Washington,
D.C 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
ASAP
EXPO, INC.
(Name of
small business issuer in its charter)
Nevada
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7389
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20-2934409
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(State
or Other Jurisdiction of Incorporation or Organization)
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(Primary
Standard Industrial Classification Code Number)
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(I.R.S.
Employer Identification Number)
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9436
Jacob Lane
Rosemead,
California 91731
626-297-1800
(Address
and telephone number of principal executive offices and principal place of
business)
Copies
to:
James
Vandeberg
The Otto
Law Group, PLLC
601 Union
Street, Suite 4500, Seattle, WA 98101
Tel.
(206) 262-9545
(Name,
address and telephone number of agent for service)
Approximate date of commencement of
proposed sale to the public:
Not applicable
If any of
the securities being registered on the Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, as
amended, check the following box.
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act of 1933, as amended, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same
offering.
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act of 1933, as amended, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act of 1933, as amended, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
CALCULATION
OF REGISTRATION FEE
Title
of Each Class of
Securities
to be
Registered
|
Amount
to
be
Registered
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Proposed
Maximum Offering Price Per Share (1)
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Proposed
Maximum Aggregate Offering Price
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Amount
of
Registration
Fee
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Common
stock
Total:
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8,701,480
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$.01
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$87,014.80
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$3.42
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|
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(1)
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Estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(f) of the Securities Act of 1933, as amended (the “Securities
Act”). The issuer has a negative book value, thus it has chosen
to use the above estimate.
|
ASAP
EXPO, INC.
8,701,480
Shares of Common
Stock
This
prospectus (the “Prospectus”) relates to the distribution of up to 8,701,480
shares of common stock of ASAP Expo, Inc., a Nevada corporation (“ASAP Expo” or
the “Company”) (the “Shares” or the “Securities”), by China Yili Petroleum
Company (“China Yili”) who owns one hundred percent (100%) of ASAP
Expo. The Shares are being distributed in the form of a dividend to
China Yili’s common stock shareholders on a pro rata basis. ASAP Expo
will not receive any proceeds in the distribution of the Shares by China
Yili. ASAP Expo will pay all expenses in connection with this
offering.
Upon
registration and listing on the Over The Counter Bulletin Board (“OTCBB”)
following the filing of a Form 15c 2-11, ASAP Expo’s shareholders may sell the
Shares on the OTCBB or on any other market or stock exchange on which the
Company’s common stock may be traded or listed at the time of
sale. The Company may also sell Shares in block transactions or
private transactions or otherwise, through brokers or dealers. These
sales will be made either at market prices prevailing at the time of sale or at
negotiated prices.
The
Securities offered hereby involve a high degree of risk. For a
discussion of certain considerations associated with the purchase of the Shares
offered hereby, see the section titled “Risk Factors” of this
Prospectus.
These
Securities have not been approved or disapproved by the Securities and Exchange
Commission or any state securities commission nor has the Securities and
Exchange Commission or any state securities commission passed upon the accuracy
or adequacy of this Prospectus. Any representation to the contrary is
a criminal offense.
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Part
II- Information Not Required in Prospectus
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17
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SUMMARY
INFORMATION
AND RISK FACTORS
PROSPECTUS
SUMMARY
The
following summary of this Prospectus does not purport to be complete and is
qualified in its entirety by reference to the more detailed information
contained in other parts of this Prospectus. Special attention should
be directed to the section describing the “Risk Factors” before making any
decision on the suitability of this investment
ASAP
Expo, Inc.
ASAP
Expo, Inc. was incorporated on April 10, 2007 under the laws of the State of
Nevada and is a wholly owned subsidiary of China Yili Petroleum Company, a
Nevada corporation (“China Yili”), formerly named ASAP Show, Inc (“ASAP
Show”). On August 13, 2007, ASAP Show acquired the outstanding
capital stock of Sino-American Petroleum Group, Inc., a Delaware corporation
(“Sino-American Petroleum”) (the “Merger”), through the issuance of Series A
Convertible Preferred Stock to the shareholders of Sino-American Petroleum, and
through an amendment to its articles of corporation, changed its corporate name
to China Yili Petroleum Company (all references herein to ASAP Show mean China
Yili prior to the Merger). Sino-American Petroleum is a holding company
that owns all of the registered capital of Tongliao Yili Asphalt Co. (“Yili
Asphalt”), a corporation organized under the laws of the People’s Republic of
China. Yili Asphalt is engaged in the business of refining heavy oil into
asphalt, fuel oil and lubricants. All of Yili Asphalt’s business is
currently in China.
Prior to
the Merger, ASAP Show assigned all of its pre-Merger business and assets to ASAP
Expo and ASAP Expo assumed responsibility for all of the liabilities of ASAP
Show that existed prior to the Merger. On May 24, 2007 ASAP Expo
entered into an Assignment and Assumption and Management Agreement with ASAP
Show and Frank Yuan whereby ASAP Expo acquired the operations of ASAP Show by
the assignment and transfer all of the assets and liabilities of ASAP Show to
ASAP Expo (the “Agreement”). The Agreement provides that Mr. Yuan
will manage ASAP Expo within his discretion, provided that his actions or
inactions do not threaten material injury to ASAP Show. The Agreement
further provides that Mr. Yuan will cause ASAP Expo to file a registration
statement that will, when declared effective, permit ASAP Show to distribute all
of the issued and outstanding shares of ASAP Expo to the holders of ASAP Show’s
common stock (the “Distribution”). Accordingly, upon the registration
statement being declared effective, the Board of Directors of China Yili will
fix a record date and shareholders of record on that date will receive the
Shares (hereinafter defined) of ASAP Expo in proportion to their ownership of
China Yili common stock.
ASAP Expo
is operating the business of organizing trade-shows. ASAP Expo is initially
targeting the apparel industry. Our corporate headquarters are
located at 9436 Jacob Lane, Rosemead, California 91731 and our phone number is
(626) 297-1800.
The
Offering
This
Prospectus relates to the distribution of 8,701,480 shares (the “Shares”) of
common stock of ASAP Expo by China Yili, which owns one hundred percent (100%)
of ASAP Expo. The Shares are being distributed in the form of a
dividend to ASAP Show’s common stock holders on a pro rata
basis. ASAP Expo will not receive any proceeds in this distribution
of Shares by China Yili. ASAP Expo will pay all expenses in
connection with this offering.
RISK
FACTORS
Prospective
investors should carefully consider the risks described below, in conjunction
with other information and the Company’s consolidated financial statements and
related notes included elsewhere in this Prospectus, before making an investment
decision. The Company’s business, financial condition and results of
operations could be affected materially and adversely by any and or all of these
risks.
The
following risk factors include, among other things, cautionary statements with
respect to certain forward-looking statements, including statements of certain
risks and uncertainties that could cause actual results to vary materially from
the future results referred to in such forward-looking statements.
THE
COMPANY IS SUBJECT TO UNITED STATES GOVERNMENT REGULATIONS WHICH COULD ADVERSELY
AFFECT THE COMPANY'S BUSINESS.
ASAP
Expo's primary source of income is from overseas apparel exporters who are
willing to exhibit at its trade shows and participate in buying trips. Apparel
imports into the United States are heavily regulated by the United States
government. If the United States government imposes higher tariffs, increases
quotas or imposes limitations on quantities of imports, it will adversely affect
ASAP Expo's business. Fewer foreign apparel exporters will participate in ASAP
Expo's events if it is limited in exporting to the United States.
THE
COMPANY IS SUBJECT TO FOREIGN GOVERNMENT REGULATIONS WHICH COULD ADVERSELY
AFFECT THE COMPANY'S BUSINESS.
ASAP
Expo's primary source of income is from overseas apparel exporters who are
willing to exhibit at its trade shows and participate in buying trips. Foreign
governments may advise their exporters to sell merchandise to countries other
than the United States to balance their export concentration. Such policies
could adversely affect ASAP Expo's trade show exhibitor revenue because foreign
exporters will promote their business by following their own government's
policies and incentives.
THE
WORLD TRADE ORGANIZATION'S BILATERAL AGREEMENTS COULD ADVERSELY AFFECT THE
COMPANY'S BUSINESS.
Apparel
imports are governed by the World Trade Organization's ("WTO") bilateral
agreements between the United States and each other country. For example, even
though China is a WTO member, the United States can elect, based upon safeguards
and market disruptions, to limit the export quantities to the United
States. The Company’s management has found that because of China's
limitations of exports to the United States, fewer Chinese manufacturers are
willing to exhibit in United States trade shows. For example, when China
officially became a member of WTO on January 1, 2005, ASAP Show's trade show in
Las Vegas in February 2005 had 35 exhibitors from China. The Chinese exporters
believed that their exports to the United States would be free of quota
limitations. However when the United States imposed the safeguards/market
disruption quotas in early 2005, the number of Chinese exhibitors at the August
2005 trade show declined to 20. However, attendance for the February 2006 trade
show increased to a number of exhibitors that was consistent with the February
2005 trade show.
ASAP Expo
estimates that 30% of its total revenue in 2008 will be from China.
THE
COMPANY EXPECTS TO BE DEPENDANT UPON REVENUE FROM UNPROVEN TRADE SHOWS WHICH
MAKES OUR REVENUE POTENTIAL UNCERTAIN.
ASAP Expo
expects to depend primarily on revenue from trade shows. The trade shows have
generated revenue in the past. Growth in trade shows depends upon venue
availability, continued willingness of manufacturers to pay to exhibit and
buyers’ willingness to attend. There is no assurance that venues will
be available in Las Vegas or that exhibitors will continue to pay fees or that
attendees will continue to find it worthwhile to attend. Therefore there is no
guarantee that the trade shows will continue to generate revenue or that revenue
will meet management's expectations. ASAP Expo's primary source of funds will be
trade show revenue and ASAP Expo’s $1,300,000 line of credit provided by Mr.
Yuan, the Company’s CEO, and his wife, Vicky Yuan.
THE
COMPANY FACES INTENSE COMPETITION FROM MANY ENTITIES.
The trade
show marketplace is highly competitive. The barrier to entry is not significant.
We have identified and continue to identify numerous companies that are better
funded, have more experience and more significant resources that have entered or
are planning to enter the trade show business. Should these companies decide to
enter our specific market, there is no guarantee that we will be able to compete
with them effectively.
THE
COMPANY IS DEPENDENT ON FOREIGN GOVERNMENTS SUBSIDIZING THEIR EXPORTERS'
EXHIBITION FEES.
ASAP Expo
heavily relies on foreign alliances with manufacturers and their governments'
willingness to subsidize their exporters’ exhibit fees for the trade shows. If a
foreign government decides to drop the financial support of its exporters at the
trade shows, this will have an immediate negative impact on ASAP Expo's trade
show revenue. For example, Macau has been supporting its exporters at ASAP
Expo's trade shows. If for any reason, the Macau government decides to not pay
for its exporters to exhibit, it will be very hard for the exporters to pay on
their own.
THE
COMPANY IS DEPENDENT ON MARKET DEMAND FOR AN ACCEPTANCE OF OUR SERVICE WHICH IF
DOES NOT EXIST WOULD HAVE A NEGATIVE IMPACT ON OUR BUSINESS.
Much of
ASAP Expo's success is dependent upon aggregating a critical mass of subscribing
overseas manufacturers and trade show attendees and establishing and maintaining
strong relationships with clients. If market demand and acceptance for our
services is not in line with our expectations, it is likely that revenue will
not meet our expectations.
WE
ARE DEPENDENT ON RELATIONSHIPS WITH KEY APPAREL RETAILERS / BUYERS, AND THE
ABILITY TO CREATE MORE SUCH RELATIONSHIPS, THE LOSS OF ANY OF WHICH COULD HAVE A
NEGATIVE IMPACT ON OUR BUSINESS.
Our
business model is retailer/buyer -centric. Successful implementation of it is
predicated on our ability to create and nurture strong relationships with
retailers/buyers. If we are unable to maintain existing relationships, our
revenue profitability will not meet our expectations. Although ASAP Expo
believes it can create and maintain the necessary relationships, there is no
guarantee that it will.
WE
DEPEND ON THE RELIABILITY OF OUR SERVICES.
As a
member of the service industry, ASAP Expo is dependent upon the reliability of
its trade show, software and hardware. There is no guarantee that ASAP Expo will
be able to provide reliable services. Even though ASAP Expo's trade show is a
unique sourcing show with niche services such as matchmaking and educational
seminars, there is no guarantee that other trade shows such as MAGIC will not
copy or follow our unique services. If a competitor starts to copy our unique
services, which is possible, management believes that it will face more intense
competition than before.
