apextalk Inc. from January 1, 2009 to September 30, 2010 and majority owned subsidiary of Yi An from June 1, 2010 to September 30, 2010. Apextalk Holdings, Inc. discontinued its telecom operations on September 1, 2010. However, Apextalk Holdings, Inc. still wholly owns Apextalk Inc. as of September 30, 2010, thus, the financial condition and results of operations of Apextalk Inc. was included in the consolidated financial statements during the respective periods. All of the material inter-company transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Concentrations and Risks

Substantially the majority of the Company's assets are located in the PRC and substantially the majority of the Company's revenues were derived from customers located in the PRC. In addition, financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of accounts receivable. The Company mitigates credit risk through procedures that include determination of credit limits, credit approvals, and related monitoring procedures to ensure delinquent receivables are collected.

Cash and Cash Equivalents

The Company considers cash on hand and amounts on deposit with financial institutions which have original maturities of three months or less to be cash and cash equivalents. The cash of $4,074,540 is uninsured by FDIC as it is held in a foreign bank account.

Accounts Receivable and Allowance for Doubtful Accounts

---Investment Consultancy services

The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and recorded based on managements’ assessment of customer credit history, overall trends in collections and write-offs, and expected exposures based on facts and prior experience. As of September 30, 2010, the Company has recorded $-0- amount allowance for doubtful accounts.

---Value- added Telecom Service

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company evaluates the trends in customers’ payment patterns, including review of specific delinquent accounts, changes in business conditions and external communications available about customers to estimate the level of allowance that is needed to address potential losses that the Company may incur due to the customer’s inability to pay. Accounts are considered delinquent or past due, if they have not been paid within the six-month-term. Delinquent account balances are written off after management has determined that the likelihood of collection is not probable. As of September 30, 2010 and December 31, 2009, the Company has recorded an allowance for doubtful accounts in the amounts of $-0- and $2,423, respectively.

Property and Equipment

Property and equipment are stated at cost and are depreciated using 150% the double-declining balance method except motor vehicles are depreciated on the straight-line method over their estimated useful lives, which differ by asset category. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful lives of the assets:

● Furniture & fixtures: 7 years

● Equipment: 5-7 years

● Software: 5 years

● Leasehold improvements: 15 years

● Motor vehicles: 5 years

Expenditures associated with upgrades and enhancements are intended to improve, add functionality, or otherwise extend the life of a respective asset are capitalized; while expenditures that do not, such as repairs and maintenance, are expensed as incurred. The residual value of property and equipment is estimated to be equal to 10% of the original cost. Upon disposal, the assets and related accumulated depreciation are removed from the Company’s accounts, and the resulting gains or losses are reflected in the statements of operations.

Intangible Assets

Intangible assets are stated at cost and are amortized using straight-line method over their estimated useful lives. Patent fees paid are not amortized until approved.

Impairment of Long-lived Assets

The Company evaluates the recoverability of its long-lived assets, including goodwill, on an annual basis or more frequently if indicators of potential impairment arise. Following the criteria of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 350, Intangibles-Goodwill & Other, the Company evaluates the recoverability of its amortizable purchased intangible assets based on an estimate of the undiscounted cash flows resulting from the use of the related asset group and its eventual disposition. The asset group represents the lowest level for which cash flows are largely independent of cash flows of other assets and liabilities. Measurement of an impairment loss for long-lived assets that the Company expects to hold and use is based on the difference between the fair value and carrying value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell.

Fair Value of Financial Instruments

FASB ASC 825, Disclosure about Fair Value of Financial Instruments, requires certain disclosures regarding the fair value of financial instruments. Fair value of financial instruments is made at a specific point in time, based on relevant information about financial markets and specific financial instruments. As these estimates are subjective in nature, involving uncertainties and matters of significant judgment, they cannot be determined with precision. Changes in assumptions can significantly affect estimated fair values.

The carrying value of other current asset, other payables and accrued liabilities approximate their fair values because of the short-term nature of these instruments. Management of the Company is of the opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

Revenue and Cost Recognition

---Investment Consultancy services

The Company recognizes revenues from consultancy services when services are performed and collectability is reasonably assured.

---Value- added Telecom Service

The Company recognizes revenue on arrangements in accordance with FASB ASC 605, Revenue Recognition. Revenue is recognized when amounts are earned and when the amount and timing of the revenue can be reasonably estimated. Accounts with no activities in three months will be cancelled and the unused balances in these accounts will not be refunded to customers and recorded as revenue. Expenses are recognized when they occurred and matched against revenue, as a component of costs of services in the statement of operations in accordance with FASB ASC 605, Revenue Recognition. Revenues from internet communication services are recognized in the period such services are used by the end user and monthly service fee is charged.

Income Taxes

The Company accounts for income taxes under the FASB ASC 740, Income Taxes. Under FASB 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 bases. 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 FASB ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period included the enactment date.

FASB ASC 740 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken (or expected to be taken) in a tax return. This Interpretation also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods and income tax disclosures. The adoption of ASC 740 has not resulted in any material impact on the Company’s financial position or results.

Foreign Currency Transactions

The functional currency of Yi An and Hua Ying is Renminbi (“RMB”). Foreign currency transactions during the period are translated to the functional currency at the approximate rates of exchange on the dates of transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the approximate rates of exchange at that date. Non-monetary assets and liabilities are translated at the rates of exchange prevailing at the time the asset or liability was acquired. Exchange gains or losses are recorded in the statement of operations.

The financial statements are translated into United States Dollars (“US$”) using the closing rate method. The balance sheet items are translated into US$ using the exchange rates at the respective balance sheet dates. The capital and various reserves are translated at historical exchange rates prevailing at the time of the transactions while income and expenses items are translated at the average exchange rate for the period. All exchange differences are recorded within equity.

