UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q /A
Amendment No. 1
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedJune 30, 2008
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________To_______________
Commission file number 000-49768
Asia Interactive Media Inc.
(Exact name of registrant as specified in its charter)
| Nevada | 43-195-4778 |
| (State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.) |
| organization) | |
| Level 30, Bank of China Tower, | 011-852-9836-2643 |
| 1 Garden Road, Central Hong Kong | |
| (Address of principal executive offices) (Zip Code) | (Registrant's telephone number, including area code) |
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
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 require to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yesx No¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer ¨Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange ActYesx No ¨
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ¨ No ¨
As of August 8, 2008, the registrant's outstanding common stock consisted of6,634,491shares.
Table of Contents
2
PART I - FINANCIAL INFORMATION
Safe Harbor Statement
This report on Form 10-Q contains certain forward-looking statements. All statements other than statements of historical fact are "forward-looking statements" for purposes of these provisions, including any projections of earnings, revenues, or other financial items; any statements of the plans, strategies, and objectives of management for future operation; any statements concerning proposed new products, services, or developments; any statements regarding future economic conditions or performance; statements of belief; and any statement of assumptions underlying any of the foregoing. Such forward-looking statements are subject to inherent risks and uncertainties, and actual results could differ materially from those anticipated by the forward-looking statements.
These forward-looking statements involve significant risks and uncertainties, including, but not limited to, the following: competition, promotional costs, and risk of declining revenues. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of a number of factors. These forward-looking statements are made as of the date of this filing, and we assume no obligation to update such forward-looking statements. The following discusses our financial condition and results of operations based upon our consolidated financial statements which have been prepared in conformity with accounting principles generally accepted in the United States. It should be read in conjunction with our financial statements and the notes thereto included elsewhere herein.
All currency references in this report are in US dollars unless otherwise noted.
Item 1. Financial Statements.
The unaudited financial statements of Asia Interactive Media Inc. ("Asia Interactive", "we", "our", "us") follow.
Asia Interactive Media Inc. (previously Black Gardenia Corp.)
(A Development Stage Company)
UNAUDITED
(Expressed in U.S. Dollars)
| June 30, 2008 | |
| Index | |
| Balance Sheet | F-2 |
| Statements of Operations | F-3 |
| Statements of Cash Flows | F-4 |
| Statement of Stockholders' Deficit | F-5 |
| Notes to the Financial Statements | F-6 |
F-1
| Asia Interactive Media Inc. (previously Black Gardenia Corp.) | ||
| (A Development Stage Company) | ||
| Balance Sheet | ||
| UNAUDITED | ||
| (Expressed in U.S. Dollars) | ||
June30, | December 31, | |
2008 | 2007 | |
$ (unaudited) | $ | |
| Assets | ||
| Current Assets | ||
| Cash | 548,158 | 583,512 |
| Total Current Assets | 548,158 | 583,512 |
| Loan receivable (Note 3) | 163,398 | 152,966 |
| Total Assets | 711,556 | 736,478 |
| Liabilities and Stockholders' Equity (Deficit) | ||
| Current Liabilities | ||
| Accounts payable and accrued liabilities | 39,021 | 23,414 |
| Due to related party (Note 5) | 17,312 | 17,312 |
| Total Current Liabilities | 56,333 | 40,726 |
| Loan Payable (Note 4) | 166,242 | 160,258 |
| Total Liabilities | 222,575 | 200,984 |
| Contingency (Notes 1) | ||
| Stockholders' Equity (Deficit) | ||
| Common Stock: Authorized: 100,000,000 shares, $0.00001 par value; 6,634,491 shares Issued and outstanding | 67 | 50 |
| Additional Paid-in Capital | 648,733 | 450 |
| Stock Subscriptions (Note 6) | - | 648,300 |
| Donated Capital | 37,628 | 37,628 |
| Deficit Accumulated During the Development Stage | (197,447) | (150,934) |
| Total Stockholders' Equity (Deficit) | 488,981 | 535,494 |
| Total Liabilities and Stockholders' Equity (Deficit) | 711,556 | 736,478 |
(The Accompanying Notes are an Integral Part of the Financial Statements)
F-2
| Asia Interactive Media Inc. (previously Black Gardenia Corp.) | |||||
| (A Development Stage Company) | |||||
| Statements of Operations | |||||