WE
DEPEND UPON KEY MEMBERS OF MANAGEMENT, THE LOSS OF ANY OF WHOM WOULD NEGATIVELY
IMPACT OUR BUSINESS.
The
implementation of our business plan relies on key members of the management team
and sales, marketing, and finance personnel. There is no guarantee that these
employees will continue to work for ASAP Expo. In addition, there is no
guarantee that ASAP Expo will be able to replace these employees with personnel
of similar caliber should they not be able to work, or decide not to work for
ASAP Expo.
ASAP
EXPO HAD AN CAPITAL DEFICIENCY OF $1,126,289 AS OF SEPTEMBER 30, 2007, AND WE
HAVE RECEIVED AN OPINION FROM OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REGARDING OUR ABILITY TO CONTINUE AS A GOING CONCERN, AND WE MAY NEVER ACHIEVE
PROFITABILITY .
ASAP
Expo’s parent company, ASAP Show, had a history of operating
losses. At September 30, 2007, the Company has a capital deficiency
of approximately $1,126,289 resulted from the accumulated deficit of its parent
company that was transferred to the Company pursuant to the
Agreement. ASAP Show has not been profitable since inception and we
do not expect ASAP Expo to be profitable in the near future. No assurances can
be given as to whether we will ever be profitable.
Our
independent registered public accounting firm has added an explanatory paragraph
to their report of independent registered public accounting firm issued in
connection with the financial statements for the period ended May 31, 2007,
relative to the substantial doubt about our ability to continue as a going
concern. Our ability to obtain additional funding will determine our ability to
continue as a going concern. Our financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
ASAP Expo
will not receive any proceeds from the distribution of the Shares.
The
Shares are being distributed as a dividend to the shareholders of China
Yili.
Not
applicable.
The sole
Selling Security Holder is China Yili Petroleum Company, which owns 100% of the
outstanding shares of common stock of ASAP Expo and will not own any shares
after the distribution.
There is
no underwriter or coordinating broker acting in connection with this
offering. China Yili may be deemed an “underwriter” within the
meaning of the Securities Act with respect to the Shares offered by China
Yili. Upon effectiveness of the registration statement, the Shares
will be distributed on a pro rata basis to the common stock holders of China
Yili (the “Distribution”). The Shares will not be distributed to
either China Yili Series A preferred stockholders or stockholders of China Yili
common stock who received their shares of common stock in exchange for shares
China Yili Series A preferred stock.
The
Distribution will be a taxable event to those China Yili common stock holders
receiving Shares therefrom.
After the
Distribution, the Shares may be sold from time to time by the shareholders of
ASAP Expo, transferees or other successors in interests. Such sales
may be made from time to time on the OTCBB or on any other market or exchange on
which the common stock of ASAP Expo may be traded or listed at the time of sale
or otherwise at prices and terms then prevailing or at prices related to the
then current market price, or in negotiated transactions. The Shares
may be sold by one or more of the following:
·
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ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
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·
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block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
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·
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purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
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·
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an
exchange distribution in accordance with the rules of the applicable
exchange;
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·
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privately
negotiated transactions;
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·
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settlement
of short sales entered into after the effective date of the registration
statement of which this Prospectus is a
part;
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·
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broker-dealers
may agree with ASAP Expo to sell a specified number of such shares at a
stipulated price per share;
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·
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through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise;
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·
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a
combination of any such methods of sale;
or
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·
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any
other method permitted pursuant to applicable
law.
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The
following is a summary of the material terms of ASAP Expo’s common
stock. This summary is subject to and qualified in its entirety by
ASAP Expo’s Articles of Incorporation and Bylaws, which are included as exhibits
to the registration statement of which this Prospectus forms a part, and by the
applicable provisions of Nevada law.
ASAP
Expo’s authorized capital consists of forty-five million (45,000,000) shares of
common stock, par value of $.001 per shares, of which eight million seven
hundred one thousand four hundred and eighty (8,701,480) are issued and
outstanding. The Articles of Incorporation do not permit cumulative
voting for the election of directors, and shareholders do not have any
preemptive rights to purchase shares in any future issuance of ASAP Expo’s
common stock.
All of
the issued and outstanding shares of common stock are duly authorized, validly
issued, fully paid and non-assessable. To the extent that additional
shares of ASAP Expo’s common stock are issued, the relative interests of the
existing shareholders may be diluted.
COMMON
STOCK
Voting
Rights
. Each holder of shares of common stock is entitled to
one vote for each share of common stock for the election of directors and on
each other matter submitted to a vote of the stockholders of ASAP
Expo. The holders of common stock have exclusive voting power on all
matters at any time.
Liquidation
Rights
. Upon liquidation, dissolution or winding up of ASAP
Expo, holders of shares of common stock are entitled to share ratably in
distributions of any assets after payment in full or provisions for all amounts
due creditors and provision for any liquidation preference of any other class or
series of stock of ASAP Expo then outstanding.
Dividends
. Dividends
may be declared by the Board of Directors and paid from time to time to the
holders of common stock, on such record dates as may be determined by the Board
of Directors, out of the net profits or surplus of ASAP Expo.
LEGAL
MATTERS
The
validity of the securities being offered will be passed upon for ASAP Expo by
James Vandeberg, The Otto Law Group, PLLC, 601 Union Street, Suite 4500,
Seattle, WA 98101. ASAP Expo's legal counsel has been employed on a
non-contingent basis.
EXPERTS
The
financial statements of ASAP Expo as of May 31, 2007, included in this
Prospectus have been included herein in reliance upon the report of Sutton
Robinson Freeman & Co., P. C., our independent registered public accounting
firm, given on the authority of said firm as an expert in auditing and
accounting.
ASAP Expo
was incorporated in April 2007 under the laws of the State of Nevada and is a
wholly owned subsidiary of China Yili. ASAP Expo is operating the business of
organizing trade-shows. ASAP Expo is initially targeting the apparel
industry.
TRADE
SHOWS
·
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ASAP
GLOBAL SOURCING SHOW - a trade show for U.S. buyers to meet hundreds of
overseas ready-made garment manufacturers - is held twice a year in Las
Vegas. Trade show revenue is generated primarily from booth sales. There
are many other ancillary revenues such as seminar fees, advertisements,
trade show decoration, material rentals, etc. Currently, management
allocates all resources and manpower to develop the tradeshows mentioned
above.
|
·
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ASAP
BUYING TRIP -It was the first buying tour of its kind designed for United
States and European Union buyers prepared to place production orders,
license their brands, understand China's distribution channels, find joint
venture possibilities and relocate United States textile plants to China.
Participation from the United States and European Union included such
prominent names such as Fruit of the Loom, Warnaco, Salvatore Ferragamo
and Marks & Spencer among others. In the course of its operations,
ASAP Show has arranged seven buying trips to China and in November, 2005,
one buying trip to Pakistan and
Bangladesh.
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·
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FASHION
INTERNATIONAL TRADE SHOW (“FITS”) - FITS is the only Licensing Trade show
held in China, committed to launch international fashion, accessory and
footwear brands into China - the fastest growing consumer market in the
world. FITS provides the most cost effective way and "first entry"
advantage by finding an experienced partner to act as a Master Licensee to
overcome the complexity of the Chinese distribution
system.
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EMPLOYEES
As of
September 30, 2007, ASAP Expo employed 15 full-time employees classified as
follows: 2 full-time executive officers; 2 full-time administrative personnel
stationed in the USA; 1 in India, 1 in Hong Kong and 9 in China. ASAP Expo
believes that relations with its employees are good.
COMPETITORS
There are
numerous fashion, apparel, textile and accessories/supplies trade shows in the
U.S. each year. Some of these shows are well established and have been held for
years.
The
primary competitors of ASAP Expo are as follows:
1.
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MAGIC
- MAGIC, the Men's Apparel Guild in California was founded in 1933. Due to
enormous growth, the show relocated from Los Angeles to Las Vegas in 1989.
Today, MAGIC International is the world's largest and most widely
recognized organizer of the fashion industry trade shows. MAGIC
encompasses every facet of fashion. MAGIC announced its Sourcing Zone and
FABRIC@MAGIC show in 2003, which is the direct competition of
ASAP.
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2.
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Material
World at New York Javits Center and Miami Convention Center – Material
World established for fabric and trim show in North America. Even though
Material World is held in different cities and focus on fabrics and trim,
but they are trying to enter apparel sourcing trade show
sector.
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3.
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SOURCES
trade show - Now in its third year, SOURCES has exhibitors that are
non-U.S. based manufacturers of gifts, home and decorative accessories,
and handcrafted products that comes the U.S. to do business with
wholesalers, importers, distributors, catalog and mail order, and direct
volume purchasers.
|
Although
the competitors detailed in the preceding paragraphs may offer similar services
to ASAP Expo, ASAP Expo believes that no other company has its range
of services, approach to serving the industry or such an experienced management
team with years of experience within the apparel industry. ASAP Expo is focused
on providing a complete merchandise sourcing solution by providing educational
seminars, matchmaking sessions, dedicated country managers and other unique
services that interlock each other and are focused on serving buyers'
/exhibitors' international sourcing and transaction needs.
INTELLECTUAL
PROPERTY PROTECTION
ASAP Expo
has trademarked the following trade names: ASAP Global Sourcing Show(TM),
DEPS(TM); FOCASTING(TM); and Internet Sourcing Network(TM).
ASAP Expo
leases its corporate headquarters located at 9643 Jacob Lane, Rosemead,
California 91770. Its telephone number is (626) 297-1800. The lease agreement is
entered with its CEO Frank Yuan, an arm length transaction, commenced on July 1,
2007, and is a month to month lease. ASAP Expo currently leases approximately
2,500 square feet at an average monthly rent of approximately
$4,500.
None.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET
INFORMATION
There is
no established public trading market for a class of common equity of ASAP
Expo.
HOLDERS
OF RECORD
As of
January 4, 2008, all of ASAP Expo's issued and outstanding common stock totaled
8,701,480 shares and were held by 1 shareholder, China Yili.
DIVIDENDS
ASAP Expo
has not paid dividends and has no plans to pay dividends in the near future.
ASAP Expo intends to reinvest its earnings on the continued development and
operation of its business. Any payment of dividends would depend upon ASAP
Expo's pattern of growth, profitability, financial condition, and such other
factors, as the Board of Directors may deem relevant.
ASAP
Expo’s Financial Statements are attached hereto as
Exhibit
A
.
Set forth
below is our historical financial data with respect to the fiscal years ended
May 31, 2007, 2006, 2005, 2004 and 2003. The information is only a summary. This
information has been derived from, and should be read in conjunction with, our
historical audited Financial Statements and unaudited Financial Statements and
related notes beginning on page F-1 and the section entitled "Management's
Discussion and Analysis".
We have
changed our fiscal year end from May 31 to December 31. The unaudited
financial data reflects the change in fiscal year end.
Selected
Historical Financial Data
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As
of and for the Year Ended May 31,
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2007
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2006
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2005
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2004
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2003
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Revenues
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$
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-
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$
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-
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$
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-
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$
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-
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$
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-
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Income
(loss) from operations
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$
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-
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|
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$
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-
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|
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$
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-
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$
|
-
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$
|
-
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|
Net
income (loss)
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|
$
|
-
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|
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$
|
-
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$
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-
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|
|
$
|
-
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|
|
$
|
-
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|
|
|
|
|
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Net
income (loss) per share:
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|
|
|
|
|
|
|
|
basic
and diluted
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Wt.
Avg. shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
basic
and diluted
|
|
|
8,701,480
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$
|
102,945
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Line
of credit, officers
|
|
$
|
1,028,307
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Shareholders'
deficit
|
|
$
|
(1,367,588
|
)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Selected
Quarterly Financial Data (Unaudited)
|
|
First
|
|
|
Second
|
|
|
Third
|
|
|
Fourth
|
|
|
|
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Quarter
|
|
|
Total
|
|
Year
ended May 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Income
(loss) from operations
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Net
income (loss)
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
ended December 31, 2007:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
65,723
|
|
|
$
|
472,949
|
|
|
|
|
|
|
|
|
|
Income
from operations
|
|
$
|
-
|
|
|
$
|
15,532
|
|
|
$
|
11,800
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$
|
-
|
|
|
$
|
4,151
|
|
|
$
|
(12,709
|
)
|
|
|
|
|
|
|
|
|
The
following discussion of the plan of operation of ASAP Expo should be read in
conjunction with ASAP Expo's audited and un-audited financial statements and the
related notes thereto which are included elsewhere in this registration
statement for the periods ended May 31, 2007, and September 30, 2007,
respectively. The Distribution of all of the issued and outstanding
shares of ASAP Expo to the holders of China Yili’s common stock will cause ASAP
Expo to spin-off from China Yili. The beginning balances of ASAP
Expo’s assets and liabilities are the balances of China Yili’s assets and
liabilities as of May 24, 2007.