The exchange rates used to translate amounts in RMB from Yi An and Hua Ying into US$ for the purposes of preparing the financial statements were as follows:

	September 30, 2010
Balance sheet items, except for share capital, additional paid-in capital and retained earnings as of period ended	RMB1=US$0.14930
Amounts included in the statements of operations and cash flows for the period	RMB1=US$0.14722

The translation gain recorded for the three months ended September 30, 2010 was $112,329. The translation gain recorded for the nine months ended September 30, 2010 was $131,051.

No presentation is made that RMB amounts have been, or would be, converted into US$ at the above rates. Although the Chinese government regulations now allow convertibility of RMB for current account transactions, significant restrictions still remain. Hence, such translations should not be construed as representations that RMB could be converted into US$ at that rate or any other rate.

The value of RMB against US$ and other currencies may fluctuate and is affected by, among other things, changes in China’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s financial condition in terms of US$ reporting.

Other Comprehensive Income

The foreign currency translation gain or loss resulting from translation of the financial statements expressed in RMB to US$ is reported as other comprehensive income in the statement of operations and comprehensive income and stockholders’ equity.

Earnings (Loss) per Share

Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by FASB ASC 260, Earnings Per Share. As of September 30, 2010 and 2009, there were no diluted shares outstanding.

Business Segments

The Company operates in two segments and segments information is presented in Note 6.

Reclassification

Certain amounts from the prior year financial statements have been reclassified to conform to the current year presentation. These reclassifications had no effect on the Company's consolidated net income (loss) or stockholders' Equity (deficiency).

Recent Accounting Pronouncements

In July 2010, the FASB issued update No. 2010-20 – Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses. The update is intended to provide additional information to assist financial statement users in assessing an entity’s credit risk exposures and evaluating the adequacy of its allowance for credit losses. The amendments are effective for the first reporting period (including interim periods) ending on or after December 15, 2010. Adoptions of the amendments will not have an impact on the company’s results of operations, financial position or liquidity.

In August 2010, the FASB issued update No. 2010-21 – Accounting for Technical Amendments to Various SEC Rules and Schedules Amendments to SEC Paragraphs Pursuant to Release No. 33-9026: Technical Amendments to Rules, Forms, Schedules and Codification of Financial Reporting Policies(SEC Update). The amendments eliminated outdated provisions and provide the needed clarifications. The amendments are effective for the first reporting period (including interim periods) beginning after issuance. Adoptions of the amendments will not have an impact on the Company’s consolidated financial statements.

In August 2010, the FASB issued update No. 2010-22 – Accounting for Various Topics – Technical Corrections to SEC Paragraphs (SEC Update). The update amends paragraphs based on external comments received and the issuance of SAB 112. The amendments are effective for the first reporting period (including interim periods) beginning after issuance. Adoptions of the amendments will not have an impact on the Company’s consolidated financial statements.

NOTE 3. ACQUISITION

On December 16, 2009, Apextalk Holdings, Inc. entered into a share transfer agreement (the “Share Transfer Agreement”) with the common stock shareholders of Guangdong Yi An Investment Consulting Co., Ltd (“Yi An”). Pursuant to the Share Transfer Agreement, Apextalk Holdings, Inc will acquire 51% of the issued and outstanding common stock of Yi An for an aggregate of RMB 25,500,000 (or approximate $4,000,000). The Share Transfer Agreement was approved by the Chinese government on March 9, 2010. With the unanimous written consent of the board of directors of the Company, on June 7, 2010 the Yi An Shareholders received an aggregate of $3,951,595. In exchange, the Company acquired 51% of the issued and outstanding common stock of Yi An (the “Closing”). As a result of the Closing, both parties agreed that Yi An became a subsidiary of the Company from June 7, 2010, and this transactions was accounted for as a business combination.

The total purchase price for this acquisition was $3,951,595. Of the total cash consideration of $3,951,595, $306,005 was preliminarily allocated to gain on bargain purchase, $13,102,872 to tangible assets, $169,403 to cash acquired, $2,563,660 to net assumed liabilities and $6,451,615 to noncontrolling interests. Gain on bargain purchase represents the excess of net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed excess over the aggregate purchase price and the fair value of the noncontrolling interest in Yi An. Such preliminarily gain is present as separately in the Company’s condensed statement of operation and other comprehensive income.

	Fair Value
Fixed assets	$	271,368
Deposits paid for acquiring P&E		2,481
Accounts receivables		900,242
Other receivables		39,591
Note receivable		11,889,190
Cash in bank		169,403
Other payables		(805	)
Note payable		(2,460,965	)
Accrued professional fees		(2,001	)
Accrued expenses		(7,205	)
Income taxes payable		(82,781	)
Other taxes payable		(9,903	)
Non-controlling interest in Hua Ying		(2,360,379	)
Non-controlling interest in Yi An		(4,090,636	)
Cash APXG paid for 51% interest in Yi An		(3,951,595	)
Gain on bargain purchase of 51% interest in Yi An	$	(306,005	)

This business combination did have a material impact on the Company’s condensed consolidated financial statements, and therefore pro forma disclosures are presented below. The following information is under the assumption that Apextalk Holdings, Inc. purchased 51% of Yi An interest on Yi An’s inception date as of January 1, 2010 at book value.

Pro forma Apextalk Holdings, Inc. condensed consolidated statements of operations and other comprehensive income
	Nine months
	ended
	9/30/2010
Total revenues	$	6,519,143
Cost of service		16,845
Gross profit (loss)		6,502,298
Total operating expenses		1,294,722
Income from operations		5,207,576
Total other income (expenses)		2,782
Income from operations before taxes		5,210,358
Income taxes expense		1,393,767
Net Income		3,816,591
Add: net profit attributable to noncontrolling interests		2,070,151
Net Income attributable to Apextalk Stockholders		1,746,440
Foreign currency translation gain attributable to Apextalk		114,848
Comprehensive Income	$	1,861,288

NOTE 4. SHARE TRANSFER AGREEMENT DATED JUNE 18, 2010

On June 18, 2010, the Company entered into another share transfer agreement with the shareholder (“Yi An noncontrolling interest shareholder”) who owned 49% of the issued and outstanding common shares of Yi An. Pursuant to this share transfer agreement, the Yi An noncontrolling interest shareholder will transfer 39% of Yi An’s issued and outstanding common shares to the Company at an aggregate purchase price of RMB 21,642,616 (approximately $3,182,738), which shall be paid in full within 720 days following June 18, 2010.

