RYVYL Inc. - Quarter Report: 2011 June (Form 10-Q)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2011
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission File Number 001-34294
ASAP EXPO INC.
(Exact name of small business issuer in its charter)
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Nevada
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22-3962936
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(State or other jurisdiction of incorporation)
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(I.R.S. Employer Identification No.)
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345 S. FIGUEROA ST. SUITE M09 LOS ANGELES, CA
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90071
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(Address of principal executive offices)
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(Zip Code)
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213-625-1200
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes T 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 T 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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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x
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Indicate by check mark whether the registrant is a shell company (as defined in 12b-2 of the Exchange Act) Yes o No T
As of August 12 2011, the registrant had 8,704,669 Shares of Common Stock (One Class), par value $0.001 per share, issued and outstanding.
ASAP EXPO INC.
__________________
Table of Contents
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Page
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3
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| PART I FINANCIAL INFORMATION |
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ITEM 1
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4
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ITEM 2
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13 | |
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ITEM 3
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16 | |
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ITEM 4
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16 | |
| PART II OTHER INFORMATION | ||
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ITEM 1
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17 | |
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ITEM 2
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17 | |
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ITEM 3
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17 | |
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ITEM 4
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17 | |
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ITEM 5
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17 | |
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ITEM 6
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17 | |
Unless otherwise indicated or the context otherwise requires, all references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” and the “Company” are to ASAP Expo Inc., a Nevada corporation.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. This Quarterly Report on Form 10-Q (“Report”) contains a number of forward-looking statements that reflect management’s current views and expectations with respect to our business, strategies, future results and events, and financial performance. All statements made in this Report other than statements of historical fact, including statements that address operating performance, the economy, events or developments that management expects or anticipates will or may occur in the future, including statements related to revenues, profitability, adequacy of funds from operations, and cash flows and financing are forward-looking statements. In particular, the words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” “will,” “can,” “plan,” “predict,” “could,” “future,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements and their absence does not mean that the statement is not forward-looking.
Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions and apply only as of the date of this Report. Our actual results, performance or achievements could differ materially from historical results as well as the results expressed in, anticipated or implied by these forward-looking statements.
For a more detailed discussion of some of the factors that may affect our business, results and prospects, see our Annual Report on Form 10-K for the year ended December 31, 2010 filed with the Securities and Exchange Commission on April 15, 2011, as well as various disclosures made by us in this Report and in our other reports we file with the Securities and Exchange Commission, including our periodic reports on Form 10-Q and current reports on Form 8-K. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ASAP EXPO, INC.
BALANCE SHEETS
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June 30,
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December 31,
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|||||||
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2011
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2010
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|||||||
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Unaudited
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||||||||
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ASSETS
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||||||||
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Current Assets
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||||||||
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Cash
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$ | 10,186 | $ | 10,026 | ||||
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Prepaid expenses and other receivables
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305 | 2,605 | ||||||
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Prepaid income taxes
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800 | 3,689 | ||||||
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Due from affiliated company
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509 | 509 | ||||||
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Total Current Assets
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11,800 | 16,829 | ||||||
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Property and equipment, net
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31,142 | 37,585 | ||||||
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Long-term Investment
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195,854 | 195,854 | ||||||
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Total Assets
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$ | 238,796 | $ | 250,268 | ||||
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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||||||||
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Current Liabilities
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||||||||
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Accounts payable and accrued expenses
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$ | 47,124 | $ | 12,623 | ||||
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Deferred Revenue
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500,000 | 500,000 | ||||||
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Capitalized Lease, current
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14,895 | 14,468 | ||||||
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Due to affiliated company
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118,451 | 110,102 | ||||||
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Total Current Liabilities
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680,470 | 637,193 | ||||||
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Long-term Liabilities
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||||||||
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Capitalized Lease, noncurrent
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14,322 | 23,101 | ||||||
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Convertible note, officers
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1,615,969 | 1,554,473 | ||||||
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Total Long-term Liabilities
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1,630,291 | 1,577,574 | ||||||
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Commitments and contingencies
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||||||||
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Stockholders' Deficit
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||||||||
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Common stock, $.001 par value, 45,000,000 shares authorized,
8,704,669 shares issued and outstanding at June 30, 2011 and December 31, 2010
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8,705 | 8,705 | ||||||
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Capital deficiency
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(1,126,292 | ) | (1,126,292 | ) | ||||
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Accumulated deficit
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(954,378 | ) | (846,912 | ) | ||||
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Total Stockholders' Deficit
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(2,071,965 | ) | (1,964,499 | ) | ||||
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Total Liabilities and Stockholders' Deficit
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$ | 238,796 | $ | 250,268 | ||||
The accompanying notes are an integral part of financial statements.