Certain
statements contained herein may constitute forward-looking
statements. The Company’s actual results could differ materially from
the results anticipated in the forward-looking statements as a result of a
variety of factors.
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The
following table presents information for the period from May 24, 2007 to
September 30, 2007.
|
|
Period
Ended
|
|
|
|
9/30/07
|
|
Revenues,
net
|
|
$
|
538,672
|
|
Income
from operations
|
|
$
|
27,332
|
|
Income
taxes
|
|
$
|
800
|
|
Net
loss
|
|
$
|
(8,557
|
)
|
Income
per share-basic and diluted
|
|
$
|
--
|
|
PLAN
OF OPERATION
REVENUES
Transaction
Sales
Even
though transaction sales gross revenue has been declining, management will
continue this business segment. ASAP Expo does not expect this net revenue
percentage to grow, as its main focus is on trade show revenue.
Trade
Shows
ASAP GLOBAL SOURCING
SHOW
The ASAP
Global Sourcing Show segment derives revenue principally from the sale of
exhibit space, sponsorship and conference attendance fees generated at its
events. In 2007, approximately 95% of our trade show revenue was from the sale
of exhibit space. Events are generally held on a semi-annual basis in Las Vegas,
Nevada. At many of our trade shows, a portion of exhibit space is reserved and
partial payment is received as much as 90 days in advance. Cash is collected in
advance of an event and is recorded on our balance sheet as deferred revenue.
Revenue and related direct event expenses are recognized in the month in which
the event is held.
Trade
show business is seasonal, with revenue typically reaching its highest levels
during the first and third quarters of each fiscal year, largely due to the
timing of the ASAP Global Sourcing shows held in February and August each year.
In 2007, approximately 58% of our tradeshow revenue was generated during the
third quarter (August show) and approximately 42% during the first quarter
(February show). Because event revenue is recognized when a particular event is
held, we also experience fluctuations in quarterly revenue based on the movement
of annual trade show dates from one quarter to another.
Due to
the Men's Apparel Guild in California's ("MAGIC") establishment of its Sourcing
Zone, which is held at the same time as our shows, management believes the
competing MAGIC show will make it difficult for the ASAP Global Sourcing Show to
have significant growth.
FASHION INTERNATIONAL TRADE
SHOW (“FITS”)
FITS is
the only Licensing Trade show held in China, committed to launch international
fashion, accessory and footwear brands into China - the fastest growing consumer
market in the world. FITS provides the most cost effective way and "first entry"
advantage by finding an experienced partner to act as a Master Licensee to
overcome the complexity of the Chinese distribution system.
FITS
generates its revenue mostly from booth sales.
CHINA BUYING
TRIPS
It was
the first buying tour of its kind designed for United States and European Union
buyers prepared to place production orders, license their brands, understand
China's distribution channels, find joint venture possibilities and relocate
United States textile plants to China. Management is planning to conduct
multiple, but small size buying trips to China and Southeast Asia countries
annually.
ECO SHOW
Environment
concerned green nature products is the main focus of Eco Trade Show, a division
of ASAP Show, which was launched its first edition in February
2007.
LIQUIDITY
AND CAPITAL RESOURCES
During
the next twelve months, ASAP Expo will focus on its trade show business model to
generate additional revenue. With the net revenue from its trade show,
controlling and reducing G & A expenses, and continuing support from its CEO
to provide a revolving line-of-credit, management believes ASAP Expo will have
enough net working capital to sustain its business for another 12
months.
ASAP Expo
has a revolving line-of-credit from ASAP Expo’s CEO, Frank Yuan, his wife Vicky
Yuan. The Line, as amended, expires on August 1, 2009, and provides
for a total maximum credit line of $1,300,000. The Line carries an interest rate
of 10% per annum. The total balance as of September 30, 2007, was
$1,083,137, excluding the accrued and unpaid interest of $35,589.
The
forecast of the period of time through which ASAP Expo’s financial resources
will be adequate to support its operations is a forward-looking statement that
involves risks and uncertainties. ASAP Expo’s actual funding requirements may
differ materially as a result of a number of factors, including unknown expenses
associated with the cost of continuing to implement ASAP Expo’s international
electronic trading business and trade show expansion.
ASAP Expo
has no commitments to make capital expenditures for the fiscal year ending May
31, 2008.
ASAP Expo
does not expect any significant change in the number of employees.
ASAP Expo
does not have any off-balance sheet arrangements.
Over the
next two to five years, ASAP Expo plans to utilize a combination of internally
generated funds from operations and potential debt and equity financing to fund
its long-term growth.
CRITICAL
ACCOUNTING POLICIES
The
preparation of financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States of America
requires management to make judgments, assumptions and estimates that affect the
amounts reported in the our financial statements and the accompanying notes. The
amounts of assets and liabilities reported on our balance sheet and the amounts
of revenues and expenses reported for each of our fiscal periods are affected by
estimates and assumptions, which are used for, but not limited to, the
accounting for revenue recognition, stock based compensation and the valuation
of deferred taxes. Actual results could differ from these estimates. The
following critical accounting policies are significantly affected by judgments,
assumptions and estimates used in the preparation of the financial
statements:
Revenue
Recognition
In
December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin 101 ("SAB 101"), "Revenue Recognition" which outlines the
basic criteria that must be met to recognize revenue and provide guidance for
presentation of revenue and for disclosure related to revenue recognition
policies in financial statements filed with the SEC. SAB 101 has been amended
and replaced by SAB 104. Management believes ASAP Expo's revenue recognition
policies conform to SAB 104.
Net
revenues include amounts earned under transaction sales, trade shows, buying
trips, Material World and subscription fees.
Transaction
Sales
Transaction
revenues are recorded in accordance with Emerging Issues Task Force Issue No.
("EITF") 99-19 "Reporting Revenue Gross as a Principal versus net as an Agent."
ASAP Expo recognizes net revenues from product transaction sales when title to
the product passes to the customer, net of factoring fees. For all product
transactions with its customers in 2007, ASAP Show acted as a principal, took
title to all products sold upon shipment, and bore inventory risk for return
products that ASAP Show was not able to return to the supplier, although these
risks are mitigated through arrangements with factories, shippers and
suppliers.
Trade
Shows
Trade
shows generate revenue through exhibitor booths sales, corporate sponsorship,
and advertising. Such revenue is typically collected in advance, deferred and
then recognized at the time of the related trade show. ASAP Expo organizes two
trade shows per year in February and August in Las Vegas.
Buying
Trips
Buying
trips generate revenue through the participating buyers ("Buyers") paying for
ASAP Expo's assistance during the travel through various foreign countries in
Asia to meet local apparel manufacturers. ASAP Expo receives a portion of
exhibition net revenues collected by the oversea government's trade promotion
agencies located in the various cities which were visited by the Buyers (we do
not share any losses, if any). Buying Trip's revenue is recognized ratably
during the period in which the event is conducted. Management is planning to
conduct multiple, but small size buying trips to China and Southeast Asia
countries annually.
Deferred Tax Asset
Valuation
ASAP Expo
accounts for income taxes under Statement of Financial Accounting Standard
("SFAS") No. 109, "ACCOUNTING FOR INCOME Taxes." Under SFAS No. 109, deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to
be recovered or settled. Management provides a valuation allowance for
significant deferred tax assets when it is more likely than not that such assets
will not be recovered.
New Accounting
Pronouncements
In
December 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123 (revised 2004),
"Share-Based Payment" ("SFAS No. 123(R)")
, which is a revision of SFAS
No. 123. SFAS No. 123(R) supersedes Accounting Principles Board ("APB") No. 25
and amends SFAS No. 95, "Statement of Cash Flows." SFAS No. 123(R) requires all
share-based payments to employees, including grants of employee stock options,
to be recognized in the income statement based on their fair values. Pro forma
disclosure is no longer an alternative. The provisions of this statement are
effective for the Company as of June 1, 2006.
SFAS No.
123(R) requires companies to recognize in the statement of operations the
grant-date fair value of stock options and other equity-based compensation
issued to employees. SFAS No. 123(R) also establishes accounting requirements
for measuring, recognizing and reporting share-based compensation, including
income tax considerations. The Company will adopt SFAS No. 123(R) using the
modified prospective application in June 2006. Under the modified prospective
application, the cost of new awards and awards modified, repurchased or
cancelled after the required effective date and the portion of awards for which
the requisite service has not been rendered (unvested awards) that are
outstanding as of the required effective date will be recognized as the
requisite service is rendered on or after the required effective date. The
compensation cost for that portion of awards shall be based on the grant-date
fair value of those awards as calculated for either recognition or pro forma
disclosures under SFAS No. 123.
The
adoption of SFAS No. 123(R)'s fair value method will have a negative impact on
the Company's results of operations if the Company grants share-based payments
to its employees in the future, although it will have no impact on its overall
financial position. The impact of adopting SFAS No. 123(R) cannot be predicted
at this time because it will depend on levels of share-based payments granted in
the future. SFAS No. 123(R) also requires the benefits of tax deductions in
excess of recognized compensation cost to be reported as a financing cash flow,
rather than as an operating cash flow as required under current accounting
literature. The requirement will reduce net operating cash flows and increase
net financing cash flows in periods of adoption.
As of
September 30, 2007, the Company has not issued any share-based payments to its
employees.
In
September 2006, the FASB issued
SFAS No. 157
, “
Fair Value Measurements”
(SFAS 157). This statement defines fair value, establishes a framework for
measuring fair value in GAAP, and expands disclosures about fair value
measurements. SFAS 157 is effective for financial statements issued for fiscal
years beginning after November 15, 2007. The Company is currently
evaluating the impact of adopting
SFAS 157
on our financial
condition and results of operations.
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)” (SFAS No. 158”). SFAS No. 158
requires an employer that sponsors one or more single-employer defined benefit
plans to (a) recognize the over-funded or under-funded status of a benefit plan
in its statement of financial position, (b) recognize as a component of other
comprehensive income, net of tax, the gains or losses and prior service costs or
credits that arise during the period but are not recognized as components of net
periodic benefit cost pursuant to SFAS No. 87, “Employers’ Accounting for
Pensions”, or SFAS No. 106, “Employers’ Accounting for Postretirement Benefits
Other Than Pensions”, (c) measure defined benefit plan assets and obligations as
of the date of the employer’s fiscal year-end, and (d) disclose in the notes to
financial statements additional information about certain effects on net
periodic benefit cost for the next fiscal year that arise from delayed
recognition of the gains or losses, prior service costs or credits, and
transition asset or obligation. The Company does not expect the adoption
of
SFAS
158
to have a material effect
on its financial statements and related disclosures.
ASAP Expo
continues to assess the effects of recently issued accounting standards. The
impact of all recently adopted and issued accounting standards has been
disclosed in the footnotes to ASAP Expo's audited financial statements, note
1.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
Foreign
Currency Exposures
Even
though ASAP Expo’s primary business is to bring foreign manufacturers to exhibit
at trade shows in the United States, our earnings are not affected by
fluctuations in the value of our currency against foreign currencies, as our
revenues are U.S. dollar denominated.
Interest
Rate Risk
The
Company’s primary cash resource has been through the Company’s line of credit
from Frank and Vickie Yuan. The interest rate for the Line is fixed
at 10% interest per annum. Hence, the Company is not affected by
interest rate fluctuations.
Credit
Line Risk
With
respect to the Company’s Line, ASAP Expo is exposed to a potential reduction of
the credit line, should Frank and Vickie Yuan choose to extend the Line to the
Company.
Country
Risk
A
substantial portion of our business and operations are located and conducted in
China, India, Pakistan, Bangladesh & other Far Eastern
countries. Should the economic growth in these countries slow due to
economic down turn, implementation of trade regulations complicating export to
the U.S., or the occurrence of any other event or events that may have a
negative impact on the economies of the aforementioned countries and region, our
business is negatively affected as a result, then our financial results,
including our ability to generate revenues and profits, will also be negatively
affected.
DIRECTORS
, EXECUTIVE OFFICERS, PROMOTRES AND CONTROL
PERSONS
Each of
the following persons is a director and executive officers of ASAP Expo as of
January 1, 2008.
