Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10Q
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(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2012
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the transition period from __________ to ___________
Commission file number: 000-21477
ASPI, INC.
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(Exact name of registrant as specified in its charter)
Delaware 27-0514566
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(State of Incorporation) (IRS Employer ID Number)
7609 Ralston Road, Arvada, CO 80002
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(Address of principal executive offices)
303-422-8127
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(Registrant's Telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to the filing requirements for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 for Regulation S-T (ss.232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated file, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ]
Indicate the number of share outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of May 9, 2012, there were 98,879,655 shares of the registrant's common stock
issued and outstanding.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) Page
----
Consolidated Condensed Balance Sheets - March 31, 2012 and
June 30, 2011 F-1
Consolidated Condensed Statements of Operations -
For Three and Nine Months Ended March 31, 2012
and 2011 F-2
Consolidated Condensed Statements of Cash Flows -
For the Three and Nine Months Ended March 31, 2012
and 2011 F-3
Notes to the Consolidated Condensed Financial Statements F-4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 1
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- Not Applicable 4
Item 4. Controls and Procedures 4
PART II - OTHER INFORMATION
Item 1. Legal Proceedings -Not Applicable 4
Item 1A. Risk Factors - Not Applicable 4
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 5
-Not Applicable
Item 3. Defaults Upon Senior Securities - Not Applicable 5
Item 4. Mine Safety Disclosures - Not Applicable 5
Item 5. Other Information - Not Applicable 5
Item 6. Exhibits 6
SIGNATURES 7
PART I
ITEM 1. FINANCIAL STATEMENTS
ASPI, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, June 30,
2012 2011
(Unaudited) (Audited)
--------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 6,125 $ 26,506
Prepaid expenses and other current assets 63,127 50,813
--------------------------------
Total current assets 69,252 77,319
Property and equipment, net of $244,702 and $136,756
accumulated depreciation, respectively 506,217 229,709
--------------------------------
Goodwill 319,934 -
--------------------------------
Total assets $ 895,403 $ 307,028
================================
LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities
Accounts payable 50,608 34,693
Accrued liabilities 2,375 263,378
Prepayments, clients 105,202 50,121
Notes payable 452,054 -
Advances, related parties 730,898 355,406
--------------------------------
Total current liabilities 1,341,137 703,598
Total liabilities 1,341,137 703,598
--------------------------------
Stockholders' deficit
Preferred stock, $0.01 par value: 25,000,000 shares authorized, no shares - -
issued and outstanding.
Common stock, $0.01 par value: 100,000,000 shares authorized 988,796 738,797
98,879,655 and 73,879,655 shares issued and outstanding at
March 31, 2012 and December 31, 2011, respectively
Other comprehensive income 5,225 2,268
Accumulated deficit (1,439,755) (1,137,635)
--------------------------------
Total stockholders' deficit (445,734) (396,570)
--------------------------------
Total liabilities and stockholders' deficit $ 895,403 $ 307,028
================================
See accompanying notes to consolidated financial statements.
F-1
ASPI, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2012
(UNAUDITED)
Three Months Ended Nine Months Ended
March 31, March 31,
2012 2011 2012 2011
------------------------------------------------------------------------
Revenue $ 162,047 $ 47,928 $ 421,890 $ 123,695
Cost of revenue 21,446 14,567 57,684 49,031
------------------------------------------------------------------------
Gross profit 140,601 33,361 364,206 74,664
Operating expenses
General and administrative 195,543 121,440 559,616 373,159
Depreciation 43,311 21,714 107,946 64,908
------------------------------------------------------------------------
Total operating expenses 238,854 143,154 667,562 438,067
------------------------------------------------------------------------
Loss from operations (98,253) (109,793) (303,356) (363,403)
Other income
Interest and other income 466 872 1,236 872
Interest expense - - - -
------------------------------------------------------------------------
Total other income 466 872 1,236 872
------------------------------------------------------------------------
Net loss $ (97,787) $ (108,921) $ (302,120) $ (362,531)
========================================================================
Other comprehensive income
Foreign currency translation adjustment 173 - 2,957 -
------------------------------------------------------------------------
Total comprehensive loss $ (97,614) $ (108,921) $ (299,163) $ (362,531)
========================================================================
Loss per common share- basic:
Net loss $ (0.00) $ (0.00) $ (0.00) (0.00)
========================================================================
Weighted average common shares outstanding:
Basic 98,879,655 73,879,655 90,513,019 73,879,655
========================================================================
See accompanying notes to consolidated financial statements.
