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 March 31, 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 May 20, 2010: 1,293,040shares of common stock.











APEXTALK HOLDINGS, INC.





FORM 10-Q





March 31, 2010





INDEX





PART I-- FINANCIAL INFORMATION





Item 1.
Financial StatementsItem 2.
Management’s Discussion and Analysis of Financial ConditionItem 3.
Quantitative and Qualitative Disclosures About Market RiskItem 4T.
Control and Procedures





PART II-- OTHER INFORMATION





Item 1
Legal ProceedingsItem 1A
Risk FactorsItem 2.
Unregistered Sales of Equity Securities and Use of ProceedsItem 3.
Defaults Upon Senior SecuritiesItem 4.
(Removed and Reserved)Item 5.
Other InformationItem 6.
Exhibits











PART I-- FINANCIAL INFORMATION





Item 1. Financial Information





Our financial statements are as follows:





APEXTALK HOLDINGS, INC. AND SUBSIDIARY








CONTENTS





PAGE
1
CONDENSED CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2010 (UNAUDITED) AND DECEMBER 31, 2009.PAGE
2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED)PAGE
3
CONDENSED CONSOLIDTAED STATEMENT OF STOCKHOLDERS' DEFICIENCY FOR THE THREE MONTHS ENDED MARCH 31, 2009 (UNAUDITED)PAGE
4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009 (UNAUDITED)PAGES
5 – 10
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS










APEXTALK HOLDINGS, INC. AND SUBSIDIARY


CONDENSED CONSOLIDATED BALANCE SHEETS








March 31,


December 31,2010


2009(UNAUDITED)ASSETSCurrent AssetsCash

$
1,854,770


$
21,710Accounts receivables, net


2,732



3,085Other receivables, net


-



1,871Prepaid expense


22,000



-Total Current Assets


1,879,502



26,666Other deposit


60,000Property and equipment, net


38,811



41,943Patent, net


8,969



8,969Total Assets

$
1,987,282


$
77,578LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)LiabilitiesAccounts payable

$
25,373


$
30,165Accrued expenses


58,826



61,093Unearned revenue


9,984



11,717Shareholder's loan


50,394



31,716Total Liabilities


144,577



134,691Stockholders' Equity (Deficiency)Common Stock, authorized 1,000,000,000 shares,par value $0.001, 1,293,040 shares and 459,706 shares

issued and outstanding, respectively


1,293



459Additional Paid in Capital


2,365,449



358,383Accumulated Deficiency


(524,037
)


(415,955
)Total Stockholders' Equity (Deficiency)


1,842,705



(57,113)Total Liabilities and Stockholders' Equity (Deficiency)

$
1,987,282


$
77,578





See accompanying notes to unaudited condensed consolidated financial statements.





1




APEXTALK HOLDINGS, INC. AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(UNAUDITED)








For the three months ended


For the three months endedMarch 31, 2010


March 31, 2009Revenue

$
3,730


$
3,126Cost of services


7,105



10,955Gross profit


(3,375
)


(7,829
)Operating Expenses:Payroll expenses


28,821



15,840Rent and utilities


6,000



1,335Legal & professional fees


36,489



48,414General and administrative


31,809



7,571Total Operating Expenses


103,119



73,160Loss from Operations before Income Taxes


(106,494
)


(80,989
)Provision for Income Tax


(1,588
)


(2,819
)Net Loss

$
(108,082
)

$
(83,808
)Loss per Share – Basic and Diluted

$
(0.11
)

$
(0.19
)Weighted average number of common shares outstanding

during the period  - Basic and Diluted


962,424



434,521





See accompanying notes to unaudited condensed consolidated financial statements.





