Ryvyl Inc. - 10-Q quarterly report FY2012 Q1

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Commission file number: 001-51554

 

(Exact name of small business issuer as specified in its charter)

 

 

 

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

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes x    No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

Number of shares outstanding of the issuer's classes of common equity, as of March 31, 2012: 8,704,669 Shares of Common Stock (One Class)

 

Transitional Small Business Disclosure Format: Yes o    No x

 

 

TABLE OF CONTENTS

 

 

 

The accompanying notes are an integral part of financial statements.

 

The accompanying notes are an integral part of financial statements.

 

The accompanying notes are an integral part of financial statements.

 

 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

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

ASAP Expo is a holding company that operates real estate, investment banking and consulting for Chinese companies. Our mission is to be the bridge between China and the Western world. Our Global Business Services division has added EB-5 Investment Visa consulting to overseas individuals seeking opportunities in the U.S. Our Investment Banking Services division lists Chinese companies on the public trading markets in the USA or Europe. Our Real Estate division assists with institutional and high net worth individuals with acquisition advisory and asset management.

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

 

At March 31, 2012, the Company has a capital deficiency of approximately $1,126,292 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 funds, if raised, would enable the Company to achieve or sustain profitable operations.

 

These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the classification of liabilities that might result from the outcome of these uncertainties.

 

USE OF ESTIMATES

The preparation of financial statements in conformity with the GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

REVENUE RECOGNITION

Accounting Standards Codification (‘ASC”) 605, Revenue Recognition which outlines the basic criteria that must be met to recognize revenue and provide guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with Securities and Exchange Commission. Management believes the Company's revenue recognition policies conform to ASC 605.

Revenues 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.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. This ASU requires an entity to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions executed under a master netting or similar arrangement and was issued to enable users of financial statements to understand the effects or potential effects of those arrangements on its financial position. This ASU is required to be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. As this ASU only requires enhanced disclosure, the adoption is not expected to have an impact on the Company’s financial position or results of operations.

 

NOTE 2 – PREPAID EXPENSES AND OTHER RECEIVABLES

At March 31, 2012, prepaid expenses and other receivables consisted of a $2,229 overpayment on health insurance. The overpayment was refunded in April 2012.

At December 31, 2011, prepaid expenses and other receivables consisted of a $175,000 deposit to escrow for purchasing a hotel.  The deal was cancelled in January 2012 and the deposit was refunded.

NOTE 3 – DUE FROM AFFILIATED COMPANY

At March 31, 2012 and December 31, 2011, ASAP Expo was owed $509 by Friendship Partners LLC in which ASAP Expo’s officers are also members. The advance was non-interest bearing and is payable on demand.

NOTE 4 - CONVERTIBLE NOTE, OFFICERS

On January 1, 2011, the Company obtained a convertible note from Frank Yuan, the Company's Chief Executive Officer (“CEO”), and his family which provides for borrowings up to a maximum of $1,800,000 and is due on demand. The note carries an interest rate of 6.0% per annum and is convertible into the Company's equity securities at a conversion price of $0.04 given a written notice of the contemplated conversion describing in reasonable detail the material terms of such equity securities and of the issue is provided.

The balance of convertible note as of March 31, 2012 was $1,689,562; the accrued and unpaid interest on the note was $126,566 which is included in accounts payable and accrued expenses. The balance of convertible note as of December 31, 2011 was $1,877,294 and the accrued and unpaid interest on the note was $100,858 .

  

NOTE 5 - INCOME TAXES

 

As of March 31, 2012, the Company had Federal net tax operating loss carry forwards of approximately $663,971 available to offset future taxable income. The carry forwards expire in varying amounts through 2031.

 

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets at March 31, 2012 and December 31, 2011 are presented below:

 

The Company had historically carried a full deferred tax assets valuation allowance so its balance sheet reported no deferred tax assets. At March 31, 2012, the Company reversed deferred tax assets valuation allowance by $2,654 to reflect the effect of net operating loss actually utilized to reduce the tax liability for the period.

NOTE 6 - SHAREHOLDERS' DEFICIT

Common Stock

At March 31, 2012, the Company has 45,000,000 shares of common stock authorized and 8,704,669 shares issued and outstanding at par value $0.00 per share.

Options and Warrants

The Company does not have a stock option plan or any options or warrants issued and outstanding as of March 31, 2012.

 

NOTE 7 - COMMITMENTS AND CONTINGENCIES

 

NOTE 8 – SUBSEQUENT EVENT

 

The Company has evaluated subsequent events for potential recognition and disclosure through the date the financial statements were issued.  

 

 

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this quarterly report for the period ended March 31, 2012. This quarterly report contains certain forward-looking statements and the Company's future operating results could differ materially from those discussed herein. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.

OVERVIEW

ASAP Expo is a holding company that operates real estate, provides investment banking and consulting services for Chinese companies. The mission is to be the bridge between China and the Western world. The Company’s Global Business Services division has added EB-5 Investment Visa consulting to overseas individuals seeking opportunities in the U.S. The Company’s Investment Banking Services division lists Chinese companies on the public trading markets in the USA or Europe. The Company’s Real Estate division assists with institutional and high net worth individuals with acquisition advisory and asset management.

ASAP Expo is fully committed to the real estate business direction. It focuses on consulting with Chinese entities to purchase U.S. real estate, mainly commercial properties because of the historically low valuations. ASAP Expo has concluded several transactions within the last year, including advisory services for the purchase of the Downtown Los Angeles Marriott, Universal Sheraton, Fullerton Heritage Inn, and representing the buyer of Holiday Inn Anaheim.