F-2
ASPI, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 2012 AND 2011
(UNAUDITED)
March 31,
2012 2011
--------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (302,120) $ (362,531)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 107,946 64,908
Changes in operating assets and liabilities:
Prepaid expenses, trade, and deposits (12,415) (1,162)
Accounts payable and accrued liabilities (241,664) 133,642
Prepayments from clients 55,082 31,086
--------------------------------
Total cash flow used in operating activities (393,171) (134,057)
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of assets (2,356) (8,392)
--------------------------------
Total cash flow used in investing activities (2,356) (8,392)
CASH FLOW FROM FINANCING ACTIVITIES
Advances from officers and directors 375,493 137,424
Advances from related party 2,503 -
--------------------------------
Total cash flow provided by financing activities 377,996 137,424
Effect of exchange rate changes on cash (2,850) (950)
--------------------------------
NET CHANGE IN CASH (20,381) (5,975)
CASH AT BEGINNING OF PERIOD 26,506 36,468
--------------------------------
CASH AT END OF PERIOD $ 6,125 $ 30,493
================================
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest $ - $ -
--------------------------------
Cash paid for income tax $ - $ -
--------------------------------
See accompanying notes to consolidated financial statements.
F-3
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 2012
(Unaudited)
NOTE 1 - BUSINESS AND BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements include the accounts of ASPI,
Inc., a Delaware corporation, its wholly-owned subsidiaries, Mega Action Limited
("Mega"), a British Virgin Island Corporation, and Prestige Prime Office,
Limited (Prestige), a Hong Kong Special Administrative Region Corporation
(collectively referred to as the "Company"). All significant intercompany
accounts and transactions have been eliminated in consolidation.
Interim Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
of America ("US GAAP") for financial information and with the instructions to
Form 10-Q. They do not include all information and footnotes required by US GAAP
for complete financial statements. However, except as disclosed herein, there
have been no material changes in the information disclosed in the notes to the
financial statements for the year ended June 30, 2011 included in the Company's
Annual Report on Form 10-K filed with the Securities and Exchange Commission.
The unaudited consolidated financial statements should be read in conjunction
with those financial statements included in the Form 10-K. In the opinion of
Management, all adjustments considered necessary for a fair presentation,
consisting solely of normal recurring adjustments, have been made. Operating
results for the three and nine months ended March 31, 2012 are not necessarily
indicative of the results that may be expected for the year ending June 30,
2012.
January 2012 Annual Shareholder Meeting
On January 15, 2012, the Company held its Annual Shareholder Meeting. At such
Shareholder Meeting, the Shareholders of the Company approved the following
actions:
- The re-election of Yuen Ling Look, Siu Fong Kelly Yeung and Sui Lun
Tong to the Board of Directors.
- The appointment of DeJoya & Griffith, as the Company's auditors.
- Amending the Company's Articles of Incorporation to change of the
Company's name to JV Group, Inc.
- Amending the Company's Articles of Incorporation to increase the
number of authorized common stock from One Hundred Million
(100,000,000) shares to One Billion (1,000,000,000) shares.
At the time of this filing, the Company is in the process of filing the
necessary documentation with the Secretary of State of Delaware to amend its
Articles of Incorporation to effect the name change and the increase in
authorized capital.
F-4
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 2012
(Unaudited)
Significant Accounting Policies
Use of Estimates
The preparation of the financial statements in conformity with accounting
principles generally accepted in the 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 periods. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less and money market instruments to be cash equivalents.