2





APEXTALK HOLDINGS, INC. AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY / (DEFICIENCY)







Common Stock


Paid in


Subscriptions


Accumulated


Total

EquityShares


Amount


Capital


Receivable


Deficit


(Deficiency)Balance, December 31, 2009


459,706


$
459


$
358,383


$
-


$
(415,955
)

$
(57,113)Common Stock issued for cash


833,334



834



1,999,166



-



-



2,000,000In kind contribution for services










7,900



-



-



7,900Net Loss


















(108,082
)


(108,082
)Balance, March 31, 2010

(UNAUDITED)


1,293,040


$
1,293


$
2,365,449


$
-


$
(524,037
)

$
1,842,705





See accompanying notes to unaudited condensed consolidated financial statements





3




APEXTALK HOLDINGS, INC. AND SUBSIDIARY


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(UNAUDITED)








For the three months ended


For the three months endedMarch 31, 2010


March 31, 2009Cash Flows from Operating ActivitiesNet Loss

$
(108,082
)

$
(83,808
)Adjustments to reconcile net income to net cash used in operating activities:Depreciation


3,132



3,212Provision for doubtful accounts


(1,297)In-kind contribution of services


7,900



14,175Changes in operating assets and liabilities:(Increase) / decrease in:Accounts receivable and other receivable


3,522



7,253Prepaid expenses


(22,000)



-Other deposit


(60,000)



-Unearned Revenue


1,733



928Deposits


-



1,000Increase / (decrease) in:Accounts payable


(4,792)



3,430Accrued expenses


(2,267)



7,790Net Cash Used In Operating Activities


(185,618
)


(46,020
)Net Cash Provided by (Used In) by Investing Activities


-



-Net Cash Flows from Financing ActivitiesProceeds from issuance of common stock


2,000,000



-Proceeds from stockholder loan


18,678



-Cash Provided by Financing Activities


2,018,678



-Net Increase/ (Decrease) in Cash


1,833,060



(46,020
)Cash, Beginning of Period


21,710



49,430Cash, End of Period

$
1,854,770


$
3,410Supplemental disclosure of cash flow Information:Interest Paid

$
-


$
-Income Taxes Paid

$
6,350


$
1,600





See accompanying notes to unaudited condensed consolidated financial statements.





4




APEXTALK HOLDINGS, INC.  AND SUBSIDIARY


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


AS OF MARCH 31, 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 subsidiary provides various telecom 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.  The transaction was accounted for as a combination of entities under common control and accordingly, recorded the merger at historical cost.  Accordingly, all shares and per share amounts have been retroactively restated.





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





NOTE  2.     SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES





Basis of Accounting





The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in The United States of America 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.





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 year.





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.





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 Financial Accounting Standards Board (FASB) Accounting Standards Codification No. 260, Earnings Per Share.  As of March 31, 2010 and 2009, there were no diluted shares outstanding.





Income Taxes





The Company accounts for income taxes under FASB Accounting Standards Codification No. 740, Income Taxes.Under FASB Accounting Standards Codification No. 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements 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 Accounting Standards Codification No. 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.




5




Use of Estimates





The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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.





Business Segments





The Company operates in one segment and therefore segment information is not presented.





Revenue and Cost Recognition





The Company recognizes revenue on arrangements in accordance with FASB Accounting Standards Codification No. 605, Revenue Recognition.Revenue is recognized when amounts are earned and when the amount and timing of the revenue can be reasonably estimated. 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 Accounting Standards Codification No. 605, Revenue Recognition. Revenues from internet communication services are recognized in the period such services are used by the end user.





Allowance for Doubtful Accounts





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 March 31, 2010 and December 31, 2009, the Company has recorded an allowance for doubtful accounts in the amounts of $1,126 and $2,423, respectively.





Consolidation





The books and records of the parent company Apextalk Holdings, Inc. have been consolidated with the records of the wholly owned subsidiary – Apextalk Inc. as of March 31, 2010 and 2009.  All of the material inter-company transactions have been eliminated.





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 loss or stockholders' deficit.





Property and Equipment





Property and equipment are stated at cost and are depreciated using 150% the double-declining balance method over their estimated useful lives, which differ by asset category:





• Furniture & fixtures: 7 years


• Equipment: 5-7 years


• Software: 5 years


• Leasehold improvements: 15 years




6


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 FASB Accounting Standards Codification 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.





Recent Accounting Pronouncements





In February 2010, the FASB issued update No. 2010-08 -- Technical Corrections to Various Topics. The amendments eliminate those inconsistencies and 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 did not have an impact on the company’s results of operations, financial position or liquidity.





NOTE 3.     INCOME TAXES





The Company accounts for income taxes under FASB Accounting Standards Codification No. 740, Income Taxes.Under FASB Accounting Standards Codification No. 740, clarification is given on the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements,  FASB Accounting Standards Codification No. 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.