ASAP EXPO, INC.
STATEMENTS OF OPERATIONS
UNAUDITED
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Three Months Ended June 30,
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Six Months Ended June 30,
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|||||||||||||||
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2011
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2010
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2011
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2010
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Revenues:
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||||||||||||||||
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Management Fee
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$ | - | $ | 21,000 | $ | - | $ | 42,000 | ||||||||
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Total revenues
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- | 21,000 | - | 42,000 | ||||||||||||
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Operating expenses:
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General and administrative
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30,967 | 37,151 | 52,054 | 77,769 | ||||||||||||
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Payroll and related benefits
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4,751 | 93,379 | 8,277 | 187,864 | ||||||||||||
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Total operating expenses
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35,718 | 130,530 | 60,331 | 265,633 | ||||||||||||
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(Loss) from operations
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(35,718 | ) | (109,530 | ) | (60,331 | ) | (223,633 | ) | ||||||||
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Other Income (Expense)
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||||||||||||||||
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Interest expense
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(23,484 | ) | (28,316 | ) | (47,134 | ) | (57,284 | ) | ||||||||
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Total other (Expense)
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(23,484 | ) | (28,316 | ) | (47,134 | ) | (57,284 | ) | ||||||||
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(Loss) before income taxes
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(59,202 | ) | (137,846 | ) | (107,465 | ) | (280,917 | ) | ||||||||
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Income taxes
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- | - | - | 800 | ||||||||||||
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Net (loss)
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$ | (59,202 | ) | $ | (137,846 | ) | $ | (107,465 | ) | $ | (281,717 | ) | ||||
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Net (loss) per common share
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||||||||||||||||
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Basic
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$ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.03 | ) | ||||
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Diluted
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$ | (0.01 | ) | $ | (0.02 | ) | $ | (0.01 | ) | $ | (0.03 | ) | ||||
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Weighted average common shares outstanding
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||||||||||||||||
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Basic
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8,704,669 | 8,704,669 | 8,704,669 | 8,704,669 | ||||||||||||
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Diluted
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8,704,669 | 8,704,669 | 8,704,669 | 8,704,669 | ||||||||||||
The accompanying notes are an integral part of financial statements.
ASAP EXPO, INC.
STATEMENTS OF CASH FLOWS
UNAUDITED
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Six Months Ended June 30,
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||||||||
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2011
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2010 | |||||||
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Cash flows from operating activities:
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Net loss
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$ | (107,465 | ) | $ | (281,717 | ) | ||
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Adjustments to reconcile net loss to net cash used in operating activities:
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Depreciation expense
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6,443 | 6,443 | ||||||
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Changes in operating assets and liabilities:
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||||||||
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Prepaid expenses and other receivables
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2,300 | 5,730 | ||||||
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Prepaid income taxes
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2,889 | - | ||||||
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Accounts payable and accrued expenses
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34,500 | 66,502 | ||||||
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Net cash (used in) operating activities
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(61,333 | ) | (203,042 | ) | ||||
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Cash flows from financing activities:
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||||||||
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Payments on auto loan
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(8,352 | ) | (6,825 | ) | ||||
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Advance from affiliated company
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8,349 | (151,038 | ) | |||||
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Proceeds from borrowings on line-of-credit from officers
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72,850 | 428,685 | ||||||
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Repayments of borrowings on line-of-credit from officers
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(11,354 | ) | (56,316 | ) | ||||
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Net cash provided by financing activities
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61,493 | 214,506 | ||||||
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Net increase in cash
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160 | 11,464 | ||||||
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Cash, beginning of period
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10,026 | 5,785 | ||||||
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Cash, end of period
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$ | 10,186 | $ | 17,249 | ||||
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Supplemental disclosures of cash flow information:
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||||||||
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Cash paid during the period
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||||||||
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Interest
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$ | 111 | $ | (36 | ) | |||
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Income taxes
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$ | - | $ | 800 | ||||
The accompanying notes are an integral part of financial statements.
