The accompanying notes are an integral part of these condensed unaudited financial statements.
The accompanying notes are an integral part of these condensed unaudited financial statements.
The accompanying notes are an integral part of these condensed unaudited financial statements.
NOTES TO UNAUDITED 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 institutions and high net worth individuals with all real estate related services focusing on hospitality including acquisition advisory, financing, asset management, and strategic repositioning.
On the hospitality acquisition side, we represent buyers at all stages of the process, from advice on selection of brands, location, opportunity sourcing and due diligence to securing 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.
Prior to July 2011, the investment banking services division was the core business of ASAP Expo. ASAP Expo helped small and medium sized businesses 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, 2017.
The balance sheets and certain comparative information as of December 30, 2016 are derived from the audited financial statements and related notes for the year ended December 31, 2016 (“2016 Annual Financial Statements”), included in the Company’s 2016 Annual Report on Form 10-K. These unaudited interim financial statements should be read in conjunction with the 2016 Annual Financial Statements.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash on hand, cash on deposit with banks, and highly liquid debt investments with a maturity of three months or less when purchased. The Company has no cash equivalents as of June 30, 2017 and December 31, 2016, respectively.
GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
At June 30, 2017, the Company had a stockholders' deficit of $580,098 and a negative working capital of $116,969, 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. These factors raise substantial doubt about the Company’s ability to continue as a going conern.
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 financial instruments consisted of cash, accounts payable and accrued liabilities, advances to due to or from affiliated companies, notes payable to officers. The estimated fair value of cash, accounts payable and accrued liabilities, due to or from affiliated companies, and notes payable approximates its carrying amount due to the short maturity of these instruments.
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 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.
NOTE 2 - PROPERTY AND EQUIPMENT
Equipment consists of the following:
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Furniture & Fixtures
|
|
$
|
35,812
|
|
|
$
|
35,159
|
|
Office Equipment
|
|
|
9,301
|
|
|
|
6,740
|
|
Automobile
|
|
|
27,657
|
|
|
|
24,527
|
|
Leasehold Improvements
|
|
|
21,710
|
|
|
|
21,710
|
|
|
|
|
94,480
|
|
|
|
88,136
|
|
Less: Accumulated depreciation
|
|
|
(13,749
|
)
|
|
|
(27,461
|
)
|
|
|
$
|
80,731
|
|
|
$
|
60,675
|
|
NOTE 3 - RELATED PARTY TRANSACTIONS
At June 30, 2017 and December 31, 2016, ASAP Expo was owed $85,740 and $29,608 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 payable on demand to the Company and expected to be paid within one year.
For the six months ended June 30, 2017 and 2016, consulting fees from affiliates was $301,000 and $521,072.
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. On December 31, 2014, the convertible note was amended to waive the right of conversion and will be used as a line of credit. During six months ended June 30, 2017 and 2016, the Company incurred interest expense totaling $18,842 and $9,711 in connection with the Line. The balance of the note payable as of June 30, 2017 was $513,289. The balance of the note payable as of December 31, 2016 was $610,952 including accrued interest of $312,750 which was transferred to the principal at December 31, 2016.
Currently, the Company is leasing office space from its officer under a month by month basis. The lease provides for monthly lease payments of $3,500.
The son of the Company’s officer (“Son”) periodically receives salary from the Company for works performed. During three months ended June 30, 2017, The Son received salary of $40,000.
NOTE 4 - PREPAID EXPENSES AND DEPOSIT
Prepaid expenses and deposit consists of a $50,000 deposit for office building purchase.
NOTE 5 - AUTO LOAN
In April 2017, the Company traded-in its old vehicle for a new vehicle with a financing agreement of $4,868 down and 2.39% interest. Future minimum payments and the obligations due under the auto loan are as follows:
For the Year Ended December 31:
|
|
|
|
2017
|
|
$
|
1,637
|
|
2018
|
|
|
3,995
|
|
2019
|
|
|
4,091
|
|
2020
|
|
|
4,190
|
|
2021
|
|
|
4,291
|
|
2022
|
|
|
4,025
|
|
Less Current Portion
|
|
|
3,955
|
|
Long Term Portion
|
|
$
|
18,274
|
|
NOTE 6 - EQUIPMENT LOAN
In September 2015, the Company installed a solar system on its leased office for $17,570 with a 30-year loan at 5.49% interest. Each payment date, the Company will pay at least the “Total Amount Due” that is displayed on the monthly bill. The Total Amount Due will be the sum of all past due amounts plus the “Current Monthly Payment” that will be displayed on the monthly bill. Current Monthly Payments will be calculated as follows: the amount of kWh produced for the preceding month by the system; multiplied by the applicable agreed Equivalent Rate per kWh. The “Equivalent Rate per kWh” is based upon 5 factors: 1) the loan balance (which includes any accrued interest); 2) the Loan Term; 3) the applicable APR; 4) the expected production of the system; and 5) 2.50 % kWh annual rate escalator. The expected production of the system is an estimate, the actual payments could be higher or lower depending on the actual production from the system. If there is a remaining balance at the end of the loan term, the outstanding balance can be refinanced for an additional 12 months or for a term that is required by law. Estimated future Current Monthly Payments are as follows:
For the Year Ended December 31:
|
|
|
|
2017
|
|
$
|
690
|
|
2018
|
|
|
704
|
|
2019
|
|
|
717
|
|
2020
|
|
|
732
|
|
2021
|
|
|
746
|
|
Thereafter
|
|
|
23,119
|
|
NOTE 7 - INCOME TAXES
The income taxes provision for the six months ended June 30, 2017 consists of current income tax of $38,947.
Uncertain Tax Positions
Interest associated with unrecognized tax benefits is classified as income tax and penalties are included in selling, general and administrative expenses in the statements of operations and comprehensive income.
For the three and the six months ended June 30, 2017 and 2016, the Company had no unrecognized tax benefits and related interest and penalties expenses. The Company’s 2014, 2015, and 2016 tax years remain subject to examination by the U.S. tax authorities.
NOTE 8 - SHAREHOLDERS' DEFICIT
Common Stock
On July 29, 2017, the Board of Directors of the Company approved to increase the authorized shares of the Company to 500,000,000 (the “Increase”), with 495,000,000 shares being Common Stock and 5,000,000 shares being preferred stock, subject to Stockholder approval. The Majority Stockholder approved the Increase by written consent in lieu of a meeting on July 29, 2017. The increased number of authorized shares were retroactively presented on balance sheets.
At June 30, 2017 and December 31, 2016, the Company had 14,445,363 shares issued and outstanding at par value $0.001 per share.
NOTE 9 - COMMITMENT
Starting January 1, 2014, the Company leased office space from one of its officer, Frank Yuan under a month by month basis. The lease provides for monthly lease payments of $3,500.
NOTE 10 - CONCENTRATION
For the six months ended June 30, 2017, three customers accounted for 88% (37%, 26% and 25%) of the Company’s consulting fee income, two of which is affiliates of the Company. For the six months ended June 30, 2016, three customers accounted for 88% (46%, 28% and 14%) of the Company’s consulting fee income, two of which are affiliates of the Company. The loss of any of these customers could have a material adverse effect on the Company’s financial position and results of operations.
NOTE 11 – SUBSEQUENT EVENT
On July 29, 2017, the Board of Directors of the Company approved to increase the authorized shares of the Company to 500,000,000 (the “Increase”), with 495,000,000 shares being Common Stock and 5,000,000 shares being preferred stock, subject to Stockholder approval. The Majority Stockholder approved the Increase by written consent in lieu of a meeting on July 29, 2017.