Asia Travel Corp

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.

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.

Net sales increased by $11,788 or 10% to $134,823 for the three months ended June 30, 2016from $123,035 for the three months ended June 30, 2015. For the three months ended June 30, 2016, $46,835 was generated from the Tengda Hotel, $32,681 was generated from the Tengfei Investment and $55,307was generated from Tengda Travel. For the three months ended June 30, 2015, $33,749 was generated from the Tengda Hotel, $34,203 was generated from the Tengfei Investment and $55,083 was generated from Tengda Travel.

Cost of goods soldincreased by $24,524 or 49% to $74,168 for the three months ended June 30, 2016from $49,644 for the three months ended June 30, 2015. The increase was due to the increase the sublet cost.  Gross profit margin in percentage for the three months ended June 30, 2016and 2015 was 45% and 60% respectively. Significant portions of our operating costs are from Tengfei, which are fixed costs.Our operating expenses decreased by $403,274or 83%to $82,145 for the three months ended June 30, 2016from $485,419for the three months ended June 30, 2015. The decrease in operating expenses is mainly due to deductthe advertising and promotion cost from corporate. Our operating expenses consist of general and administrative and selling expenses.

Net loss decreased by $407,789or 89%to $48,558 for the three months ended June 30, 2016from $456,347for the three months ended June 30, 2015. Among this amount, net loss of $25,697 was generated from the Tengda Hotel, net loss of $22,191 was generated from the Tengfei Investment and net loss of $670 from Tengda Travel for the three months ended June 30, 2016, and Corporate loss of $nil. Net loss of $5,125 was generated from the Tengda Hotel, net loss of $44,567 was generated from the Tengfei Investment and net loss of $2,427 from Tengda Travel for the three months ended June 30, 2015,and Corporate loss of $404,228. The decrease in net loss is mainly due to decrease in operating expenses related to advertising and promotion.

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.