On September 24, 2010, the Company transferred $2,000,000 cash to the Yi An noncontrolling interest shareholder to execute part of this share transfer agreement. As this cash payment was not settled as of September 30, 2010, therefore, the Company accounted 51% ownership of Yi An as of September 30, 2010.

NOTE 5. DISCONTINUED THE OPERATIONS OF APEXTALK INC.

On November 19, 2010, Apextalk, Inc. entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Inno Global Inc. (“Innoglo”), a California company, The Purchase Agreement was effective September 1, 2010 and provided for the transfer of cash equal to $2,753 and gross accounts receivable equal to $ 2,244 net of an allowance for doubtful accounts equal to $395 by Apextalk, Inc. to Innoglo in exchange for the assumption of certain Apextalk, Inc. liabilities by Innoglo. Specifically, Innoglo assumed deferred revenue from Apextalk, Inc. equal to $4,602. The net assets transferred from Apextalk, Inc. to Innoglo were equal to the net liabilities assumed by Innoglo from Apextalk, Inc. As such, no gain or loss is recognized on the transaction. Pursuant to the closing of the Purchase Agreement, Apextalk Holdings, Inc. transferred Apextalk Inc.’s telecom customers to Innoglo and discontinued its telecom business operations.

The following table summarized the assets and liabilities of the discontinued operations, excluding intercompany balances eliminated in consolidated, at September 30, 2010 and December 31, 2009, respectively:


	9/30/2010		12/31/2009
Assets in discontinued operations
Current assets:
Cash and cash equivalents	$	9,089	$	21,710
Accounts receivable, net of allowance		-		3,085
Total current assets		9,089		24,795

Non-current assets:
Property, plant and equipment, net		30,733		41,404

Total assets in discontinued operations	$	39,822	$	66,199


Liabilities in discontinued operations
Accounts payable	$	18,884	$	23,055
Accrued expenses		57,743		54,743
Unearned revenue		-		11,717
Accounts payable to Innoglo		2,753		-
Shareholder's loan		1,100		1,000

Total liabilities in discontinued operations	$	80,480	$	90,515

Financial data for the discontinued operations of Apextalk Inc. for the three and nine months ended September 30, 2010 and September 30, 2009 is as follows:


	Three Months Ended						Nine Months Ended
	9/30/2010			09/30/2009			9/30/2010			09/30/2009

Total revenue	$	4,070		$	7,755		$	13,468		$	14,427
Pretax loss		(5,459	)		(19,815	)		(29,071	)		(58,338	)
Income tax provision		-			-			-			(800	)
Net loss		(5,459	)		(19,815	)		(29,071	)		(59,138	)
Net loss attributable to Apextalk Holdings, Inc.	$	(5,459	)	$	(19,815	)	$	(29,071	)	$	(59,138	)

Per share information attributable to Apextalk Holdings, Inc.
Basic and diluted net loss per common shares	$	(0.00	)	$	(0.04	)	$	(0.02	)	$	(0.13	)
Average common shares outstanding - basic and diluted		2,312,063			459,706			1,645,223			447,190

During the discontinued transactions, Apextalk Inc. retired some computers and record $1,041 loss on the disposal.

NOTE 6. SEGMENT INFORMATION

Upon the closing of the first acquisition of Yi An (see Note 3), both Apextalk Holdings, Inc. and Yi An agreed that Yi An would be a subsidiary of Apextalk Holdings, Inc. as of June 7, 2010, therefore, we were involved in two segments of business: investment consulting services in the PRC and value-added telecom service in the U.S.

Investment consulting services segment engages in financial consulting, investment advisory, management consulting, and business information consulting in the PRC.

Value-add telecom service segment has integrated VoIP and wireless technology to develop various market driven applications in the U.S..

The following tables present summarized information by segment (note: prior to June 7, 2010, the Company only had one segment, therefore, no table related to September 30, 2009 year end segment information is present).

For the three months ended September 30, 2010
	Investment					Intersegment		Consolidated
	Consulting		Other			Eliminations		Results
Total segment operating revenues	$	5,167,397	$	0		$		$	5,167,397
Operations and supports expenses		685,791		82,102					767,893
Depreciation and amortization expenses		24,486		158					24,644
Total segment operating expenses		710,277		82,260					792,537
Segment operation income (loss)		4,457,120		(82,260	)				4,374,860
Other income		1,956		179,580			(179,580)		1,956
Segment income (loss) before income taxes	$	4,459,076	$	97,320		$	(179,580)	$	4,376,816

For the nine months ended September 30, 2010
	Investment					Intersegment		Consolidated
	Consulting		Other			Eliminations		Results
Total segment operating revenues	$	5,511,050	$	0		$		$	5,511,050
Operations and supports expenses		761,171		300,985					1,062,156
Depreciation and amortization expenses		31,900		222					32,122
Total segment operating expenses		793,071		301,207					1,094,278
Segment operation income (loss)		4,717,979		(301,207	)				4,416,772
Other income		2,136		485,585			(179,580)		308,141
Segment income (loss) before income taxes	$	4,720,115	$	64,378		$	(179,580)	$	4,724,913


Reconciliation of Reportable Segment Assets to Consolidated Assets
Assets for investment consulting	$	18,664,991
Assets for discontinued operations		39,822
Assets for corporate		6,355,499
Intersegment investment		(5,951,595)
Intersegment notes		(167,093)
Consolidated total assets	$	18,941,624

NOTE 7. NOTE RECEIVABLE FROM RELATED COMPANY

As of September 30, 2010, Yi An has a loan of $8,390,439 to Guangzhou China Royal Pawn Co. Ltd. (“China Royal Pawn”), which is controlled by a director of Yi An (see Note 15). Loan to the related company is unsecured, interest free and repayable on demand. A fee from the related company based on 2.5% per month of the outstanding loan amount is charged each month for an interest charge. On November 3, 2010, the outstanding notes receivable balance of $8,390,439 as at September 30, 2010, has been fully paid back (see Note 17).

