ASIA8, INC.
Notes to the Condensed Financial Statements (Unaudited)
September 30, 2012
NOTE 1 - ORGANIZATION AND HISTORY
Asia8, Inc. (the “Company”) was incorporated in Nevada as “H&L Investments, Inc.” in September of
1996. On December 22, 1999 the Company changed its name to “Asia4sale.com, Inc.” on acquiring
Asia4Sale.com, Ltd., a Hong Kong registered software development company. The Company sold
Asia4Sale.com, Ltd. in January of 2005.
The Company acquired a 49% interest in World Wide Auctioneers, Inc., a Nevada registered corporation,
holding 100% of a British Virgin Island registered company World Wide Auctioneers, Ltd (“World
Wide”), an international equipment auction company on June 30, 2000. World Wide, based in the United
Arab Emirates (UAE) holds unreserved auctions on a consignment basis for the sale of construction,
industrialand transportation equipment. On August 8, 2003 World Wide Auctioneers, Inc. sold 100% of
World Wide to a Nevada registered company, WWA Group, Inc. (“WWA Group”) in a stock exchange
transaction. The stock exchange caused the Company to acquire a minority equity investment in WWA
Group which it accounted for using the equity method. WWA Group sold World Wide to Seven
International Holdings, Ltd. (“Seven”), a Hong Kong registered company, on October 31, 2010, in
exchange for Seven’s assumption of the assets and liabilities of World Wide subject to certain exceptions.
The disposition did not affect WWA Group’s interest in Asset Forum, LLC., its ownership of proprietary
on-line auction software or its equity interest and debt position in Infrastructure Developments Corp.
(“Infrastructure”).On March 26, 2012, the Company sold 3,240,000 shares from its investment in WWA
Group at a price of $0.025 per share, for a net amount of $81,000. At September 30, 2012 the Company
did not own substantial shareholding in WWA Group and therefore did not record its share in the profit
and loss of WWA Group for the period ended September 30, 2012.
The Company maintains the exclusive rights to distribute Unic Cranes, Atomix boats and Renhe Mobile
House products or “Wing Houses” in the UAE though it has since discontinued distribution efforts in
relation to the Unic Crane and Atomix boat products.
NOTE 2 – GOING CONCERN
The accompanying consolidated financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and liabilities in the normal course of business. Accordingly, they
do not include any adjustments relating to the realization of the carrying value of assets or the amounts
and classification of liabilities that might be necessary should the Company be unable to continue as a
going concern. The Company has accumulated losses and working capital and cash flows from operations
are negative which raises doubt as to the validity of the going concern assumptions. These financials do
not include any adjustments to the carrying value of the assets and liabilities, the reported revenues and
expenses and balance sheet classifications used that would be necessary if the going concern assumption
were not appropriate; such adjustments could be material.
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ASIA8, INC.
Notes to the Condensed Financial Statements (Unaudited)
September 30, 2012
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Presentation
The accompanying consolidated financial statements include our accounts and the accounts of our
subsidiaries. All intercompany accounts and transactions have been eliminated.
Our interim financial statements have been prepared in accordance with generally accepted accounting
principles in the United States (“U.S.GAAP”) for interim financial information and the rules and
regulations of the Securities and Exchange Commission (the “SEC”) for interim financial statements and
accounting policies, consistent, in all material respects with those applied in preparing our audited
consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2011. Accordingly, they do not include all of the information and footnotes required by
U.S. generally accepted accounting principles for complete financial statements. In our opinion, all
adjustments, consisting of only normal recurring adjustments considered necessary for fair presentation,
have been included.
Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2012 or any future period.
b. Basic Loss per Share
For the Three Months Ended September 30, 2012
Income
Shares
Per-Share
(Numerator)
(Denominator)
Amount
$(7,338)
30,692,727
$ (0.00)
For the Three Months Ended September 30, 2011
Income
Shares
Per Share
(Numerator)
(Denominator)
Amount
$
(8,365)
24,156,078 $(0.03)
The computations of basic loss per share of common stock are based on the weighted average number of
shares outstanding at the date of the financial statements. There are no common stock equivalents
outstanding.
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ASIA8, INC.