ASAP EXPO, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
ASAP Expo, Inc. (“ASAP Expo” or the “Company” or “We” or “Our”) d.b.a. ASAP International Holdings Inc., was incorporated on April 10, 2007 under the laws of the State of Nevada.
Prior to December 31, 2008, ASAP Expo was a wholly owned subsidiary of China Yili Petroleum Company, a Nevada corporation (“China Yili”), formerly named ASAP Show, Inc (“ASAP”).
On December 31, 2008, China Yili declared a dividend of 100% of the outstanding shares of ASAP Expo to its shareholders. The dividend declaration caused ASAP Expo to spin-off from China Yili.
ASAP Expo provides investment banking, management consulting and global trading services for Chinese companies. The mission is to bridge the China and the Western world.
The Investment Banking Services division helps Chinese companies list on the public trading markets in the United States of America (“USA”) or Europe. Management Consultant division assists our own portfolio companies to meet Western management standards and enhance its value in the public market arena. Global Business Services division provides consulting to entities seeking business opportunities in the USA, Europe, and China.
UNAUDITED INTERIM FINANCIAL INFORMATION
These unaudited interim consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (the “GAAP”) for interim financial reporting and the rules and regulations of the Securities and Exchange Commission that permit reduced disclosure for interim periods. Therefore, certain information and footnote disclosures normally included in financial statements prepared in accordance with the GAAP have been condensed or omitted. In the opinion of management, all adjustments of a normal recurring nature necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented have been made. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for the year ending December 31, 2011.
These unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes for the year ended December 31, 2010, included in the Company’s 2010 Annual Report on Form 10-K.
GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
At June 30, 2011, the Company has a capital deficiency of $1,126,292 resulted from the accumulated deficit of its parent company that was transferred to the Company upon spin-off, negative working capital of $669,470 and a lack of profitable operating history. The Company hopes to increase revenues from its financial advisory services business. In the absence of significant increases in revenues, the Company intends to fund operations through additional debt and equity financing arrangements. The successful outcome of future activities cannot be determined at this time and there are no assurances that if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results.
The Company's success is dependent upon numerous items, certain of which are the successful growth of revenues from its services and its ability to obtain new customers in order to achieve levels of revenues adequate to support the Company's current and future cost structure, for which there is no assurance. Unanticipated problems, expenses, and delays are frequently encountered in establishing and maintaining profitable operations. These include, but are not limited to, competition, the need to develop customer support capabilities and market expertise, technical difficulties, market acceptance and sales and marketing. The failure of the Company to meet any of these conditions could have a materially adverse effect on the Company and may force the Company to reduce or curtail operations. No assurance can be given that the Company can achieve or maintain profitable operations.
The Company believes it will have adequate cash to sustain operations until it achieves sustained profitability. However, until the Company has a history of maintaining revenue levels sufficient to support its operations and repay its working capital deficit, the Company may require additional financing. Sources of financing could include capital infusions, additional equity financing or debt offerings. There can be no assurance that funding will be available on acceptable terms, if at all, or that such funds, if raised, would enable the Company to achieve or sustain profitable operations.
These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the classification of liabilities that might result from the outcome of these uncertainties.
USE OF ESTIMATES
The preparation of financial statements in conformity with the GAAP 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 revenues and expenses during the reporting period. Actual results could differ from those estimates.
REVENUE RECOGNITION
Accounting Standards Codification (‘ASC”) 605, Revenue Recognition which outlines the basic criteria that must be met to recognize revenue and provide guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with Securities and Exchange Commission. Management believes the Company's revenue recognition policies conform to ASC 605.
Revenues include consulting fees and management fee.
