RYVYL INC.
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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(MARK ONE)
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x
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2013
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OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ___________ to ___________
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Commission file number:
001-34294
ASAP EXPO INC.
(Exact name of registrant as specified in its charter)
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Nevada
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22-3962936
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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9436 Jacob Lane, Rosemead, CA 91770
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91770
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(Address of principal executive offices)
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(Zip Code)
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(310)266-6890
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value per share
(Title of Class)
Over The Counter Bulletin Board (OTCBB)
(Name of exchange on which registered)
Indicate by check mark if registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
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No
x
Indicate by check mark if registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes
o
No
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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
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No
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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date file required to be submitted and posted pursuant to Rule 405 of Regulations S-T (Section232.405 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
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No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes
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No
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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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Check one:
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on June 30, 2013, computed by reference to the closing price of that date, was $76,727.
On April 15, 2014, the registrant had 14,445,363 shares of Common Stock outstanding
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
o
No
x
ASAP
Expo
Inc.
TABLE OF CONTENTS
to Annual Report on Form 10-K
for the Fiscal Year Ended December 31, 2013
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PART I
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Item 1
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4
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Item 1A
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5
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Item 2
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8
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Item 3
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8
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Item 4
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8
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PART II
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Item 5
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9
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Item 6
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9
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Item 7
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12
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Item 8
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12
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Item 8A
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12
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Item 8B
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13
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PART III
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Item 9
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14
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Item 10
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15
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Item 11
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15
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Item 12
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15
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Item 13
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15
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PART IV
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Item 14
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16
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18
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FORWARD-LOOKING STATEMENTS
Except for historical information, the following annual report on Form 10-K (“Annual Report”) contains forward-looking statements based upon current expectations that involve certain risks and uncertainties. Such forward-looking statements within the meaning of Section 27a of the Securities Act of 1933, as amended, and Section 21e of the Securities Exchange Act of 1934, as amended, include statements regarding, among other things, and specifically in the sections entitled "Description of Business" and "Management's Discussion and Analysis or Plan of Operations," or otherwise incorporated by reference into this document contain "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995).. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “plan”, “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found in this Annual Report under the sections entitled “Description of Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under the section herein entitled “Risk Factors” and matters described in this Annual Report generally. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Annual Report will in fact occur as projected.
In this Annual Report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to “common shares” refer to the common shares in our capital stock. As used in this Annual Report, the terms “we,” “us,” “our” and the “Company” mean ASAP Expo Inc. unless otherwise indicated.
ASAP Expo, Inc. (“ASAP Expo” or the “Company” or “We” or “Our”) 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 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.
EMPLOYEES
As of December 31, 2013, ASAP Expo employed 6 full-time employees, one of them is classified as executive officer. The Company believes that relations with its employees are good.
COMPETITORS
According to the management’s best information, there are currently a limited number of similar investment consulting and commercial real estate firms in the market who focuses on similar Chinese clients, but, in the future, there might be other new players that enter into the business and compete with us, despite the intellectual and financial capital required.
The following risk factors include, among other things, cautionary statements with respect to certain forward-looking statements, including statements of certain risks and uncertainties that could cause actual results to vary materially from the future results referred to in such forward-looking statements.
GOVERNMENT REGULATION
We are subject to all applicable laws, policies and regulations that govern the financial guarantee industry in China, including those adopted by China’s central bank, the People’s Bank of China (“PBOC”), which sets monetary policy and, together with the State Administration of Foreign Exchange (“SAFE”), foreign-exchange policies. According to the 1995 Central Bank law, the State Council maintains oversight of PBOC policies.
Regulations were recently promulgated by State Development and Reform Commission, or SDRC, and SAFE, that require registration with, and approval from, PRC government authorities in connection with direct or indirect offshore investment activities by individuals who are PRC residents and PRC corporate entities. These regulations may apply to the Company’s future offshore or cross-border acquisitions, as well as to the equity interests in offshore companies held by the Company’s PRC shareholders who are considered PRC residents. The Company intends to make all required applications and filings and will require the shareholders of the offshore entities in the Company’s corporate group who are considered PRC residents to make the application and filings as required under these regulations and under any implementing rules or approval practices that may be established under these regulations. However, because these regulations are relatively new and lacking implementing rules or reconciliation with other approval requirements, it remains uncertain how these regulations and any future legislation concerning offshore or cross-border transactions will be interpreted and implemented by the relevant government authorities.
The approval criteria by SDRC agencies for outbound investment by PRC residents are not provided under the relevant SDRC regulations. Also, the criteria for registration with SAFE agencies, and whether such registration procedure is discretionary, are still uncertain as the criteria, if any, are not provided for under relevant SDRC regulations. Furthermore, there is a lack of relevant registration precedents for us to determine the registration criteria in practice. Accordingly, the Company cannot provide any assurances that we will be able to comply with, qualify under or obtain any registration or approval as required by these regulations or other related legislations. Further, we cannot assure you that our shareholders would not be considered PRC residents, given uncertainties as to what constitutes a PRC resident for the purposes of the regulation, or that if they are deemed PRC residents, they would (or would be able to) comply with the requirements. Our failure or the failure of our PRC resident shareholders to obtain these approvals or registrations may restrict our ability to acquire a company outside of China or use our entities outside of China to acquire or establish companies inside of China, which could negatively affect our business and future prospects.
As a U.S. public company, we are also subject to Federal and state securities laws.