Notes to the Condensed Financial Statements (Unaudited)
September 30, 2012
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES, Continued
c. Recent Accounting Pronouncements
We have examined all recent accounting pronouncements and believe that none of them will have a
material impact on the financial statements of Asia8, Inc.
NOTE 4- EQUITY INVESTMENT
In August 2000 the Company paid $970,000 cash to acquire 49% of World Wide Auctioneers, Inc., a
Nevada registered company holding 100% of British Virgin Island registered company World Wide
Auctioneers, Ltd. (“World Wide”). In August 2003 World Wide Auctioneers, Inc., sold 100% of World
Wide to WWA Group in a stock for stock transaction whereby the stock of WWA Group was issued
directly to owners of World Wide Auctioneers, Inc. The Company was issued 7,525,000 shares of WWA
Group in 2003, comprising 47.5% of the issued and outstanding stock of WWA Group. At December 31,
2011 the Company owned 32% of the issued and outstanding shares of WWA Group. On March 26,
2012, the Company sold 3,240,000 out of its investment in WWA Group shares at a price of $0.025 per
share, for a net amount of $81,000. At March 31, 2012, the Company owned 16% of the issued and
outstanding WWA Group common stock.As on April 15, 2012 the company transferred 2,412,408 shares
out of its investment in WWA group shares to settle $109,049 in various debts. As of September 30, 2012
the Company does not own a substantial shareholding in WWA Group and therefore no longer records its
share in the profit and loss of WWA Group for the period ended September 30, 2012.
NOTE 5- EQUITY TRANSACTIONS
In 2012, the Company issued 4,152,000 shares of common stock to retire 2,280 preferred shares series
1comprised of $228,000 in principal and $83,400 in interest valued at $0.075 a share. Further the
Company issued 2,129,367 shares of common stock by converting notes payable and other payables into
equity at $0.03 per share.
.
In 2009, the Company issued 255,282 shares of common stock for cash at $0.16 per share.
In 2008, the Company issued 1,084,243 shares of common stock by converting notes payables into equity
at $0.16 per share. In 2007, the Company issued 2,124,250 shares of common stock for cash at prices
ranging from $0.08 to $0.16 per share for a total value of $304,800. Further, the Company issued 1,280
shares of preferred stock for cash at $100 per share.
In 2007, the Company issued 1,000 shares of preferred stock at $100 per share. Each share of preferred
stock was convertible to 400shares of common stock. The Series 1 preferred shares had a coupon rate of
9% interest per annum, with no redemption provision.
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ASIA8, INC.
Notes to the Condensed Financial Statements (Unaudited)
September 30, 2012
NOTE 6 - ADDITIONAL FOOTNOTES INCLUDED BY REFERENCE
Except as indicated in the Note 1 through Note 5, above, there have been no other material changes in the
information disclosed in the notes to the financial statements included in the Company’s Form 10-K for
the year-ended December 31, 2011. Therefore, those footnotes are included herein by reference.
NOTE 7 – USE OF ESTIMATES
The preparation of the financial statements in conformity with generally accepted accounting principles in
United States of America 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.
NOTE 8 – ACCOUNTS PAYABLE TO RELATED PARTY
Accounts Payable and Accrued Expenses do not include any Notes Payable to related party.
NOTE 9 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet date through the date the financial
statements were issued and is unaware of any subsequent events which would require recognition or
disclosure in the financial statements.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis of Financial Condition andResults of Operations and other
parts of this quarterly report contain forward-looking statements that involve risks and uncertainties.
Forward-looking statements can be identified by words such as “anticipates,” “expects,” “believes,”
“plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future
performance and our actual results may differ significantly from the results discussed in the forward-
looking statements. Factors that might cause such differences include but are not limited to those
discussed in the subsection entitled Forward-Looking Statements and Factors That May Affect Future
Results and Financial Condition below. The following discussion should be read in conjunction with our
financial statements and notes thereto included in this report. All information presented herein is based on
the three and nine month periods ended Septembers 30, 2012.Our fiscal year end is December 31.
Discussion and Analysis
General
The Company’s current focus is to work towards our acquisition of Emerging Market Property Advisors
Ltd. (“EMP”). On May 16, 2012 our board of directors caused us to enter into a Share Exchange
Agreement to acquire all of the issued and outstanding shares of EMP in exchange for a forty nine percent
(49%) interest in the Company’s common stock. The transaction is subject to shareholder approval and
requires us to obtain audited financial statements for EMP, which accounts are currently in process.