Consulting Fees
The Consulting fees are recognized when earned. Consulting fees subject to refund are recorded as deferred revenue until the project is completed and the fees are no longer refundable.
Management Fee
The management fee is recognized when earned.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In April 2010, the FASB issued the amendment to ASC Topic 718, “Compensation – Stock Compensation”, which provides clarification that an employee share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trade should not be considered to contain a condition that is not a market, performance, or service condition. As a result, an entity would not classify such an award as a liability if it otherwise qualifies as equity. This topic was effective for periods beginning on or after December 15, 2010. Adoption of this topic had no material effect on the Company’s consolidated financial statements.
NOTE 2 – PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
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June 30,
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December 31,
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|||||||
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2011
|
2010
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|||||||
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Automobile
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$
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64,431
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$
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64,431
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||||
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64,431
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64,431
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|||||||
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Less: Accumulated depreciation
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(33,289
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)
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(26,846
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)
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||||
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$
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31,142
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$
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37,585
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|||||
NOTE 3 – LONG-TERM INVESTMENT
In September 2009, the Company made a long-term investment in ASAP Hotel, Inc. (“ASAP Hotel”) to purchase 19.84% of equity interest for $200,000. The equity method has been used for this investment for the six months ended June 30, 2011. The balance for the investment including earnings from the investment as of June 30, 2011 was $195,854.
ASAP Hotel had no activities for the six months ended June 30, 2011.
The following table provides the summary of balance sheet information for ASAP Hotel as of June 30, 2011:
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ASAP HOTEL, INC.
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||||||||
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June 30, 2011
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December 31, 2010
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|||||||
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Total assets
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$
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5,379,103
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$
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5,379,103
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||||
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Total liabilities
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-
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-
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||||||
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Net assets
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5,379,103
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5,379,103
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||||||
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ASAP Expo's 19.84% ownership
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1,067,284
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1,067,284
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||||||
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Ending balance of investment account
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195,854
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195,854
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||||||
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Difference
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871,430
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871,430
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||||||
The difference of $871,430 was mainly due to the discount when ASAP Expo purchased the 19.84% of ownership in ASAP Hotel. ASAP Hotel’s net asset was $5,400,000 and ASAP Expo invested $200,000 (instead of $1,071,430) to purchase the 19.84% of ownership in ASAP Hotel.
NOTE 4 – DEFERRED REVENUE
Consulting fees received for providing advisory services are subject to refund until the client becomes publicly traded in the United States or Europe, thus are recorded as deferred revenue until the fees are no longer refundable.
At June 30, 2011, the deferred revenue was $500,000 for the advisory services being provided to ASAP Hotel for its planned public listing in the US.
NOTE 5 - CAPITAL LEASE
In 2008, the Company entered into a lease arrangement to acquire a vehicle. Future minimum payments and the obligations due under the capital lease are as follows:
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For the Year Ended December 31:
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||||
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2011
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$
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8,007
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||
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2012
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16,015
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|||
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2013
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6,673
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|||
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Less amount representing interest at 5% per annum
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(1,478
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)
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||
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29,217
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||||
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Less Current Portion
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(14,895
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)
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||
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Long Term Portion
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$
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14,322
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||
NOTE 6 – DUE TO AFFILIATED COMPANY
ASAP Hotel advanced the Company $100,000 for the purpose of acquiring used vehicles for ASAP Hotel and exporting them to China. ASAP Hotel’s China WOFE is allowed to import up to eight used vehicles into China. At June 30, 2011 no automobiles had been purchased for, or exported to, ASAP Hotel. In addition, ASAP Expo owed ASAP Hotel $18,451 at June 30, 2011 for over reimbursed travel expenses. The advances were non interest bearing and are payable on demand.
At June 30, 2011, ASAP Expo was owed $509 by Friendship Partners LLC in which ASAP Expo’s officers are also members. The advance was non interest bearing and are payable on demand.
