Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitionthe definitions of “large accelerated filer”,filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act. Check one:
Large accelerated filer o☐ | Accelerated filer ☐ |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company ☒ |
| | Emerging growth company Accelerated filer o | | Non-accelerated filer o
| | Smaller reporting company x☐
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant on June 30, 2015,2017, computed by reference to the closing price of that date, was $76,727.$76,728.
On March 31, 2016,2018, 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, 20152017
| PART I | | |
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| | Item 1 | | 4 |
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| | Item 1A | | 5 |
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| | Item 2 | | 8 |
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| | Item 3 | | 8 |
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| | Item 4 | | 8 |
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| PART II | | |
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| | Item 5 | | 9 |
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| | Item 6 | | 10 |
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| | Item 7 | | 1214 |
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| | Item 8 | | 1214 |
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| | Item 8A | | 1314 |
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| | Item 8B | | 1314 |
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| PART III | | | |
| | | | |
| | Item 9 | | 1415 |
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| | Item 10 | | 1415 |
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| | Item 11 | | 1516 |
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| | Item 12 | | 1516 |
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| | Item 13 | | 1516 |
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| PART IV | | | |
| | | | |
| | Item 14 | | 1617 |
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| | | | 1819 |
PART I
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“Description of Business"Business” and "Management's“Management’s Discussion and Analysis or Plan of Operations,"” or otherwise incorporated by reference into this document contain "forward-looking statements"“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.
ITEM 1. DESCRIPTION OF BUSINESS
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 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.
Our Commercial Real Estate division provides Chinese institutional and high net worth individualindividuals a 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 securesecuring 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, 2015,2017, ASAP Expo employed 49 full-time employees, one of them are classified as executive officer.employees. 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.
ITEMITEM 1A. RISK FACTORS RELATING TO ASAP EXPO
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.
WE ARE SUBJECT TO UNITED STATES GOVERNMENT REGULATIONS WHICH COULD ADVERSELY AFFECT THE COMPANY'SCOMPANY’S BUSINESS.
The primary source of income of the Company'sCompany’s commercial real estate Division is from the hotels bought by Chinese large corporations and high-net worth individuals. Capital transferred into the United States areis heavily regulated by the United States government. If the United States government imposes limitations on accepting investment from China, it will adversely affect the Company'sCompany’s business.
WE ARE SUBJECT TO FOREIGN GOVERNMENT REGULATIONS WHICH COULD ADVERSELY AFFECT THE COMPANY'SCOMPANY’S BUSINESS.
The primary source of income of the Company'sCompany’s Commercial Real Estate Division is from overseas investors purchasing Hotels in the U.S. Foreign governments which may advise their approval to allow investment aboard.abroad. Such policies could adversely affect the Company'sCompany’s commercial real estate transaction consultant revenue.
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. 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 perform asset management roleroles after acquired.
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-PRICEDPENNY 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'sCompany is a unique niche services firm, there is no guarantee that other investment advisory firms will not copy or follow the Company'sCompany’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 A SHAREHOLDERS’ DEFICIT OF $671,714$524,385 AS OF DECEMBER 31, 20152017 AND HAVE RECEIVED AN OPINION FROM OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM REGARDING SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.
We have history of operating losses. As of December 31, 2015,2017, shareholders’ deficit is $671,714.$524,385. These losses have resulted principally from expenses incurred for general and administrative, payroll and interest. 2011 is the first year we had 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, 20152017 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.
ITEMITEM 2. DESCRIPTION OF PROPERTY
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 party with $3,500 per month on month to month basis.
ITEMITEM 3. LEGAL PROCEEDINGS
NONE
ITEMITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSMINE SAFETY DISCLOSURES
NONE
PART II
ITEMITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company'sCompany’s common stock began trading on the Over-the-Counter Bulletin Board ("OTC-BB"(“OTC-BB”) on January 20, 2010 under the symbol "ASAE"“ASAE”. As of April 14, 2016,2018, there has been limited trading volume.
HOLDERS OF RECORD
On December 31, 2015,2017, the Company'sCompany’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'sCompany’s pattern of growth, profitability, financial condition, and such other factors, as the Board of Directors may deem relevant.