TAX IMPLICATIONS OF THE COMPANY’S BUSINESS
Taxes on profits earned on our affiliated China companies are calculated in accordance with taxation principles currently effective in the PRC. We expect that the Chinese government will continue its stable financial policy, move forward with its reform of its tax system, and continue to emphasize financial and economic efficiency. The essential aim of the tax policy of China is to sustain current stable economic and social development pace. Specifically, in terms of the reform of the tax collection policy, the principles underlying such reform include simplifying the tax system, expanding the tax foundation, lowering the tax rate, and implementing a strict collection system. These principles are aimed at immediate and efficient economic development, the development of science and technology, and economic usage of energy and resources. We expect that the Add-Value Tax system will be continued in China.
WE ARE SUBJECT TO UNITED STATES GOVERNMENT REGULATIONS WHICH COULD ADVERSELY AFFECT THE COMPANY'S BUSINESS.
The primary source of income of the Company's Global Trading Service Division is from overseas apparel exporters who are willing to exhibit at its trade shows and participate in buying trips. Apparel imports into the United States are heavily regulated by the United States government. If the United States government imposes higher tariffs, increases quotas or imposes limitations on quantities of imports, it will adversely affect the Company's business. Fewer foreign apparel exporters will participate in the Company's events if they are limited in exporting to the United States.
WE ARE SUBJECT TO FOREIGN GOVERNMENT REGULATIONS WHICH COULD ADVERSELY AFFECT THE COMPANY'S BUSINESS.
The primary source of income of the Company's Global Trading Service Division is from overseas apparel exporters who are willing to exhibit at its trade shows and participate in buying trips. Foreign governments may advise their exporters to sell merchandise to countries other than the United States to balance their export concentration. Such policies could adversely affect the Company's trade show exhibitor revenue because foreign exporters will promote their business by following their own government's policies and incentives.
LIMITED OPERATING HISTORY
Until February 28, 2009, the Company operated a business consisting of organizing trade shows and events. The Company abandoned this line of business in March of 2009 and the Company entered the investment consulting business full time. Accordingly, there is a limited relevant operating history upon which an evaluation of the Company’s prospects and future performance can be based. In mid-2012, the Company switched its business direction to be a consultant company to assist Chinese Institution and high net individuals acquire U.S. hotels and asset management role after acquired. Because the Company’s markets are relatively new and constantly changing, the Company may need to change its business model frequently.
LIMITED PUBLIC MARKET FOR THE COMPANY’S COMMON STOCK
There is currently a limited public market for the shares of the Company’s common stock. There can be no assurances that such limited market will continue or that any shares of the Company’s common stock may be sold without incurring a loss. The market price of the Company’s common stock may not necessarily bear any relationship to the Company’s book value, assets, past operating results, financial condition or any other established criteria of value, and may not be indicative of the market price for its common stock in the future. Further, the market price for the Company’s common stock may be volatile depending on a number of factors, including business performance, industry dynamics, news announcements or changes in general economic conditions.
LOW-PRICED STOCKS
The Company’s common stock is currently listed for trading on the OTC Bulletin Board, which is generally considered to be a less efficient market than markets such as NASDAQ or other national exchanges, and which make it more difficult for the Company’s shareholders to conduct trades. It may also make it more difficult for the Company to obtain future financing. Further, the Company’s securities are subject to the “penny stock rules” adopted pursuant to Section 15 (g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The penny stock rules apply to non-NASDAQ companies whose common stock trades at less than $5.00 per share or which have tangible net worth of less than $5,000,000 ($2,000,000 if the company has been operating for three or more years). Such rules require, among other things, that brokers who trade “penny stock” to persons other than “established customers” complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade “penny stocks” because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. In the event that the Company remains subject to the “penny stock rules” for any significant period, there may develop an adverse impact on the market, if any, for the Company’s securities. Because the Company’s securities are subject to the “penny stock rules”, investors will find it more difficult to dispose of the Company’s securities. Further, for companies whose securities are traded in the over-the-counter market, it is more difficult to obtain accurate quotations and to obtain coverage for significant news events because major wire services, such as the Dow Jones News Service, generally do not publish press releases about such companies.
NO DIVIDENDS
The Company has not paid any dividends on its common stock to date and there are no plans for paying dividends on its common stock in the foreseeable future. The Company intends to retain earnings, if any, to provide funds for the execution of its business plan. The Company does not intend to declare or pay any dividends in the foreseeable future. Therefore, there can be no assurance that holders of common stock will receive any additional cash, stock or other dividends on their shares of common stock until the Company has funds, which our board of directors determines can be allocated to dividends.
INTERNAL POLITICAL RISKS
Changes in laws and regulations, or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on the Company’s business, results of operations and financial condition. Under its current leadership, the Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. There is no assurance, however, that the Chinese government will continue to pursue these policies, or that it will not significantly alter these policies from time to time without notice. In addition, the Chinese government could enact laws which restrict or prohibit the Company from conducting its surety and loan guarantees.
RISKS RELATED TO LIMITATIONS ON THE LIABILITY OF OUR DIRECTORS TO OUR SHAREHOLDERS
Our articles of incorporation provide, as permitted by governing Nevada law, that our directors shall not be personally liable to our stockholders for monetary damages for breach of fiduciary duty as a director, with certain exceptions. Our bylaws require us to provide mandatory indemnification of directors to the fullest extent permitted by Nevada law, except for matters arising under the securities laws of the United States. Further, we may elect to adopt forms of indemnification agreements to cover directors and officers. These provisions and agreements may discourage shareholders from bringing suit against a director for breach of fiduciary duty and may reduce the likelihood of derivative litigation brought by shareholders on behalf of us against a director.