NOTE 7 - CONVERTIBLE NOTE, OFFICERS
On January 1, 2011, the Company obtained a convertible note from Frank Yuan, the Company's Chief Executive Officer, and his family which provides for borrowings up to a maximum of $1,800,000 and is due on demand. The note carries an interest rate of 6.0% per annum and is convertible into the Company's equity securities at a conversion price of $0.04 given a written notice of the contemplated conversion describing in reasonable detail the material terms of such equity securities and of the issue is provided. Prior to obtaining the convertible note, the Company had an unsecured revolving line-of-credit from Frank Yuan and certain of his family members which is due upon demand and provided for borrowings up to a maximum of $1,800,000, as amended.
The balance of convertible note as of June 30, 2010 was $1,615,969; the accrued and unpaid interest on the note was $47,023 which is included in accounts payable and accrued expenses. The balance of line-of-credit as of December 31, 2010 was $1,554,473 including unpaid interest of $160,620 which was transferred into principal at December 31, 2010.
NOTE 8 - INCOME TAXES
As of June 30, 2011, the Company had Federal net tax operating loss carry forwards of approximately $955,178 available to offset future taxable income. The carry forwards expire in varying amounts through 2031.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at June 30, 2011 and 2010 are presented below:
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Three Months Ended March 31,
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||||||||
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2011
|
2010
|
|||||||
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Deferred tax assets:
|
||||||||
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Net operating loss carryforwards
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$
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43,127
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$
|
112,220
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||||
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Total deferred tax assets
|
43,127
|
112,220
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||||||
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Less: valuation allowance
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(43,127
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)
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(112,220
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)
|
||||
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Net deferred tax assets
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$
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-
|
$
|
-
|
||||
NOTE 9 - SHAREHOLDERS' DEFICIT
Common Stock
At June 30, 2011, the Company has 45,000,000 shares of common stock authorized and 8,704,669 shares issued and outstanding at par value $0.001 per share.
Options and Warrants
The Company does not have a stock option plan or any options or warrants issued and outstanding as of June 30, 2011.
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Operating Lease
Starting June 15, 2010, the Company leases office space under a five-year lease term agreement with Shenzhen New World Group. The lease provides for monthly lease payments of $0. Up to November 2010, the Company subleased part of its office space to one of its affiliated companies for monthly lease payment of $2,000 and recorded it as management fee.
NOTE 11 – SUBSEQUENT EVENT
On July 12, 2010, the Company refunded $300,000 of the advisory services fee back to ASAP Hotel as ASAP Hotel has terminated its plan of public listing in the USA. The remaining $200,000 of advanced advisory services fee will also be refunded.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this quarterly report for the period ended March 31, 2011. This quarterly report contains certain forward-looking statements and the Company's future operating results could differ materially from those discussed herein. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.
OVERVIEW
ASAP Expo provides investment banking, management consulting and global trading services to Chinese companies. The mission is to bridge the China and the Western world.
The Investment Banking Services division helps Chinese companies list on the public trading markets in the USA or Europe. In 2008, ASAP Expo entered the Germany Frankfurt Exchange and established its presence in the Deutsche Boerse Open Market. The products we created are capable of proving our clients, especially small and median size companies, the opportunity to access international capital markets. Our mission is to provide our clients, including start ups and early stage developments with the services that will assist them in the “first step” in becoming a public company.
Management Consultant division assists our own portfolio companies to meet Western management standards and enhance its value in the public market arena.
Global Business Services division provides consulting to entities seeking business opportunities in the U.S, Europe, and China. Its Global Trade Services (GTS) provides the following services:
1) Resources for buyers.
2) Quality inspection and assurance.
3) Logistics, including ocean or air shipment, and door to door service.
4) Finance assistance including opening Letter of Credits (LC) for the buyer to purchase the merchandise.
5) LDP (Landed Duty Paid) quotations and payment terms for all the merchandise.
RESULTS OF OPERATIONS
Three and Six Months Ended June 30, 2011 and 2010
Revenue
During the three and six months ended June 30, 2010, the Company provided office space and staff to help ASAP Hotel start up its business operations, accordingly, charged a management fee of $21,000 and $42,000, respectively. There was no management fee income for the three and six months ended June 30, 2011.
Operating Expenses
General and administrative expenses consist primarily of administrative personnel costs, facilities expenses, and travel expenses.