EMP is involved in the internet marketing of a wide range of international real estate investment
opportunities through lead generation, email marketing campaigns and property showings to buyers
around the world. Sellers are also offered assistance with corporate identity, web development and
enhanced graphics to build awareness of the opportunities presented.
Despite the decrease in our equity interest in WWA Group Inc. (“WWA Group”) and its agreement to be
acquired by Summit Digital, Inc., we continue to work with WWA Group and InfrastructureDevelopment
Corporation (“Infrastructure”) to leverage those relationships to develop the distribution of Wing House
mobile shelter systems. We anticipate that we will require additional capital to market this business and
recognize that the economic downturnin the global economyhas decreased demand for our products that
depend on the vitality of the construction sector industry.
Distribution Rights
We are displaying and using Wing House office units on the internet and in a yard in Thailand while
actively marketing the units by email. We are offering the units for sale or rental on a 60 day delivery
schedule from order date. We are negotiating financing with the manufacturer to spur sales effortsthough
demand for this type of housing has receded.Infrastructuremay continue to tender contracts in Asia that
may lead to more “in house” created demand for the units. The Company and Infrastructure will share
gross profits made on any sales or rentals generated by Infrastructure’s efforts.
WWA Group Equity Interest
Since the relationship between the Company and WWA Group is one of common management control,
we benefit from the contacts and business development opportunities generated by its business activities.
We intend to provide additional business support to WWA Group as necessary to help grow the value of
our remaining equity interest, and to provide us opportunities generated by WWA Group.
Infrastructure
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Even though WWA Group no longer maintains a consolidated equity interest in Infrastructure, we
continue to believe that despite competitive pricing pressures, a significant number of projects will fall
within the criteria expressed by Infrastructure and that alternative fuel conversions will become
widespread as fuel prices rise and fueling infrastructure becomes available.
Since Infrastructure shares common management with the Company we believe that there exists an
opportunity to utilize our international presence and existing relationships to assist Infrastructure in
procuring new projects and managing existing ones. We expect to continue to work with Infrastructure on
an as needed basis to provide any assistance that might be required and within our ability to assist.
Asset Forum, LLC.
On May 1, 2012 WWA Group abandoned efforts to commercialize the operations of Asset Forum LLC.
due to a lack of sufficient resources to develop the site and intense completion in the online auction space.
Expansion Plans into other Businesses
The Company has signed a Share Exchange Agreement to acquire EMP, a UK limited liability company
in a stock for stock exchange transaction that is involved in the marketing of international real estate
opportunities to prospective investors through the internet.EMP offers lead generation, email marketing
campaigns and property showings to a variety of clients that are intent on presenting a wide array of real
estate investment options to international investors. Clients are also offered assistance with corporate
identity, web development and enhanced graphics to build awareness of the opportunities presented.
Since 2005 EMP has consistently increased its revenue stream, grown gross profit margins, and
established a loyal customer base.The transaction is intended as a stock exchange whereby the Company
will acquire EMP as a wholly owned subsidiary that will continue to operate as an autonomous unit. Due
to delays associated with obtaining the requisite financial information we do not expect to close the
anticipated transaction until the 1st quarter of 2013 subject to shareholder approval.
Financial Condition and Business Development Risks
Our financial condition and results of operations will depend primarily on prospective income generated
from our investments and/or expansion businesses. Meanwhile, our continued operation is tied to our
ability to realize debt or equity financing. Since the Company is currently without income it can provide
no assurance that income will be forthcoming or in the event income is realized that such return will
provide sufficient cash flows to sustain our operations.
Our business development strategy is prone to significant risks and uncertainties which are having an
immediate impact on our efforts to realize net cash flow. We have a limited history of generating income.
Should we be unable to generate income, the Company’s ability to continue its business operations will
be in jeopardy.
Results of Operations
During the period ending September 30, 2012, the Company failed to realize revenues from the sale of its
products, which failure resulted in a continuation of net losses for the period. Nevertheless, the Company
remains optimistic that Wing Houses are in demand, and that a global economic recovery in 2012
alongside the efforts of Infrastructure will generate sales of Wing Houses.
