RYVYL Inc. - Quarter Report: 2011 March (Form 10-Q)
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
|
(MARK ONE)
|
|
|
x
|
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended March 31, 2011
|
|
|
OR
|
|
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
|
|
For the transition period from ______________ to ______________
|
|
Commission file number: 001-51554
ASAP EXPO, INC.
(Exact name of small business issuer as specified in its charter)
|
Nevada
|
22-3962936
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification Number)
|
|
9436 Jacob Lane, Rosemead, CA
|
91770
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Issuer's telephone number: (626) 279-1800
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 o No x
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. (Check one):
|
Large accelerated filer o
|
Accelerated filer o
|
|
Non-accelerated filer o
|
Smaller reporting company x
|
|
(Do not check if a smaller reporting company)
|
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
Number of shares outstanding of the issuer's classes of common equity, as of March 31, 2011: 8,704,669 Shares of Common Stock (One Class)
Transitional Small Business Disclosure Format: Yes o No x
TABLE OF CONTENTS
|
Page
|
||
|
PART I Financial Information
|
||
|
Item 1.
|
3
|
|
|
3
|
||
|
4
|
||
|
5
|
||
|
6
|
||
|
Item 2.
|
12
|
|
|
Item 3.
|
15
|
|
|
PART II Other Information
|
||
|
Item 1.
|
16
|
|
|
Item 2.
|
16
|
|
|
Item 3.
|
16
|
|
|
Item 4.
|
16
|
|
|
Item 5.
|
16
|
|
|
Item 6.
|
16
|
|
|
17
|
||
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
|
ASAP EXPO, INC.
|
||||||||
|
BALANCE SHEETS
|
||||||||
|
March 31,
|
December 31,
|
|||||||
|
2011
|
2010
|
|||||||
|
Unaudited
|
||||||||
|
ASSETS
|
||||||||
|
Current Assets
|
||||||||
|
Cash
|
$ | 5,519 | $ | 10,026 | ||||
|
Prepaid expenses and other receivables
|
305 | 2,605 | ||||||
|
Prepaid income taxes
|
- | 3,689 | ||||||
|
Due from affiliated company
|
509 | 509 | ||||||
|
Total Current Assets
|
6,333 | 16,829 | ||||||
|
Property and equipment, net
|
34,363 | 37,585 | ||||||
|
Long-term Investment
|
195,854 | 195,854 | ||||||
|
Total Assets
|
$ | 236,550 | $ | 250,268 | ||||
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
|
Current Liabilities
|
||||||||
|
Accounts payable and accrued expenses
|
$ | 23,530 | $ | 12,623 | ||||
|
Deferred Revenue
|
500,000 | 500,000 | ||||||
|
Capitalized Lease, current
|
14,589 | 14,468 | ||||||
|
Due to affiliated company
|
111,735 | 110,102 | ||||||
|
Total Current Liabilities
|
649,854 | 637,193 | ||||||
|
Long-term Liabilities
|
||||||||
|
Capitalized Lease, noncurrent
|
20,619 | 23,101 | ||||||
|
Convertible note, officers
|
1,578,839 | 1,554,473 | ||||||
|
Total Long-term Liabilities
|
1,599,458 | 1,577,574 | ||||||
|
Commitments and contingencies
|
||||||||
|
Stockholders' Deficit
|
||||||||
|
Common stock, $.001 par value, 45,000,000 shares authorized,
|
||||||||
|
8,704,669 shares issued and outstanding at March 31, 2011 and December 31, 2010
|
8,705 | 8,705 | ||||||
|
Capital deficiency
|
(1,126,292 | ) | (1,126,292 | ) | ||||
|
Accumulated deficit
|
(895,175 | ) | (846,912 | ) | ||||
|
Total Stockholders' Deficit
|
(2,012,762 | ) | (1,964,499 | ) | ||||
|
Total Liabilities and Stockholders' Deficit
|
$ | 236,550 | $ | 250,268 | ||||
The accompanying notes are an integral part of financial statements.
|
ASAP EXPO, INC.