RISKS ASSOCIATED WITH PAYMENT SECURITIES
To the extent the Company receives Payment Securities as payment for the performance of investment banking services, the financial status of the Company will be affected by the volatility of these securities for as long as they are held by the Company. You may lose money on your investment in the Company if the value of the Payment Securities declines. The risks affecting the value of the Payment Securities are described below:
MARKET RISK
Stock prices are volatile. Market risk refers to the risk that the value of Payment Securities in the Company’s portfolio may decline due to daily fluctuations in the securities markets generally. The Company’s financial performance will change periodically based on many factors that may generally affect the stock market, including fluctuation in interest rates, national and international economic conditions and general equity market conditions. In a declining stock market, stock prices for all companies (including those in the Company’s portfolio) may decline, regardless of their long-term prospects.
SMALL COMPANY RISK
The Company may hold Payment Securities of smaller companies. Stocks of smaller companies may have more risks than those of larger companies. In general, smaller companies have less experienced management teams, serve smaller markets, and find it more difficult to obtain financing for growth or potential development than larger companies. Due to these and other factors, small companies may be more susceptible to market downturns, and their stock prices may be more volatile than those of larger companies.
BUSINESS AND SECTOR RISK
From time to time, a particular set of circumstances may affect a particular industry or certain companies within an industry, while having little or no impact on other industries or other companies within the industry. For instance, economic or market factors; regulation or deregulation; and technological or other developments may negatively impact all companies in a particular industry. To the extent the Company invests heavily in a particular industry that experiences such a negative impact, the Company’s portfolio will be adversely affected.
INTEREST RATE RISK
Increases in interest rates typically lower the present value of a company’s future earnings stream. Since the market price of a stock changes continuously based upon investors’ collective perceptions of future earnings, stock prices will generally decline when investors anticipate or experience rising interest rates.
ISSUER RISK
The value of an individual security or particular type of security can be more volatile than the market as a whole and can perform differently from the value of the market as a whole.
WE DEPEND ON THE RELIABILITY OF OUR SERVICES.
As a member of the service industry, the Company is dependent upon the reliability of its consulting advice. There is no guarantee that the Company will be able to provide reliable services. Even though the Company's is a unique niche services firm, there is no guarantee that other investment advisory firms will not copy or follow the Company's unique services. If a competitor starts to copy our unique services, which is possible, management believes that it will face more intense competition than before.
WE DEPEND UPON KEY MEMBERS OF MANAGEMENT, THE LOSS OF ANY OF WHOM WOULD NEGATIVELY IMPACT OUR BUSINESS.
The implementation of our business plan relies on key members of the management team and sales, marketing, and finance personnel. There is no guarantee that these employees will continue to work for the Company. In addition, there is no guarantee that the Company will be able to replace these employees with personnel of similar caliber should they not be able to work, or decide not to work for the Company.
WE HAVE AN ACCUMULATED DEFICIT OF $968,552 AS OF DECEMBER 31, 2013 AND HAVE RECEIVED AN OPINION FROM OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REGARDING OUR ABILITY TO CONTINUE AS A GOING CONCERN.
We have history of operating losses. As of December 31, 2012, we had an accumulated deficit of $625,055. These losses have resulted principally from expenses incurred for general and administrative, payroll and interest. 2011 is the first year we have profit. No assurances can be given as to whether we will continue to be profitable.
Our independent registered public accounting firm has added an explanatory paragraph to their report of independent registered public accounting firm issued in connection with the financial statements for the year ended December 31, 2013 relative to the substantial doubt about our ability to continue as a going concern. Our ability to obtain additional funding will determine our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
OUR BUSINESS AND GROWTH WILL SUFFER IF WE ARE UNABLE TO HIRE AND RETAIN KEY PERSONNEL THAT ARE IN HIGH DEMAND.
Our future success depends on our ability to attract and retain highly skilled personnel. In general, qualified individuals are in high demand in China, and there are insufficient experienced personnel to fill the demand. If we are unable to successfully attract or retain the personnel we need to succeed, we will be unable to implement our business plan.
WE HAVE LIMITED BUSINESS INSURANCE COVERAGE.
The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products, and do not, to our knowledge, offer business liability insurance. As a result, we do not have any business liability insurance coverage for our operations. Moreover, while business disruption insurance is available, we have determined that the risks of disruption and cost of the insurance are such that we do not require it at this time. Any business disruption, litigation or natural disaster might result in substantial costs and diversion of resources.
The Company’s executive offices in the United States are leased from one of its executives and located at 9436 Jacob Lane, Rosemead, CA 91770. Its telephone number is (310) 266-6890. The Company currently leases approximately 2,800 square feet of office space from a related staff with no rent payment on month to month basis.
NONE
NONE
The Company's common stock began trading on the Over-the-Counter Bulletin Board ("OTC-BB") on January 20, 2010 under the symbol "ASAE". As of April 15, 2014, there has been limited trading volume.
HOLDERS OF RECORD
On December 31, 2013, the Company's issued and outstanding common stock totaled 14,445,363 shares, held by approximately 150 shareholders of record and by indeterminate number of additional shareholders through nominee or street name accounts with brokers.
DIVIDENDS
The Company has not paid dividends in prior years and has no plans to pay dividends in the near future. The Company intends to reinvest its earnings on the continued development and operation of its business. Any payment of dividends would depend upon the Company's pattern of growth, profitability, financial condition, and such other factors, as the Board of Directors may deem relevant.