| UNAUDITED | |||||
| (Expressed in U.S. Dollars) | |||||
| Accumulated from | |||||
| February 9, 2000 | For the three | For the three | For the six | For the six | |
| (Date of Inception) | months ended | Months ended | months ended | Months ended | |
| to June 30, 2008 | June 30, 2008 | June 30, 2007 | June 30, 2008 | June 30, 2007 | |
| $ | $ | $ | $ | $ | |
| Revenue | - | - | - | - | - |
| Operating Expenses | |||||
| General and administrative | 211,853 | 29,241 | 13,319 | 56,945 | 27,072 |
| Total Operating Expenses | 211,853 | 29,241 | 13,319 | 56,945 | 27,072 |
| Other Income | 14,406 | 5,594 | 586 | 10,432 | 586 |
| Net Income (Loss) | (197,447) | (23,647) | (12,733) | (46,513) | (26,486) |
| Net Loss Per Share - Basic and Diluted | - | - | - | - | |
| Weighted Average Shares Outstanding | 6,634,491 | 5,000,000 | 6,634,491 | 5,000,000 | |
(The Accompanying Notes are an Integral Part of the Financial Statements)
F-3
| Asia Interactive Media Inc. (previously Black Gardenia Corp.) | |||
| (A Development Stage Company) | |||
| Statements of Cash Flows | |||
| UNAUDITED | |||
| (Expressed in U.S. Dollars) | |||
| Accumulated from February 9, 2000 | |||
| (Date of Inception) to | For the six months ended | For the six months ended | |
| June 30, 2008 | June 30, 2008 | June 30, 2007 | |
| $ | $ | $ | |
| Operating Activities | |||
| Net loss | (197,447) | (46,513) | (26,486) |
| Adjustment to reconcile net loss to net cash used in operating activities | |||
| Donated expenses | 23,000 | - | - |
| Change in operating assets and liabilities | |||
| Loan receivable | (163,398) | (10,432) | (32,276) |
| Accounts payable and accrued liabilities | 39,021 | 15,607 | (2,448) |
| Due to related party | 17,312 | - | 3,821 |
| Advances from Officers | 14,628 | - | - |
| Net Cash Used in Operating Activities | (266,884) | (41,338) | (57,389) |
| Financing Activities | |||
| Loan payable | 166,242 | 5,984 | 154,208 |
| Common stock | 67 | 17 | - |
| Additional paid-in capital | 648,733 | 648,283 | - |
| Stock subscriptions | - | (648,300) | 117,602 |
| Net Cash Provided by Financing Activities | 815,042 | 5,984 | 271,810 |
| Net Increase in Cash | 548,158 | (35,354) | 214,421 |
| Cash - Beginning of Period | - | 583,512 | - |
| Cash - End of Period | 548,158 | 548,158 | 214,421 |
| Supplemental Disclosures: | |||
| Interest paid | - | - | - |
| Income tax paid | - | - | - |
(The Accompanying Notes are an Integral Part of the Financial Statements)
F-4
| Asia Interactive Media Inc. (previously Black Gardenia Corp.) | |||||
| (A Development Stage Company) | |||||
| Statement of Stockholders' Deficit | |||||
| For the Period from February 9, 2000 (Date of Inception) to June 30, 2008 | |||||
| UNAUDITED | |||||
| (Expressed in U.S. Dollars) | |||||
| Additional Paid-in | Deficit Accumulated | ||||
| Capital | During the | ||||
| Shares | Amount | (Discount) | Exploration Stage | Total | |
| # | $ | $ | $ | $ | |
| Balance - February 9, 2000 | |||||
| (Date of Inception) | - | - | - | - | - |
| March 2, 2000 - Issuance of stock for cash | 5,000,000 | 50 | 450 | - | 500 |
| Net loss | - | - | - | (580) | (580) |
| Balance - December 31, 2000 and 2001 | 5,000,000 | 50 | 450 | (580) | (80) |
| Net loss | - | - | - | (2,812) | (2,812) |
| Balance - December 31, 2002 | 5,000,000 | 50 | 450 | (3,392) | (2,892) |
| Net loss | - | - | - | (1,858) | (1,858) |
| Balance - December 31, 2003 | 5,000,000 | 50 | 450 | (5,250) | (4,750) |
| Net loss | - | - | - | (4,778) | (4,778) |
| Balance - December 31, 2004 | 5,000,000 | 50 | 450 | (10,028) | (9,528) |
| Net loss | - | - | - | (5,100) | (5,100) |
| Balance - December 31, 2005 | 5,000,000 | 50 | 450 | (15,128) | (14,628) |
| Net loss | - | - | - | (39,217) | (39,217) |
| Balance - December 31, 2006 | 5,000,000 | 50 | 450 | (54,345) | (53,845) |
| Net loss | - | - | - | (96,589) | (96,589) |
| Balance - December 31, 2007 | 5,000,000 | 50 | 450 | (150,934) | (150,434) |
| January 8, 2008 - Issuance of stock for cash | 1,634,491 | 17 | 648,283 | - | 648,300 |
| Net loss | - | - | - | (46,513) | (46,513) |
| Balance - June 30, 2008 | 6,634,491 | 67 | 648,733 | (197,447) | 451,353 |
(The Accompanying Notes are an Integral Part of the Financial Statements)
F-5
| 1. | Nature of Business and Continuance of Operations | |
| Black Gardenia Corp, herein "the Company", was incorporated on February 9, 2000 pursuant to the Laws of the State of Nevada, USA. The Company has no business operations and is considered a development stage company, as defined by Statement of Financial Accounting Standard ("SFAS") No. 7 "Accounting and Reporting by Development Stage Enterprises". On March 22, 2007 the Company changed its name to "Asia Interactive Media Inc." | ||
