RYVYL Inc. - Quarter Report: 2014 September (Form 10-Q)

asapexpo10q093014.htm

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 September 30, 2014

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)

345 S. FIGUEROA ST. SUITE M09 LOS ANGELES, CA	90071
(Address of principal executive offices)	(Zip Code)

Issuer's telephone number: (213) 625-1200

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 x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x 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. (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 November 14, 2014: 14,445,363 Shares of Common Stock (One Class)

Transitional Small Business Disclosure Format: Yes o No x

Table of Contents

TABLE OF CONTENTS

		Page
PART I Financial Information

Item 1.	Condensed Financial Statements	3
	Condensed Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013	3
	Condensed Statements of Operations for the Three and Nine Months Ended September 30, 2014 and September 30, 2013 (unaudited)	4
	Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2014 and September 30, 2013 (unaudited)	5
	Notes to Condensed Financial Statements (unaudited)	6

Item 2.	Management's Discussion and Analysis or Plan of Operation	10
Item 3.	Controls and Procedures	13

PART II Other Information

Item 1.	Legal Proceedings	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	14
Item 3.	Defaults Upon Senior Securities	14
Item 4.	Submission of Matters to a Vote of Security Holders	14
Item 5.	Other Information	14
Item 6.	Exhibits	14
Signatures		15

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ASAP EXPO, INC.
CONDENSED BALANCE SHEETS

	September 30,			December 31,
	2014			2013
	(Unaudited)

ASSETS
Current Assets
Cash	$	66,880		$	205,967
Prepaid income taxes		800			800
Due from affiliated company		43,290			9,527
Total Current Assets		110,970			216,294

Furniture and equipment, net		32,178			21,665

Total Assets	$	143,148		$	237,959

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
Accounts payable and accrued expenses	$	276,849		$	262,192
Auto Loan, current		4,905			4,905
Income tax payable		119,725			-
Due to affiliated company		65,550			245,740
Total Current Liabilities		467,029			512,837

Long-term Liabilities
Auto Loan, noncurrent		13,490			17,169
Convertible note, officers		439,025			676,505
Total Long-term Liabilities		452,515			693,674

Commitments and contingencies

Stockholders' Deficit
Common stock, $.001 par value, 45,000,000 shares authorized, 14,445,363 and 14,445,363 shares issued and outstanding at September 30, 2014 and December 31, 2013		14,445			14,445
Accumulated earnings (deficit)		(790,841	)		(982,997	)
Total Stockholders' Deficit		(776,396	)		(968,552	)

Total Liabilities and Stockholders' Deficit	$	143,148		$	237,959

The accompanying notes are an integral part of these condensed financial statements

Table of Contents

ASAP EXPO, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2014			2013			2014			2013

Revenues:
Commission income	$	47,500		$	-		$	48,125		$	967
Consulting fee		365,032			840,000			1,246,532			1,447,962
Management Fee		-			15,000			-			15,000
Total revenues		412,532			855,000			1,294,657			1,463,929

Cost of Sales
Consulting expense		166,525			406,000			615,025			629,800
Total cost of sales		166,525			406,000			615,025			629,800

Gross Profit		246,007			449,000			679,632			834,129

General and administrative		65,271			45,686			302,300			88,091

Income from operations		180,736			403,314			377,332			746,038

Other Income (Expense)
Interest expense		(7,376	)		(16,875	)		(22,846	)		(59,153	)
Total other (Expense)		(7,376	)		(16,875	)		(22,846	)		(59,153	)

Income before income taxes		173,360			386,439			354,486			686,885
Income taxes		42,477			45,621			162,330			45,621

Net Income	$	130,883		$	340,818		$	192,156		$	641,264

Net income per common share
Basic	$	0.01		$	0.03		$	0.01		$	0.06
Diluted	$	0.01		$	0.01		$	0.01		$	0.02

Weighted average common shares outstanding
Basic		14,445,363			12,697,189			14,445,363			10,088,593
Diluted		25,421,000			29,390,288			25,421,000			26,781,692

The accompanying notes are an integral part of these condensed financial statements