The Company minimizes its credit risk associated with cash by periodically
evaluating the credit quality of its primary financial institution. The balance
at times may exceed federally insured limits. At March 31, 2012 and June 30,
2011, the balance did not exceed the federally insured limit.
Fair Value of Financial Instruments
Fair value is defined as the price that would be received upon sale of an asset
or paid upon transfer of a liability in an orderly transaction between market
participants at the measurement date and in the principal or most advantageous
market for that asset or liability. The fair value should be calculated based on
assumptions that market participants would use in pricing the asset or
liability, not on assumptions specific to the entity. In addition, the fair
value of liabilities should include consideration of non-performance risk
including our own credit risk.
In addition to defining fair value, the standard expands the disclosure
requirements around fair value and establishes a fair value hierarchy for
valuation inputs. The hierarchy prioritizes the inputs into three levels based
on the extent to which inputs used in measuring fair value are observable in the
market. Each fair value measurement is reported in one of the three levels which
is determined by the lowest level input that is significant to the fair value
measurement in its entirety. These levels are:
Level 1 - inputs are based upon unadjusted quoted prices for identical
instruments traded in active markets.
Level 2 - inputs are based upon significant observable inputs other
than quoted prices included in Level 1, such as quoted prices for
identical or similar instruments in markets that are not active, and
model-based valuation techniques for which all significant assumptions
are observable in the market or can be corroborated by observable
market data for substantially the full term of the assets or
liabilities.
Level 3 - inputs are generally unobservable and typically reflect
management's estimates of assumptions that market participants would
use in pricing the asset or liability. The fair values are therefore
determined using model-based techniques that include option pricing
models, discounted cash flow models, and similar techniques.
F-5
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 2012
(Unaudited)
The carrying value of the Company's financial assets and liabilities which
consist of cash, accounts payable, and advances from related parties in
management's opinion approximate their fair value due to the short maturity of
such instruments. These financial assets and liabilities are valued using level
3 inputs, except for cash which is at level 1. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest,
exchange, or credit risks arising from these financial instruments.
Net Loss per Common Share
Basic net loss per common share is calculated by dividing total comprehensive
loss applicable to common shares by the weighted average number of common and
common equivalent shares outstanding during the period. For the three and nine
month periods ended March 31, 2012 and 2011, there were no potential common
equivalent shares used in the calculation of weighted average common shares
outstanding as the effect would be anti-dilutive.
Impairment of Long Lived Assets
Long-lived assets are reviewed for impairment in accordance with the applicable
FASB standard, "Accounting for the Impairment or Disposal of Long- Lived
Assets". Under the standard, long-lived assets are tested for recoverability
whenever events or changes in circumstances indicate that their carrying amounts
may not be recoverable. An impairment charge is recognized for the amount, if
any, which the carrying value of the asset exceeds the fair value.
Other Comprehensive Income (Loss)
The Company recognizes unrealized gains and loss on the Company's foreign
currency translation adjustments as components of other comprehensive income
(loss).
Recent Accounting Pronouncements
There were various other accounting standards and interpretations issued in 2011
and 2012, none of which are expected to have a material impact on the Company's
financial position, operations, or cash flows.
NOTE 2 - GOING CONCERN
The Company's financial statements for the three and nine months ended March 31,
2012 have been prepared on a going concern basis, which contemplates the
realization of assets and the settlement of liabilities and commitments in the
normal course of business. The Company reported a net loss of $302,120 for the
nine months ended March 31, 2012 and an accumulated deficit of $1,439,755 at
March 31, 2012. At March 31, 2012, the Company had total current assets of
$69,252 and total liabilities, all current of $1,341,137 for a working capital
deficit of $1,271,885.
The Company's ability to continue as a going concern may be dependent on the
success of management's plan discussed below. The financial statements do not
include any adjustments relating to the recoverability and classification of
assets or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
F-6
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 2012
(Unaudited)
To the extent the Company's operations are not sufficient to fund the Company's
capital requirements, the Company may attempt to enter into a revolving loan
agreement with financial institutions or attempt to raise capital through the
sale of additional capital stock or through the issuance of debt. At the present
time, the Company does not have a revolving loan agreement with any financial
institution nor can the Company provide any assurance that it will be able to
enter into any such agreement in the future or be able to raise funds through
the further issuance of debt or equity in the Company.