NAME
|
AGE
|
POSITIONS
HELD WITH COMPANY
|
Charles
Rice
|
65
|
Director
since 2007
|
Deborah
Shamaley
|
49
|
Director
since 2007
|
James
Vandeberg
|
64
|
Director
since 2007
|
Alvin
S. Mirman
|
70
|
Director
since 2007
|
Frank
S. Yuan
|
59
|
Chairman
of the Board since 2007;
Chief
Executive Officer since 2007
|
There are
no family relationships among any of the directors and executive
officers.
The
following sets forth certain biographical information concerning each director
and executive officer:
CHARLES
RICE. Charles Rice, Senior International and Domestic buyer, retired from Sears
Roebuck and Montgomery Ward. His 30 plus years of buying experience, reputation,
contacts and product sourcing knowledge bring ASAP Expo tremendous benefits and
a head start in the retail industry. Mr. Rice holds a B.S. degree in business
and economics from the University of Delaware. Mr. Rice was a director of C-ME
since 1996, ASAP Show since 2005 and ASAP Expo since 2007.
DEBORAH
SHAMALEY. Deborah Shamaley, a chain store and apparel-jobbing entrepreneur, has
20 years of retail and wholesale apparel experience. Mrs. Shamaley co-founded
The Apparel Group ("TAG"). TAG imported and sold women's apparel wholesale to
more than 1,800 retailers including Nordstrom's, J.C. Penney's, Sears, and
Burlington Coat Factory. TAG also owned and operated a 23 apparel store-chain
under the name $11.99 Puff. Ms. Shamaley sold the company in 1996. Mrs. Shamaley
has also been involved in Shamaley Ford car dealership, one of the largest in El
Paso, Texas since 1995. Ms. Shamaley was a director of C-ME since 1996, ASAP
Show since 2005 and ASAP Expo since 2007.
JAMES
VANDEBERG. James Vandeberg has been an attorney in private practice specializing
in corporate finance for the past 11 years. He brings more than 20 years of
corporate counsel and corporate secretary experience to ASAP Expo. He has
significant experience advising both internet and retail companies on
securities, financings, mergers and acquisitions, and general corporate matters,
including IPO's, SEC compliance, and investor relations' issues. His retail
experience includes 14 years as Corporate Counsel and Secretary at the former
Carter Hawley Hale Stores, a holding company for the multi-billion dollar
department and specialty retail stores which operated under the names: The
Broadway, Neiman Marcus, Contempo Casuals, Emporium, Weinstock's, Bergdorf
Goodman, Holt Renfrew - Canada, Waldenbooks, John Wanamaker, Thalhimers, and
Sunset House. In addition, Mr. Vandeberg serves on the board of directors for
Information Highway.com, Inc. (OTC: BB IHWY), IAS Communications, Inc. (OTC: BB
IASCA), and REGI US, Inc. (OTC: BB RGUS). He received his B.A. in accounting
from the University of Washington and his J.D. from New York University. Mr.
Vandeberg was a director of C-ME since 2001, ASAP Show since 2005 and ASAP since
Expo 2007.
ALVIN S.
MIRMAN.
Alvin S.
Mirman was founder, chief operating officer, President and Chairman of US
Capital Partners, Inc from 2002 until January of 2006. Previously, he founded
First Level Capital in 1998 where he was chief operating officer and Chairman
until the firm merged with vFinance in 2001. Since the merger, he has been FinOp
and research director for vFinance is licensed Series 3, 4, 7, 24, 27 and 65.
From May 1997 until August 1998, Mr. Mirman was a partner at Grady & Hatch
where he served as Vice President and CFO. At Commonwealth Associates, he was
Director of Research, and member of both the Executive and Commitment Committees
from August 1994 until June 1997. From 1987 to 1994, Mr. Mirman at Gruntal &
Company specialized in the telecommunications industry. Prior to that time, from
1983 through 1987, he was a Vice President at E.F. Hutton. Mr. Mirman was the
host of a nationwide TV show, “Wall Street Today” where he interviewed top
management about their companies. Mr. Mirman is widely quoted in various
publications including the Wall Street Journal, Bloomberg Financial, CNBC and
Forbes. He has been a member of the New York Society of Securities Analysts for
the past 30 years. Mr. Mirman is a director of ASAP Show since 2006 and ASAP
Expo since 2007.
FRANK S.
YUAN. Combining decades of experience in the apparel, banking, real estate,
insurance and computer industries, Frank Yuan has developed and started multiple
new ventures in his 30 plus years as an immigrant in the United States. Before
ASAP Expo, Mr. Yuan founded multi-million dollars of business in men's apparel
private label & wholesale company, a "Knights of Round Table" sportswear
line, a "Uniform Code" sweater line, and men's clothing retail store chain. Mr.
Yuan also founded UNI-Fortune, a real-estate development company, and co-founded
United National Bank, Evertrust Bank, Western Cities Title Insurance Company and
Serv-American National Title Insurance. Mr. Yuan received a B.A. degree in
economics from Fu-Jen Catholic University in Taiwan and a M.B.A. degree from
Utah State University. Mr. Yuan was a director & CEO of C-ME since 1996,
ASAP Show since 2005 and ASAP Expo since 2007.
BOARD
MEETINGS AND COMMITTEES
The
Executive Committee consists of Frank Yuan, Charles Rice and Deborah Shamaley.
The Executive Committee has authority to take any action other than appointment
of auditors, election and removal of directors and appointment of officers,
which can be taken only by the entire Board. During the fiscal year ended May
31, 2007, the Executive Committee held no meetings.
The
Compensation Committee consists of Deborah Shamaley, Alvin Mirman and Charles
Rice. The principal functions of the Compensation Committee are to establish the
compensation of executive officers, review management organization and
development, review significant employee benefit programs and administer ASAP
Expo's Stock Option Plans. The Compensation Committee held no meetings during
the fiscal year ended May 31, 2007.
ASAP Expo
does not have a Nominations Committee. The Board of Directors, as a whole,
identifies and screens candidates for membership on ASAP Expo's
Board.
AUDIT
COMMITTEE REPORT
The Audit
Committee selects our independent registered public accounting firm, reviews the
results and scope of the audit and other services provided by our independent
registered public accounting firm, reviews our financial statements for each
quarterly period and reviews and evaluates our internal control functions.
Charles Rice serves as the Audit Committee Chairman. Mr. Rice is an independent
audit committee member according to the definition used by NASDAQ for audit
committee independence, and is an audit committee qualified financial expert.
James Vandeberg and Alvin Mirman are other members of the audit
committee.
CODE
OF ETHICS
For the
period ended September 30, 2007, ASAP Expo did not have formal written values
and ethical standards. However, ASAP Expo's management does communicate values
and ethical standards during company-wide meetings.
COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
The
following table sets forth the compensation that ASAP Show paid to each
executive officer and all executive officers as a group, for the fiscal years
ended May 31, 2007 and 2006 including salary and bonuses paid by ASAP Show to
the Chief Executive Officer. No other executive officers received more than
$100,000 during the fiscal years ended May 31, 2007 and 2006. ASAP Expo does not
currently have a long-term compensation plan and does not grant any long-term
compensation to its executive officers or employees.
The table
does not reflect certain personal benefits, which in the aggregate are less than
ten percent of the named executive officer's salary and bonus. No other
compensation was granted in fiscal years ended May 31, 2007 and
2006.
SUMMARY
COMPENSATION TABLE
|
|
|
|
|
|
Long
Term Compensation
|
|
|
|
|
Annual
Compensation
|
|
|
Awards
|
|
|
Payouts
|
|
Name
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
Securities
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
Annual
|
|
|
Restricted
|
|
|
Underlying
|
|
|
|
|
|
|
|
Principal
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
Stock
|
|
|
Options/
|
|
|
LTIP
|
|
|
All
Other
|
|
Position
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
($)
|
|
|
Award(s)
|
|
|
SARs
(#)
|
|
|
Payouts
($)
|
|
|
Compensation
|
|
Yuan,
Frank
|
2007
|
|
$
|
150,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
N/A
|
|
|
$
|
-
|
|
|
$
|
-
|
|
(CEO)
|
2006
|
|
$
|
150,000
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
N/A
|
|
|
$
|
-
|
|
|
$
|
-
|
|
COMPENSATION
OF DIRECTORS
All
outside directors are reimbursed for any reasonable expenses incurred in the
course of fulfilling their duties as directors of ASAP Expo and do not receive
any payroll.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of
January 4, 2008, the sole shareholder of ASAP Expo is China Yili.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS; ORGANIZATION WITHIN LAST FIVE
YEARS
ASAP
Expo’s Line with Frank and Vicky Yuan allows for a total of $1.3 Million in draw
downs by, the Company. The Line bears interest at 10% per annum and expires on
August 1, 2009. During fiscal 2007 and 2006, our parent company, ASAP
Show, incurred interest expense totaling $99,676 and $82,000 in connection with
the Line. At September 30, 2007, the balance of the Line was $1,083,137,
excluding the accrued and unpaid interest of $35,589.
ASAP Expo
has a working capital advance loan to an affiliated company, IBMC, whose major
shareholder is Frank Yuan. There is no written note for the working
capitals loaned to IBMC. At September 30, 2007, the balance of the
loan was $150,389.
ASAP Expo
was incorporated under the laws of the State of Nevada on April 10, 2007, and is
a wholly owned subsidiary of China Yili (a Nevada corporation formerly operating
under the name ASAP Show, Inc.). On May 24, 2007, prior to ASAP
Show’s merger with Sino-American Petroleum, ASAP Show assigned to ASAP Expo its
pre-merger operations, assets, and liabilities in exchange for 8,701,480 shares
of ASAP Expo’s common stock.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
ASAP
Expo's Articles of Incorporation provide that ASAP Expo shall indemnify to the
fullest extent permitted by Nevada law any person who is made, or threatened to
be made, a party to any action, suit or proceeding, whether civil, criminal,
administrative, investigative, or otherwise (including an action, suit or
proceeding by or in the right of the corporation) by reason of the fact that the
person is or was a director or officer of the corporation or a fiduciary within
the meaning of the Employee Retirement Income Security Act of 1974 with respect
to any employee benefit plan of the corporation, or serves or served at the
request of the corporation as a director or officer, or as a fiduciary of an
employee benefit plan, of another corporation, partnership, joint venture, trust
or other enterprise. The right to and amount of indemnification shall be
determined in accordance with the provisions of Nevada Revised Statutes in
effect at the time of the determination.
Our
Bylaws generally require that we advance to our directors and officers expenses
incurred by them in defending a proceeding in advance of its final disposition,
provided that the director or officer agrees to reimburse us for such advances
if it is ultimately found that the director or officer is not entitled to
indemnification. In addition, our bylaws permit us to purchase insurance on
behalf of our directors and officers against any liability asserted against them
in such capacity. We intend to obtain such insurance.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of ASAP Expo pursuant
to the foregoing provisions, or otherwise, ASAP Expo has been advised that in
the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by ASAP Expo of
expenses incurred or paid by a director, officer or controlling person of ASAP
Expo in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, ASAP Expo will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
PART
II-INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13 -
OTHER
EXPENSES OF ISSUANCE AND
DISTRIBUTION
The
expenses listed below are estimates and will be paid for by ASAP
Expo.
Registration
Fee
|
|
$
|
3.42
|
|
Printing
Expenses
|
|
|
0
|
|
Legal
Fees and Expenses*
|
|
|
25,000
|
|
Accounting
Fees and Expenses*
|
|
|
5,000
|
|
Blue
Sky Fees
|
|
|
0
|
|
Engineering
Fees and Expenses
|
|
|
0
|
|
Miscellaneous
|
|
|
0
|
|
Total
|
|
$
|
30,342
|
|
ASAP
Expo's Articles of Incorporation provide that ASAP Expo shall indemnify to the
fullest extent permitted by Title 7 of the Nevada Revised Statutes any person
who is made, or threatened to be made, a party to any action, suit or
proceeding, whether civil, criminal, administrative, investigative, or otherwise
(including an action, suit or proceeding by or in the right of the corporation)
by reason of the fact that the person is or was a director or officer of the
corporation or a fiduciary within the meaning of the Employee Retirement Income
Security Act of 1974 with respect to any employee benefit plan of the
corporation, or serves or served at the request of the corporation as a director
or officer, or as a fiduciary of an employee benefit plan, of another
corporation, partnership, joint venture, trust or other enterprise. The right to
and amount of indemnification shall be determined in accordance with the
provisions of the Delaware Corporate Code in effect at the time of the
determination.