Table of Contents

ASAP EXPO, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	Nine Months Ended September 30,
	2014			2013
Operating Activities:
Net Income	$	192,156		$	641,264
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense		4,331			1,635
Changes in operating assets and liabilities:
Accounts payable and accrued expenses		14,656			516,141
Income tax payable		119,725			-

Net cash provided by operating activities		330,868			1,159,040

Investing Activities:
Acquisitions of property and equipment		(14,844	)		-
Due from affiliated companies		(33,743	)		(99,236	)

Net cash (used in) investing activities		(48,587	)		(99,236	)

Financing Activities:
Payments on auto loan		(3,679	)		(1,227	)
Repayment to affiliated company		(180,210	)		-
Proceeds from borrowings on convertible note from officers		454,250			159,570
Repayments of borrowings on convertible note from officers		(691,729	)		(817,344	)

Net cash (used in) financing activities		(421,368	)		(659,001	)

Net (decrease) / increase in cash		(139,087	)		400,803

Cash, beginning of period		205,967			8,752

Cash, end of period	$	66,880		$	409,555

Supplemental disclosures of cash flow information:
Cash paid during the period
Interest	$	-		$	-
Income taxes	$	42,605		$	-

The accompanying notes are an integral part of these condensed financial statements

Table of Contents

ASAP EXPO, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

ASAP Expo, Inc. (“ASAP Expo” or the “Company”) d.b.a. ASAP International Holdings, was incorporated on April 10, 2007 under the laws of the State of Nevada.

ASAP Expo is a holding company that operates commercial real estate consulting for Chinese Institutions and high net worth individuals. Our mission is to be the bridge between China and the Western world.

ASAP Commercial Real Estate division advisory provides Chinese institutional and high net worth individual home office with all real estate related services focusing on hospitality including acquisition advisory, financing, asset management, and strategic repositioning. Our international reach, scope of services and dedication to achieving the best results ensures our clients gain competitive advantage.

In the hospitality acquisition side, we represent buyers at all stages of the process, from advice on selection and location to opportunity sourcing, due diligence and secure the debt financing. Our clients have the advantage of our local market knowledge and contacts in capital markets around the globe, as well as our deep experience in real estate strategy and management. This means a broader value perspective on property utilization prospects—not to mention a finger on the pulse of real-time market conditions at any moment.

Prior to July 2011, the investment banking services division was the core business of ASAP Expo. ASAP Expo helped small and medium sized business raise funds and promote business through capital markets.

In July 2011, ASAP Expo transitioned its core business to providing real estate advisory services from investment banking advisory services for Chinese companies.

Unaudited Interim Financial Information

These unaudited interim financial statements have been prepared in accordance with 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 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, 2014.

The balance sheets and certain comparative information as of December 31, 2013 are derived from the audited financial statements and related notes for the year ended December 31, 2013 (“2013 Annual Financial Statements”), included in the Company’s 2013 Annual Report on Form 10-K. These unaudited interim financial statements should be read in conjunction with the 2013 Annual Financial Statements.

BASIS OF PRESENTATION

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

COMPRENSIVE INCOME

Comprehensive income-The company has adopted Accounting Standards Update 2011-05, Comprehensive Income (Topic 220); Presentation of Comprehensive Income. For the nine months ended September 30, 2014 and 2013 comprehensive income equaled net income, as the company had no other comprehensive income. As of September 30, 2014 and December 31, 2013, accumulated other comprehensive income was 0.

GOING CONCERN

The accompanying unaudited financial statements have been prepared assuming that the Company will continue as a going concern.

Table of Contents

At September 30, 2014, the Company has an accumulated deficit of $790,841, which mainly resulted from the accumulated deficit of its former parent company that was transferred to the Company upon its spin-off from the parent company, and a lack of profitable operating history. The Company hopes to increase revenues from its real estate business and 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 fund, 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.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash, prepaid expenses and other receivables, accounts payable, accrued liabilities and due to/from affiliated company. The fair value of these financial instruments approximate their carrying amounts reported in the balance sheets due to the short term maturity of these instruments.