NOTE 8. NOTE RECEIVABLE

As of September 30, 2010, cash advances to third parties of $2,090,145 are unsecured, interest free and repayable on October 8, 2010 to November 29, 2010. Consultancy fees from third parties based on 0.05% per day of the outstanding loan amount is charged each day in place of an interest charge. As of October 26, 2010, $1,492,961 of the outstanding amount has been duly received.

NOTE 9. PROPERTY AND EQUIPMENT

At September 30, 2010 and December 31, 2009 property and equipment is as follows:

	September 30, 2010 (unaudited)		December 31, 2009

Computer and Office Equipment	$	37,311	$	635
Motor Vehicles		275,337		-
Leasehold Improvement		72,363		-
Less accumulated depreciation		(32,217)		(96)
	$	352,794	$	539

Depreciation expense for the nine months ended September 30, 2010 and 2009 was $32,122 and $64, respectively.

NOTE 10. NOTE PAYABLE

As of September 30, 2010, Yi An has cash advanced from a third party of $2,487,273, which is unsecured, interest free and repayable on demand.

NOTE 11. INCOME TAXES

The Company accounts for income taxes under FASB ASC 740, Income Taxes. Under FASB ASC 740, clarification is given on the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements, FASB ASC 740, Income Taxes, describes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

Yi An was incorporated in the PRC and is subject to PRC income tax which is computed according to the relevant laws and regulations in the PRC. The applicable tax rate is 25% in 2010.

NOTE 12. LEASE COMMITMENTS

Operating Lease Commitments

Yi An leased office space from a third party under an operating lease which expires on March 25, 2012 at a monthly rental rate of $13,049, and several staff quarters from third parties under operating leases which expire on varies dates in 2011 at monthly rental rate of $2,463.

As at September 30, 2010, Yi An had an outstanding commitment with respect to the above operating leases, which are due as follows:

Year ending December 31	Amount
2010	$	46,538
2011		171,496
2012		36,899
Total	$	268,271

Capital Commitments

Yi An renovated the office during nine months ended September 30, 2010. As at September 30, 2010, Yi An had an outstanding commitment of $15,684 with respect to the renovation contracts.

NOTE 13. STOCKHOLDERS’ EQUITY

Common Stocks

On January 20, 2010, the Company effectuated an initial closing of the Stock Purchase Agreement whereby the Company issued to the Champion Investors (China) Ltd. (“Purchaser”) 416,667 shares in exchange for $1,000,000 of the Purchase Price.

On February 22, 2010, the Company effectuated the second closing of the Stock Purchase Agreement upon receipt of an additional $1,000,000 of the Purchase Price, in connection with which the Company issued to the Purchaser 416,667 shares of the Company’s common stock.

On May 26, 2010, the Company effectuated the third and final closing of the Stock Purchase Agreement whereby the Company issued to the Purchaser 833,334 shares of the Company’s common stock in exchange for $2,000,000 cash. Further, the Company sold the Purchaser additional 104,167 shares of the Company’s newly issued common stock at a purchase price of $2.40 per share with an aggregate amount of $250,000.

On September 9, 2010, the Company entered another Stock Purchase Agreement with the Champion Investors (China) Ltd, that the Company agreed to sell 833,333 shares of the Company’s newly issued common stock at a purchase price of $2.40 per share with an aggregate amount of $2,000,000. On September 21, 2010, the Company effectuated this stock purchase agreement.

In Kind Contribution

For the nine months ended September 30, 2010, key management personnel contributed administrative and managerial services to the Company with a fair value of $28,700 (See Note 15).

Cash Dividend

On August 16, 2010, Yi An paid $352,049 (RMB 2,400,000) cash dividend to Yi An’s shareholders. As one of the Yi An’s shareholders, Apextalk Holdings, Inc. received $179,580 cash dividend from Yi An.

NOTE 14. STATUTORY RESERVES

As stipulated by the relevant laws and regulations for enterprises operating in PRC, Yi An is required to make annual appropriations to a statutory surplus reserve fund. Specifically, Yi An is required to allocate 10% of its profits after taxes, as determined in accordance with the PRC accounting standards applicable to Yi An , to a statutory surplus reserve until such reserve reaches 50% of the registered capital of Yi An. During the year ended December 31, 2009, Yi An provided $64,500 statutory reserve.

NOTE 15. RELATED PARTY TRANSACTIONS

---Value- added Telecom Service

The current U.S. office space is sub-leased from one of the shareholders on a month to month basis. The rent expense for the nine month ended September 30, 2010 and 2009 is $18,000 and $2,205, respectively.

The Company entered into an agreement with Apex Telecom, a shareholder of the Company, for leasing the facility and related equipment for use in operations during 2009. The monthly rate of this lease was $200 per month. Effective on January 1, 2010, the Company does not lease the facility and related equipment from Apex Telecom, the leasing expense for the nine months ended September 30, 2010 and 2009 was $0 and $1,800, respectively. In addition, Apex Telecom had accounted for 100% of the total cost of sales of the company, for the nine months ended September 30, 2010, and 2009, respectively.

During the period ended September 30, 2010 and 2009, Apextalk Inc. accrued compensation for key management personnel for the administrative and managerial services rendered to the company. The total compensation accrued for the nine months ended September 30, 2010 and 2009 is $3,000 and $4,995, respectively.