During the 2012 fiscal year, the Company intends to continue its efforts in
growing its office service operations.
NOTE 3 - LEASE ACQUISITION
On September 8, 2011, the Company and its wholly-owned subsidiary, Prestige
entered into an Agreement to purchase certain leaseholds from an unrelated third
party in exchange for 25,000,000 of shares of the Company's restricted common
stock and a $450,000 promissory note. The transfer of leases and the assets and
liabilities associated with the leases occurred on October 1, 2011.
The $450,000 promissory note has a term of six months and therefor will be due
on March 1, 2012. The promissory note does not accrue interest. At March 31,
2012, the promissory note is still outstanding. There is no default provision in
the promissory note.
As part of the acquisition of the leases, the Company acquired the furniture,
fixtures, and office equipment associated with the acquisition. Such property
was considered to have a book value of $384,107.
The following table presents the allocation of acquisition costs to the assets
acquired and liabilities assumed, based on their fair values at October 1, 2011:
Purchase Price
25,000,000 shares of the Company's common
stock valued at $0.01 per share $ 250,000
Promissory Note 450,000
-----------------
Total Consideration $ 650,000
=================
Allocation of purchase price
Furniture and Fixtures $ 335,895
Office Equipment 44,552
Computer Equipment 3,660
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384,107
Liabilities (53,817)
-----------------
Goodwill $ 319,710
F-7
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 2012
(Unaudited)
NOTE 4 - PROPERTY AND EQUIPMENT
At March 31, 2012 and June 30, 2011, Property and Equipment consisted of:
March 31, June 30,
2012 2011
-------------------- ---------------------
Furniture and Fixtures $ 593,120 $ 256,811
Office Equipment 137,774 93,126
Computer Equipment 20,025 16,528
-------------------- ---------------------
750,919 366,465
Accumulated Depreciation (244,702) (136,756)
-------------------- ---------------------
Total $ 506,217 $ 229,709
==================== =====================
Property and equipment held by Prestige have an original cost basis valued in
Hong Kong Dollars. The change in value is a result of foreign currency exchange
differences.
NOTE 5 - ADVANCES, RELATED PARTIES
During the years ended June 30, 2011 and 2010, Mr. Yeung Cheuk Hung, the manager
of Prestige and the majority shareholder of the Company, has advanced funds of
$179,884 and $163,745, respectively, to support the operations of Prestige.
During the nine months ended March 31, 2012, Mr. Yeung Cheuk Hung advanced an
additional $310,744. At March 31, 2012, the Company owes him $654,373. Such
funds are unsecured, bear no interest, and are due on demand.
During the year ended June 30, 2011 and 2010, Ms. Look, an officer and director
of the Company and the manager of Mega, advanced funds of $7,710 and $321,
respectively to Mega to support operations. During the nine months ended March
31, 2012, Ms. Look advanced an additional $70,654. At March 31, 2012, Ms. Look
is owed $70,654. Such funds are unsecured, bear no interest, and are due on
demand.
During the year ended June 30, 2011 and 2010, Top Growth Holdings Group, Inc.,
an affiliate and entity of which Ms. Look, an officer and director of the
Company, advanced $750 and $2,996, respectively to the Company. At March 31,
2012, Top Growth Holdings Group, Inc. is owed $5,871. Such funds are unsecured,
bear no interest, and are due on demand.
NOTE 6 - PREPAYMENTS, CLIENTS
Clients pay a deposit on the Company's provided services upon entering into a
lease agreement with the Company. Such deposits are recognized by the Company
not only as deposits, but as a corresponding liability. At March 31, 2012 and
June 30, 2011, the Company had $105,202 and $50,121, respectively, in prepayment
liabilities.