Fair Value Measurements

ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value, establishes a three-level valuation hierarchy for disclosure of fair value measurement and enhances disclosure requirements for fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company’s adoption of fair value measurements and disclosures did not have a material impact on the financial statements and financial statement disclosures.

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.

Table of Contents

Revenues are mainly consulting fees. The consulting fees are recognized when earned. Consulting fees from investment banking services and real estate advisory services that are subject to refund are recorded as deferred revenue until the project is completed and the fees are no longer refundable.

INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred income taxes are recognized for temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, net of operating loss carry forwards and credits, by applying enacted statutory tax rates applicable to future years. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is not more likely than not that some portion or all of the deferred tax assets will be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

EARNINGS PER SHARE

A basic earnings per share is computed by dividing net income to common stockholders by the weighted average number of shares outstanding for the year. Dilutive earnings per share include the effect of any potentially dilutive debt or equity under the treasury stock method, if including such instruments is dilutive.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (ASU2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU2014-09 recognized at the date of adoption (which includes additional footnote disclosures). Early adoption is not permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40), Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern (ASU 2014-15). The guidance in ASU 2014-15 sets forth management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a going concern as well as required disclosures. ASU 2014-15 indicates that, when preparing financial statements for interim and annual financial statements, management should evaluate whether conditions or events, in the aggregate, raise substantial doubt about the entity's ability to continue as a going concern for one year from the date the financial statements are issued or are available to be issued. This evaluation should include consideration of conditions and events that are either known or are reasonably knowable at the date the financial statements are issued or are available to be issued, as well as whether it is probable that management's plans to address the substantial doubt will be implemented and, if so, whether it is probable that the plans will alleviate the substantial doubt. ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods and annual periods thereafter. Early application is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s financial statements

NOTE 2 - PROPERTY AND EQUIPMENT

Equipment consists of the following:

	September 30,			December 31,
	2014			2013
	(Unaudited)
Furniture & Fixtures	$	14,844		$	-
Automobile		24,527			24,527
		39,371			24,527
Less: Accumulated depreciation		(7,193	)		(2,862	)
	$	32,178		$	21,665

Table of Contents

NOTE 3 - DUE FROM (TO) AFFILIATED COMPANIES

At September 30, 2014 and December 31, 2013, ASAP Expo was owed $43,290 and $9,527 from affiliated companies in which ASAP Expo’s officers are also owners and officers. The advance has no written note, is non-interest bearing and is payable on demand to the company and expected to be paid within one year.

At September 30, 2014, and December 31, 2013, ASAP Expo owed $65,550 and $245,740 to affiliated companies in which ASAP Expo’s officers are also owners and officers, the company plans to repay within one year.

NOTE 4 - AUTO LOAN

In June 2013, the Company entered into a zero down and 0% interest financing arrangement to acquire a vehicle. Future minimum payments and the obligations due under the auto loan are as follows:

For the Year Ended December 31:	(Unaudited)
2014		1,226
2015		4,905
2016		4,905
2017		4,905
2018		2,454
		18,395
Less Current Portion		(4,905	)
Long Term Portion	$	13,490

NOTE 5 - CONVERTIBLE NOTE, OFFICERS

On January 1, 2011, the Company obtained a convertible note from Frank Yuan, the Company's Chief Executive Officer (“CEO”), 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. On July 29, 2013, $229,760 of convertible note and interest was converted into 5,744,000 shares of common stock.

The balance of the convertible note as of September 30, 2014 was $439,025; the accrued interest on the note was $264,728 which is included in accounts payable and accrued expenses. The balance of convertible note as of December 31, 2013 was $676,505 and the accrued interest on the note was $241,882.

NOTE 6 - INCOME TAXES

Income tax payable is $ 119,725 as of September 30, 2014 and $ 0 as of December 31, 2013.

Uncertain Tax Positions

Interest associated with unrecognized tax benefits are classified as income tax and penalties are classified in selling, general and administrative expenses in the statements of operations and comprehensive income.

For the three months ended September 30, 2014 and 2013, the Company had no unrecognized tax benefits and related interest and penalties expenses. Currently, the Company is not subject to examination by major tax jurisdictions.