|
||||||||
|
STATEMENTS OF OPERATIONS
|
||||||||
|
UNAUDITED
|
||||||||
|
Three Months Ended March 31,
|
||||||||
|
2011
|
2010
|
|||||||
|
Revenues:
|
||||||||
|
Management Fee
|
$ | - | $ | 21,000 | ||||
|
Total revenues
|
- | 21,000 | ||||||
|
Operating expenses:
|
||||||||
|
General and administrative
|
21,087 | 40,618 | ||||||
|
Payroll and related benefits
|
3,526 | 94,485 | ||||||
|
Total operating expenses
|
24,613 | 135,103 | ||||||
|
(Loss) from operations
|
(24,613 | ) | (114,103 | ) | ||||
|
Other Income (Expense)
|
||||||||
|
Interest expense
|
(23,650 | ) | (28,968 | ) | ||||
|
Total other (Expense)
|
(23,650 | ) | (28,968 | ) | ||||
|
(Loss) before income taxes
|
(48,263 | ) | (143,071 | ) | ||||
|
Income taxes
|
- | 800 | ||||||
|
Net (loss)
|
$ | (48,263 | ) | $ | (143,871 | ) | ||
|
Net (loss) per common share
|
||||||||
|
Basic and diluted
|
$ | (0.01 | ) | $ | (0.02 | ) | ||
|
Weighted average common shares outstanding
|
||||||||
|
Basic and diluted
|
8,704,669 | 8,704,669 | ||||||
The accompanying notes are an integral part of financial statements.
|
ASAP EXPO, INC.
|
||||||||
|
STATEMENTS OF CASH FLOWS
|
||||||||
|
UNAUDITED
|
||||||||
|
Three Months Ended March 31,
|
||||||||
|
2011
|
2010 | |||||||
|
Cash flows from operating activities:
|
||||||||
|
Net loss
|
$ | (48,263 | ) | $ | (143,871 | ) | ||
|
Adjustments to reconcile net loss to net cash
|
||||||||
|
used in operating activities:
|
||||||||
|
Depreciation expense
|
3,222 | 3,222 | ||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Prepaid expenses and other receivables
|
2,300 | 5,730 | ||||||
|
Prepaid income taxes
|
3,689 | 800 | ||||||
|
Accounts payable and accrued expenses
|
10,908 | 34,125 | ||||||
|
Net cash (used in) operating activities
|
(28,144 | ) | (99,994 | ) | ||||
|
Cash flows from financing activities:
|
||||||||
|
Payments on auto loan
|
(2,362 | ) | (2,256 | ) | ||||
|
Advance from affiliated company
|
1,633 | (53,972 | ) | |||||
|
Proceeds from borrowings on line-of-credit from officers
|
35,112 | 161,200 | ||||||
|
Repayments of borrowings on line-of-credit from officers
|
(10,746 | ) | (2,659 | ) | ||||
|
Net cash provided by financing activities
|
23,637 | 102,313 | ||||||
|
Net (decrease) increase in cash
|
(4,507 | ) | 2,319 | |||||
|
Cash, beginning of period
|
10,026 | 5,785 | ||||||
|
Cash, end of period
|
$ | 5,519 | $ | 8,104 | ||||
|
Supplemental disclosures of cash flow information:
|
||||||||
|
Cash paid during the period
|
||||||||
|
Interest
|
$ | 464 | $ | 500 | ||||
|
Income taxes
|
$ | - | $ | - | ||||
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 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 U.S, 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 March 31, 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 $620,364 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:
|
March 31,
|
December 31,
|
|||||||
|
2011
|
2010
|
|||||||
|
Automobile
|
$ | 64,431 | $ | 64,431 | ||||
| 64,431 | 64,431 | |||||||
|
Less: Accumulated depreciation
|
(30,068 | ) | (26,846 | ) | ||||
| $ | 34,363 | $ | 37,585 | |||||
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 three months ended March 31, 2011. The balance for the investment including earnings from the investment as of March 31, 2011 was $195,854.
ASAP Hotel had no activities for the three months ended March 31, 2011.
The following table provides the summary of balance sheet information for ASAP Hotel as of March 31, 2011:
|
ASAP HOTEL, INC.
|
||||||||
|
March 31, 2011
|
December 31, 2010
|
|||||||
|
Total assets
|
$ | 5,379,103 | $ | 5,379,103 | ||||
|
Total liabilities
|
- | - | ||||||
|
Net assets
|
5,379,103 | 5,379,103 | ||||||
|
ASAP Expo's 19.84% ownership
|
1,067,284 | 1,067,284 | ||||||
|
Ending balance of investment account
|
195,854 | 195,854 | ||||||
|
Difference
|
871,430 | 871,430 | ||||||
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 March 31, 2011, the deferred revenue was $500,000 for the advisory services provided to one of its affiliated companies.
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:
|
For the Year Ended December 31:
|
||||
|
2011
|
$ | 14,680 | ||
|
2012
|
16,015 | |||
|
2013
|
6,673 | |||
|
Less amount representing interest at 5% per annum
|
(2,160 | ) | ||
| 35,208 | ||||
|
Less Current Portion
|
(14,589 | ) | ||
|
Long Term Portion
|
$ | 20,619 | ||
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 March 31, 2011 no automobiles had been purchased for, or exported to, ASAP Hotel. In addition, ASAP Expo owed ASAP Hotel $11,735 at March 31, 2011 for over reimbursed travel expenses. The advances were non interest bearing and are payable on demand.