| The financial statements have been prepared using generally accepted accounting principles in the United States of America applicable for a going concern which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. At June 30, 2008, the Company had a working capital surplus of $491,825 and has accumulated losses of $197,447 since its inception. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. It is management's plan to seek additional capital through equity and/or debt financings. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. | ||
| 2. | Summary of Significant Accounting Policies | |
| a) | Basis of Presentation | |
| These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company's fiscal year-end is December 31. | ||
The Company's consolidated balance sheet as of June 30, 2008 has been taken from the Company's audited consolidated balance sheet as of the date. All other financial statements contained herein are unaudited and, in the opinion of management, contain all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of financial position, results of operations and cash flows for the period presented. | ||
| b) | Use of Estimates | |
| The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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. | ||
| c) | Basic and Diluted Net Income (Loss) Per Share | |
| The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. | ||
| d) | Comprehensive Loss | |
| SFAS No. 130, "Reporting Comprehensive Income," establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2007 and 2006, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements. | ||
| e) | Cash and Cash Equivalents | |
| The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. | ||
| f) | Long-Lived Assets | |
In accordance with SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the carrying value of long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value. | ||
F-6
| 2. | Summary of Significant Accounting Policies (continued). | |
| g) | Financial Instruments | |
| The fair value of financial instruments, which include cash, accounts payable, accrued liabilities and due to related party, were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. Foreign currency transactions are primarily undertaken in Canadian dollars. The financial risk is the risk to the Company's operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk. | ||
| h) | Income Taxes | |
| Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109 "Accounting for Income Taxes" as of its inception. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years. | ||
| i) | Foreign Currency Translation | |
| The Company's functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 "Foreign Currency Translation", using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations. | ||
| j) | Recent Accounting Pronouncements | |
| In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R)". This statement requires employers to recognize the overfunded or underfunded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. The provisions of SFAS No. 158 are effective for employers with publicly traded equity securities as of the end of the fiscal year ending after December 15, 2006. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations. | ||
| In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements". The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations. | ||
| In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statements No. 109". FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing a two-step method of first evaluating whether a tax position has met a more likely than not recognition threshold and second, measuring that tax position to determine the amount of benefit to be recognized in the financial statements. FIN 48 provides guidance on the presentation of such positions within a classified statement of financial position as well as on derecognition, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations. | ||
F-7
| 2. | Summary of Significant Accounting Policies (continued). | |
| j) | Recent Accounting Pronouncements (continued). | |
| In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year beginning after September 15, 2006. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations. | ||
| In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140", to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", to permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the Impairment or Disposal of Long-Lived Assets", to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier application allowed. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations. | ||
| 3. | Loan Receivable | |