NOTE 7 - SHAREHOLDERS' DEFICIT

Common Stock

At September 30, 2014, the Company has 45,000,000 shares of common stock authorized and 14,445,363 shares issued and outstanding at par value $0.001 per share.

On July 29, 2013, 5,744,000 shares of common stock were issued to an officer upon conversion of $200,000 of convertible note and $29,760 of accrued interest.

NOTE 8 – CONCENTRATION

For the nine months ended September 30, 2013, three customers accounted for 46%, 29% and 24% of the Company’s consulting fee income. The loss of any of these customers could have a material adverse effect on the Company’s financial position and results of operations.

Table of Contents

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the audited financial statements and the related notes thereto included elsewhere in this annual report for the period ended December 31, 2013. This annual 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 (“ASAP” or “The Company” or “Our” or “We”) mission is to be the bridge between China and the Western world. ASAP is a holding company that assists Chinese institutional and high net worth individuals with acquisition advisory and asset management of U.S. hotels.

Our investors include AVIC International USA, Junson Capital, Urban Commons, Sky Harbor Management, Shenzhen New World, American Curvet, and USA Heritage.

From August 2010 until now, our group has provided consulting services regarding purchasing 20 hotels primarily in California, Georgia and Michigan. Hotel brands include Marriott, Hilton, Westin, Doubletree by Hilton, Four Points by Sheraton, and Holiday Inn. We are one of the most active hotel buyers in the market.

ASAP believes we will continue this growth for the next couple of years, taking advantage of current below replacement cost assets with reasonable cap rates and value-add opportunities in the current U.S. hotel market.

RESULTS OF OPERATIONS

Revenues

Since the Company’s primary business is based upon potential transactions in real estate, the Company is subject to variance in revenues due to investors sentiment towards real estate.

We believe our services revenue is typically seasonal. Historically, during normal economic conditions, this seasonality has caused revenue, operating income, net income and cash flows from operating activities to be lower in the first six months of the year and higher in the second half of the year. We believe the concentration of earnings and cash flows in the last six months of the year has historically been due to an industry-wide focus of clients to complete transactions towards the end of the calendar year. However, this seasonality did not occur in 2007 or 2008 during the disruptions facing all global capital markets, and in particular the U.S. commercial real estate markets, and this historical pattern of seasonality may or may not continue.

Substantially all of our revenues are in the form of consulting fees collected from our clients, usually negotiated on a transaction-by-transaction basis. The company’s consulting fees primarily consist of revenue derived from transaction commission received from acquisition advisory. The company earns the consulting fees by sourcing the deal, underwriting financials, coordinating due diligence on all contracts, recommending lenders, hiring third party property management companies, and negotiating franchise agreements. Another revenue source for the company includes asset management fees, which consist of supervision of daily, weekly, and monthly operating results of the hotel, review of capital expenditure requests, communication with lenders, negotiating personal and real property tax assessments, and most importantly, oversight on brand relations.

The Company’s clients include concentration of 3 main clients. Our concentration of clients does provide a risk for revenue growth. The Company has established strong relationships with our clients. Our business and client relationships, and our culture and philosophy are firmly centered on putting the clients’ interests first. We have been building strong reputation in the hospitality industry which is bringing several new potential clients. We expect to have steady revenue stream from our 3 major clients while building new client base for future revenue growth. We believe that our product offerings, asset management services, client diversification, expertise in a property types and national platform have the potential to create a sustainable revenue stream within the U.S. commercial real estate sector.

Table of Contents

During the three and nine months ended September 30, 2014, the Company earned consulting fee of $365,032 and $1,246,532, respectively, as compared to consulting fee of $840,000 and $1,447,962 for the same periods last year. The decrease in consulting fee is mainly because the Company closed hotel acquisition deals at lower fees in the quarter and nine months ended September 30, 2014. During the three and nine months ended September 30, 2014, the Company earned commission income of $47,500 and $48,125, respectively, as compared to commission income of $0 and $967 for the same periods last year. The increase in commission income is mainly due to a real estate deal closed in July 2014. During the three and nine months ended September 30, 2014, the Company earned management fee of $0 as compared to management fee of $15,000 for the same periods last year from providing hotel management service.