PENNY STOCK
The Company's securities are subject to the Securities and Exchange Commission's "penny stock" rules. The penny stock rules may affect the ability of owners of the Company's shares to sell them. There may be a limited market for penny stocks due to the regulatory burdens on broker-dealers. The market among dealers may not be active. Investments in penny stocks often are unable to sell stock back to the dealer that sold them the stock. The mark-ups or commissions charged by the broker-dealers might be greater than any profit an investor may make. Because of large spreads that market makers quote, investors may be unable to sell the stock immediately back to the dealer at the same price the dealer sold the stock to the investor.
The Company's securities are also subject to the Securities and Exchange Commission rule that imposes special sales practice requirements upon broker-dealers that sell such securities to other than established customers or accredited investors. For purposes of the rule, the phrase "accredited investor" means, in general terms, institutions with assets exceeding $5,000,000 or individuals having net worth in excess of $1,000,000 or having an annual income that exceeds $200,000 (or that, combined with a spouse's income, exceeds $300,000). For transactions covered by the rule, the broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of purchasers of the Company's securities to buy or sell in any market.
SUBSEQUENT EVENT
None.
RECENT SALES OF UNREGISTERED SECURITIES
None
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 purchased 10 hotels primarily in California, Georgia and Michigan. Hotel brands include Marriott, Hilton, Starwood, and Doubletree by Hilton. 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
The Company earned consulting fee for providing advisory services in real estate acquisition deals. During the year ended December 31, 2013, the Company earned consulting fee of $1,704,962, as compared to a consulting fee of $
483,775
for the same period last year because the Company closed more hotel acquisition deals this year. During the year ended December 31, 2013, the Company earned commission income of $967 for providing sourcing service as compared to commission income of $9,124 from property leasing service for the same period last year. During the year ended December 31, 2013, the Company provided hotel management service and earned management fee of $15,000 as compared to management fee of $0 for the same period last year.
Cost of Sales
For the years ended December 31, 2013 and 2012, the Company incurred consulting expense of $653,800 and $261,852, respectively for providing advisory services in real estate acquisition deals. The higher consulting expense in 2013 was mainly due to the closing of more hotel acquisition deals this year.
Operating Expenses
General and administrative (“G&A”) expenses consist primarily of administrative personnel costs, facilities expenses, and professional fee expenses.
For the year ended December 31, 2013, general and administrative expenses increased $376,381 or 495.6% to $452,327 compared to $75,946 for the same period last year. The increase was primarily due to a bad debt write off of $254,298 and higher personnel costs of $122,308 as the Company hired new employee and put certain officer on payroll in September 2013.
Interest Expense
Interest expense decreased to $70,472 during the year ended December 31, 2013 from $100,320 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 $544,330 for the year ended December 31, 2013 as compared to a net income of $54,781 for the same period last year. The increase in net income was mainly due to the higher consulting fee and management fee, and lower interest expense, offset by higher consulting expense and G&A expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital deficit was $296,543 at December 31, 2013, as compared to a working capital deficit of $143,224 at December 31, 2012. 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.
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 December 31, 2013 was $676,505, and the accrued interest was $241,882.
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, 2013.
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, 2012 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.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Adopted
Effective January 2013, we adopted FASB ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). The amendments in ASU 2011-11 require the disclosure of information on offsetting and related arrangements for financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position. Amendments under ASU 2011-11 will be applied retrospectively for fiscal years, and interim periods within those years, beginning after January 1, 2013. The adoption of this update did not have a material impact on the financial statements.
Not Adopted
In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Top 205): Liquidation Basis of Accounting.
The objective of ASU No. 2013-07 is to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. The amendments in this standard is effective prospectively for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. We are evaluating the effect, if any, adoption of ASU No. 2013-07 will have on our financial statements.
In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Top 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.
The objective of ASU No. 2013-11 is to provide guidance on the financial statement presentation of an unrecognized tax benefit when a net loss carryforward, similar tax loss, or tax credit carryforward exists. The amendments in this standard is effective for all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists for fiscal years, and interim periods beginning after December 15, 2013. We are evaluating the effect, if any, adoption of ASU No. 2013-11 will have on our (consolidated) financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
The Company's audited Financial Statements are set forth beginning on page F-1 in this Form 10-K.
None
Under the supervision and with the participation of our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), Mr. Frank S Yuan, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) of the Exchange Act as of a date (the "Evaluation Date") within 90 days prior to filing the Company's December 31, 2013 Form 10-K. Based upon that evaluation, our CEO and CFO concluded that, as of December 31, 2013, our disclosure controls and procedures were effective in timely alerting management to the material information relating to us required to be included in our periodic filings with the SEC. Based on his most recent evaluation as of the Evaluation Date, our CEO and CFO has also concluded that there are no significant deficiencies in the design or operation of internal controls over financial reporting, at the reasonable assurance level, which are reasonably likely to adversely affect our ability to record, process, summarize and report financial information, and such officer has identified no material weaknesses in our internal controls over financial reporting.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, we conducted an evaluation of 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 of the end of the period covered by this Annual Report. Based on this evaluation, our President and Chief Financial Officer concluded as of December 31, 2013 that our disclosure controls and procedures were effective such that the information required to be disclosed in our reports filed with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.
Evaluation of and Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over our financial reporting. Our President and Chief Financial Officer have evaluated the effectiveness of our internal control over financial reporting as of December 31, 2013 based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations (COSO). Based on this evaluation, management concluded that, as of December 31, 2013, our internal control over financial reporting is effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Changes in Internal Control over Financial Reporting
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our independent registered public accounting firm pursuant to rules of the SEC that permit us to provide only management’s report in this Annual Report.