Our
Bylaws generally require that we advance to our directors and officers expenses
incurred by them in defending a proceeding in advance of its final disposition,
provided that the director or officer agrees to reimburse us for such advances
if it is ultimately found that the director or officer is not entitled to
indemnification. In addition, our bylaws permit us to purchase insurance on
behalf of our directors and officers against any liability asserted against them
in such capacity. We intend to obtain such insurance.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
foregoing provisions or otherwise, we have been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by us of expenses incurred or paid by a director, officer or
controlling person of us in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
ITEM 15 -
RECENT
SALES OF UNREGISTERED SECURITIES
Pursuant
to the Agreement whereby ASAP Show assigned all of its pre-Merger business and
assets to ASAP Expo and ASAP Expo assumed responsibility for all of the
liabilities of ASAP Show that existed prior to the Merger, ASAP Expo issued
8,701,480 shares of common stock to ASAP Show. This issuance was
exempt from registration under Section 4(2) of the Securities Act as a
transaction not involving a public offering.
ITEM 16 -
EXHIBITS
AND FINANCIAL STATEMENT SCHEDULES
Exhibit
|
Description
|
|
|
2.1
|
Assignment
and Assumption and Management Agreement dated May 24, 2007, by and among
ASAP Expo, Inc., ASAP Show, Inc., and Frank S. Yuan
|
|
|
2.2
|
First
Amendment to the Assignment and Assumption and Management
Agreement
|
|
|
3.1
|
Amended
and Restated Articles of Incorporation of ASAP Expo,
Inc.
|
|
|
3.2
|
Bylaws
of ASAP Expo, Inc.
|
|
|
5.1
|
Opinion
of The Otto Law Group, PLLC
|
|
|
10.1
|
Revolving
Credit Line and Promissory Note by and between ASAP Expo, Inc. and Frank
S. Yuan and Vicky Yuan
|
|
|
10.2
|
Agreement
and Plan of Merger, dated as of May 24, 2007, by and among ASAP Show,
Inc., CRI Acquisition Corp., and Sino-American Petroleum Group,
Inc.
|
|
|
23.1
|
Consent
of The Otto Law Group, PLLC (included in Exhibit 5.1)
|
|
|
23.2
|
Consent
of Accountant
|
Financial
Statements
The
Financial Statements are attached hereto as
Exhibit
A
.
The
undersigned registrant hereby undertakes:
(1)
|
To
file, during any period in which offers or sales are being made, a post
effective amendment to this registration
statement:
|
a.
|
To
include any Prospectus required by Section 10(a) (3) of the Securities
Act; and
|
b.
|
To
reflect in the Prospectus any facts or events which arising after the
effective of the registration statement (or the most recent post-effective
amendment) or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
|
(2)
|
That,
for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a registration
statement relating to the securities therein, and the offering of such
securities that time shall be deemed to be the initial bona offering
thereof.
|
(3)
|
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
|
(4)
|
That,
insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore,
unenforceable.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Rosemead, State of
California, on February 8th, 2008.
ASAP
Expo, Inc.
/s/ Frank S.
Yuan
By: Frank
S. Yuan
Its:
Director and Chief Executive Officer
In
accordance with the requirements of the Securities Act, this registration
statement was signed by the following persons in the capacities and on the dates
stated:
/s/ Charles
Rice
Charles
Rice, Director
/s/ Deborah
Shamaley
Deborah
Shamaley, Director
/s/ James
Vandeberg
James
Vandeberg, Director
/s/ Alvin S.
Mirman
Alvin S.
Mirman, Director
EXHIBIT
A
FINANCIAL
STATEMENTS
ASAP
EXPO, INC.
Un-audited Financial
Statements
|
|
Balance
Sheet as of September 30, 2007
|
F-1
|
Statements
of Operations for the period from May 24, 2007 to September 30,
2007
|
F-2
|
Statements
of Cash Flows for the period from May 24, 2007 to September 30,
2007
|
F-3
|
Notes
to Financial Statements
|
F-4
|
Report
of Independent Registered Public Accounting Firm
|
F-9
|
|
|
Audited Financial
Statements
|
|
Balance
Sheet as of May 31, 2007
|
F-10
|
Statements
of Operations for the period from May 24, 2007 to May
31,2007
|
F-11
|
Statements
of Shareholders' Deficit for the period from May 24, 2007 to May 31,
2007
|
F-12
|
Statements
of Cash Flows for the period from May 24, 2007 to May 31,
2007
|
F-13
|
Notes
to Financial Statements
|
F-14
|
ASAP
EXPO, INC.
BALANCE
SHEET
SEPTEMBER
30, 2007
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
|
$
|
95,070
|
|
Other receivable
|
|
|
1,304
|
|
Due from affiliated company
|
|
|
150,389
|
|
Total current assets
|
|
|
246,763
|
|
Total assets
|
|
$
|
246,763
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
289,771
|
|
Total current liabilities
|
|
|
289,771
|
|
|
|
|
|
|
Line
of credit, officers
|
|
|
1,083,137
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders'
deficit:
|
|
|
|
|
Common stock, $0.001 par value; 45,000,000 shares
|
|
|
|
|
authorized; 8,701,480 shares issued and outstanding
|
|
|
8,701
|
|
Capital deficiency
|
|
|
(1,126,289
|
)
|
Accumulated deficit
|
|
|
(8,557
|
)
|
Total shareholders' deficit
|
|
|
(1,126,145
|
)
|
Total liabilities and shareholders' deficit
|
|
$
|
246,763
|
|
The
accompanying notes are an integral part of these financial
statements.
ASAP
EXPO, INC.
STATEMENTS
OF OPERATIONS
FOR
THE PERIOD OF MAY 24, 2007 TO SEPTEMBER 30, 2007
|
|
Period
Ended
September
30, 2007
|
|
Revenues:
|
|
|
|
Transaction
sales
|
|
$
|
9,974
|
|
Tradeshow
revenue
|
|
|
514,897
|
|
Buying
trip
|
|
|
13,801
|
|
Total revenues
|
|
|
538,672
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Cost
of transaction sales
|
|
|
(6,806
|
)
|
General
and administrative
|
|
|
448,028
|
|
Payroll
and related benefits
|
|
|
70,118
|
|
Total operating expenses
|
|
|
511,340
|
|
|
|
|
|
|
Income
from operations
|
|
|
27,332
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
Other
income
|
|
|
500
|
|
Interest
expense
|
|
|
(35,589
|
)
|
Total other income (expense)
|
|
|
(35,089
|
)
|
|
|
|
|
|
Loss
before income taxes
|
|
|
(7,757
|
)
|
Income
taxes
|
|
|
800
|
|
Net loss
|
|
$
|
(8,557
|
)
|
|
|
|
|
|
Basic
and diluted net loss available to common
|
|
|
|
|
shareholders per share
|
|
$
|
--
|
|
Weighted-average
number of common shares
|
|
|
|
|
outstanding, basic and diluted
|
|
|
8,701,480
|
|
The
accompanying notes are an integral part of these financial
statements.
ASAP
EXPO, INC.
STATEMENTS
OF CASH FLOWS
FOR
THE PERIOD OF MAY 24, 2007 TO SEPTEMBER 30, 2007
|
|
Period
Ended
|
|
|
|
September
30, 2007
|
|
Cash
flows from operating activities:
|
|
|
|
Net
loss
|
|
$
|
(8,557
|
)
|
Adjustments
to reconcile net loss to net cash used in
|
|
|
|
|
operating activities:
|
|
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
Employee
advances
|
|
|
(50
|
)
|
Other
assets
|
|
|
9,800
|
|
Accounts
payable and accrued expenses
|
|
|
3,404
|
|
Deferred
revenue
|
|
|
(67,184
|
)
|
Customer
deposits
|
|
|
(88,675
|
)
|
Net
cash used in operating activities
|
|
|
(151,262
|
)
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
Payments
for affiliated company
|
|
|
(113,215
|
)
|
Net
cash used in investing activities
|
|
|
(113,215
|
)
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
Proceeds
from capital contribution receivable
|
|
|
50,000
|
|
Advances
from line of credit, officers
|
|
|
425,000
|
|
Repayments
on line of credit, officers
|
|
|
(370,170
|
)
|
Proceeds
from shareholder contribution
|
|
|
200,000
|
|
Net
cash provided by financing activities
|
|
|
304,830
|
|
|
|
|
|
|
Net
increase in cash
|
|
|
40,353
|
|
Cash,
beginning of period
|
|
|
54,717
|
|
Cash,
end of period
|
|
$
|
95,070
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
Cash
paid during the period
|
|
|
|
|
Interest
|
|
|
25,600
|
|
Income
taxes
|
|
|
800
|
|
The
accompanying notes are an integral part of these financial
statements.
ASAP
EXPO, INC.
NOTES
TO FINANCIAL STATEMENTS
SEPTEMBER
30, 2007
NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
ASAP
Expo, Inc. (“ASAP Expo” or the “Company”) was incorporated on April 10, 2007
under the laws of the State of Nevada and is a wholly owned subsidiary of ASAP
Show, Inc., a Nevada corporation (“ASAP Show”).
On August
13, 2007 ASAP Show acquired the outstanding capital stock of Sino-American
Petroleum Group, Inc., a Delaware corporation (“Sino-American Petroleum”) (the
“Merger”), through the issuance of Series A Convertible Preferred Stock to
the shareholders of Sino-American Petroleum.Sino-American Petroleum is a holding
company that owns all of the registered capital of Tongliao Yili Asphalt Co.
(“Yili Asphalt”), a corporation organized under the laws of The People’s
Republic of China.Yili Asphalt is engaged in the business of refining heavy oil
into asphalt, fuel oil and lubricants.All of Yili Asphalt’s business is
currently in China.
Prior to
the Merger, ASAP Show assigned all of its pre-Merger business and assets to ASAP
Expo and ASAP Expo assumed responsibility for all of the liabilities of ASAP
Show that existed prior to the Merger.On May 24, 2007 ASAP Expo entered into an
Assignment and Assumption and Management Agreement with ASAP Show and Frank Yuan
whereby ASAP Expo acquired the operations of ASAP Show by the assignment and
transfer all of the assets and liabilities of ASAP Show to ASAP Expo (the
“Agreement”).The Agreement provides that Mr. Yuan will manage ASAP Expo within
his discretion, provided that his actions or inactions do not threaten material
injury to ASAP Show.The Agreement further provides that Mr. Yuan will cause ASAP
Expo to file a registration statement that will, when declared effective, permit
ASAP Show to distribute all of the issued and outstanding shares of ASAP Expo to
the holders of ASAP Show’s common stock (the “Distribution”).Upon the
registration statement being declared effective, the Board of Directors of ASAP
Show will fix a record date and shareholders of record on that date will receive
the Shares of ASAP Expo in proportion to their ownership of ASAP Show common
stock as a dividend to ASAP Show’s common stock held by them.
The
Distribution will cause ASAP Expo to spin-off from ASAP Show and allow the
shareholders of ASAP Show to participate in the growth of the trade show
business through the spin-off of the ASAP Expo, which owns and operates the
trade show business.The beginning balances of ASAP Expo’s assets and liabilities
are the balances of ASAP Show’s assets and liabilities as of May 24,
2007.
ASAP
Show, Inc. was incorporated in December 2004 under the laws of the State of
Nevada. ASAP Show's value to global suppliers and buyers in the manufacturing,
wholesaling and retailing clothing business lies in its capabilities as an
intermediary for the industry. The Company believes it has built a foundation to
meet today's ever-changing international trading landscape.
The
Apparel Sourcing Association Pavilion Trade Show ("ASAP Show") is the core
business of the Company. ASAP Show is a global apparel and textile sourcing show
that brings leading manufacturers from around the world to one venue to meet,
greet and sell to buyers. The ASAP Show is held twice a year in Las Vegas,
Nevada.
GOING
CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.
At
September 30, 2007, the Company has a capital deficiency of approximately
$1,126,289 resulted from the accumulated deficit of its parent company that was
transferred to the Company according to the Agreement, negative working capital
of approximately $43,008 and a lack of profitable operating history. The Company
hopes to increase revenues from its trade shows and buying trips. In the absence
of significant increases in revenues, the Company intends to fund operations
through additional debt and equity financing arrangements. The successful
outcome of future activities cannot be determined at this time and there are no
assurances that if achieved, the Company will have sufficient funds to execute
its intended business plan or generate positive operating results.
The
Company's success is dependent upon numerous items, certain of which are the
successful growth of revenues from its products and services and its ability to
obtain new customers/exhibitors in order to achieve levels of revenues adequate
to support the Company's current and future cost structure, for which there is
no assurance. Unanticipated problems, expenses, and delays are frequently
encountered in establishing and maintaining profitable operations. These
include, but are not limited to, competition, the need to develop customer
support capabilities and market expertise, technical difficulties, market
acceptance and sales and marketing. The failure of the Company to meet any of
these conditions could have a materially adverse effect on the Company and may
force the Company to reduce or curtail operations. No assurance can be given
that the Company can achieve or maintain profitable operations.