PENNY STOCK
The Company'sCompany’s securities are subject to the Securities and Exchange Commission's "penny stock"Commission’s “penny stock” rules. The penny stock rules may affect the ability of owners of the Company'sCompany’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'sCompany’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"“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'sspouse’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'spurchaser’s written agreement to the transaction prior to the sale. Consequently, the rule may affect the ability of purchasers of the Company'sCompany’s securities to buy or sell in any market.
SUBSEQUENT EVENT
None.
RECENT SALES OF UNREGISTERED SECURITIES
None
ITEMITEM 6. MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the audited financial statements and the related notes thereto included elsewhere in this annual report for the period ended December 31, 2015.2017. This annual report contains certain forward-looking statements and the Company'sCompany’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’s (“ASAP” or “The Company” or “Our” or “We”) mission is to be the bridge between China and the Western world. ASAP is a holding company that assists Chinese institutional and high net worth individuals with acquisition advisory and asset management of U.S. hotels.
Our investors include AVIC International USA, Junson Capital, Urban Commons, Sky Harbor Management, Shenzhen New World, American Curvet, and USA Heritage.
From August 2010 until now, our group has provided consulting services regarding purchasing 20 hotels primarily in California, Florida, Colorado, Connecticut, Georgia, New Jersey and Michigan. Hotel brands include Marriott, Hilton, Westin, Doubletree by Hilton, Four Points by Sheraton, and Holiday Inn. We are one of the most active hotel buyers in the market.
ASAP believes we will continue this growth for the next couple of years, taking advantage of current below replacement cost assets with reasonable cap rates and value-added opportunities in the current U.S. hotel market.
RESULTS OF OPERATIONS
Revenues
Since the Company’s primary business is based upon potential transactions in real estate, the Company is subject to variances in revenues due to investorsinvestors’ sentiment towards real estate.
We believe our services revenue is typically seasonal. Historically, during normal economic conditions, this seasonality has caused revenue, operating income, net income and cash flows from operating activities to be lower in the first six months of the year and higher in the second half of the year. We believe the concentration of earnings and cash flows in the last six months of the year has historically been due to an industry-wide focus of clients to complete transactions towards the end of the calendar year. However, this seasonality did not occur in 2007 or 2008 during the disruptions facing all global capital markets, and in particular the U.S. commercial real estate markets, and this historical pattern of seasonality may or may not continue.
Substantially all of our revenues are in the form of consulting fees collected from our clients, usually negotiated on a transaction-by-transaction basis. The Company’s consulting fees primarily consist of revenue derived from transaction commission received from acquisition advisory.advisory services. The Company earns the consulting fees by sourcing the deal, underwriting financials, coordinating due diligence on all contracts, recommending lenders, hiring third party property management companies, and negotiating franchise agreements. Another revenue source for the Company includes asset management fees, which consist of supervision of daily, weekly, and monthly operating results of the hotel, review of capital expenditure requests, communication with lenders, negotiating personal and real property tax assessments, and most importantly, oversight on brand relations.
The Company’s clients include concentration ofare concentrated to two to three main clients.clients, some of them may be affiliates because the Company’s shareholder officer may take small ownership in the hotel or real estate project that the Company helps acquire or manage. Our concentration of clients does provide a risk for revenue growth. The Company has established strong relationships with our clients. Our business and client relationships, and our culture and philosophy are firmly centered on putting the clients’ interests first. We have been building strong reputation in the hospitality industry which is bringing several new potential clients. We expect to have steady revenue streams from our two major clients while building a new client base for future revenue growth. We believe that our product offerings,deep knowledge of the hospitality industry, asset management services, client diversification, expertise in a property types and national sourcing deals platform have the potential to create a sustainable revenue stream within the U.S. commercial real estate sector.
During the year ended December 31, 2015,2017, the Company earned consulting fees of $2,119,332,$2,079,068 including $1,648,050 from affiliated companies in which the Company’s officers are also small owners, as compared to consulting fees of $2,741,932$1,715,522 for the same period last year. The decrease in consulting fees during the year 2015 is mainly because the Company closed fewer hotel acquisition deals at a lower fee and received more monthly advisory feesof which $1,267,072 were from existing hotel clients. The Company earns commission by occasionally acting as a merchandise purchasing agent.affiliated companies. During the year ended December 31, 2015, commission income2017, the Company also earned management fee of $55,200, from one hotel client. The increase in consulting fees in 2017 was $0 as compared to $48,125 formainly because the same period last year.Company closed three hotel acquisition deals and one hotel refinance deal versus two acquisitions in year 2016, in addition, the Company also received more consulting fees from more hotel clients.