F-8
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Condensed Financial Statements
For the Nine Months Ended March 31, 2012
(Unaudited)
NOTE 7 - COMMITMENTS AND CONTINGENCIES
Prestige operates from Silvercord, No. 30 Canton Road, Tsimshatsui, which is a
premier commercial building in Hong Kong. The center is located on one floor and
occupies approximately 5,000 square feet. Per the lease agreement, we pay an
annual rental rate of $213,780 which expires September 30, 2014. The Company's
minimum annual rent rate is:
Fiscal Year Ended
June 30, Annual Rent
-------- -----------
2012 $195,965
NOTE 8 - STOCKHOLDERS' DEFICIT
The authorized capital stock of the Company is 100,000,000 shares of common
stock with a $0.01 par value and 25,000,000 shares of preferred stock with a par
value of $0.01 per share. At March 31, 2012, the Company had 98,879,655 shares
of its common stock issued and outstanding.
During the nine months end March 31, 2012, the Company issued 25,000,000 shares
of its common stock valued at $250,000 in connection with the acquisition of
certain leases, as discussed in Note 3.
NOTE 9 - SUBSEQUENT EVENTS
In May 2012, the Company has entered into an agreement with a service provider
to issue 2,500,000 shares of the Company's restricted common stock in payment of
fees of $50,000. The shares will be issued after the increase in authorized
shares is approved by FINRA.
The Company has evaluated it activities subsequent to the nine months ended
March 31, 2012 and found no other reportable subsequent events.
F-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our unaudited
financial statements and notes thereto included herein. In connection with, and
because we desire to take advantage of, the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995, we caution readers regarding
certain forward looking statements in the following discussion and elsewhere in
this report and in any other statement made by, or on our behalf, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond our control and many
of which, with respect to future business decisions, are subject to change.
These uncertainties and contingencies can affect actual results and could cause
actual results to differ materially from those expressed in any forward looking
statements made by, or on our behalf. We disclaim any obligation to update
forward-looking statements.
The independent registered public accounting firm's report on the Company's
financial statements as of June 30, 2011, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
PLAN OF OPERATIONS
------------------
ASPI's strategy is to be a serviced office provider in the Far East through its
wholly-owned subsidiary, Prestige Prime Office Ltd. in Hong Kong.
The office space provided is fully furnished, equipped and staffed, located at
premier addresses in central business districts with convenient access to
airports or public transportation. Services include advanced communication
system, network access, updated IT, and world-class administrative support, as
well as a full menu of business services and facilities, such as meeting rooms
and video conferencing.
Prestige intends to provide services that will support the growing trend of
mobile and at home working. Supporting workers at home and on the road with
services such as Virtual Office and Virtual PA, providing dedicated business
addresses as their business base, as well as mail and call handling services.
On September 8, 2011, the Company and its wholly-owned subsidiary, Prestige
entered into an Agreement to purchase certain leaseholds from an unrelated third
party in exchange for 25,000,000 shares of the Company's restricted common stock
and a $450,000 promissory note with anticipated due date of six months from
issuance. The promissory note will not accrue interest. The transfer of leases
occurred on October 1, 2011.
The Company will need substantial additional capital to support its budget. The
Company has had minimal revenues. The Company has no committed source for any
funds as of date hereof. In the event funds cannot be raised when needed, the
Company may not be able to carry out its business plan, may never achieve sales
or royalty income, and could fail in business as a result of these
uncertainties.
The Company may borrow money to finance its future operations, although it does
not currently contemplate doing so. Any such borrowing will increase the risk of
loss to the investor in the event the Company is unsuccessful in repaying such
loans.
1
The independent registered public accounting firm's report on the Company's
financial statements as of June 30, 2011, and for each of the years in the
two-year period then ended, includes a "going concern" explanatory paragraph,
that describes substantial doubt about the Company's ability to continue as a
going concern.
RESULTS OF OPERATIONS
---------------------
For the Three Months Ended March 31, 2012 Compared to the Three Months Ended
March 31, 2011
During the three months ended March 31, 2012 and 2011, we recognized revenues of
$162,047 and $47,928 from our service office operations. The increase of
$114,119 is a result of an increase in clients, combined with an increase in the
number leases held by the Company due to the acquisition of such leases on
October 1, 2011. During the three months ended March 31, 2012 and 2011, we
incurred cost of revenues of $21,446 and $14,567, respectively. During the three
months ended March 31, 2012 and 2011, we recognized resulting gross profits of
$140,601 and $33,361, respectively. The resulting increase in gross profits is a
result of the increase in revenues offset by a decrease in cost of revenues.