| On February 16, 2007, the Company entered into a Bridge Loan Agreement (subsequently amended on November 16, 2007) with Live-Interactive Technology Ltd. ("Live-Interactive"), a company based in China, whereby the Company agreed to loan funds, to a maximum of $195,000 (RMB1,500,000), to Live-Interactive on an interest-free basis for three months from the date of the loan advance. Interest at 15% per annum is charged on all outstanding amounts after the three month interest-free period. As at June 30, 2008, a total of $163,398, including accrued interest, was owing from Live-Interactive. | ||
| 4. | Loan Payable | |
| On February 9, 2007, the Company entered into a Convertible Promissory Note Agreement with CIBT Education Group Inc. ("CEG") (previously named Capital Alliance Group Inc.), a company based in Canada, whereby CEG agreed to lend $150,000 to the Company at an interest rate of 8% per annum. The amount is due on February 9, 2009, and at any time before February 9, 2009 CEG has the right to convert all or a portion of the $150,000 into common stock of the Company at a conversion price of $0.01 per share. Upon conversion of the full loan amount CEG would have direct beneficial control of 75% of the Company. As at June 30, 2008, a total of $166,242, including accrued interest, was due to CEG. | ||
| 5. | Related Party Transactions | |
| At June 30, 2008, the Company is indebted to Tokay Sequoia Management Company Ltd., the majority shareholder of the Company, in the amount of $17,312, representing expenses paid on behalf of the Company. This amount is non-interest bearing, unsecured and has no specific terms of repayment. | ||
| 6. | Stock Subscriptions |
| On January 8, 2008 a total of 1,634,491 common shares were issued pursuant to three separate private placements of the Company's common stock. A total of 980,433 share purchase warrants were issued in connection with one of the private placements. Each share purchase warrant entitles the warrant holder to purchase one common share of the Company at $1.00 per share. The share purchase warrants expire on January 8, 2009. | |
F-8
Item 2. Management Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We were incorporated as a Nevada company on February 9, 2000 to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. We currently maintain a mailing address at Level 30, Bank of China Tower, 1 Garden Road, Central, Hong Kong, and our telephone number is 011-852-9836-2643. We do not have any subsidiaries.
We are a "shell company" as defined in Rule 405 under the Securities Act of 1933 and Rule 12b-2 under the Securities Exchange Act of 1934, since we have only conducted nominal operations and have only nominal assets.
Until recently, we were negotiating to enter into a joint venture agreement with Live Interactive Technology Limited, a Chinese company, to co-develop and co-market an employment search website,www.fiva.cn. We are no longer pursuing any negotiations with Live Interactive, and no agreement has been reached. To date, we have loaned funds to Live Interactive and provided them with business development consulting services at no cost. We are reviewing other businesses for potential acquisitions or strategic alliances.
Results of Operations
Revenue
From February 9, 2000 (date of inception) to June 30, 2008 we have not generated any revenues. We had total assets of $711,556, total liabilities of $222,575 and an accumulated deficit of $197,447 as of June 30, 2008.
We anticipate that we will not earn any revenues during the current fiscal year or in the foreseeable future, as we do not have any operations and are presently engaged in seeking acquisitions, mergers, joint ventures or other strategic transactions. We anticipate that our business will incur significant losses in the next two years. We believe that our success depends on the completion of our proposed acquisitions, joint ventures or other strategic transactions, and our ability to develop our acquired businesses.
Net Loss
From February 9, 2000 (date of inception) to June 30, 2008 we incurred net loss of $197,447. Our net loss increased by $10,914 or approximately 86% from $12,733 during the three months ended March 31, 2007 to $23,647 for the same period in 2008. During the six months ended June 30, 2008 our net loss increased by $20,027 or approximately 76% to $46,513 compared to our net loss of $26,486 for the same period in 2007. The increase in net loss during these periods was a result of increased day to day operating activities.
3
Expenses
From February 9, 2000 (date of inception) to June 30, 2008, we accumulated total expenses of $191,447. Our expenses consist entirely of general and administrative expenses, which include professional fees, management fees and other general and administrative fees such as cost of travel, meals and entertainment, office maintenance, communication expenses (cellular, internet, fax, and telephone), office supplies, courier and postage costs.