General and administrative expenses decreased by $6,184, or 16.6%, to $30,967 for the three months ended June 30, 2011, as compared to $37,151 for the same period last year. For the six months ended June 30, 2011, general and administrative expenses decreased by $25,715 or 33.1% to $52,054 compared to $77,769 for the same period last year. The decrease in general and administrative expenses was primarily due to the Company cut the spending.
Payroll and related benefits decreased by approximately $88,628 or 94.9% to $4,751 for the three months ended June 30, 2011 from $93,379 for the same period last year. For the six months ended June 30, 2011, payroll and related benefits increased by $179,587 or 95.6% to $82,77 compared to $187,864 for the same period last year. The decrease was primarily because the Company stopped payroll in 2011 as a way to cut cost while in the second quarter and the first half of 2010, the Company was still paying employees in the United States and overseas.
Interest Expense
Interest expense decreased to $23,484 during the three months ended June 30, 2011 from $47,134 for the same period last year, and decreased to $47,134 during the six months ended June 30, 2011 from $57,284 for the same period last year. This decrease is due to lower interest rate of 6% versus 10% in the same period last year.
Income Taxes
Income taxes for the six months ended June 30, 2011 were $0 compared to $800 for the same period last year. The decrease was due to the Company has terminated its registration in California state since January 1, 2011, thus is no longer subject to the $800 minimum California state tax.
Net Loss
The Company recorded a net loss of $59,202 and $107,465 for the three and six months ended June 30, 2011, respectively, as compared to a net loss of $137,846 and $281,717 for the same periods last year, respectively. The decrease in the net loss was mainly due to the decrease in operating expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital deficit was $668,670 at June 30, 2011, as compared to $620,364 at December 31, 2010. During the next twelve months, ASAP Expo will focus on its investment banking, management consulting and global trading services to generate additional revenue. With the net revenue from its services, and continuing support from its major shareholders to provide a convertible note, management believes ASAP Expo will have enough net working capital to sustain its business for another 12 months.
The Company has a convertible note (the "Yuan Note") from Frank Yuan and his family, which is due on demand, and provides for borrowings up to a maximum total of $1,800,000. The Yuan Note carries an interest rate of 6.0% per annum and is convertible into the Company's equity securities at a conversion price of $0.04 given a written notice of the contemplated conversion describing in reasonable detail the material terms of such equity securities and of the issue is provided. The total balance as of June 30, 2011 was $1,615,969, and the accrued and unpaid interest was $47,023.
The forecast of the period of time through which ASAP Expo’s financial resources will be adequate to support its operations is a forward-looking statement that involves risks and uncertainties. ASAP Expo’s actual funding requirements may differ materially as a result of a number of factors, including unknown expenses associated with the cost of providing investment banking, management consulting and global trading services.
ASAP Expo has no commitments to make capital expenditures for the fiscal year ending December 31, 2011.
Over the next two to five years, ASAP Expo plans to utilize a combination of internally generated funds from operations and potential debt and equity financing to fund its long-term growth.
The Report of the Company's Independent Registered Public Accounting Firm on our December 31, 2010 financial statements includes an explanatory paragraph stating that the Company has suffered recurring losses from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. The financial statements do no include any adjustments that might result from the outcome of this uncertainty.
At the present time, we have received no commitments for the funds required for our planned capital investments. Obtaining those funds, if we can do so, will require that we issue substantial amounts of equity securities or incur significant debts. We believe that the expected return on those investments will justify the cost. However, our plan, if accomplished, will significantly increase the risks to our liquidity.
CRITICAL ACCOUNTING POLICIES
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in the our financial statements and the accompanying notes. The amounts of assets and liabilities reported on our balance sheet and the amounts of revenues and expenses reported for each of our fiscal periods are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition, stock based compensation and the valuation of deferred taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of the financial statements:
Revenue Recognition
Accounting Standards Codification (“ASC”) 605, "Revenue Recognition" outlines the basic criteria that must be met to recognize revenue and provide guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with Securities and Exchange Commission. Management believes the Company's revenue recognition policies conform to ASC 605.