NOTE 4.     PROPERTY AND EQUIPMENT





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





March 31, 2010 (unaudited)


December 31, 2009Computer and Office Equipment

$
68,400


$
68,400Less accumulated depreciation


(29,589
)


(26,457
)$
38,811


$
41,943




7


Depreciation expense for the three months ended March 31, 2010 and 2009 was $3,132 and $3,212, respectively.





NOTE 5.     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 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.





In Kind Contribution





For the three months ended March 31, 2010, key management personnel contributed administrative and managerial services to the Company with a fair market value of $7,900 (See Note 6).





NOTE 6.     RELATED PARTY TRANSACTIONS





The current office space is sub-leased from one of the shareholders on a month to month basis.  The rent expense for the three month ended March 31, 2010 and 2009 is $6,000 and $735, respectively.





The Company entered into an agreement with Apex Telecom, 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 three months ended March 31, 2010 and 2009 was $0 and $600, respectively. In addition,  Apex Telecom had accounted for 100% of the total cost of sales of the company, for the three months ended March 31, 2010, and 2009, respectively.





During the period ended March 31, 2010 and 2009, the Company accrued compensation for key management personnel for the administrative and managerial services rendered to the Company.  The total compensation accrued for the three months ended March 31, 2010 and 2009 is $1,125 and $1,665, respectively.





In addition on the compensation for key management personal accrued by the Company as stated above, for the three months ended March 31, 2010 and 2009, key management personnel contributed administrative and managerial services to the Company with a fair market value of $7,900 and $14,175, respectively (See Note 5).





NOTE 7.     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”).





Pursuant to the Agreement, the Apextalk Shareholders agreed to transfer to the Purchasers an aggregate of 413,736 shares of Apextalk Holdings common stock (the “Purchased Shares”), representing 90% of the Company’s issued and outstanding common stock, at an aggregated purchase price of $300,000 (the “Purchase Price”). After the final closing of the Stock Purchase, the Purchasers aggregately hold 90% of the Company’s issued and outstanding common stock.





In addition, subject to the terms and condition of the Agreement, the Company will transfer 70% of its equity interest in Apextalk to Global Apex and the Company will retain the remaining 30% equity interest in Apextalk. As of May 20, 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 June 2010.




8




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 March 31, 2010, Global Apex Holdings received $60,000 in cash payments from the Company related to the $2,000,000 common stocks issued to the outside investors during the three months end at March 31, 2010. The company recorded the $60,000 payments as other deposits until the close of the transactionwith Global Apex Holdings. (See Note 5).





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 March 31, 2009, $48,794 from the proceeds was loaned to the Company.





NOTE 8.     SUBSEQUENT EVENTS





On April 19, 2010, the Company effectuated a partial closing of the Share Transfer Agreement  dated December 16, 2009 by paying $1,750,000 of the Aggregate Purchase Price of $4,000,000 with Guangdong Yi An Investment Consulting Co., Ltd. (“Yi An”) .  As of May 20, 2010, the agreement between Yi An and the Company was not closed.





On December 16, 2009, we entered into a share transfer agreement (the “Share Transfer Agreement”) with Ms. Weiling Liang and Mr. Yu Chen. Each of Weiling Liang and Yu Chen respectively owns 78% and 22% of the issued and outstanding common shares of Guangdong Yi An Investment Consulting Co., Ltd (“Yi An”), a company organized under Chinese laws and engaged in financial consulting, investment advisory, management consulting, and business information consulting. Pursuant to the Share Transfer Agreement, Weiling Liang will transfer 29% of Yi An’s issued and outstanding common shares to us at an aggregate purchase price of $2,270,000, and Yu Chen will transfer 22% of Yi An’s issued and outstanding common shares to us at an aggregate purchase price of $1,730,000. The Share Transfer Agreement was approved by the Chinese government on March 9, 2010.On April 19, 2010, we effectuated a partial closing of the Share Transfer Agreement by paying $1,750,000 of the Aggregate Purchase Price to Weiling Liang and Yu Chen.





After we consummate a final closing of the Share Transfer Agreement, Yi An will become our 51% owned subsidiary and operating through Yi An, we will expand our current business operations by entering into the financial consulting business in Peoples’ Republic of China.