During the three months ended March 31, 2012, we incurred operational expenses
of $238,854. During the three months ended March 31, 2011, we incurred $143,154
in operational expenses. The increase of $95,700 was a result of a $74,143
increase in general and administrative expenses and a $21,597 increase in
depreciation expenses.
During the three months ended March 31, 2012, we incurred a net loss of $97,787.
During the three months ended March 31, 2011, we incurred a net loss of
$108,921. The decrease of $11,134 was a result of the increase of $114,119 in
revenues offset by a $95,700 increase in operational expenses, as discussed
above.
For the Nine Months Ended March 31, 2012 Compared to the Nine Months Ended March
31, 2011
During the nine months ended March 31, 2012 and 2011, we recognized $421,890 and
$123,695 from our service office operations. The increase of $298,195 is a
result of an increase in clients, combined with an increase in the number leases
held by the Company due to the acquisition of such leases on October 1, 2011.
During the nine months ended March 31, 2012 and 2011, we incurred cost of
revenues of $57,684 and $49,031, respectively. During the nine months ended
March 31, 2012 and 2011, we recognized resulting gross profits of $364,206 and
$74,664, respectively. The resulting increase in gross profits is a result of
the increase in revenues caused by the acquisition of leases offset by a minimal
decrease in cost of revenues.
During the nine months ended March 31, 2012, we incurred operational expenses of
$667,562. During the nine months ended March 31, 2011, we incurred $438,067 in
operational expenses. The increase of $229,495 was a result of an $186,457
increase in general and administrative expenses and a $43,038 increase in
depreciation expenses.
During the nine months ended March 31, 2012, we incurred a net loss of $302,120.
During the nine months ended March 31, 2011, we incurred a net loss of $362,531.
The decrease of $60,411 was a result of the increase of $298,195 in revenues
offset by a $229,495 increase in operational expenses, as discussed above.
2
LIQUIDITY
---------
At March 31, 2012, we had total current assets of $69,252, consisting of $6,125
in cash and cash equivalents and $63,127 in prepaid expenses and other assets.
At March 31, 2012, we had total liabilities of $1,341,137, all current. Total
liabilities included $50,608 in accounts payable, $2,375 in accrued liabilities
$105,202 in client prepayments, $452,054 in note payables and $730,898 in
advances from related parties.
During the nine months ended March 31, 2012, we used funds of $393,171 in our
operational activities. During the nine months ended March 31, 2012, we
recognized a net loss of $302,120, which was adjusted for depreciation of
$107,946. During the nine months ended March 31, 2011, we used funds of $134,057
in our operational activities. During the nine months ended March 31, 2011, we
incurred a net loss of $362,531 which was adjusted for depreciation of $64,908.
During the nine months ended March 31, 2012, we used $2,356 to acquire office
equipment. During the nine months ended March 31, 2011, we used $8,392 in our
investing activities consisting of the purchase of office equipment.
During the nine months ended March 31, 2012, we received $377,996 from our
financing activities. During the nine months ended March 31, 2011, we received
$137,424 from our financing activities.
During the years ended June 30, 2011 and 2010, Mr. Yeung Cheuk Hung, the manager
of Prestige and the majority shareholder of the Company, has advanced funds of
$179,884 and $163,745, respectively, to support the operations of Prestige.
During the nine months ended March 31, 2012, Mr. Yeung Cheuk Hung advanced an
additional $310,744. At March 31, 2012, the Company owes him $654,373. Such
funds are unsecured, bear no interest, and are due on demand.