The
Company believes it will have adequate cash to sustain operations until it
achieves sustained profitability. However, until the Company has a history of
maintaining revenue levels sufficient to support its operations and repay its
working capital deficit, the Company may require additional financing. Sources
of financing could include capital infusions, additional equity financing or
debt offerings. There can be no assurance that funding will be available on
acceptable terms, if at all, or that such funds, if raised, would enable the
Company to achieve or sustain profitable operations.
These
factors, among others, raise substantial doubt about the Company's ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the classification of liabilities
that might result from the outcome of these uncertainties.
USE
OF ESTIMATES
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. No significant estimates were made in these
financial statements.
RISKS
AND UNCERTAINTIES
The
Company operates in a highly competitive trade show environment that is subject
to government regulation and rapid change. The Company's operations are subject
to significant risk and uncertainties including financial, operational and other
risks associated with the business, including the potential risk of business
failure.
CURRENT
VULNERABILITY DUE TO CERTAIN CONCENTRATIONS
Certain
financial instruments, principally accounts receivable, potentially subject the
Company to credit risks. The Company performs ongoing credit evaluations of its
customers but does not require collateral. The Company maintains an allowance
for doubtful receivables and sales returns based upon factors surrounding the
credit risk of specific customers, historical trends and the Company's estimate
of future product returns. As of the balance sheet date, no allowance is
required nor provided against these receivables, which are deemed to be
collectible in the normal course of business. Although the Company expects to
collect amounts due, actual collections may differ from the estimated
amounts.
There
were no significant sales concentrations for period from May 24, 2007 to
September 30, 2007 and no accounts receivable concentrations at September 30,
2007.
PROPERTY
AND EQUIPMENT
Property
and equipment are stated at cost. Depreciation of property and equipment was
calculated on the straight-line method over the estimated useful lives of the
assets, generally three to five years. Leasehold improvements were amortized
over the shorter of the amortized useful lives or the lease term.
Maintenance,
repairs and minor renewals are charged directly to expense as incurred.
Additions and betterments to property and equipment are capitalized. When assets
are disposed of, the related cost and accumulated depreciation thereon are
removed from the accounts and any resulting gain or loss is included in the
statement of operations.
Property
and equipment are fully depreciated at September 30, 2007.
REVENUE
RECOGNITION
In
December 1999, the SEC issued Staff Accounting Bulletin 101 ("SAB 101"),
"Revenue Recognition," which outlines the basic criteria that must be met to
recognize revenue and provide guidance for presentation of revenue and for
disclosure related to revenue recognition policies in financial statements filed
with the SEC. SAB 101 has been amended and replaced by SAB 104. Management
believes the Company's revenue recognition policies conform to SAB
104.
Revenues
include amounts earned under transaction sales, trade shows, and Buying
Trips.
Transaction
Sales
Transaction
revenues are recorded in accordance with Emerging Issues Task Force Issue No.
("EITF") 99-19 "Reporting Revenue Gross as a Principal versus net as an Agent."
The Company recognizes revenues from product transaction sales when title to the
product passes to the customer. For all product transactions with its customers,
the Company acts as a principal, takes title to all products sold upon shipment,
and bears inventory risk for return products that the Company is not able to
return to the supplier, although these risks are mitigated through arrangements
with factories, shippers and suppliers.
Trade
Shows
Trade
Shows generate revenue through exhibitor booths sales, corporate sponsorship,
and advertising. Such revenue is typically collected in advance, deferred and
then recognized at the time of the related trade show. The Company organizes two
trade shows per year in February and August in Las Vegas.
Buying
Trips
Buying
Trips generate revenue through the participating buyers ("Buyers") paying for
the Company's assistance during the travel through various foreign countries in
Asia to meet local apparel manufacturers. The Company receives a portion of
exhibition net revenues collected by the overseas government's trade promotion
agencies located in the various cities which were visited by the Buyers (i.e.
the Company does not share any losses, if any). The Buying Trip's revenue is
recognized ratably during the period in which the event is conducted. Management
is planning to conduct multiple, but small size buying trips to China and
Southeast Asia countries annually.
INCOME
TAXES
The
Company accounts for income taxes under Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes." Under SFAS No. 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation allowance is
provided for significant deferred tax assets when it is more likely than not
those assets will not be recovered.
LOSS
PER SHARE
Under
SFAS No. 128, "Earnings per Share," basic loss per share is computed by dividing
net loss available to common shareholders by the weighted-average number of
common shares assumed to be outstanding during the period of computation.
Diluted earnings per share is computed similar to basic loss per share except
that the denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common shares had been
issued and if the additional common shares were dilutive. If the Company has
incurred net losses, basic and diluted losses per share are the same as
additional potential common shares would be anti-dilutive.
FAIR
VALUE
SFAS No.
107, "Disclosures about Fair Value of Financial Instruments," requires
disclosure of fair value information about financial instruments when it is
practicable to estimate that value. The carrying amounts of the Company's cash,
accounts receivable, accounts payable, accrued expenses, deferred revenues and
line of credit from shareholders approximate their fair values due to the
short-term maturities of those financial instruments.
ADVERTISING
The
Company expenses the cost of advertising when incurred as general and
administrative expenses. No advertising expenses were incurred for period from
May 24, 2007 to September 30, 2007. Advertising costs consist primarily of costs
associated with the promotion of ASAP Global Sourcing Show
awareness.
SEGMENTS
OF AN ENTERPRISE AND RELATED INFORMATION
SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information"
dictates the way public companies report information about segments of their
business in their annual financial statements and requires them to report
selected segment information in their quarterly reports issued to shareholders.
It also requires entity-wide disclosures about the products and services an
entity provides, the material countries in which it holds assets and reports
revenues and its major customers (see Note 7).
RECENT
ACCOUNTING PRONOUNCEMENTS
In
December 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123 (revised 2004),
"Share-Based Payment" ("SFAS No. 123(R)")
, which is a revision of SFAS
No. 123. SFAS No. 123(R) supersedes Accounting Principles Board ("APB") No. 25
and amends SFAS No. 95, "Statement of Cash Flows." SFAS No. 123(R) requires all
share-based payments to employees, including grants of employee stock options,
to be recognized in the income statement based on their fair values. Pro forma
disclosure is no longer an alternative. The provisions of this statement are
effective for the Company as of June 1, 2006.
SFAS No.
123(R) requires companies to recognize in the statement of operations the
grant-date fair value of stock options and other equity-based compensation
issued to employees. SFAS No. 123(R) also establishes accounting requirements
for measuring, recognizing and reporting share-based compensation, including
income tax considerations. The Company will adopt SFAS No. 123(R) using the
modified prospective application in June 2006. Under the modified prospective
application, the cost of new awards and awards modified, repurchased or
cancelled after the required effective date and the portion of awards for which
the requisite service has not been rendered (unvested awards) that are
outstanding as of the required effective date will be recognized as the
requisite service is rendered on or after the required effective date. The
compensation cost for that portion of awards shall be based on the grant-date
fair value of those awards as calculated for either recognition or pro forma
disclosures under SFAS No. 123.
The
adoption of SFAS No. 123(R)'s fair value method will have a negative impact on
the Company's results of operations if the Company grants share-based payments
to its employees in the future, although it will have no impact on its overall
financial position. The impact of adopting SFAS No. 123(R) cannot be predicted
at this time because it will depend on levels of share-based payments granted in
the future. SFAS No. 123(R) also requires the benefits of tax deductions in
excess of recognized compensation cost to be reported as a financing cash flow,
rather than as an operating cash flow as required under current accounting
literature. The requirement will reduce net operating cash flows and increase
net financing cash flows in periods of adoption.
As of
September 30, 2007, the Company has not issued any share-based payments to its
employees.
In
September 2006, the FASB issued
SFAS No. 157
, “
Fair Value Measurements”
(SFAS 157). This statement defines fair value, establishes a framework for
measuring fair value in GAAP, and expands disclosures about fair value
measurements. SFAS 157 is effective for financial statements issued for fiscal
years beginning after November 15, 2007. The Company is currently
evaluating the impact of adopting
SFAS 157
on our financial
condition and results of operations.
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)” (SFAS No. 158”). SFAS No. 158
requires an employer that sponsors one or more single-employer defined benefit
plans to (a) recognize the over-funded or under-funded status of a benefit plan
in its statement of financial position, (b) recognize as a component of other
comprehensive income, net of tax, the gains or losses and prior service costs or
credits that arise during the period but are not recognized as components of net
periodic benefit cost pursuant to SFAS No. 87, “Employers’ Accounting for
Pensions”, or SFAS No. 106, “Employers’ Accounting for Postretirement Benefits
Other Than Pensions”, (c) measure defined benefit plan assets and obligations as
of the date of the employer’s fiscal year-end, and (d) disclose in the notes to
financial statements additional information about certain effects on net
periodic benefit cost for the next fiscal year that arise from delayed
recognition of the gains or losses, prior service costs or credits, and
transition asset or obligation.The Company does not expect the adoption of
SFAS
158
to have a material effect
on its financial statements and related disclosures.
Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the American Institute of Certified Public Accountants, and
the Securities and Exchange Commission did not or are not believed by Management
to have a material impact on the Company's present or future financial
statements.
NOTE
2 – DUE FROM AFFILIATED COMPANY
The
Company has a loan to an affiliated company, IBMC whose major shareholder, Frank
Yuan is also a significant shareholder of ASAP Show.There is no written note for
the working capitals loaned to IBMC.At September 30, 2007, the balance of the
loan was $150,389.
NOTE
3 - LINE-OF-CREDIT FROM OFFICERS
The
Company has an unsecured revolving line-of-credit (the "Line") from Frank Yuan,
the Company's Chief Executive Officer, and certain family members which expires
on August 1, 2009 and provides for borrowings up to a maximum of $1,300,000, as
amended. The Line carries an interest rate of 10.0% per annum. The balance as of
September 30, 2007 was $1,083,137, and the accrued and unpaid interest was
$35,589.
NOTE
4 - INCOME TAXES
In
connection with the spin-off, the tax attributes associated with ASAP Show have
not been retained by the Company.At September 30, 2007, the Company’s deferred
tax assets or deferred tax liabilities were immaterial.
NOTE
5 - SHAREHOLDERS' DEFICIT
Options and
Warrants
The
Company does not have a stock option plan or any options or warrants issued and
outstanding as of September 30, 2007.
NOTE
6 - COMMITMENTS AND CONTINGENCIES
Operating
Lease
Starting
July 1, 2007, the Company leases office space under month to month lease
agreement with its CEO Frank Yuan, an arms length transaction. The lease
provides for monthly lease payments of $4,500.
Litigation
On March
7, 2006, a complaint was filed against ASAP Show’s former parent company, Cyber
Merchants Exchange Inc. (“C-ME”) in a Chapter 7 bankruptcy proceeding in U.S.
Bankruptcy Court in the District of Delaware in the matter captioned In Re:
Factory 2-U Stores, Inc. The complaint seeks to recover from C-ME $91,572 in
alleged preferential transfers made to C-ME by the debtor during the ninety-day
period prior to the filing of the debtor's bankruptcy petition. C-ME intends to
defend against such preference claim by asserting that such transfers were made
in the ordinary course of business and such other available
defenses.
To the
extent C-ME incurs any losses, costs or damages with respect to the preference
claim, including attorneys' fees and related costs, C-ME believes it may recover
such losses, costs and damages from Frank Yuan and ASAP Show pursuant to the
indemnification provisions under the Transfer Agreement, which C-Me transferred
all of its assets and liabilities to ASAP Show. C-ME has informed Frank Yuan and
ASAP Show that it intends to seek indemnification from them with respect to the
preference claim. Further, C-ME has informed Frank Yuan and ASAP Show that the
$50,000 reserve originally due to be paid on March 28, 2006 under the terms of
the Transfer Agreement will be retained by C-ME until this preference claim is
resolved to satisfy any potential indemnity claims.
The
preference claim was settled in July, 2007 and on July 2, 2007, ASAP Expo
received $34,987 settlement amount derived from $50,000 net of $15,013 attorney
fee.