In addition on the compensation for key management personal accrued by Apextalk, Inc. as stated above, for the nine months ended September 30, 2010 and 2009, key management personnel contributed administrative and managerial services to Apextalk Holdings, Inc. with a fair value of $28,700 and $40,275, respectively (See Note 13).

---Investment Consultancy services

On July 1, 2010, Yi An entered into a two-year strategic alliance agreement with, Guangzhou China Royal Pawn Co. Ltd. (“China Royal Pawn”), a related company controlled by a director of Yi An . China Royal Pawn is owned by four shareholders, which are four different companies. A director of Apextalk Holdings, Inc. and Yi An, is the company shareholder representative of one of four companies above. This director owns shares in Apextalk Holdings, Inc., but not Yi An. According to the agreement, Yi An would refer clients to the related company, and receive 10% of the fee charged by the related company as referral commission, and an additional 30% as consultancy fee for risk control services provided regarding the referred clients.

During the four month period ended September 30, 2010, Yi An received consultancy fees of $845,745 from the related company, China Royal Pawn. Total accounts receivable of $8,390,439 from this related company is recorded as of September 30, 2010. On November 3, 2010, the outstanding notes receivable balance of $8,390,439 as at September 30, 2010, has been fully paid back.

NOTE 16. STOCK PURCHASE AGREEMENT DATED NOVEMBER 17, 2009

On December 14, 2009, the Company assisted its then existing shareholders (the “Apextalk Shareholders”) to close a portion of a stock purchase agreement (the “Agreement”) with Apextalk, Inc.(“Apextalk”), Global Apex Holdings, Inc., a Delaware corporation whose shareholders were identical to the Apextalk Shareholders (“Global Apex Holdings”), Global Apex, Inc., a California corporation and a wholly owned subsidiary of Global Apex Holdings (“Global Apex”) and five individual purchasers set forth in the Agreement (the “Purchasers”).

Subject to the terms and condition of the Agreement, the Company will transfer 70% of its equity interest in Apextalk, Inc. to Global Apex, Inc. and the Company will retain the remaining 30% equity interest in Apextalk, Inc.. As of November 22, 2010, the transfer has not completed due to the complications arise from operations and of net assets transfer. The Company is planning to complete this transfer by the end of December, 2010.

As additional consideration, the Company agreed to grant Global Apex Holdings the right to receive a cash payment in the amount of $30,000 for each $1,000,000 invested into the Company of up to $4,000,000 in the aggregate from outside investors. As of September 30, 2010, Global Apex Holdings received $120,000 in cash payments from the Company related to the $4,000,000 common stocks issued to the outside investors during the nine months end at September 30, 2010. The Company recorded the $120,000 payments as other assets to Global Apex Holdings as the transaction with Global Apex Holdings is not complete.

Among the $300,000 purchase price proceeds, approximately $50,000 will be available in the form of a short-term loan to the Company to support its operations and expansion. As of September 30, 2010, $48,794 from the proceeds was loaned to the Company.

NOTE 17. SUBSEQUENT EVENTS

On October 25, 2010, Apextalk Holdings, Inc. completed a partial closing of the stock transfer agreement dated June 18, 2010 (See Note 4) by paying the Yi An noncontrolling interest shareholder $2,000,000 for 24.37% of Yi An’s issued and outstanding common stock. As a result, Apextalk Holdings, Inc. owns 75.37% of the issued and outstanding common stock of Yi An.

On November 3, 2010, the outstanding notes receivable balance of $8,390,439 as of September 30, 2010, which was made to China Royal Pawn, has been fully paid back.

On November 8, 2010, Board of Directors of Apextalk Holdings, Inc. approved a total of $30,000 cash dividend and a one-for-ten stock dividend to be effected to stockholders of record on October 26, 2010. The date of distribution is not finalized as of November 22, 2010.

On November 19, 2010, Apextalk, Inc. entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Inno Global Inc. (“Innoglo”), a California company, Pursuant to the closing of the Purchase Agreement, Apextalk Holdings, Inc. transferred Apextalk Inc.’s telecom customers to Innoglo and discontinued its telecom business operations (See Note 5).

Item 2. Management’s Discussion and Analysis of Financial Condition

The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in these forward-looking statements, including the risks and uncertainties described below and other factors we describe from time to time in our periodic filings with the U.S. Securities and Exchange Commission (the “SEC”). We therefore caution you not to rely unduly on any forward-looking statements. The forward-looking statements in this report speak only as of the date of this report, and we undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

Business Overview

Apextalk Holdings, Inc. (hereinafter referred to as the “Company,” “we,” “us,” or “our”) was incorporated in the State of Delaware on November 7, 2007. On November 16, 2007 we entered into a share exchange agreement with Apextalk, Inc., a California based corporation, whereby Apextalk, Inc. became our wholly owned subsidiary. On November 18, 2007, we issued 89,619 common shares (post reverse split) to TLMS International, Inc. and 44,810 common shares (post reverse split) to Spencer Luo for in exchange for an aggregate $111,038 investment in us.

On December 16, 2009, we entered into a share transfer agreement by and among the Company, Guandong Yi An Investment Consulting Co., Ltd (“Yi An”), Ms Weiling Liang, and Mr. Yu Chen. The share transfer transaction was approved by the Chinese Government on March 9, 2010 and Yi An became a 51% owned subsidiary as of June 7, 2010. On June 18, 2010, we entered into a new share transfer agreement with Ms Weiling Liang, for the purchase of additional 39% Yi An equity interest, in the amount of $3,200,000. Upon completion of the transaction, Yi An will become a 90% owned subsidiary of the Company. The transaction is currently partially closed, as we Ms. Weiling Liang received our $2,000,000 partial payment on October 25, 2010. As a result of the partial payment, Yi An currently owns approximately 75.27% Yi An.