Our total expenses increased $10,914 or approximately 86% to $23,647 for the three months ended June 30, 2008 from $12,733 for the same period in 2007. Our total expenses increased $20,027 or approximately 76% to $46,513 for the six months ended June 30, 2008 from $26,486 for the same period in 2007.
The increase in our total expenses was mainly due to increased professional fees and management fees. Our professional fees included accounting, audit and legal fees.
Liquidity and Capital Resources
As of June 30, 2008 we had a working capital surplus of $491,825 and cash of $548,158 in our bank accounts. Our book tangible assets were $325,516.65 or $0.04 per share as of June 30, 2008. Our net loss of $197,447 from February 9, 2000 (date of inception) to June 30, 2008 was mostly funded by our equity financing.
Since February 9, 2000 (date of inception) to June 30, 2008 we raised gross proceeds of $648,733 in cash from the sale of our securities.
During the six months ended June 30, 2008 we received net cash of $5,984 from our financing activities, compared to net cash of $271,810 for the same period in 2007. During the six months ended June 30, 2008 we used net cash of $41,338 in our operating activities, compared to net cash of $57,389 for the same period in 2007. We currently do not have any investing activities. The decrease in cash during the six months ended June 30, 2008 was $35,354.
We are reviewing other businesses for potential acquisitions or strategic alliances. If we are successful in acquiring or entering into a joint venture or other strategic partnership, we will incur additional costs for personnel and business expansion. In order for us to attract and retain quality personnel, our management anticipates it will need to offer competitive salaries, issue common stock to consultants and employees, and grant stock options to future employees. We estimate that our expenses over the next 12 months (beginning June 2008) will be approximately $750,000 as listed in the table below. These estimates may change significantly depending on the nature of our future business activities and whether we continue our operations.
4
| Description | Estimated Amount |
| Expenses for completion of joint venture or acquisition | $525,000 |
| General and administration expenses | $55,000 |
| Investor relations costs | $50,000 |
| Travel expenses | $25,000 |
| Professional fees | $50,000 |
| Rent | $35,000 |
| Utilities | $10,000 |
| Total | $750,000 |
Our current ratio was 9.7 as at June 30, 2008. While we are currently in good short-term financial standing, we anticipate that we will not generate any revenues in the near future and we do not anticipate enough positive internal operating cash flow until we can generate substantial revenues, which may take the next few years to fully realize. There is no assurance we will achieve profitable operations.
As of June, 2008 we had cash of $548,158 on hand. The balance of our cash requirements for the next 12 months (beginning June 2008) was approximately $201,842. We intend to meet the balance of our cash requirements for the next 12 months through external sources: a combination of debt financing and equity financing through private placements. We currently do not have any arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. There is no assurance that any financing will be available or if available, on terms that will be acceptable to us. We may not raise sufficient fund to fully carry out any business plan.
Obtaining additional financing will be subject to a number of factors including market conditions, investor acceptance of our business plan and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive or unavailable to us. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. If we are unable to raise additional financing, we will have to significantly reduce our spending, delay or cancel planned activities or substantially change our current corporate structure. In such an event, we intend to implement expense reduction plans in a timely manner. However, these actions would have material adverse effects on our business, revenues, operating results, and prospects, resulting in a possible failure of our business. If we raise funds through equity or convertible securities, our existing stockholders may experience dilution and our stock price may decline.
5
We have never generated any revenues and incurred significant operating losses from operations. We anticipate we will continue to experience net negative cash flows from operations and will be required to obtain additional financing to fund operations through equity securities' offerings and debt financing to the extent necessary to provide working capital. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow from stockholders or other outside sources to sustain operations and meet our obligations on a timely basis and ultimately to attain profitability. We have limited capital with which to pursue our business plan. There can be no assurance that our future operations will be significant and profitable, or that we will have sufficient resources to meet our objectives.
These factors raise substantial doubt about our ability to continue as a going concern. Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business. If we are unable to obtain additional financing from outside sources and eventually produce enough revenues, we may be forced to sell our assets, curtail or cease our operations.