There have been no changes in internal controls, or in factors that could materially affect internal controls, subsequent to the date that management completed their evaluation.
None.
The following are the directors and executive officers of the Company as of April 15, 2014.
|
NAME
|
AGE
|
POSITIONS HELD WITH COMPANY
|
||
|
Frank S. Yuan
|
65 |
Chairman and Chief Executive Officer since 2007
|
||
|
Charles Rice
|
71 |
Director since 2007
|
||
|
James Vandeberg
|
69 |
Director since 2007
|
||
|
Peter Lin
|
44 |
Director since 2010
|
||
|
Deborah Shamaley
|
55 |
Director since 2007
|
There are no family relationships among any of the directors and executive officers.
The following sets forth certain biographical information concerning each director and executive officer:
Frank Yuan - Combining decades of experience in the apparel, banking, real estate, insurance and computer industries, Frank Yuan has developed and started multiple new ventures in his 30 plus years as an immigrant in the United States. Before the Company, Mr. Yuan founded multi-million dollars of business in men's apparel private label & wholesale company, a "Knights of Round Table" sportswear line, a "Uniform Code" sweater line, and men's clothing retail store chain. Mr. Yuan also founded UNI-Fortune, a real-estate development company, and co-founded United National Bank, Evertrust Bank, Western Cities Title Insurance Company and Serv-American National Title Insurance. Mr. Yuan received a B.A. degree in economics from Fu-Jen Catholic University in Taiwan and a M.B.A. degree from Utah State University. Mr. Yuan was a director & CEO of C-ME since 1996 and ASAP Expo since 2005.
James Vandeberg. Mr. Vandeberg has served as a director of the Company since 2007. He has been an attorney practicing in Seattle, Washington since 1996. He specializes in corporate finance with an emphasis on securities and acquisitions. Prior to practicing in Seattle, he was counsel and secretary to two NYSE listed companies. He graduated from NYU Law School in 1969 where he was a Root-Tilden Scholar and holds a BA degree in accounting from the University of Washington. Mr. Vandeberg is a director of American Sierra Gold Corp., Legend Oil and Gas Ltd., REGI US, Inc., IAS Energy, Inc. and ASAP Holdings, Inc., all of which are reporting companies on the OTCBB.
Charles Rice - is a former senior buyer for Sears & Montgomery Ward, has more than 30 years of international apparel buying experience, working for both Sears and Wards. He brings extensive lists of long established contacts with both retailers and manufacturers to ASAP’s board. Rice holds a B.S. in business and economics from the University of Delaware.
Deborah Shamaley - a chain store and apparel-jobbing entrepreneur, has 20 years of retail and wholesale apparel experience. Ms. Shamaley co-founded The Apparel Group (“TAG”). TAG imported and sold women's apparel wholesale to more than 1,800 retailers, including Nordstrom's, J.C. Penney's, Sears, and Burlington Coat Factory. TAG also owned and operated a 23 apparel store-chain under the name $11.99 Puff. Ms. Shamaley sold the company in 1996. Since 1995, Ms. Shamaley has also been involved as an owner in Shamaley Ford car dealership one of the largest in El Paso, Texas.
Peter Lin - Worked as Investment Credit Research Manager, and managed structured finance securities credit research for a US$ 30 Billion investment portfolio at WesCorp. His research coverage includes U.S. and foreign RMBS, CMBS, ABS and CDOs. He also leads the research team in conducting research and credit analysis on financial institutions, broker dealers, bond issuers and servicers, and sovereign countries. Prior to joining WesCorp, Mr. Lin was an Investment Analyst at EquiView Capital, a hedge fund management company that specializes in small and mid cap equities and offshore private placement investment. Prior to joining EquiView Capital, Mr. Lin worked as a mergers and acquisitions analyst at Watson Pharmaceuticals where his team completed more than $500 million in product rights and company acquisitions. Mr. Lin began his professional career as an associate at The Capital Group Companies and Franklin Templeton Group. Peter received his MBA from University of Southern California, MIS from Claremont Graduate University, and BS Business Admin from UC Berkeley.
COMMITTEES
The Board of Directors does not have an audit committee or a compensation committee, due to the small size of the Board. The Board of Directors also does not have an audit committee financial expert.
CODE OF ETHICS
The Company does not have formal written values and ethical standards, due to the small number of members of management.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the compensation we have paid to each executive officer and all executive officers as a group, for the fiscal years ended December 31, 2013 and 2012, annual compensation, including salary and bonuses paid by the Company to the Chief Executive Officer. No other executive officers received more than $150,000 during the fiscal years-ended December 31, 2013 and 2012. The Company does not currently have a long-term compensation plan and does not grant any long-term compensation to its executive officers or employees.
The table does not reflect certain personal benefits, which in the aggregate are less than ten percent of the named executive officer's salary and bonus. No other compensation was granted for the periods ended December 31, 2013 and 2012.
SUMMARY COMPENSATION TABLE
|
Long Term Compensation
|
||||||||||||||||||||||||||||||
|
Annual Compensation
|
Awards
|
Payouts
|
||||||||||||||||||||||||||||
|
Name and
Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Other Annual Compensation
|
Restricted Stock Award(s)
|
Securities Underlying Options/SARs (#)
|
LTIP Payouts ($)
|
All Other Compensation
|
||||||||||||||||||||||
|
Yuan, Frank
|
2013
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
N/A
|
$
|
-
|
$
|
-
|
||||||||||||||||
|
(CEO)
|
2012
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
N/A
|
$
|
-
|
$
|
-
|
||||||||||||||||
COMPENSATION OF DIRECTORS
All outside directors are reimbursed for any reasonable expenses incurred in the course of fulfilling their duties as directors of the Company and do not receive any payroll.