Cost of Sales
In the course of providing real estate advisory services and asset management services, the Company pays consulting fees for finding properties and other services that facilitate the closing of deals.
Cost of sales consisting mainly of consulting expense,expenses, is primarily the result of the commissions and other incentive compensation incurred directly related to acquisition advisory services. Therefore, the fluctuation in revenue may directly impact the cost of sales.
For the year ended December 31, 20152017 and 2014,2016, the Company incurred consulting expenses of $1,157,757$1,070,800 for providing advisory services in real estatehotel acquisition as compared to $1,847,265$817,297 incurred in the same period last year. The lowerhigher consulting expenses were mainly because the Company closed fewermore hotel acquisition deals, at a lower fee, and accordingly incurred lowerhigher consulting expenses related to the acquisition.
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, 2015,2017, G&A expenses increased by $108,151$82,944 or 21.6%10.6% to $608,102$867,722 as compared to $499,951$784,778 for the same period last year. The increase in the year 2015 was mainly due to higher payroll expenses, staff expenses,and related employee benefits as more employees were hired, higher professional fees, and higher office and maintenance expenses as a result of office remodeling.an auto lease for the whole year versus only paid 4-month in 2016, partly offset by lower marketing expenses.
Interest Expense
Interest expense decreasedincreased to $21,243$33,578 during the year ended December 31, 2015 from $29,1932017 as compared to $22,128 for the same period last year. The decreases waschanges in interest expense were mainly due to the lowerchanges in average note payable balances.
Net Income
The Company recorded a net income of $260,480$89,471 for the year ended December 31, 2015,2017, as compared to a net income of $36,358$57,858 for the same period last year. The increase in net income was mainly due to the higher gross profit, no moreand the lack of loss on settlement, and lower income tax provision, offset by higher G&A expenses.expenses, higher interest expense and higher income tax provisions.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital deficit was $387,196 at December 31, 2015, as compared to a working capital deficit of $540,957 at December 31, 2014. 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 note payable, 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. On December 31, 2014, the convertible note was amended to waive the right of conversion and will be used as a line of credit. The Yuan Note carries an interest rate of 6.0% per annum. The total balance as of December 31, 2015 was $327,085, and the accrued interest was $291,309. The balance of the convertible note as of December 31, 2014 was $389,804 and the accrued interest on the note was $271,075.
The forecast of the period of time through which ASAP Expo’s financial resources will be adequate to support its operations is a forward-looking statement that involves risks and uncertainties. ASAP Expo’s actual funding requirements may differ materially as a result of a number of factors, including unknown expenses associated with the cost of providing real estate advisory, investment banking, and management consulting services.
The Company has no commitments to make capital expenditures for the fiscal year ending December 31, 2015.
Over the next two to five years, the Company plans to utilize a combination of internally generated funds from operations and potential debt and equity financing to fund its long-term growth.
The Report of the Company'sCompany’s Independent Registered Public Accounting Firm on our December 31, 20152017 financial statements includes an explanatory paragraph stating that the Company has suffered recurring losses from operationsnegative working capital and has an accumulated stockholders'stockholders’ deficit, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
At the present time, the Company has received no commitmentsLiquidity and Capital Resources
Our working capital for the funds requiredperiods presented is summarized as follows:
| | | As of December 31, 2017 ($) | | | As of December 31, 2016 ($) | |
| Current assets | | $ | 111,163 | | | $ | 62,369 | |
| Current liabilities | | | 685,751 | | | | 722,148 | |
| Working capital | | $ | (574,588 | ) | | $ | (659,779 | ) |
The following table shows cash flows for its plannedthe periods presented:
| | | Twelve Months Ended December 31, | |
| | | 2017 | | | 2016 | |
| Net cash provided by (used in) operating activities | | $ | 467,324 | | | $ | 29,920 | |
| Net cash provided by investing activities | | | (7,239 | ) | | | (3,655 | ) |
| Net cash provided by (used in) financing activities | | | (402,564 | ) | | | (40,176 | ) |
| Net increase (decrease) in cash | | $ | 57,521 | | | $ | (13,911 | ) |
Operating Activities
For the twelve months ended December 31, 2017, net cash provided by operating activities was $467,324. This was primarily due to a net income of $89,471, adjusted by non-cash related expenses of depreciation of $11,086 and non-cash related gain on disposal of fixed assets of $5,277, then increased by favorable changes in working capital
investments. Obtaining those funds, ifof $372,044. The favorable changes in working capital resulted from an increase in accounts payable and accrued expenses and accrued expenses - officer of $314,968, an increase in income tax payable of $48,350, and a decrease in due from affiliated companies of $8,727.