Known Material Trends and Uncertainties
Until recently, we were negotiating to enter into a joint venture agreement with Live Interactive Technology Limited, a Chinese company, to co-develop and co-market an employment search website,www.fiva.cn. We are no longer pursuing any negotiations with Live Interactive, and no agreement has been reached. To date, we have loaned funds to Live Interactive and provided them with business development consulting services at no cost. On November 16, 2007 we entered into a new bridge loan agreement (effective on March 16, 2008) with Live Interactive Technology Ltd. to replace our three bridge loan agreements respectively dated on February 16, 2007, July 10, 2007, and September 1, 2007. Pursuant to the new bridge loan agreement, we agreed lend Live Interactive a maximum of approximately $195,000 (¥1,500,000). As at June 30, 2008 Live Interactive owned us an aggregate of $163,398, including accrued interest, under this agreement.
We are reviewing other businesses for potential acquisitions or strategic alliances. Our management is unable to predict whether or when any strategic alliance or acquisition transactions will occur or the likelihood of any particular transaction being completed on favorable terms and conditions. We may be unable to obtain the necessary financing to complete any future transactions and could financially overextend ourselves. Joint ventures or acquisitions may present financial, managerial and operational challenges, including diversion of management attention from existing business and difficulties in integrating operations and personnel. Any failure to integrate new businesses or manage any new joint ventures or assets successfully could adversely affect our business and financial performance.
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On February 9, 2007 CIBT Education Group Inc., a related party, loaned to us, $150,000 in exchange for an 8% convertible promissory note due February 9, 2009 in connection with its divestiture plan. As at June 30, 2008 we owed a total of $166,242 to CIBT Education Group Inc. in respect of the loan.
CIBT Education Group is a public company listed on the TSX Venture Exchange and the American Stock Exchange. Toby Chu and Tim Leong are officers and directors of CIBT Education Group. Both Mr. Chu and Mr. Leong have served on our Board of Directors since January 15, 2007. Additionally, from January 15, 2007 to July 23, 2007, Mr. Chu served as our President and Chief Executive Officer and Mr. Leong served as our Chief Financial Officer and Secretary.
We had intended to acquire Irix Design Group Inc., an internet based marketing company and wholly-owned subsidiary of CIBT Education Group. Our negotiations with CIBT Education Group were stalled, however, because we were unable to reach an agreement with CIBT Education Group regarding the valuation of Irix Design Group. We do not presently intend to resume negotiations with CIBT Education Group regarding the acquisition. CIBT may require us to convert all or a portion of the loan of $150,000 into shares of our common stock at anytime before February 9, 2009. If CIBT were to convert the full loan amount into shares, it would have direct beneficial control of 75% of our issued shares. Additionally, if we breach any term of the loan agreement with CIBT, CIBT may require us to pay the full amount of the loan prior to the due date, which could have an adverse effect on our continuing operations, profitability, liquidity or capital resources, or which could cause changes to our reported financial information that may not be necessarily indicative of future operating results or our financial condition. Even we successfully resume the negotiation with CIBT Education Group regarding the sale of Irix Design Group, there can be no assurance that financing for any potential acquisition, if necessary, will be available on acceptable terms, if at all, or that we will be able to accomplish our strategic objectives in connection with such acquisition.
Off-Balance Sheet Arrangements
As of June 30, 2008 we had no off balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
Not applicable.
Item 4. Controls and Procedures.
Not applicable.
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Item 4T. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2008 . Based on this evaluation, our management has concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.
The evaluation of our disclosure controls and procedures did not identify any change in our internal control over financial reporting that occurred during the three months ended June 30, 2008 that has materially affected or is reasonably likely to materially affect our internal control over such reporting.
The term "internal control over financial reporting" is defined as a process designed by, or under the supervision of, the registrant's principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant's Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
| (1) | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant; |
| (2) | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant; and |
| (3) | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, or use or disposition of the registrant's assets that could have a material effect on the financial statements. |
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Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Because of our inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of June 30, 2008 . In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework.
Our management conducted a walk through of the procedures and controls documented in this memo or relied on personal knowledge where no walk through was possible in order to test the effectiveness of our internal control over financial reporting.