None.
The Company has a revolving line of credit totaling $1,800,000 with Frank Yuan and certain members of his family. The line of credit bears interest at 6% per annum starting October 1, 2010, 10% prior to October 1, 2010 and is due upon demand, as amended. During fiscal 2013 and 2012, the Company incurred interest expense totaling $70,472 and $100,320 in connection with the Line. At December 31, 2013, the balance of the Line was $676,505. The Note holder has sole discretion right to convert the note to Common Stock at a conversion price of $0.04 per share any time when he/she requests the conversion in part or in whole amount of the outstanding debt.
The following table sets forth the fees paid by the Company for professional services rendered for the audits of the annual financial statements and fees billed for other services rendered by its principal accountants:
|
Type of Services Rendered
|
2013
|
2012
|
||||||
|
Audit Fees
|
$
|
5,000
|
$
|
3,000
|
||||
|
Audit-Related Fees
|
$
|
1,950
|
$
|
-
|
||||
|
Tax Fees
|
$
|
-
|
$
|
-
|
||||
|
All Other Fees
|
$
|
-
|
$
|
-
|
||||
Pre-approval Policies and Procedures
The Audit Committee has sole authority to approve any audit and significant non-audit services to be performed by its independent accountants. Such approval is required prior to the related services being performed.
1. Financial Statements
ASAP EXPO, INC.
|
F-1
|
|
|
Financial Statements
|
|
|
F-2
|
|
|
F-3
|
|
|
F-4
|
|
| Statements of Cash Flows for the years ended December 31, 2013 and 2012 |
F-5
|
|
F-6
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
ASAP Expo, Inc.
We have audited the accompanying balance sheets of ASAP Expo Inc. (the “Company”) as of December 31, 2013 and 2012, and the related statements of operations, stockholders’ deficit and cash flows for the years then ended December 31, 2013 and 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audit also included assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013, and the results of its operations and its cash flows for the year then ended December 31, 2013, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has had an accumulated deficit of $968,552 since inception. These conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans concerning these matters are also described in Note 2, which includes the raising of additional equity financing or merger with another entity. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Anton & Chia LLP
Newport Beach, CA
April 15, 2014
ASAP EXPO, INC.
|
December 31,
|
December 31,
|
|||||||
|
2013
|
2012
|
|||||||
|
ASSETS
|
||||||||
|
Current Assets
|
||||||||
|
Cash
|
$ | 205,967 | $ | 8,752 | ||||
|
Prepaid income taxes
|
800 | 800 | ||||||
|
Due from affiliated company
|
9,527 | 52,298 | ||||||
|
Total Current Assets
|
216,294 | 61,850 | ||||||
|
Equipment, net
|
21,665 | - | ||||||
|
Total Assets
|
$ | 237,959 | $ | 61,850 | ||||
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
||||||||
|
Current Liabilities
|
||||||||
|
Accounts payable and accrued expenses
|
$ | 262,192 | $ | 203,563 | ||||
|
Auto Loan, current
|
4,905 | - | ||||||
|
Due to affiliated company
|
245,740 | 1,511 | ||||||
|
Total Current Liabilities
|
512,837 | 205,074 | ||||||
|
Long-term Liabilities
|
||||||||
|
Auto Loan, noncurrent
|
17,169 | - | ||||||
|
Convertible note, officers
|
676,505 | 1,599,418 | ||||||
|
Total Long-term Liabilities
|
693,674 | 1,599,418 | ||||||
|
Total Liabilities
|
1,206,511 | 1,804,492 | ||||||
|
Stockholders' Deficit
|
||||||||
|
Common stock, $.001 par value, 45,000,000 shares authorized,
14,445,363 and 8,701,363 shares issued and outstanding at December 31, 2013 and December 31, 2012
|
14,445 | 8,705 | ||||||
|
Additional paid in capital
|
(902,272 | ) | (1,126,292 | ) | ||||
|
Accumulated deficit
|
(80,725 | ) | (625,055 | ) | ||||
|
Total Stockholders' Deficit
|
(968,552 | ) | (1,742,642 | ) | ||||
|
Total Liabilities and Stockholders' Deficit
|
$ | 237,959 | $ | 61,850 | ||||
The accompanying notes are an integral part of these financial statements
ASAP EXPO, INC.
STATEMENTS OF OPERATIONS AND
COMPREHENSIVE
INCOME
|
Year Ended December 31,
|
||||||||
|
2013
|
2012
|
|||||||
|
Revenues:
|
||||||||
|
Commission income
|
$ | 967 | $ | 9,124 | ||||
|
Consulting fee
|
1,704,962 | 483,775 | ||||||
|
Management Fee
|
15,000 | - | ||||||
|
Total revenues
|
1,720,929 | 492,899 | ||||||
|
Cost of Sales
|
||||||||
|
Consulting expense
|
653,800 | 261,852 | ||||||
|
Gross Profit
|
1,067,129 | 231,047 | ||||||
|
General and administrative
|
452,327 | 75,946 | ||||||
|
Income from operations
|
614,802 | 155,101 | ||||||
|
Other Expense
|
||||||||
|
Interest expense
|
(70,472 | ) | (100,320 | ) | ||||
|
Total other (Expense)
|
(70,472 | ) | (100,320 | ) | ||||
|
Income before income taxes
|
544,330 | 54,781 | ||||||
|
Income taxes
|
- | - | ||||||
|
Net Income and comprehensive income
|
$ | 544,330 | $ | 54,781 | ||||
|
Net income per common share
|
||||||||
|
Basic and diluted
|
$ | 0.05 | $ | 0.01 | ||||
|
Diluted
|
$ | 0.02 | $ | 0.01 | ||||
|
Weighted average common shares outstanding
|
||||||||
|
Basic
|
11,156,333 | 8,704,669 | ||||||
|
Diluted
|
27,849,432 | 8,704,669 | ||||||
The accompanying notes are an integral part of these financial statements
ASAP EXPO, INC.