NOTE
7 - BUSINESS SEGMENTS
Reportable
business segments for the period from May 24, 2007 to September 30, 2007 were as
follows:
|
|
Period
Ended
|
|
|
|
September
30, 2007
|
|
Revenues:
|
|
|
|
Transaction
sales
|
|
$
|
9,974
|
|
Trade
shows
|
|
|
514,897
|
|
Buying
trips
|
|
|
13,801
|
|
|
|
$
|
538,672
|
|
Income
(loss) from operations:
|
|
|
|
|
Transaction
sales
|
|
$
|
16,780
|
|
Trade
shows
|
|
|
(3,083
|
)
|
Buying
trips
|
|
|
13,635
|
|
Corporate
|
|
|
--
|
|
|
|
$
|
27,332
|
|
Identifiable
assets:
|
|
|
|
|
Transaction
sales
|
|
$
|
--
|
|
Trade
shows
|
|
|
246,763
|
|
Buying
trips
|
|
|
--
|
|
|
|
$
|
246,763
|
|
Net sales
as reflected above consist of sales to unaffiliated customers only as there were
no significant inter-segment sales for the period from May 24, 2007 to September
30, 2007.There were no significant capital expenditures for the period from May
24, 2007 to September 30, 2007.
There was
no significant concentration on net segment sales for the period from May 24,
2007 to September 30, 2007.Trade Show revenue relates to the Company's Las
Vegas, Nevada, and China show.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Shareholders of
ASAP
Expo, Inc.
We have
audited the accompanying balance sheets of ASAP Expo, Inc. for the year ended
May 31, 2007 and the related statements of operations, shareholders' equity, and
cash flows for the year then ended. These financial statements are the
responsibility of the Company's management.Our responsibility is to express an
opinion on these financial statements based on our audit.
We
conducted our audit in accordance with auditing standards of the Public Company
Oversight Board (United States).Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement.An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.We believe that our audit provides a reasonable basis for
our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of ASAP Expo, Inc. as of May 31, 2007
and the results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has suffered recurring losses from operations and has a
net capital deficiency, which raises substantial doubt about its ability to
continue as a going concern. Management’s plans regarding those matters also are
described in Note 1.The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
Sutton
Robinson Freeman & Co., P. C.
Certified
Public Accountants
December
17, 2007
ASAP
EXPO, INC.
BALANCE
SHEET
MAY 31, 2007
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
|
$
|
54,717
|
|
Other
receivable
|
|
|
1,254
|
|
Due
from affiliated company
|
|
|
37,174
|
|
Total
current assets
|
|
|
93,145
|
|
Other
assets
|
|
|
9,800
|
|
Total assets
|
|
$
|
102,945
|
|
|
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' DEFICIT
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$
|
286,367
|
|
Deferred
revenue
|
|
|
67,184
|
|
Customer
deposits
|
|
|
88,675
|
|
Total current liabilities
|
|
|
442,226
|
|
|
|
|
|
|
Line
of credit, officers
|
|
|
1,028,307
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders'
deficit:
|
|
|
|
|
Common
stock, $0.001 par value; 45,000,000 shares
|
|
|
|
|
authorized;
8,701,480 shares issued and outstanding
|
|
|
8,701
|
|
Capital
contribution receivable
|
|
|
(50,000
|
)
|
Capital
deficiency
|
|
|
(1,326,289
|
)
|
Retained
earnings
|
|
|
--
|
|
Total
shareholders' deficit
|
|
|
(1,367,588
|
)
|
Total liabilities and shareholders' deficit
|
|
$
|
102,945
|
|
The
accompanying notes are an integral part of these financial
statements.
ASAP
EXPO, INC.
STATEMENTS
OF OPERATIONS
FOR
THE PERIOD OF MAY 24, 2007 TO MAY 31, 2007
|
|
Period
Ended
|
|
|
|
May
31, 2007
|
|
Revenues
|
|
$
|
--
|
|
Operating
expenses
|
|
|
--
|
|
Income
before income taxes
|
|
|
--
|
|
Income
taxes
|
|
|
--
|
|
Net
Income
|
|
$
|
--
|
|
Basic
and diluted net income available to common
|
|
|
|
|
shareholders per share
|
|
$
|
--
|
|
Weighted-average
number of common shares
|
|
|
|
|
outstanding,
basic and diluted
|
|
|
8,701,480
|
|
The
accompanying notes are an integral part of these financial
statements.
ASAP
EXPO, INC.
STATEMENTS
OF SHAREHOLDERS' DEFICIT
FOR
THE PERIOD OF MAY 24, 2007 TO MAY 31, 2007
|
|
Common
Stock
|
|
|
Capital
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Contribution
|
|
|
Capital
|
|
|
Retained
|
|
|
Shareholder's
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Receivable
|
|
|
deficiency
|
|
|
Earnings
|
|
|
Deficit
|
|
Balance,
May 24, 2007
|
|
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
|
$
|
--
|
|
Capital contribution
from
the spin-off reorganization
|
|
|
8,701,480
|
|
|
|
8,701
|
|
|
|
(50,000
|
)
|
|
|
(1,326,289
|
)
|
|
|
--
|
|
|
|
(1,367,588
|
)
|
Net
income
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
May 31, 2007
|
|
|
8,701,480
|
|
|
$
|
8,701
|
|
|
$
|
(50,000
|
)
|
|
$
|
(1,326,289
|
)
|
|
$
|
--
|
|
|
$
|
(1,367,588
|
)
|
The
accompanying notes are an integral part of these financial
statements.
ASAP
EXPO, INC.
STATEMENTS
OF CASH FLOWS
FOR
THE PERIOD OF MAY 24, 2007 TO MAY 31, 2007
|
|
Period
Ended
|
|
|
|
May
31, 2007
|
|
Cash
flows from operating activities:
|
|
|
|
Net
income
|
|
$
|
--
|
|
Adjustments
to reconcile net income to net cash provide by (used in)
|
|
|
|
|
operating
activities:
|
|
|
--
|
|
Net
cash provided by (used in) operating activities
|
|
|
--
|
|
Cash
flows from investing activities
|
|
|
--
|
|
|
|
|
|
|
Cash
flows from financing activities
|
|
|
--
|
|
|
|
|
|
|
Net
increase (decrease) in cash
|
|
|
--
|
|
Cash,
beginning of period
|
|
|
54,717
|
|
Cash,
end of period
|
|
$
|
54,717
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
|
Cash
paid during the period
|
|
|
|
|
Interest
|
|
$
|
--
|
|
Income
taxes
|
|
$
|
--
|
|
The
accompanying notes are an integral part of these financial
statements.
ASAP
EXPO, INC.
NOTES
TO FINANCIAL STATEMENTS
MAY
31, 2007
NOTE
1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
ASAP
Expo, Inc. (“ASAP Expo” or the “Company”) was incorporated on April 10, 2007
under the laws of the State of Nevada and is a wholly owned subsidiary of ASAP
Show, Inc., a Nevada corporation (“ASAP Show”).
On August
13, 2007 ASAP Show acquired the outstanding capital stock of Sino-American
Petroleum Group, Inc., a Delaware corporation (“Sino-American Petroleum”) (the
“Merger”), through the issuance of Series A Convertible Preferred Stock to
the shareholders of Sino-American Petroleum.Sino-American Petroleum is a holding
company that owns all of the registered capital of Tongliao Yili Asphalt Co.
(“Yili Asphalt”), a corporation organized under the laws of The People’s
Republic of China.Yili Asphalt is engaged in the business of refining heavy oil
into asphalt, fuel oil and lubricants.All of Yili Asphalt’s business is
currently in China.
Prior to
the Merger, ASAP Show assigned all of its pre-Merger business and assets to ASAP
Expo and ASAP Expo assumed responsibility for all of the liabilities of ASAP
Show that existed prior to the Merger.On May 24, 2007 ASAP Expo entered into an
Assignment and Assumption and Management Agreement with ASAP Show and Frank Yuan
whereby ASAP Expo acquired the operations of ASAP Show by the assignment and
transfer all of the assets and liabilities of ASAP Show to ASAP Expo (the
“Agreement”).The Agreement provides that Mr. Yuan will manage ASAP Expo within
his discretion, provided that his actions or inactions do not threaten material
injury to ASAP Show.The Agreement further provides that Mr. Yuan will cause ASAP
Expo to file a registration statement that will, when declared effective, permit
ASAP Show to distribute all of the issued and outstanding shares of ASAP Expo to
the holders of ASAP Show’s common stock (the “Distribution”).Upon the
registration statement being declared effective, the Board of Directors of ASAP
Show will fix a record date and shareholders of record on that date will receive
the Shares of ASAP Expo in proportion to their ownership of ASAP Show common
stock as a dividend to ASAP Show’s common stock held by them.
The
Distribution will cause ASAP Expo to spin-off from ASAP Show and allow the
shareholders of ASAP Show to participate in the growth of the trade show
business through the spin-off of the ASAP Expo, which owns and operates the
trade show business.The beginning balances of ASAP Expo’s assets and liabilities
are the balances of ASAP Show’s assets and liabilities as of May 24,
2007.
ASAP
Show, Inc. was incorporated in December 2004 under the laws of the State of
Nevada. ASAP Show's value to global suppliers and buyers in the
manufacturing, wholesaling and retailing clothing business lies in its
capabilities as an intermediary for the industry. The Company believes it has
built a foundation to meet today's ever-changing international trading
landscape.
The
Apparel Sourcing Association Pavilion Trade Show ("ASAP Show") is the core
business of the Company. ASAP Show is a global apparel and textile sourcing show
that brings leading manufacturers from around the world to one venue to meet,
greet and sell to buyers. The ASAP Show is held twice a year in Las Vegas,
Nevada.
GOING
CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.
At May
31, 2007, the Company has a capital deficiency of approximately $1,376,289
resulted from the accumulated deficit of its parent company that was transferred
to the Company according to the “Agreement”, negative working capital of
approximately $349,081 and a lack of profitable operating history. The Company
hopes to increase revenues from its trade shows and buying trips. In the absence
of significant increases in revenues, the Company intends to fund operations
through additional debt and equity financing arrangements. The successful
outcome of future activities cannot be determined at this time and there are no
assurances that if achieved, the Company will have sufficient funds to execute
its intended business plan or generate positive operating results.
The
Company's success is dependent upon numerous items, certain of which are the
successful growth of revenues from its products and services and its ability to
obtain new customers/exhibitors in order to achieve levels of revenues adequate
to support the Company's current and future cost structure, for which there is
no assurance. Unanticipated problems, expenses, and delays are frequently
encountered in establishing and maintaining profitable operations. These
include, but are not limited to, competition, the need to develop customer
support capabilities and market expertise, technical difficulties, market
acceptance and sales and marketing. The failure of the Company to meet any of
these conditions could have a materially adverse effect on the Company and may
force the Company to reduce or curtail operations. No assurance can be given
that the Company can achieve or maintain profitable operations.
The
Company believes it will have adequate cash to sustain operations until it
achieves sustained profitability. However, until the Company has a history of
maintaining revenue levels sufficient to support its operations and repay its
working capital deficit, the Company may require additional financing. Sources
of financing could include capital infusions, additional equity financing or
debt offerings. There can be no assurance that funding will be available on
acceptable terms, if at all, or that such funds, if raised, would enable the
Company to achieve or sustain profitable operations.
These
factors, among others, raise substantial doubt about the Company's ability to
continue as a going concern. The accompanying financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the classification of liabilities
that might result from the outcome of these uncertainties.
USE
OF ESTIMATES
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America ("GAAP") requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting periods. No significant estimates were made in these
financial statements.
RISKS
AND UNCERTAINTIES
The
Company operates in a highly competitive trade show environment that is subject
to government regulation and rapid change. The Company's operations are subject
to significant risk and uncertainties including financial, operational and other
risks associated with the business, including the potential risk of business
failure.
CURRENT
VULNERABILITY DUE TO CERTAIN CONCENTRATIONS
Certain
financial instruments, principally accounts receivable, potentially subject the
Company to credit risks. The Company performs ongoing credit evaluations of its
customers but does not require collateral. The Company maintains an allowance
for doubtful receivables and sales returns based upon factors surrounding the
credit risk of specific customers, historical trends and the Company's estimate
of future product returns. As of the balance sheet date, no allowance is
required nor provided against these receivables, which are deemed to be
collectible in the normal course of business. Although the Company expects to
collect amounts due, actual collections may differ from the estimated
amounts.
There
were no significant sales concentrations for period from May 24, 2007 to May 31,
2007 and no accounts receivable concentrations at May 31, 2007.
PROPERTY
AND EQUIPMENT
Property
and equipment are stated at cost. Depreciation of property and equipment was
calculated on the straight-line method over the estimated useful lives of the
assets, generally three to five years. Leasehold improvements were amortized
over the shorter of the amortized useful lives or the lease term.