For the Company can do so, will require that it issues substantial amountstwelve months ended December 31, 2016, net cash used in operating activities was $57,775. This was primarily due to a net income of equity securities or incur significant debts.$57,858, adjusted by non-cash related expenses of depreciation of $10,474, then decreased by unfavorable changes in working capital of $38,412. The Company believes thatunfavorable changes in working capital resulted from a decrease in accounts payable and accrued expenses of $107,986, a decrease in income tax payable of $18,121, and a decrease in due from affiliated companies of $87,695.
Investing Activities
For the expected returntwelve months ended December 31, 2017, net cash provided by investing activities was $1,487. This was due to the acquisition of property and equipment of $7,239.
For the twelve months ended December 31, 2016, net cash provided by investing activities was $84,040. This was due to the purchase of a computer for $3,655.
Financing activities
For the twelve months ended December 31, 2017, net cash used in financing activities was $402,564 which was mainly due to net repayment to note payable from officers of $398,812, offset by payments on those investments will justifyauto loan of $3,752.
For the cost. However, the Company’s plan, if accomplished, will significantly increase the riskstwelve months ended December 31, 2016, net cash used in financing activities was $40,176 which was mainly resulted from net payment to its liquidity.note payable from officers of $30,000, offset by payments on auto loan of $4,905 and payments on equipment loan of $5,271.
CRITICAL ACCOUNTING POLICIES
Use of Estimates
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"“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'sCompany’s revenue recognition policies conform to ASC 605.
Revenues are mainly consulting fees. The Consulting fees are recognized when earned.work is complete. Consulting fees paid in advance and 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“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
In April 2015,February 2016, the FinancialFASB issued Accounting Standards BoardUpdates ASU No. 2016-02, “Leases (Topic 842)” (“FASB”ASU 2016-02”). ASU 2016-02 requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases. ASU 2016-02 will also require new qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently reviewing the provisions of this ASU 2016-02 to determine if there will be any impact on the Company’s financial statements.
In August 2016, the FASB issued Accounting Standards Update (“ASU”) 2015-3, “SimplifyingASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments”. The updated guidance aims to reduce diversity in presentation and classification of certain cash receipts and cash payments by addressing eight specific cash flow issues including (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the PresentationEffective Interest Rate of Debt Issuance Costs” (“ASU 2015-3”). ASU 2015-3the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned Life Insurance Policies; (6) Distributions Received from Equity Method Investees; (7) Beneficial Interests in Securitization Transactions and (8) Separately Identifiable Cash Flows and Application of the Predominance Principle. Among the afore-mentioned eight addressed cash flow issues, the category of “Separately Identifiable Cash Flows and Application of the Predominance Principle” requires a reporting entity to classify cash receipts and payments that debt issuance costs related to a recognized debt liability be presentedhave aspects of more than one class of cash flows first by applying specific guidance in generally accepted accounting principles (GAAP) and, only in the balance sheet asabsence of specific guidance, by determining each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, a direct deduction fromreporting entity should classify such cash receipts and cash payments by referring to the carrying amountpredominant source or use of that debt liability, consistent with debt discounts, rather than separately as an asset. ASU 2015-3cash flows for the item. The updated guidance is effective for annualfrom reporting periods beginning after December 15, 2015, including interim periods within those years, and is to be applied retrospectively. Early adoption is permitted.2018. The Company doesis assessing the impact to its accounting practices and financial reporting procedures as a result of the issuance of this standard.
As of December 31, 2017, there are no recently issued accounting standards not expectyet adopted that would have a material effect on the adoptionCompany’s financial statements.
ITEMITEM 7. FINANCIAL STATEMENTS
The Company'sCompany’s audited Financial Statements are set forth beginning on page F-1 in this Form 10-K.
ITEMITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
NoneEffective April 13, 2017, the Company engaged Heaton & Company, PLLC, Certified Public Accountants (“Heaton” ) as its independent accountants for the year ended December 31, 2016.