Revenue
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Revenue for the three and nine month periods ended September, 2012 and September 30, 2011was $0.
The lack of revenues over the comparative periods can be primarily attributed to the effect that a global
recession has had on the demand for Wing Houses. We expect revenue in future periods with a return to
economic normalization in global markets, and a broadening of Infrastructure’s business, which we
expect will create an “in house” demand for Wing Houses and the acquisition of EMP.
Operating Expenses
Operating expenses for the three month period ended September 30, 2012, were $7,338 as compared to
$10,797 for the three month period ended September 30, 2011. Operating expenses for the nine month
period ended September 30, 2012 were $66,792 as compared to $54,738 for the nine month period ended
September 30, 2011. The increase in expenses over the comparative nine month period can be attributed
to an increase in general and administrative expenses. We expect that operating expenses will increase as
we move forward with our acquisition of EMP.
Depreciation and amortization expenses for the three and nine month periods ended September 30,
2012and September 30, 2011 were $0. Depreciation and amortization expenses are anticipated in future
periods.
Other Income (Expenses)
Other income for the three month period ended September 30, 2012, was $0 as compared to other income
of $2,433 for the three month period ended September 30, 2011. Other income for the nine month period
ended September 30, 2012 was $27,690 as compared to other expenses of $689,742 for the nine month
period ended September 30, 2011. The transition toward other come from other expenses in the current
periods can be primarily attributed to the losses recognized in the prior comparative periods from our
equity investment in WWA Group. We expect to continue recognize other income in future periods.
Net Losses
Net Loss for the three month period ended September 30, 2012, were $7,338 as compared to a net loss of
$8,365 for the three month period ended September 30, 2011. Net losses for the nine month period ended
September 30, 2012 were $39,101 as compared to $744,480 for the nine month period ended September
30, 2011. The decrease in net losses over the comparative three month periods can be attributed to the
decrease in general and administrative expenses. The decrease in net losses over the comparative nine
month periods can be attributed to the realization of other income and income from equity investment in
the current nine month period that offset the increase in general and administrative expenses. We expect
to continue to realize net losses until such time as our operations produce revenue.
Capital Expenditures
The Company did not spend any significant amounts on capital expenditures during the three month
period ended September 30, 2012.
Income Tax Expense (Benefit)
The Company may have an income tax benefit resulting from net operating losses to offset any future
operating profit. However, the Company has not recorded this benefit in the financial statements because
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it cannot be assured that it will utilize the net operating losses carried forward in future years.
Impact of Inflation
The Company believes that inflation has had a negligible effect on operations over the past three years.
Liquidity and Capital Resources
As of September 30, 2012, the Company had a working capital deficit of $1,199. Our current assets were
$8,094 consisting of $500 in cash, and $7,594 in other current assets. Our total assets were $50,454
consisting of current assets and our equity investments totaling $42,360. At September 30, 2012, our
current and total liabilities were $9,293.
Cash flow used in operating activities for the period ended September 30, 2012, was $251,226 as
compared to cash flow used in operating activities of $41,613 for the period ended September 30, 2011.
Cash flow used in operating activities in the current period can be primarily attributed to losses associated
with an equity investment and a decrease in amounts payable. We expect that cash flow used in operating
activities will decrease as net losses decrease.
Cash flow provided by investing activities for the periods ended September 30, 2012 and September 30,
2011, was $190,048 and $0 respectively. Cash flow provided by investing activities in the period ended
September 30, 2012 can be attributed to the sale of a portion of the Company’s interest in WWA Group
and debt settlements that utilized shares of the Company’s interest in WWA Group. We expect cash flow
to be provided by investing activities in future periods as the Company may determine to liquidate its
remaining equity interest in WWA Group.
Cash flow provided in financing activities for the period ended September 30, 2012, was $61,286 as
compared to $5,391 in cash flow provided financing activitiesfor the period ended September 30, 2011.
Cash flow provided by financing activities in the current period can be attributed to the issuance of
common shares for debt offset by a decrease in a note payable. We expect to continue to have cash flow
provided by financing activities in the near term in order to finance operations.