Revenues include amounts earned under consulting fee and management fees.
Consulting Fees
The Company acted as a consultant for international brands to enter the China market. For this service, the Company charged international brands a consultant fee. The fee is based upon hours serviced and an upfront retainer fee. The Company also receives a portion of royalty revenue from the brand for sales above and beyond a pre-specified minimum guarantee. The Company recognizes its Consultant fees and Royalty revenue when they are received.
In addition, the Company provides advisory services for companies wanting to become publicly traded and raise capital in the United States or Europe. Consulting fees received for providing advisory services are subject to refund until the client becomes publicly traded in the United States or Europe, thus are recorded as deferred revenue until the fees are no longer refundable.
Management Fee
The management fee is recognized when earned.
Income Taxes
The Company accounts for income taxes under ASC 740, "Income Taxes." Under 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. Management provides a valuation allowance for significant deferred tax assets when it is more likely than not that such asset will not be recovered.
New Accounting Pronouncements
In May 2011, the FASB issued ASU 2011-04 Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU is the result of joint efforts by the FASB and International Accounting Standards Board (“IASB”) to develop a single, converged fair value framework — that is, converged guidance on how (not when) to measure fair value and on what disclosures to provide about fair value measurements. Thus, there are few differences between this ASU and its international counterpart, IFRS 13. While this ASU is largely consistent with existing fair value measurement principles in U.S. GAAP, it expands Topic 820’s existing disclosure requirements for fair value measurements and makes other amendments. Many of these amendments were made to eliminate unnecessary wording differences between U.S. GAAP and IFRSs. However, some could change how the fair value measurement guidance in Topic 820 is applied. This ASU is effective for interim and annual periods beginning after December 15, 2011 for public entities. This ASU is not expected to have a material impact on the Company’s consolidated financial statements.
In June 2011, the FASB issued ASU 2011-05 Comprehensive Income (Topic 220): Presentation of Comprehensive Income, which revises the manner in which entities present comprehensive income in their financial statements. This ASU removes the presentation options in Topic 220 and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. This ASU does not change the items that must be reported in other comprehensive income. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. Early adoption is permitted. This ASU does not require incremental disclosures in addition to those required by Topic 250 or any transition guidance. This ASU is not expected to have a material impact on the Company’s consolidated financial statements except for a revision of presentation of comprehensive income.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls and procedures include components of our internal control over financial reporting and, as such, are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Management’s assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met (see the section below in this Item 3 entitled Limitations on the Effectiveness of Internal Controls ).
Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) that occurred during the period covered by this Report, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Internal Controls
Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ASAP Hotel, Frank Yuan, and Investors reached a global settlement on June 23, 2011. All parties have dismissed the lawsuits and cross complaints with prejudice. Consequently, ASAP Expo will pay back the $500,000 advanced consultant fees to ASAP Hotel. Because ASAP Hotel will no longer pursue an IPO, no fee can be earned. The shares that investor’s received will be destroyed by ASAP Hotel. ASAP Hotel will have only two shareholders as originally established – Frank Yuan 80% and Expo 20%. All other shares will be destroyed and cancelled.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. REMOVED AND RESERVED
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS
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31.1
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32.1
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101.INS
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XBRL Instance Document*
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101.SCH
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XBRL Taxonomy Extension Schema Document*
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document*
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document*
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document*
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document*
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* Furnished electronically with this filing
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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ASAP EXPO, INC.
(Registrant)
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Date: August 15, 2011
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By:
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/s/ Frank S. Yuan
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Frank S. Yuan,
Chairman, Chief Executive Officer
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EXHIBIT INDEX
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Exhibit No.
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Description
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Location
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31.1
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Filed herewith.
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32.1
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Filed herewith.
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101.INS
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XBRL Instance Document
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Furnished electronically with this filing | ||
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101.SCH
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XBRL Taxonomy Extension Schema Document
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Furnished electronically with this filing | ||
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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Furnished electronically with this filing | ||
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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Furnished electronically with this filing | ||
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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Furnished electronically with this filing | ||
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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Furnished electronically with this filing |