ITEMITEM 8A. EVALUATION OF CONTROLS AND PROCEDURESUnder 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, 2015 Form 10-K. Based upon that evaluation, our CEO and CFO concluded that, as of December 31, 2015, 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, 20152017 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, 20152017 based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations (COSO)(COSO - 2013). Based on this evaluation, management concluded that, as of December 31, 2015,2017, 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.
Limitations on Controls
Management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
ITEMITEM 8B. OTHER INFORMATION
None.
PART III
ITEMITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The following are the directors and executive officers of the Company as of March 31, 2016.2018.
Frank S. Yuan, Chairman, CEO and CFO since 2007
The following sets forth certain biographical information concerning director:
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'smen’s apparel private label & wholesale company, a "Knights“Knights of Round Table"Table” sportswear line, a "Uniform Code"“Uniform Code” sweater line, and men'smen’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.
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.
ITEMITEM 10. EXECUTIVE COMPENSATION
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, 20152017 and 2014,2016, annual compensation, including salary and bonuses paid by the Company to the Chief Executive Officer. No other executive officers received more than $150,000 during the fiscal years-ended December 31, 20152017 and 2014.2016. The Company does not currently have a long-term compensation plan and does not grant any long-term compensation to its executive officers or employees.
The table does not reflect certain personal benefits, which in the aggregate are less than ten percent of the named executive officer'sofficer’s salary and bonus. No other compensation was granted for the periods ended December 31, 20152017 and 2014.2016.
SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | Long Term Compensation | |
| | | | | Annual Compensation | | | Awards | | | Payouts | |
Name and Principal Position | | Year | | Salary ($) | | | Bonus ($) | | | Other Annual Compensation | | | Restricted Stock Award(s) | | | Securities Underlying Options/SARs (#) | | | LTIP Payouts ($) | | | All Other Compensation | |
| | | | | | | | | | | | | | | | | | |
| Yuan, Frank | | 2017 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | | | |
| | | | | N/A | | | | | | | | | |
| (CEO/CFO) | | 2016 | | | | | | | $ | - | | | $ | - | | | $ | - | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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.
ITEMITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
None.
ITEMITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has a revolving line of credit totaling $1,800,000 with Frank Yuan and certain members of his family.Jerome Yuan. 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 20152017 and 2014,2016, the Company incurred interest expense totaling $21,243$32,100 and $29,193$21,441 in connection with the Line. At December 31, 2015, theline of credit. The balance of the Lineline of credit as of December 31, 2017 was $327,085. The Note holder has sole discretion right to convert$212,140 and the accrued interest on 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 amountwas $32,100. The balance of the outstanding debt. In 2015,note payable as of December 31, 2016 was $610,952 including accrued interest of $312,750 which was transferred to the Note holder waivedprincipal at December 31, 2016.
For the rightyear ended December 31, 2017 and 2016, consulting fees from affiliates were $1,648,050 and $1,267,072, respectively.
For the year ended December 31, 2017 and 2016, consulting expense to related parties were $293,500 and $297,000, respectively.
Currently, the Company is leasing office space from its officer under a month by month basis. The lease provides for monthly lease payments of conversion.$3,500. As of December 31, 2017 and 2016, accrued rent expense was $42,000 and $0, respectively.
The son of the Company’s officer (“Son”) receives salary from the Company for work performed. During year 2017 and 2016, The Son received a total salary of $160,000 and $180,000, respectively.
A brother of the Company’s officer (“Brother”) is receiving consulting fees from the Company for work performed. During year 2017 and 2016, the Brother earned a total consulting fee of $0 and $72,000, respectively.
ITEMITEM 13. PRINCIPAL ACCOUNTANT FEES AND SERVICES
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 | | 2015 | | 2014 | | | 2017 | | | 2016 | |
| | | | | | | | | | | | |
| | | | | | | | | $ | 14,400 | | | $ | 12,600 | |
| | | | | | | | | $ | - | | | $ | 9,450 | |
| | | | | | | | | $ | - | | | $ | - | |
| | | | | | | | | $ | - | | | $ | - | |
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.
The accompanying notes are an integral part of these financial statements.
The accompanying notes are an integral part of these financial statements.
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 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.
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
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 December 31, 20152017 and 2014,2016, respectively.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.
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.
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.
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 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.
Revenues are mainly consulting fees. The consulting fees are recognized when earned.work is complete. 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 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.
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. As of December 31, 2017 and 2016, the Company did not have any potentially dilutive instruments.