STATEMENTS OF
STOCKHOLDERS'
DEFICIT
|
Additional
|
Total
|
|||||||||||||||||||
|
Common stock
|
paid in
|
(Accumulated
|
stockholders'
|
|||||||||||||||||
|
Shares
|
Amount
|
capital
|
deficit)
|
deficit
|
||||||||||||||||
|
Balance , January 1, 2012
|
8,701,363 | $ | 8,705 | $ | (1,126,292 | ) | $ | (679,836 | ) | $ | (1,797,423 | ) | ||||||||
|
Net income
|
- | - | - | 54,781 | 54,781 | |||||||||||||||
|
Balance , December 31, 2012
|
8,701,363 | 8,705 | (1,126,292 | ) | (625,055 | ) | (1,742,642 | ) | ||||||||||||
|
Conversion of convertible note and accrued interest to common stock
|
5,744,000 | 5,744 | 224,016 | - | 229,760 | |||||||||||||||
|
Adjust prior period cancelled common stock
|
- | (4 | ) | 4 | - | - | ||||||||||||||
|
Net income
|
- | - | - | 544,330 | 544,330 | |||||||||||||||
|
Balance , December 31 2013
|
14,445,363 | $ | 14,445 | $ | (902,272 | ) | $ | (80,725 | ) | $ | (968,552 | ) | ||||||||
The accompanying notes are an integral part of these financial statements
ASAP EXPO, INC.
STATEMENTS OF CASH
FLOWS
|
Year Ended December 31,
|
||||||||
|
2013
|
2012
|
|||||||
|
Operating Activities:
|
||||||||
|
Net Income
|
$ | 544,330 | $ | 54,781 | ||||
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
||||||||
|
Depreciation expense
|
2,861 | - | ||||||
|
Interest Expenses
|
29,760 | |||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Prepaid expenses and other receivables
|
- | 175,000 | ||||||
|
Accounts payable and accrued expenses
|
58,628 | 101,845 | ||||||
|
Net cash provided by operating activities
|
635,579 | 331,626 | ||||||
|
Investing Activities:
|
||||||||
|
Payment from affiliated company
|
42,773 | - | ||||||
|
Net cash used in investing activities
|
42,773 | - | ||||||
|
Financing Activities:
|
||||||||
|
Payments on auto loan
|
(2,453 | ) | - | |||||
|
Advance from (Repayment to) affiliated company
|
244,229 | (50,278 | ) | |||||
|
Proceeds from borrowings on convertible note from officers
|
309,570 | 521,648 | ||||||
|
Repayments of borrowings on convertible note from officers
|
(1,032,483 | ) | (799,524 | ) | ||||
|
Net cash used in financing activities
|
(481,137 | ) | (328,154 | ) | ||||
|
Net increase in cash
|
197,215 | 3,472 | ||||||
|
Cash, beginning of period
|
8,752 | 5,280 | ||||||
|
Cash, end of period
|
$ | 205,967 | $ | 8,752 | ||||
|
Supplemental disclosures of cash flow information:
|
||||||||
|
Cash paid during the period
|
||||||||
|
Interest
|
$ | - | $ | 8 | ||||
|
Income taxes
|
$ | - | $ | - | ||||
|
Non-cash investing and financing activities:
|
||||||||
|
Vehicle purchased through auto loan
|
$ | 24,527 | $ | - | ||||
|
Conversion of convertible note to common stock
|
$ | 200,000 | $ | - | ||||
The accompanying notes are an integral part of these financial statements
ASAP
EXPO, INC.
NOTES TO FINANCIAL STATEMENTS
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 along with investment banking services for Chinese companies.
BASIS OF PRESENTATION
The accompanying audited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
GOING CONCERN
The accompanying audited financial statements have been prepared assuming that the Company will continue as a going concern.
At December 31, 2013, the Company has an accumulated stockholders' deficit of $968,552 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 and accrued liabilities. 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.
Revenues are mainly consulting fees. The consulting fees are recognized when earned. Consulting fees from investment banking 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
Adopted
Effective January 2013, we adopted FASB ASU No. 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). The amendments in ASU 2011-11 require the disclosure of information on offsetting and related arrangements for financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position. Amendments under ASU 2011-11 will be applied retrospectively for fiscal years, and interim periods within those years, beginning after January 1, 2013. The adoption of this update did not have a material impact on the financial statements.
Not Adopted
In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Top 205): Liquidation Basis of Accounting.
The objective of ASU No. 2013-07 is to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. The amendments in this standard is effective prospectively for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. We are evaluating the effect, if any, adoption of ASU No. 2013-07 will have on our financial statements.
In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Top 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.