On April 23, 2010, the Company entered into the Second Amendment Agreement (the “Second Amendment”) with Champion Investors (China), Ltd. (the “Purchaser”) to amend certain Securities Purchase Agreement dated December 30, 2009 (the “Execution Date”) between the Company and the Purchaser. Under the Second Amendment, the Company agrees to extend the Payment Period for the remaining $2,000,000 to 150 days after the Execution Date. The Second Amendment does not amend any other provisions of the Securities Purchase Agreement.





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





Business Overview




We have integrated VoIP and wireless technology to develop various market driven applications. With its “Soft-switch”, Apextalk has developed a few unique applications with proprietary programming. To date, these applications have only been soft launched into the market by approaching our friends and business associates to test our services as opposed to heavily promoting our services to the public market.




Business Plan




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




9




1.
We are focusing on two segments of business: a) value added telecom service provider, and b) financial consulting service in Peoples’ Republic of China.For value added telecom business·We plan to partner with different local value-added service providers around the globe.  In addition to the US market, our strategy is to open up the burgeoning market place in the People’s Republic of China (“PRC”).  We will continue to reach out to potential candidates in the PRC, Hong Kong, and the Philippines to develop global business opportunities.We will continue to attract subscribers to sign up with our services through various marketing channels such as a referral program, online advertising, out-door sales teams going after telecom retail outlets, and also start developing the alliance and the joint venture program with overseas value-added telecom operators.  We expect the total cost of the marketing to substantially increase in 2010.For financial consulting service in Peoples’ Republic of China·We entered into an agreement to acquire 51% Guangdong Yi An Investment Consulting Company, Ltd, the transaction was approved by the Chinese government on March 9, 2010. Currently, we are in the process of finalizing the transaction.2.
We expect that Yi An will start to provide revenue and profits to us since the second quarter of 2010. This will bring us a new opportunity by entering into China’s emerging financial consulting services market.


RESULTS OF OPERATIONS





For ease of reading, Apextalk Holdings, Inc. is referred to as “we,” “Apextalk,” or the “Company” throughout this document. Apextalk is a holding company whose subsidiary operates in the communication services industry in the United States. You should read this discussion in conjunction with the consolidated financial statements, accompanying notes and management’s discussion and analysis of financial condition and results of operations included in our Quarterly Report on Form 10-Q for three months ended March 31, 2010. A reference to a “Note” in this section refers to the accompanying Notes to Consolidated Financial Statements.





The following table presents certain consolidated statement of operations information for the three months ended March 31, 2010 and 2009.  The discussion following the table is based on these results.





10




For the three months ended


For the three months endedMarch 31, 2010


March 31, 2009Revenue

$
3,730


$
3,126Cost of services


7,105



10,955Gross profit


(3,375
)


(7,829
)Operating Expenses:Payroll expenses


28,821



15,840Rent and utilities


6,000



1,335Legal & professional fees


36,489



48,414General and administrative


31,809



7,571Total Operating Expenses


103,119



73,160Loss from Operations before Income Taxes


(106,494
)


(80,989
)Provision for Income Tax


(1,588
)


(2,819
)Net Loss

$
(108,082
)

$
(83,808
)Loss per Share – Basic and Diluted

$
(0.11
)

$
(0.19
)Weighted average number of common shares outstanding

during the period  - Basic and Diluted


962,424



434,521





Revenue: Our revenue was generated by existing customers and signing up of new customers through our referral program and from our services rendered to business associates, friends and relatives of our officer and directors.  For the three months ended March 31, 2010, we generated $3, 730 in revenue, representing an increase of $604 or 19% compared to the revenue of $3,126 during the same period ended on March 31, 2009.   The increase of our revenue was mainly attributable to the recovery of the general economic conditions.





Cost of Services:Our cost of services includes expenses related to the purchase of communication usage fees from Apex Telecom, one of our shareholders.  Our cost of services were $7,105 for the three months ended March 31, 2010, compared to $10,955 for the same period ended March 31, 2009, representing a decrease of $3,850 or 35%. Our cost of services decreased because certain cost-cutting measures implemented by our management have taken into effect.





Payroll expenses: The payroll expenses were $28,821 for the three months ended March 31, 2010 and $15,840 for the same period ended March 31, 2009, representing an increase of $12,981 or 82%.  The increase was primarily due to the hiring of three additional employees to perform our daily operations during the first quarter of 2010.