During the year ended June 30, 2011 and 2010, Ms. Look, an officer and director
of the Company and the manager of Mega, advanced funds of $7,710 and $321,
respectively to Mega to support operations. During the nine months ended March
31, 2012, Ms. Look advanced an additional $70,654. At March 31, 2012, Ms. Look
is owed $70,654. Such funds are unsecured, bear no interest, and are due on
demand.
During the year ended June 30, 2011 and 2010, Top Growth Holdings Group, Inc.,
an affiliate and entity of which Ms. Look, an officer and director of the
Company, advanced $750 and $2,996, respectively to the Company. At March 31,
2012, Top Growth Holdings Group, Inc. is owed $5,871. Such funds are unsecured,
bear no interest, and are due on demand.
Off-Balance Sheet Arrangements
We have no material off-balance sheet arrangements nor do we have any
unconsolidated subsidiaries.
Short Term
On a short-term basis, we generate limited revenues, which are not sufficient to
cover operations. Based on our limited operating history in the service office
industry, we will continue to have insufficient revenue to satisfy current and
recurring liabilities for the near future. For short term needs we will be
dependent on receipt, if any, of offering proceeds.
Capital Resources
We have only common stock as our capital resource.
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We have no material commitments for capital expenditures within the next year,
however if operations are commenced, substantial capital will be needed to pay
for working capital.
Need for Additional Financing
We do not have capital sufficient to meet our cash needs. We will have to seek
loans or equity placements to cover such cash needs. Once exploration commences,
our needs for additional financing is likely to increase substantially.
No commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow it to cover our expenses as they may be
incurred.
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable
ITEM 4. CONTROLS AND PROCEDURES
Disclosures Controls and Procedures
We have adopted and maintain disclosure controls and procedures (as such term is
defined in Rules 13a 15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) that are designed to ensure that
information required to be disclosed in our reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods required
under the SEC's rules and forms and that the information is gathered and
communicated to our management, including our Chief Executive Officer (Principal
Executive Officer) and Chief Financial Officer (Principal Financial Officer), as
appropriate, to allow for timely decisions regarding required disclosure.
As required by SEC Rule 15d-15(b), our Chief Executive Officer carried out an
evaluation under the supervision and with the participation of our management,
of the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period
covered by this report. Based on the foregoing evaluation, our Chief Executive
Officer has concluded that our disclosure controls and procedures are effective
in timely alerting them to material information required to be included in our
periodic SEC filings and to ensure that information required to be disclosed in
our periodic SEC filings is accumulated and communicated to our management,
including our Chief Executive Officer, to allow timely decisions regarding
required disclosure as a result of the deficiency in our internal control over
financial reporting discussed below.
There was no change in our internal control over financial reporting that
occurred during the fiscal quarter ended March 31, 2012, that has materially
affected, or is reasonably likely to materially affect, our internal control
over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
NONE.
ITEM 1A. RISK FACTORS
Not Applicable to Smaller Reporting Companies.
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ITEM 2. CHANGES IN SECURITIES
The Company did not make any unregistered sales of its securities from January
1, 2012 through March 31, 2012.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
NONE.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
NONE.
ITEM 6. EXHIBITS
Exhibits. The following is a complete list of exhibits filed as part of this
Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.
Exhibit 31.1 Certification of Chief Executive and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act
Exhibit 32.1 Certification of Principal Executive and Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
Exhibit 101.INS XBRL Instance Document
Exhibit 101.SCH XBRL Taxonomy Extension Schema Document (1)
Exhibit 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document (1)
Exhibit 101.DEF XBRL Taxonomy Extension Definition Linkbase Document (1)
Exhibit 101.LAB XBRL Taxonomy Extension Label Linkbase Document (1)
Exhibit 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document (1)
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(1) Pursuant to Rule 406T of Regulation S-T, this interactive data file is
deemed not filed or part of a registration statement or prospectus for
purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed
not filed for purposes of Section 18 of the Securities Exchange Act of
1934, and otherwise is not subject to liability under these sections.
5
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ASPI, INC.
(Registrant)
Dated: May 17, 2012 By: /s/ Look Yuen Ling
-------------------
Look Yuen Ling
President, Chief Executive Officer and
Chief Financial Officer