The objective of ASU No. 2013-11 is to provide guidance on the financial statement presentation of an unrecognized tax benefit when a net loss carryforward, similar tax loss, or tax credit carryforward exists. The amendments in this standard is effective for all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists for fiscal years, and interim periods beginning after December 15, 2013. We are evaluating the effect, if any, adoption of ASU No. 2013-11 will have on our financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
Equipment consists of the following:
|
December 31,
|
December 31,
|
|||||||
|
2013
|
2012
|
|||||||
|
Automobile
|
$
|
24,526
|
$
|
-
|
||||
|
24,526
|
-
|
|||||||
|
Less: Accumulated depreciation
|
(2,861
|
)
|
-
|
|||||
|
$
|
21,665
|
$
|
-
|
|||||
At December 31, 2013 and 2012, ASAP Expo was owed $9,527 and $52,298 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.
At December 31, 2013, ASAP Expo owed $245,740 to an affiliated company in which ASAP Expo’s officers are also owners and officers.
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:
|
||||
|
2014
|
4,905
|
|||
|
2015
|
4,905
|
|||
|
2016
|
4,905
|
|||
|
2017
|
4,905
|
|||
|
2018
|
2,454
|
|||
|
22,074
|
||||
|
Less Current Portion
|
(4,905
|
)
|
||
|
Long Term Portion
|
$
|
17,169
|
||
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 convertible note as of December 31, 2013 was $676,505; the accrued interest on the note was $241,882 which is included in accounts payable and accrued expenses. The balance of convertible note as of December 31, 2012 was $1,599,418 and the accrued interest on the note was $201,170.
As of December 31, 2012, the Company had Federal net tax operating loss carry forwards of approximately $553,000 available to offset future taxable income. However, the Company had reserved a full deferred tax assets valuation allowance so its balance sheet reported no deferred tax assets as of December 31, 2012 on the basis of the Company’s history of losses that more likely than not the Company will not realize operating loss carry forwards in the foreseeable future. As a result of the full deferred tax assets valuation allowance in the previous periods, the Company’s effective tax rate at December 31, 2013 was 0% because after utilizing the net operating loss carry forwards, the Company recorded no income taxes.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at December 31, 2013 and 2012 are presented below:
|
Year Ended December 31,
|
||||||||
|
2013
|
2012
|
|||||||
|
Net operating loss
|
$
|
(185,072
|
)
|
$
|
(18,626
|
)
|
||
|
Total deferred tax assets
|
(185,072
|
)
|
(18,626
|
)
|
||||
|
Reversal of valuation allowance
|
185,072
|
18,626
|
||||||
|
Net deferred tax assets
|
$
|
-
|
$
|
-
|
||||
The Company had historically carried a full deferred tax assets valuation allowance so its balance sheet reported no deferred tax assets. At December 31, 2013 and 2012, the Company reversed deferred tax assets valuation allowance by $185,072 and $18,626, respectively, to reflect the effect of net operating loss actually utilized to reduce the tax liabilities for the respective periods.
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 year ended December 31, 2013 and 2012, 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.
Common Stock
At December 31, 2013, 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.
2. Exhibits
EXHIBIT INDEX
|
Exhibit No.
|
Description
|
Location
|
|
31.1
|
Filed herewith.
|
|
|
32.1
|
Filed herewith.
|
|
|
101.INS
|
XBRL Instance Document
|
Furnished electronically with this filing
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
Furnished electronically with this filing
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
Furnished electronically with this filing
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
Furnished electronically with this filing
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document
|
Furnished electronically with this filing
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
ASAP EXPO, INC.
|
|||
|
Date: April 15, 2014
|
By:
|
/s/ Frank Yuan
|
|
|
Frank Yuan
|
|||
|
Chief Executive Officer and President
|
|||
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
By:
|
/s/ Frank S. Yuan
|
Date: April 15, 2014
|
|
|
Frank S. Yuan
|
|||
|
Director
|
|||
|
By:
|
/s/ Charles Rice
|
Date: April 15, 2014
|
|
|
Charles Rice
|
|||
|
Director
|
|||
|
By:
|
/s/ Deborah Shamaley
|
Date: April 15, 2014
|
|
|
Deborah Shamaley
|
|||
|
Director
|
|||
|
By:
|
/s/ James Vandeberg
|
Date: April 15, 2014
|
|
|
James Vandeberg
|
|||
|
Director
|
|||
|
By:
|
/s/ Peter Lin
|
Date: April 15, 2014
|
|
|
Peter Lin
|
|||
|
Director
|
18
TABLE OF CONTENTS
Part IItem 1. Description Of BusinessItem 1A. Risk Factors Relating To Asap ExpoItem 2. Description Of PropertyItem 3. Legal ProceedingsItem 4. Submission Of Matters To A Vote Of Security HoldersPart IIItem 5. Market For Common Equity and Related Stockholder MattersItem 6. Management's Discussion and Analysis Or Plan Of OperationsItem 7. Financial StatementsItem 8. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureItem 8A. Evaluation Of Controls and ProceduresItem 8B. Other InformationPart IIIItem 9. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) Of The Exchange ActItem 10. Executive CompensationItem 11. Security Ownership Of Certain Beneficial Owners and ManagementItem 12. Certain Relationships and Related TransactionsItem 13. Principal Accountant Fees and ServicesPart IVItem 14. Exhibits, Financial Statement SchedulesNote 1 - Summary Of Significant Accounting PoliciesNote 2 - Property and EquipmentNote 3 - Due From Affiliated CompaniesNote 4 - Auto LoanNote 5 - Convertible Note, OfficersNote 6 - Income TaxesNote 7 - Shareholders' Deficit