Yi An was founded in September 2009 and is located in Guangzhou, Guangdong Province in the People’s Republic of China. Yi An is a consulting company which engages in financial consulting, management consulting, and business information consulting. Yi An provides various services to its clients, including generating customer credit information for use by short term lenders, and helping clients to establish and improve internal controls and compliance systems and procedures. It currently operates four offices in Guangzhou, Beijing, Foshan and Dongguan.

Apextalk, Inc., our wholly owned subsidiary, provides telecom services to individuals and institutions around the world. Apextalk, Inc. has integrated voice-over-internet-protocol (“VoIP”), a form of communication that transmits with wireless technology via the internet, to develop various market driven applications. Apextalk, Inc. owns a patent pending for its “promotional minutes” program. It is an innovative marketing tool that enables our clients to advertise to their customers through smart phones, and other devices. On November 19, 2010, Apextalk, Inc. entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Inno Global Inc. (“Innoglo”), a California company, The Purchase Agreement was effective September 1, 2010 and provided for the transfer of cash equal to $2,753 and gross accounts receivable equal to $ 2,244 net of an allowance for doubtful accounts equal to $395 by Apextalk, Inc. to Innoglo in exchange for the assumption of certain Apextalk, Inc. liabilities by Innoglo. Specifically, Innoglo assumed deferred revenue from Apextalk, Inc. equal to $4,601. The net assets transferred from Apextalk, Inc. to Innoglo were equal to the net liabilities assumed by Innoglo from Apextalk, Inc. As such, no gain or loss is recognized on the transaction.

Business Plan

The following outlines our business plan for the next 12 months:

1.	The first 90 days, we will continue to focus on our current business consulting service in China. We acquired an equity interest in Yi An on June 1, 2010. As we continue to increase our equity interest in Yi An and discontinue our telecom business, we expect Yi An to be our sole contributor of revenue and net income. Yi An established four offices located in Guangzhou, Beijing, Foshan and Dongguan. These offices began generating revenue in July 2010. Based on our year-to-date statistics, we expect Yi An’s consulting service to continue to grow rapidly throughout the year of 2010. To maintain increased growth, we will continue our customer-relationship-building strategy by sending our sales managers to visit target Small-and-Medium Enterprises (SMEs) Associations in the major cities of China. We will also expand our sales team by hiring more sales managers to better support our growth strategy and expanding network. We expect to close the Yi An stock purchase transaction signed on June 18, 2010. Upon completion, we will subsequently own 90% equity interest of Yi An.

2.	During the next 180 days, we will focus on maintaining the rapid growth of Yi An business, as well as improving earnings. We are planning to open additional offices in Shanghai and other major cities located in China. We will target SMEs. Our new offices will provide the same business consulting services as our current four offices. We expect the opening of these additional offices will expand our business network to the local clients, as well as diversify our source of revenue geographically. Having clients located in different geographic areas diversifies our business and mitigates the government policy risk which we would face if we were concentrated in a single geographic area.

RESULTS OF OPERATIONS

Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009

The following tables set forth key components of our results of operations for the periods indicated, in U.S. dollars, and key components of our revenue for the period indicated, in dollars.

	For the Nine Months Ended
	September 30,
	2010			2009

Consultancy fees earned - from a related company	$	845,745		$	-
Consultancy fees earned		4,665,305			-
Total Revenue		5,511,050			-

Operating Expenses
Payroll expenses		225,270			40,275
Rent and utilities		105,126			-
General and administrative		580,040			3,097
Legal and professional fees		183,842			74,029
Total Operating Expenses		1,094,278			117,401

Operating Income (Loss)		4,416,772			(117,401	)

Other Income
Gain on bargain purchase of Yi An		306,005			-
Interest income		2,136			-
Total Other Income		308,141			-

Income (Loss) from Continuing Operations before Income Taxes and Discontinued Operations		4,724,913			(117,401	)

Provision for Income Taxes		(1,191,790	)		(4,457	)

Income (Loss) from Continuing Operations		3,533,123			(121,858	)

Less: Income attributable to noncontrolling interests		1,757,807			-

Income (Loss) attributable to Controlling Interest		1,775,316			(121,858	)

Discontinued Operations, Net of Taxes
Loss from discontinued operations, net of taxes		(28,030	)		(59,138	)
Loss on disposal of assets, net of taxes		(1,041	)		-
Loss from Discontinued Operations		(29,071	)		(59,138	)

Net Income (Loss)		1,746,245			(180,996	)

Amounts attributable to Apextalk Stockholders
Income from continuing operations		1,775,316			(121,858	)
Discontinued operations, net of taxes		(29,071	)		(59,138	)
Net income (loss)		1,746,245			(180,996	)

Other Comprehensive Income
Total foreign currency translation gain		256,963			-
Less: foreign currency translation gain attributable to noncontrolling interests		(125,912	)		-
Foreign currency translation gain attributable to Apextalk stockholders		131,051			-

Comprehensive Income (Loss)	$	1,877,296		$	(180,996	)

Revenue: For the nine months ended September 30, 2010, we generated $5,511,050 in revenue, representing an increase of $5,511,050 compared to the revenue of $-0- during the same period ended on September 30, 2009. The increase of our revenue was mainly attributable to the revenue recognition of our newly acquired Yi An subsidiary, as well as rapid growth of Yi An business due to the opening of new offices in four cities in China. The same period in 2009 has $-0- revenue, due to the discontinuation of our telecom business.

Payroll expenses: The payroll expenses were $225,270 for the nine months ended September 30, 2010 and $40,275 for the same period ended September 30, 2009, representing an increase of $184,995 or 4.59 times. The increase was primarily due to the additional headcounts from our newly acquired Yi An subsidiary, as well as the hiring of three additional employees for our increased administrative work and daily operation since the first quarter of 2010. The number in the same period in 2009 reflected the discontinuation of our telecom business.