Cost of Sales

In the course of providing real estate advisory services and asset management services, the Company pays consulting fees for finding properties and other services that facilitate the closing of deals.

Cost of sales consisting mainly consulting expense, is primarily the result of the commissions and other incentive compensation incurred directly related to acquisition advisory services. Therefore, the fluctuation in revenue will directly impact the cost of sales.

For the three and nine months ended September 30, 2014 and 2013, the Company incurred consulting expense of $166,525 and $615,025, respectively for providing advisory services in real estate acquisition deals as compared to $406,000 and $629,800 incurred in the same periods last year. The lower consulting expense in 2014 was mainly due to the lower consulting fees charged to the clients..

Operating Expenses

General and administrative (“G&A”) expenses consist primarily of administrative personnel costs, facilities expenses, and professional fee expenses.

For the three months ended September 30, 2014, general and administrative expenses increased by $19,585 or 42.9% to $65,271 as compared to $45,686 for the same period last year. The increase in the third quarter of 2014 was mainly due to higher ad and promotion expense, higher office expense resulting from moving office and higher professional fees. For the nine months ended September 30, 2014, general and administrative expenses increased by $214,209 or 243% to $302,300 as compared to $88,091 for the same period last year. The increase in the first nine months of 2014 was primarily due to higher personnel costs as the Company hired new employees and put certain officer on payroll starting in September 2013.

Interest Expense

Interest expense decreased to $7,376 during the three months ended September 30, 2014 from $16,875 for the same period last year, and decreased to $22,846 in the nine months ended September 30, 2014 from $59,153 for the same period last year. This decrease was due to the lower average convertible note balances. The conversion of $200,000 convertible note into common stocks in July 2013 also contributed to the decrease in average convertible note balances.

Net Income

The Company recorded a net income of $130,883 for the three months ended September 30, 2014 as compared to a net income of $340,818 for the same period last year. The decrease in net income was mainly due to the lower gross profit, higher G&A expenses, offset by lower interest expense and income tax provision.

The Company had a net income of $192,156 for the nine months ended September 30, 2014 as compared to a net income of $641,264 for the same period last year. The decrease in net income was mainly due to lower gross profit, higher G&A expenses, higher income tax provision as a result of no more net operating loss carryforward and including prior year under-accrued income tax in current period, offset by lower interest expense.

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital deficit was $356,059 at September 30, 2014, as compared to a working capital deficit of $296,543 at December 31, 2013. During the next twelve months, ASAP Expo will focus on its real estate transactions 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.

Table of Contents

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 September 30, 2014 was $439,025, and the accrued interest was $264,728.

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 real estate advisory, investment banking, and management consulting services.

The Company has no commitments to make capital expenditures for the fiscal year ending December 31, 2014.

Over the next two to five years, The Company 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, 2013 financial statements includes an explanatory paragraph stating that the Company has suffered recurring losses from operations and has an accumulated stockholders' deficit, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

At the present time, The Company has received no commitments for the funds required for its planned capital investments. Obtaining those funds, if the Company can do so, will require that it issues substantial amounts of equity securities or incur significant debts. The Company believes that the expected return on those investments will justify the cost. However, the Company’s plan, if accomplished, will significantly increase the risks to its 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 are mainly 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.

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.

Table of Contents

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

ITEM 3. 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.

Table of Contents

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Management currently is not aware of any legal matters or pending litigation that would have a significant effect on the Company’s financial statements as of September 30, 2014.

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	Certifications of the Chief Executive Officer Under Section 302 of the Sarbanes-Oxley Act
32.1	Certifications of the Chief Executive Officer Under Section 906 of the Sarbanes-Oxley Act
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema Document*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document*

* Furnished electronically with this filing

Table of Contents

SIGNATURES

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: November 14, 2014	By:	/s/ Frank S. Yuan
		Frank S. Yuan, Chairman, Chief Executive Officer