The Investment Banking Services division helps Chinese companies list on the public trading markets in the USA or Europe. In 2008, ASAP Expo entered the Germany Frankfurt Exchange and established its presence in the Deutsche Boerse Open Market. The products we created are capable of providing our clients, especially small and median size companies, the opportunity to access international capital markets. Our mission is to provide our clients, including start ups and early stage developments with the services that will assist them in the “first step” in becoming a public company.

RESULTS OF OPERATIONS

 

During the three months ended March 31, 2012, the Company earned $78,475 consulting fee income for providing advisory services in real estate acquisition deals. There was no revenue from consulting services for the three months ended March 31, 2011.

For the three months ended March 31, 2012, the Company incurred consulting expense of $25,000 for providing advisory services in real estate acquisition deals.

General and administrative expenses consist primarily of administrative personnel costs, facilities expenses, and professional fee expenses.

 

For the three months ended March 31, 2012, general and administrative expenses decreased by $1,134 or 5.4% to $19,953 compared to $21,087 for the same period last year. The slight decrease in general and administrative expenses was primarily due to the lower depreciation expense as the automobile was transferred to Frank Yuan, CEO of the Company, as payment for his convertible note at December 31, 2011.

 

Payroll and related benefits decreased by $3,526 or 100% for the three months ended March 31, 2012 from $3,526 for the same period last year. The decrease was primarily because the Company paid education costs for administrative personnel in the three months ended March 31, 2011.

 

Interest expense increased to $25,716 during the three months ended March 31, 2012 from $23,650 for the same period last year. This increase was due to the higher average convertible note balance.

 

 

The Company recorded a net income of $7,807 for the three months ended March 31, 2012, as compared to a net loss of $48,263 for the same period last year. The improvement in net income was mainly due to the consulting fees generated from the consulting services for real estate acquisition deals.

LIQUIDITY AND CAPITAL RESOURCES

The Company's working capital deficit was $100,055 at March 31, 2012, as compared to a working capital of $79,871 at December 31, 2011. During the next twelve months, ASAP Expo will focus on its real estate transactions and global trading services to generate additional revenue. With the net revenue from its services, and continuing support from its major shareholders to provide a convertible note, management believes ASAP Expo will have enough net working capital to sustain its business for another 12 months.

 

The Company has a convertible note (the "Yuan Note") from Frank Yuan and his family, which is due on demand, and provides for borrowings up to a maximum total of $1,800,000. The Yuan Note carries an interest rate of 6.0% per annum and is convertible into the Company's equity securities at a conversion price of $0.04 given a written notice of the contemplated conversion describing in reasonable detail the material terms of such equity securities and of the issue is provided. The total balance as of March 31, 2012 was $1,689,562, and the accrued and unpaid interest was $126,566.

 

The forecast of the period of time through which ASAP Expo’s financial resources will be adequate to support its operations is a forward-looking statement that involves risks and uncertainties. ASAP Expo’s actual funding requirements may differ materially as a result of a number of factors, including unknown expenses associated with the cost of providing investment banking, management consulting and global trading services.

 

ASAP Expo has no commitments to make capital expenditures for the fiscal year ending December 31, 2012.

 

Over the next two to five years, ASAP Expo plans to utilize a combination of internally generated funds from operations and potential debt and equity financing to fund its long-term growth.

 

The Report of the Company's Independent Registered Public Accounting Firm on our December 31, 2011 financial statements includes an explanatory paragraph stating that the Company has suffered recurring losses from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

At the present time, we have received no commitments for the funds required for our planned capital investments.  Obtaining those funds, if we can do so, will require that we issue substantial amounts of equity securities or incur significant debts.  We believe that the expected return on those investments will justify the cost.  However, our plan, if accomplished, will significantly increase the risks to our liquidity.

CRITICAL ACCOUNTING POLICIES

 

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in the our financial statements and the accompanying notes. The amounts of assets and liabilities reported on our balance sheet and the amounts of revenues and expenses reported for each of our fiscal periods are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition, stock based compensation and the valuation of deferred taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of the financial statements:

 

Revenue Recognition

 

Accounting Standards Codification (“ASC”) 605, "Revenue Recognition" outlines the basic criteria that must be met to recognize revenue and provide guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with Securities and Exchange Commission. Management believes the Company's revenue recognition policies conform to ASC 605.

 

 

Revenues 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.

 

New Accounting Pronouncements

In December 2011, the FASB issued ASU 2011-11, Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. This ASU requires an entity to disclose both gross and net information about instruments and transactions eligible for offset in the statement of financial position as well as instruments and transactions executed under a master netting or similar arrangement and was issued to enable users of financial statements to understand the effects or potential effects of those arrangements on its financial position. This ASU is required to be applied retrospectively and is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013. As this ASU only requires enhanced disclosure, the adoption is not expected to have an impact on the Company’s financial position or results of operations.

 

ITEM 3. CONTROLS AND PROCEDURES

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report.  Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (ii) is accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure.  Our disclosure controls and procedures include components of our internal control over financial reporting and, as such, are designed to provide reasonable assurance that such information is accumulated and communicated to our management.  Management’s assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met (see the section below in this Item 3 entitled Limitations on the Effectiveness of Internal Controls ).

Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) that occurred during the period covered by this Report, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

 

 

ITEM 1. LEGAL PROCEEDINGS

 

The Company’s affiliate, ASAP Hotel, the Company’s CEO, Frank Yuan, and Investors reached a global settlement on June 23, 2011. All parties have dismissed the lawsuits and cross complaints with prejudice.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

 

 

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.