Rent and utilities: The rent and utilities were $6,000 for the three months ended March 31, 2010, compared to $1,335 in the same period ended March 31, 2008, representing an increase of $4,665 or 349%. Our expenses for rent and utilities increased primarily because we increase the office space that we rent to meet our growing need for more office space. The rent expense for the three month ended March 31, 2010 and 2009  was $6,000 and $735, respectively.





General and Administrative Expenses: General and administrative expenses include depreciation, licenses, advertising, travel and entertainment expenses.  Our general and administrative expenses were $31, 809 for the three months ended March 31, 2010, compared to $7,571 in the same period ended March 31, 2009, representing an increase of $24, 238 or 320% which was primarily due to increased travel and other business-related expenditures.





Legal and professional fees: The legal and professional fees were $36,489 for the three months ended March 31, 2010 and $45,414 for the three months ended March 31, 2009, representing a decrease of $11,925 or 25%.  The decrease was primarily attributable to the higher amount of legal and other professional fees that we paid in the three months ended March 31, 2010 as compared to the same period ended March 31, 2009, to ensure our compliance with applicable securities laws and regulations and to maintain our public company status.





Liquidity and Capital Resources





11




As of March 31, 2010, we had $1,854,770 in cash, compared to $21,710 as of December 31, 2009.  This increase in cash was primarily due to net cash proceeds of $2,000,000 from the issuance of common stock during the first quarter of 2010.  On April 19, 2010, the Company effectuated a partial closing of the Share Transfer Agreement  dated December 16, 2009 by paying $1,750,000 of the Aggregate Purchase Price of $4,000,000 with Guangdong Yi An Investment Consulting Co., Ltd. (“Yi An”) .  As of May 20, 2010, the agreement between Yi An and the Company was not closed. We believe that we have sufficient funding to satisfy our cash requirements for the next twelve months.





Our net loss for the three months ended March 31, 2010 was $168,082.  Net cash used in the operating activities was $185,618 during the three months ended March 31, 2010 as compared to cash used in the operating activities of $46,020 for the three months ended March 31, 2009.  Cash used in the operating activities for the three months ended March 31, 2010 mainly consisted of net loss of $168,082 and  an increase in prepaid expenses of $22,000.




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





Revenue and Cost Recognition





The Company recognizes revenue on arrangements in accordance with FASB Accounting Standards Codification No. 605, Revenue Recognition.Revenue is recognized when amounts are earned and when the amount and timing of the revenue can be reasonably estimated. 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 Accounting Standards Codification No. 605, Revenue Recognition. Revenues from internet communication services are recognized in the period such services are used by the end user.





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 Financial Accounting Standards Board (FASB) Accounting Standards Codification No. 260, Earnings Per Share.  As of March 31, 2010 and 2009, there were no diluted shares outstanding.





Income Taxes





The Company accounts for income taxes under FASB Accounting Standards Codification No. 740, Income Taxes.Under FASB Accounting Standards Codification No. 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements 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 Accounting Standards Codification No. 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.





Allowance for Doubtful Accounts





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 one year terms. Delinquent account balances are written off after management has determined that the likelihood of collection is not probable. As of March 31, 2010 and December 31, 2009, the Company has recorded an allowance for doubtful accounts in the amounts of $1,125 and $2,423, respectively.




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Recent Accounting Pronouncements





In February 2010, the FASB issued update No. 2010-08 -- Technical Corrections to Various Topics. The amendments eliminate those inconsistencies and 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 did not have an impact on the company’s results of operations, financial position or liquidity.





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 first 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 Accounting Officer concluded that our disclosure controls and procedures were effective as of March 31, 2010.





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. Our management team will continue to evaluate our internal control over financial reporting in 2010 as we implement our Sarbanes Oxley Act testing.





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.








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





On January 20, 2010, we effectuated an initial closing of the Stock Purchase Agreement whereby we issued to the purchaser 416,667 shares of our common stock in exchange for $1,000,000 of the purchase price.
 
 On February 22, 2010, we 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 we issued to the purchaser 416,667 shares of our common stock.
 
 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





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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.RegistrantDate: May 24, 2010

By: /s/ Hui LiuHui LiuChief Executive Officer





Date: May 24, 2010

By: /s/ Shan LiuShan Liu

Chief Financial and Accounting Officer