At March 31, 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 March 31, 2010 was $1,578,839; the accrued and unpaid interest was $23,186. The balance of line-of-credit as of December 31, 2010 was $1,554,473 including capitalized accrued and unpaid interest of $160,620.
NOTE 8 - INCOME TAXES
In connection with the spin-off, the tax attributes associated with parent company was not retained by the Company. As of March 31, 2011, the Company had Federal net tax operating loss carry forwards of approximately $887,117 available to offset future taxable income. The carry forwards expire in varying amounts through 2030.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at March 31, 2011 and 2010 are presented below:
|
Three Months Ended March 31,
|
||||||||
|
2011
|
2010
|
|||||||
|
Deferred tax assets:
|
||||||||
|
Net operating loss carryforwards
|
$ | 19,225 | $ | 57,310 | ||||
|
Total deferred tax assets
|
19,225 | 57,310 | ||||||
|
Less: valuation allowance
|
(19,225 | ) | (57,310 | ) | ||||
|
Net deferred tax assets
|
$ | - | $ | - | ||||
NOTE 9 - SHAREHOLDERS' DEFICIT
Common Stock
At March 31, 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 March 31, 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
The Company has evaluated subsequent events for potential recognition and disclosure through the date the financial statements were issued.
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 Months Ended March 31, 2011 and 2010
Revenue
During the three months ended March 31, 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. There was no management fee income for the three months ended March 31, 2011.
Operating Expenses
General and administrative expenses consist primarily of administrative personnel costs, facilities expenses, and travel expenses.
General and administrative expenses decreased by $19,531, or 48.1%, to $21,087 for the three months ended March 31, 2011, as compared to $40,618 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 $90,959 or 96.3% to $3,526 for the three months ended March 31, 2011 from $94,485 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 first quarter of 2010, the Company was still paying employees in the United States and overseas.
Interest Expense
Interest expense decreased to $23,650 during the three months ended March 31, 2011 from $28,968 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 three months ended March 31, 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 $48,263 for the three months ended March 31, 2011 as compared to a net loss of $143,871 for the same period last year. 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 $643,521 at March 31, 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 March 31, 2011 was $1,578,839, and the accrued and unpaid interest was $23,186.
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 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 will be effective for periods beginning on or after December 15, 2010. The Company has not elected to early adopt this topic and is evaluating the impact that this topic will have on the Company’s financial statements.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures. The Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of the Company's disclosure controls and procedures. Based upon that evaluation, the CEO and CFO concluded that as of March 31, 2010 our disclosure controls and procedures were effective in timely alerting them to the material information relating to the Company required to be included in the Company's periodic filings with the SEC, subject to the various limitations on effectiveness set forth below under the heading, "LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS," such that the information relating to the Company, required to be disclosed in SEC reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company's management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure." (b) Changes in internal control over financial reporting. There has been no change in the Company's internal control over financial reporting that occurred during the fiscal quarter ended March 31, 2010 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.
LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS The Company's management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. An internal control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. 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 also is 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, and/or the degree of compliance with the policies or procedures may deteriorate.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Even though there is no legal proceeding for ASAP Expo Inc., as of now, the relationship between ASAP Expo Inc. and ASAP Hotel Management Corp (“ASAP Hotel”) may be reviewed in the future because of the current legal proceedings between Mr. Frank Yuan, CEO of ASAP Expo and ASAP Hotel, and ASAP Hotel’s minority shareholder’s group since ASAP Expo owns 19.84% of ASAP Hotel.
On February 19, 2010, Mr. Yuan and ASAP Hotel was served with a complaint by minority investors Case Number BC432064 at the California Superior Court for rescinding agreement and investment, fraud, breach of contract, etc. On March 23, 2010, Yuan and ASAP Hotel filed a cross-complaint against Ms. Xu, Rump Board and former employee Mr. Ian YiZhe Zhang for same allegations.
On September 20, 2010 the Honorable Judge Barbara Meiers issued Right to Attach ruling on the Company ASAP Hotel assets. On November 19, 2010 the Honorable Judge Rita Miller granted a preliminary injunction on behalf of plaintiffs against Frank Yuan and ASAP Hotel to maintain the current status quo. On December 6, 2010 Yuan and Hotel filed a notice of appeal for the mandatory injunction which is automatically stayed during appeal.
Management believes that if ASAP Hotel were forced to liquidate, the 19.84% ownership share of ASAP Hotel would be worth 0.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
|
31.1
|
|
|
32.1
|
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.
|
ASAP EXPO, INC.
(Registrant)
|
|||
|
Date: May 23, 2011
|
By:
|
/s/ Frank S. Yuan
|
|
|
Frank S. Yuan,
Chairman, Chief Executive Officer
|
|||