Rent and utilities: The rent and utilities were $105,126 for the nine months ended September 30, 2010, compared to $-0- in the same period ended September 30, 2009. Our expenses for rent and utilities increased primarily because we increased the office space that we rent to meet our growing need. The same period in 2009 has $-0- expense, due to discontinuation of our telecom business.

General and Administrative Expenses: General and administrative expenses include depreciation, licenses, advertising, travel and entertainment expenses. Our general and administrative expenses were $580,040 for the nine months ended September 30, 2010, compared to $3,097 in the same period ended September 30, 2009, representing an increase of $576,943 or 186.29 times, which was primarily due to the expansion of scale and scope of our business after acquisition of Yi An, and that resulted in an increase of general and administrative expenses. The number in the same period in 2009 reflected the discontinuation of our telecom business.

Legal and professional fees: The legal and professional fees were $183,842 for the nine months ended September 30, 2010 and $74,029 for the nine months ended September 30, 2009, representing an increase of $109,813 or 1.48 times. The increase was primarily attributable to the higher demand of legal, accounting and other professional services in the process of acquiring additional equity interest of our Yi An subsidiary in the third quarter, in order to ensure our compliance with applicable securities laws and regulations and to maintain our public company status.

Three Months Ended September 30, 2010 Compared to Three Months Ended September 30, 2009

The following tables set forth key components of our results of operations for the periods indicated, in U.S. dollars, and key components of our revenue for the period indicated, in dollars.

	For the Three Months Ended
	September 30,
	2010			2009

Consultancy fees earned - from a related company	$	518,020		$	-
Consultancy fees earned		4,649,377			-
Total Revenue		5,167,397			-

Operating Expenses
Payroll expenses		148,676			11,925
Rent and utilities		84,066			-
General and administrative		506,334			56
Legal and professional fees		53,461			18,752
Total Operating Expenses		792,537			30,733

Operating Income (Loss)		4,374,860			(30,733	)

Other Income
Gain on bargain purchase of Yi An		-			-
Interest income		1,956			-
Total Other Income		1,956			-

Income (Loss) from Continuing Operations before Income Taxes and Discontinued Operations		4,376,816			(30,733	)

Provision for Income Taxes		(1,136,863	)		(1,219	)

Income (Loss) from Continuing Operations		3,239,953			(31,952	)

Less: Income attributable to noncontrolling interests		1,647,739			-

Income (Loss) attributable to Controlling Interest		1,592,214			(31,952	)

Discontinued Operations, Net of Taxes
Loss from discontinued operations, net of taxes		(4,418	)		(19,815	)
Loss on disposal of assets, net of taxes		(1,041	)		-
Loss from Discontinued Operations		(5,459	)		(19,815	)

Net Income (Loss)		1,586,755			(51,767	)

Amounts attributable to Apextalk Stockholders
Income from continuing operations		1,592,214			(31,952	)
Discontinued operations, net of taxes		(5,459	)		(19,815	)
Net income (loss)		1,586,755			(51,767	)

Other Comprehensive Income
Total foreign currency translation gain		220,254			-
Less: foreign currency translation gain attributable to noncontrolling interests		(107,925	)		-
Foreign currency translation gain attributable to Apextalk stockholders		112,329			-

Comprehensive Income (Loss)	$	1,699,084		$	(51,767	)

Revenue: For the three months ended September 30, 2010, we generated $5,167,397 in revenue, representing an increase of $5,167,397 compared to the revenue of $-0- during the same period ended on September 30, 2009. The increase of our revenue was mainly attributable to the opening of four new offices of Yi An. The same period in 2009 has $-0- revenue, due to the discontinuation of our telecom business.

Payroll expenses: The payroll expenses were $148,676 for the three months ended September 30, 2010 and $11,925 for the same period ended September 30, 2009, representing an increase of $136,751 or 11.47 times. The increase was primarily due to the additional headcounts from our newly acquired Yi An subsidiary, as well as the hiring of three additional employees for our increased administrative work and daily operation since the first quarter of 2010. The number in the same period in 2009 reflected the discontinuation of our telecom business.

Rent and utilities: The rent and utilities were $84,066 for the three months ended September 30, 2010, compared to $-0- in the same period ended September 30, 2009. Our expenses for rent and utilities increased primarily because we increased our rental office space to meet our growing need. The same period in 2009 has $-0- expense, due to discontinuation of our telecom business.

General and Administrative Expenses: General and administrative expenses include depreciation, licenses, advertising, travel and entertainment expenses. Our general and administrative expenses were $506,334 for the three months ended September 30, 2010, compared to $56 in the same period ended September 30, 2009, representing an increase of $506,278 or 9,040.68 times, which was primarily due to the expansion of scale and scope of our business after acquisition of Yi An, and that resulted in an increase of general and administrative expenses. The number in the same period in 2009 reflected the discontinuation of our telecom business.

Legal and professional fees: The legal and professional fees were $53,461 for the three months ended September 30, 2010 and $18,752 for the three months ended September 30, 2009, representing an increase of $34,709 or 1.85 times. The increase was primarily attributable to the higher demand of legal, accounting and other professional services in the process of acquiring additional equity interest of our Yi An subsidiary in the third quarter, in order to ensure our compliance with applicable securities laws and regulations and to maintain our public company status.

Liquidity and Capital Resources

As of September 30, 2010, the Company’s current assets were $18,429,128 and current liabilities were $4,680,476. Cash and cash equivalents totaled $4,180,387 as of September 30, 2010. The Company’s shareholders’ equity at September 30, 2010 was $14,261,148. The Company had cash provided by operating activities in continuing operations for the nine months ended September 30, 2010 of $4,019,697 and used in for the nine months ended September 30, 2009 of $91,392, respectively. The Company had net cash used in investing activities in continuing operations of $5,956,784 and $635 for the nine months ended September 30, 2010 and 2009, respectively. The Company had net cash provided by financing activities in continuing operations of $6,073,720 and $60,664 for the nine months ended September 30, 2010 and 2009, respectively. The Company had net cash used in discontinued operations of $12,728 and $13,400 for the nine months end September 30, 2010 and 2009, respectively.