Our management believes that our internal control over financial reporting is currently ineffective at preventing or detecting a material misstatement in the financial statements because the following material weaknesses exist:
| 1. | The accounts payable and expenses may be overstated because there is lack of segregation of duties and therefore we are susceptible to fraud. |
| 2. | Cash management may be a problem because the person in charge of writing cheques also reconciles the bank account. The cash in our bank account is a relatively small but material amount and is susceptible to misappropriation. |
| 3. | There are no preventative and detective IT systems in place to prevent and/or detect fraud other than password protection. There no software based accounting controls in place to prevent double entries, monitor performance, etc. |
| 4. | There is a lack of entity wide controls establishing a "tone at the top", including no audit committee, no policy on fraud and no code of ethics. A whistleblower policy is not necessary given the small size of the organization. |
The recommendations to remediate these deficiencies are as follows:
| 1. | Hire an external accountant to record transactions and prepare the financial statements. The information should be sent to the accountant by someone who is not in control of the bank account. |
| 2. | Obtain quotes for prevention and detection software in order to protect against fraud. |
| 3. | Consider purchasing basic accounting software to record accounting transactions and print cheques. However, a basic accounting program may not be GAAP compliant and may not provide an adequate audit trail. We need to evaluate all options. |
| 4. | Adopt a corporate records and document retention policy to ensure that all significant records are kept for the appropriate amount of time as required by law. |
| 5. | Appoint a minimum of two independent directors to the board of directors and then implement an audit committee to review all financial statements and SEC filings and oversee the development of corporate policies. |
This quarterly report does not include an attestation report of our registered public accountant regarding internal control over financial reporting. Our management's report was not subject to attestation by our registered public accountant pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management's report in this report.
We did not make any changes to our internal control over financial reporting during the three months ended June 30, 2008 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Management is not aware of any legal proceedings contemplated by any governmental authority or any other party against us. None of our directors, officers or affiliates are (i) a party adverse to us in any legal proceedings, or (ii) have an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings that have been threatened against us.
Item 1A. Risk Factors.
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the six months ended June 30, 2008 we made the following sale of unregistered securities:
On January 8, 2008 we issued 14 non US investors and one US investor an aggregate of 980,433 units at $0.50 per unit for cash proceeds of approximately $490,216. Each unit consists of one common share and one share purchase warrant entitling the holder to purchase one additional common share at a price of $1.00 per share until January 8, 2009. Also, we issued five non US investors 599,808 common shares at $0.22 per share for cash proceeds of $131,958. We issued 49 non US investors 54,250 common shares at $0.50 per share for cash proceeds of $27,125. These issuances were exempt from registration pursuant to Regulation S and Section 4 (2) of the Securities Act. The price discrepancy between the various concurrent issuances of shares and units during the month of January, 2008 was due to the fact that cash payments in respect of subscriptions for the $0.22 share issuances, subsequent $0.50 shares issuances and subsequent unit issuances were received at various times during fiscal 2007 and were not processed in a timely manner due to administrative delays. Subscriptions for the $0.22 share issuances were initially entered into in April, 2007 at the price of $0.25 per share and later amended. Subscriptions for the $0.50 share issuances were entered into in July, 2007 and subscriptions for the $0.50 unit issuance were entered into in August, 2007.
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The offerings of the common stock pursuant to Rule 903 of Regulation S of the Securities Act were made on the basis that the sale of the common stock was completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the units. Each investor was not a U.S. person, as defined in Regulation S, and was not acquiring the shares for the account or benefit of a U.S. person.
Our reliance upon the exemption under Section 4(2) of the Securities Act of 1933 was based on the fact that the issuance of these shares did not involve a "public offering."The offering was not a "public offering" as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of shares offered. We did not undertake an offering in which we sold a high number of shares to a high number of investors. In addition, the investors had the necessary investment intent as required by Section 4(2) since they agreed to and received a share certificate bearing a legend stating that such shares are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these shares would not be immediately redistributed into the market and therefore not be part of a "public offering." The investors negotiated the terms of the transactions directly with our executive officers. No general solicitation was used, no commission or other remuneration was paid in connection with these transactions, and no underwriter participated. Based on an analysis of the above factors, these transactions were effected in reliance on the exemption from registration provided in Section 4(2) of the Securities Act for transactions not involving any public offering.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
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Item 6. Exhibits.
SIGNATURES
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.
| Asia Interactive Media Inc. | |
| (Registrant) | |
| Date: September 2, 2008 | By: /s/ Ken Ng |
| Ken Ng | |
| President, Chief Executive Officer, Chief Financial Officer | |
| (Authorized Officer and Principal Financial Officer) | |
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