The Company’s current assets are insufficient to conduct its business operations over the next twelve (12)
months. We will have to seek at least $100,000 in debt or equity financing over the next twelve months to
fund marketing efforts for our Wing Houses and to integrate the operations of EMP into our own. The
Company has no current commitments or arrangements with respect to, or immediate sources of this
funding. Further, no assurances can be given that funding is available. The Company’s shareholders are
the most likely source of new funding in the form of loans or equity placements though none have made
any commitment for future investment and the Company has no agreement formal or otherwise. The
Company’s inability to obtain sufficient funding will have a material adverse affect on its ability to
continue business operations.
The Company does not expect to pay cash dividends in the foreseeable future.
The Company had no lines of credit or other bank financing arrangements.
The Company has no defined benefit plan or contractual commitment with any of its officers or directors.
The Company has no current plans for the purchase or sale of any plant or equipment.
The Company has no current plans to make any changes in the number of employees.
14
Off Balance Sheet Arrangements
As of September 30, 2012, the Company has no significant off-balance sheet arrangements that have or
are reasonably likely to have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources
that is material to stockholders.
Critical Accounting Policies
In the notes to the audited financial statements for the year ended December 31, 2011 included in our
Form 10-K, the Company discussed those accounting policies that are considered to be significant in
determining the results of operations and our financial position. The Company believes that the
accounting principles we utilized conform to accounting principles generally accepted in the United
States of America.
The preparation of financial statements requires our management to make significant estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and expenses. By their nature,
these judgments are subject to an inherent degree of uncertainty. On an on-going basis, we evaluate
estimates. We base our estimates on historical experience and other facts and circumstances that are
believed to be reasonable, and the results form the basis for making judgments about the carrying value of
assets and liabilities. The actual results may differ from these estimates under different assumptions or
conditions. With respect to revenue recognition, we apply the following critical accounting policies in the
preparation of our financial statements.
Revenue Recognition
The Company intends to generate revenue through the sale of its products on a private, commercial, and
industrial basis. Revenue from product sales is recognized at the time the product is shipped and invoiced
and collectability is reasonably assured. The Company believes that certain revenue should be recognized
as title passes to the customer at the time of shipment.
Going Concern
The Company’s auditors have expressed an opinion as to the Company’s ability to continue as a going
concern as a result of an accumulated deficit of $3,712,641 as of December 31, 2011 which increased to
$3,751,743 as of September 30, 2012. The Company’s ability to continue as a going concern is subject to
the ability of the Company to realize a profit and/or obtain funding from outside sources. Management’s
plan to address the Company’s ability to continue as a going concern includes: (i) obtaining funding from
the private placement of debt or equity; and (ii) realizing revenues from the sale of Wing Houses or
prospectively from the operations of EMP. Management believes that it will be able to obtain funding to
allow the Company to remain a going concern through the methods discussed above, though there can be
no assurances that such methods will prove successful.
Forward Looking Statements and Factors That May Affect Future Results and Financial Condition
The statements contained in the section titled Management’s Discussion and Analysis of Financial
Condition andResults of Operations and elsewhere in this current report, with the exception of historical
facts, are forward looking statements. Forward looking statements reflect our current expectations and
beliefs regarding our future results of operations, performance, and achievements. These statements are
15
subject to risks and uncertainties and are based upon assumptions and beliefs that may or may not
materialize. These statements include, but are not limited to, statements concerning:
our anticipated financial performance;
the sufficiency of existing capital resources;
our ability to fund cash requirements for future operations;
uncertainties related to the growth of our business and the acceptance of our products and
services;
our ability to achieve and maintain an adequate customer base to generate sufficient revenues to
maintain and expand operations;
the volatility of the stock market; and,
general economic conditions.
We wish to caution readers that our operating results are subject to various risks and uncertainties that
could cause our actual results to differ materially from those discussed or anticipated including the factors
set forth in the section entitled Risk Factors included elsewhere in this report. We also wish to advise
readers not to place any undue reliance on the forward looking statements contained in this report, which
reflect our beliefs and expectations only as of the date of this report. We assume no obligation to update
or revise these forward looking statements to reflect new events or circumstances or any changes in our
beliefs or expectations, other than as required by law.
Recent Accounting Pronouncements
Please see Note 3 to our financial statements for recent accounting pronouncements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required.
16