As of September 30, 2010, the Company had an outstanding commitment of $15,684 with respect to the renovation contracts.

The Company has commitments to pay approximately $3,182,738 within 720 days following June 18, 2010 to acquire additional 39% of Yi An’s interest. As of September 30, 2010, $2,000,000 cash was paid and $1,182,738 is outstanding to complete the transaction. The Company plans to issue common stock to complete the transaction.

Off-Balance Sheet Arrangements

We have never entered into any off-balance sheet financing arrangements and have never established any special purpose entities. We have not guaranteed any debt or commitments of other entities or entered into any options on non-financial assets.

Critical Accounting Policies

The discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements, which have been prepared in accordance with GAAP. In connection with the preparation of consolidated financial statements, the Company is required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses, and the related disclosures. The assumptions, estimates and judgments included within these estimates are based on historical experience, current trends and other factors we believe to be relevant at the time the consolidated financial statements were prepared. On a regular basis, the accounting policies, assumptions, estimates and judgments are reviewed to ensure that the consolidated financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from the assumptions and estimates, and such differences could be material.

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosures of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Significant estimates and assumptions are used for, but are not limited to: (1) asset impairments and (2) depreciable lives of assets. Future events and their effects cannot be predicted with certainty, and accordingly, accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. We evaluate and update these assumptions and estimates on an ongoing basis and may employ outside experts to assist with these evaluations. Actual results could differ from the estimates that have been used.

A summary of significant accounting policies is included in Note 2 to the consolidated financial statements for the periods ended September 30, 2010 and 2009. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our Company's operating results and financial condition.

Recent Accounting Pronouncements

For recently issued accounting pronouncements, see Note 2 to the consolidated financial statements included in this prospectus.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not required for smaller reporting companies.

Item 4T. Evaluation of Disclosure Controls and Procedures

a) Evaluation of Disclosure Controls. Our Chief Executive Officer and Chief Accounting Officer evaluated the effectiveness of our disclosure controls and procedures as of the end of our third fiscal quarter 2010 pursuant to Rule 13a-15(b) of the Securities and Exchange Act. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, as appropriate to allow timely decisions regarding required disclosure. Based on his evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not fully effective for the purpose for which it is intended due to the following reasons as of September 30, 2010:

i) A deficiency was identified as the Company did not finalize the terms of its asset purchase agreement before it executed the transaction and did not disclosure the transaction timely. To cope with this deficiency, the management will set up the policy to ensure all agreements related to the material transactions must be finalized and signed before they can be executed. Board of directors will evaluate and review the result during the board meetings.

ii) A significant deficiency was identified as the Company did not have adequate internal procedure to evaluate in occasion of related party transactions. To cope with this deficiency, the management will set up a procedure that an approval from Chief Financial Officer in writing is required whenever the company has business activities with a related or potentially related company, regardless of the transaction amount. The management will also hold monthly evaluation meeting to review and monitor the transactions in each month to ensure all related party transactions have been properly approved and disclosed.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system are met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

(b) Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

We are not presently parties to any litigation, nor to our knowledge and belief is any litigation threatened or contemplated.

Item 1A. Risk Factors

Not applicable because we are a smaller reporting company.

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

On September 9, 2010, we entered into a Stock Purchase Agreement pursuant to which we issued to the Purchaser 833,333 shares of our common stock in exchange for a cash payment of $2,000,000.

On September 21, 2010, we effectuated the Stock Purchase Agreement pursuant to which we issued to the Purchaser 833,333 shares of our common stock in exchange for a cash payment of $2,000,000.

The issuance of these securities was exempt from registration under the safe harbor provided by Regulation D Rule 506 and Section 4(2) of the Securities Act. We made this determination based on the representations of the purchaser, which included, in pertinent part, that such Investors were either (a) “accredited investors” within the meaning of Rule 501 of Regulation D promulgated under the General Rules and Regulations of the Securities Act (“Regulation D”), or (b) not a “U.S. person” as that term is defined in Rule 902(k) of Regulation S promulgated under the General Rules and Regulations of the Securities Act, and upon such further representations from the purchaser that (a) the purchaser was acquiring the securities for its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the purchaser agreed not to sell or otherwise transfer the purchased shares unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the purchaser had knowledge and experience in financial and business matters such that it was capable of evaluating the merits and risks of an investment in us, (d) the purchaser had access to all of our documents, records, and books pertaining to their investment in the common stock and was provided the opportunity to ask questions and receive answers regarding the terms and conditions of the offering and to obtain any additional information which we possessed or was able to acquire without unreasonable effort and expense, and (e) the purchaser had no need for the liquidity in its investment in the common stock and could afford the complete loss of such investment. In addition, there was no general solicitation or advertising for securities issued in reliance upon Regulation D.

Item 3. Defaults Upon Senior Securities.

None

Item 4. (Removed and Reserved.)

Item 5. Other Information.

None

Item 6. Exhibits.

(a) Exhibits

31.1 Certifications pursuant to Section 302 of Sarbanes Oxley Act of 2002

31.2 Certifications pursuant to Section 302 of Sarbanes Oxley Act of 2002

32.1 Certifications pursuant to Section 906 of Sarbanes Oxley Act of 2002

32.2 Certifications pursuant to Section 906 of Sarbanes Oxley Act of 2002

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

		APEXTALK HOLDINGS, INC.
		Registrant

Date: November 23, 2010		By: /s/ Hui Liu
		Hui Liu
		Chief Executive Officer


Date: November 23, 2010		By: /s/ Shan Liu
		Shan Liu Chief Financial and Accounting Officer

Attached files

Apextalk Holdings Inc Reports

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