Maintenance,
repairs and minor renewals are charged directly to expense as incurred.
Additions and betterments to property and equipment are capitalized. When assets
are disposed of, the related cost and accumulated depreciation thereon are
removed from the accounts and any resulting gain or loss is included in the
statement of operations.
Property
and equipment are fully depreciated at May 31, 2007.
REVENUE
RECOGNITION
In
December 1999, the SEC issued Staff Accounting Bulletin 101 ("SAB 101"),
"Revenue Recognition," which outlines the basic criteria that must be met to
recognize revenue and provide guidance for presentation of revenue and for
disclosure related to revenue recognition policies in financial statements filed
with the SEC. SAB 101 has been amended and replaced by SAB 104. Management
believes the Company's revenue recognition policies conform to SAB
104.
Revenues
include amounts earned under transaction sales, trade shows, and Buying
Trips.
Transaction
Sales
Transaction
revenues are recorded in accordance with Emerging Issues Task Force Issue No.
("EITF") 99-19 "Reporting Revenue Gross as a Principal versus net as an Agent."
The Company recognizes revenues from product transaction sales when title to the
product passes to the customer. For all product transactions with its customers,
the Company acts as a principal, takes title to all products sold upon shipment,
and bears inventory risk for return products that the Company is not able to
return to the supplier, although these risks are mitigated through arrangements
with factories, shippers and suppliers.
Trade
Shows
Trade
Shows generate revenue through exhibitor booths sales, corporate sponsorship,
and advertising. Such revenue is typically collected in advance, deferred and
then recognized at the time of the related trade show. The Company organizes two
trade shows per year in February and August in Las Vegas.
Buying
Trips
Buying
Trips generate revenue through the participating buyers ("Buyers") paying for
the Company's assistance during the travel through various foreign countries in
Asia to meet local apparel manufacturers. The Company receives a portion of
exhibition net revenues collected by the overseas government's trade promotion
agencies located in the various cities which were visited by the Buyers (i.e.
the Company does not share any losses, if any). The Buying Trip's revenue is
recognized ratably during the period in which the event is conducted. Management
is planning to conduct multiple, but small size buying trips to China and
Southeast Asia countries annually.
INCOME
TAXES
The
Company accounts for income taxes under Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes." Under SFAS No. 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. A valuation allowance is
provided for significant deferred tax assets when it is more likely than not
those assets will not be recovered.
LOSS
PER SHARE
Under
SFAS No. 128, "Earnings per Share," basic loss per share is computed by dividing
net loss available to common shareholders by the weighted-average number of
common shares assumed to be outstanding during the period of computation.
Diluted earnings per share is computed similar to basic loss per share except
that the denominator is increased to include the number of additional common
shares that would have been outstanding if the potential common shares had been
issued and if the additional common shares were dilutive. If the Company has
incurred net losses, basic and diluted losses per share are the same as
additional potential common shares would be anti-dilutive.
FAIR
VALUE
SFAS No.
107, "Disclosures about Fair Value of Financial Instruments," requires
disclosure of fair value information about financial instruments when it is
practicable to estimate that value. The carrying amounts of the Company's cash,
accounts receivable, accounts payable, accrued expenses, deferred revenues and
line of credit from shareholders approximate their fair values due to the
short-term maturities of those financial instruments.
ADVERTISING
The
Company expenses the cost of advertising when incurred as general and
administrative expenses. No advertising expenses were incurred for period from
May 24, 2007 to May 31, 2007. Advertising costs consist primarily of costs
associated with the promotion of ASAP Global Sourcing Show
awareness.
SEGMENTS
OF AN ENTERPRISE AND RELATED INFORMATION
SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information"
dictates the way public companies report information about segments of their
business in their annual financial statements and requires them to report
selected segment information in their quarterly reports issued to shareholders.
It also requires entity-wide disclosures about the products and services an
entity provides, the material countries in which it holds assets and reports
revenues and its major customers (see Note 7).
RECENT
ACCOUNTING PRONOUNCEMENTS
In
December 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123 (revised 2004),
"Share-Based Payment" ("SFAS No. 123(R)")
, which is a revision of SFAS
No. 123. SFAS No. 123(R) supersedes Accounting Principles Board ("APB") No. 25
and amends SFAS No. 95, "Statement of Cash Flows." SFAS No. 123(R) requires all
share-based payments to employees, including grants of employee stock options,
to be recognized in the income statement based on their fair values. Pro forma
disclosure is no longer an alternative. The provisions of this statement are
effective for the Company as of June 1, 2006.
SFAS No.
123(R) requires companies to recognize in the statement of operations the
grant-date fair value of stock options and other equity-based compensation
issued to employees. SFAS No. 123(R) also establishes accounting requirements
for measuring, recognizing and reporting share-based compensation, including
income tax considerations. The Company will adopt SFAS No. 123(R) using the
modified prospective application in June 2006. Under the modified prospective
application, the cost of new awards and awards modified, repurchased or
cancelled after the required effective date and the portion of awards for which
the requisite service has not been rendered (unvested awards) that are
outstanding as of the required effective date will be recognized as the
requisite service is rendered on or after the required effective date. The
compensation cost for that portion of awards shall be based on the grant-date
fair value of those awards as calculated for either recognition or pro forma
disclosures under SFAS No. 123.
The
adoption of SFAS No. 123(R)'s fair value method will have a negative impact on
the Company's results of operations if the Company grants share-based payments
to its employees in the future, although it will have no impact on its overall
financial position. The impact of adopting SFAS No. 123(R) cannot be predicted
at this time because it will depend on levels of share-based payments granted in
the future. SFAS No. 123(R) also requires the benefits of tax deductions in
excess of recognized compensation cost to be reported as a financing cash flow,
rather than as an operating cash flow as required under current accounting
literature. The requirement will reduce net operating cash flows and increase
net financing cash flows in periods of adoption.
As of May
31, 2007, the Company has not issued any share-based payments to its
employees.
In March
2006, the Financial Accounting Standards Board issued Statement of Accounting
Standards No. 156,
Accounting for Servicing of
Financial Assets (SFAS 156),
which amends
SFAS 140
,
Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities
.
SFAS 156
permits, but does
not require, an entity to choose either the amortization method or the fair
value measurement method for measuring each class of separately recognized
servicing assets and servicing liabilities.The provisions of
SFAS No. 156
are effective
for fiscal years beginning after September 15, 2006.The Company does not expect
the adoption of
SFAS
156
to have a material
effect on its financial statements and related disclosures.
In
June 2006, the Financial Accounting Standards Board issued
FASB Interpretation
No. 48
,
Accounting
for Uncertainty in Income Taxes – an interpretation of FASB Statement
No. 109
(FIN 48).This interpretation clarifies the accounting for
uncertainty in income taxes recognized in an enterprise's financial statements
in accordance with
FASB
Statement No. 109
,
Accounting for Income Taxes.
FIN 48 prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. It also provides guidance on
derecognition, classification, interest and penalties, accounting in interim
periods, disclosure, and transition.FIN 48 is effective for fiscal years
beginning after December 15, 2006.The Company does not expect the adoption
of
FIN 48
to have a
material effect on its financial statements and related
disclosures.
In
September 2006, the FASB issued
SFAS No. 157
, “
Fair Value Measurements”
(SFAS 157). This statement defines fair value, establishes a framework for
measuring fair value in GAAP, and expands disclosures about fair value
measurements. SFAS 157 is effective for financial statements issued for fiscal
years beginning after November 15, 2007. The Company is currently
evaluating the impact of adopting
SFAS 157
on our financial
condition and results of operations.
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)” (SFAS No. 158”). SFAS No. 158
requires an employer that sponsors one or more single-employer defined benefit
plans to (a) recognize the over-funded or under-funded status of a benefit plan
in its statement of financial position, (b) recognize as a component of other
comprehensive income, net of tax, the gains or losses and prior service costs or
credits that arise during the period but are not recognized as components of net
periodic benefit cost pursuant to SFAS No. 87, “Employers’ Accounting for
Pensions”, or SFAS No. 106, “Employers’ Accounting for Postretirement Benefits
Other Than Pensions”, (c) measure defined benefit plan assets and obligations as
of the date of the employer’s fiscal year-end, and (d) disclose in the notes to
financial statements additional information about certain effects on net
periodic benefit cost for the next fiscal year that arise from delayed
recognition of the gains or losses, prior service costs or credits, and
transition asset or obligation.The Company does not expect the adoption of
SFAS
158
to have a material effect
on its financial statements and related disclosures..
Other
recent accounting pronouncements issued by the FASB (including its Emerging
Issues Task Force), the American Institute of Certified Public Accountants, and
the Securities and Exchange Commission did not or are not believed by Management
to have a material impact on the Company's present or future financial
statements.
NOTE
2 – DUE FROM AFFILIATED COMPANY
The
Company has a loan to an affiliated company, IBMC whose major shareholder, Frank
Yuan is also a significant shareholder of ASAP Show.There is no written note for
the working capitals loaned to IBMC.At May 31, 2007, the balance of the loan was
$37,174.
NOTE
3 - LINE-OF-CREDIT FROM OFFICERS
The
Company has an unsecured revolving line-of-credit (the "Line") from Frank Yuan,
the Company's Chief Executive Officer, and certain family members which expires
on August 1, 2009 and provides for borrowings up to a maximum of $1,300,000, as
amended. The Line carries an interest rate of 10.0% per annum. The balance as of
May 31, 2007 was $1,028,307, and the accrued and unpaid interest was
$12,185.
NOTE
4 - INCOME TAXES
In
connection with the spin-off, the tax attributes associated with ASAP Show have
not been retained by the Company.Therefore, the Company has no deferred tax
assets or deferred tax liabilities.In addition, the Company has no tax operating
loss carry forwards available to offset future income.
NOTE
5 - SHAREHOLDERS' DEFICIT
Options and
Warrants
The
Company does not have a stock option plan or any options or warrants issued and
outstanding as of May 31, 2007.
NOTE
6 - COMMITMENTS AND CONTINGENCIES
Operating
Lease
The
Company leases office space under a non-cancelable operating lease agreement.The
lease provides for monthly lease payments approximating $4,990 and expires on
June 30, 2007. Future minimum lease payments under non-cancelable operating
leases as of May 31, 2007 approximate the following:
Year Ending May 31,
2007,
one
month $5,000
Starting
July 1, 2007, the Company will lease office space under month to month lease
agreement with its CEO Frank Yuan, an arms length transaction. The lease
provides for monthly lease payments of $4,500.
Litigation
On March
7, 2006, a complaint was filed against ASAP Show’s former parent company, Cyber
Merchants Exchange Inc. (“C-ME”) in a Chapter 7 bankruptcy proceeding in U.S.
Bankruptcy Court in the District of Delaware in the matter captioned In Re:
Factory 2-U Stores, Inc. The complaint seeks to recover from C-ME $91,572 in
alleged preferential transfers made to C-ME by the debtor during the ninety-day
period prior to the filing of the debtor's bankruptcy petition. C-ME intends to
defend against such preference claim by asserting that such transfers were made
in the ordinary course of business and such other available
defenses.
To the
extent C-ME incurs any losses, costs or damages with respect to the preference
claim, including attorneys' fees and related costs, the C-ME believes it may
recover such losses, costs and damages from Frank Yuan and ASAP Show pursuant to
the indemnification provisions under the Transfer Agreement, which C-Me
transferred all of its assets and liabilities to ASAP Show. C-ME has informed
Frank Yuan and ASAP Show that it intends to seek indemnification from them with
respect to the preference claim. Further, C-ME has informed Frank Yuan and ASAP
Show that the $50,000 reserve originally due to be paid on March 28, 2006 under
the terms of the Transfer Agreement will be retained by C-ME until this
preference claim is resolved to satisfy any potential indemnity
claims.
The
preference claim was settled in July, 2007 and on July 2, 2007, ASAP Expo
received $34,987 settlement amount derived from $50,000 net of $15,013 attorney
fee.
NOTE
7 - BUSINESS SEGMENTS
Reportable
business segments for the period from May 24, 2007 to May 31, 2007 were as
follows:
|
|
Period
Ended
|
|
|
|
May
31, 2007
|
|
Revenues:
|
|
|
|
Transaction
sales
|
|
$
|
--
|
|
Trade
shows
|
|
|
--
|
|
Buying
trips
|
|
|
--
|
|
|
|
$
|
--
|
|
Income
(loss) from operations:
|
|
|
|
|
Transaction
sales
|
|
$
|
--
|
|
Trade
shows
|
|
|
--
|
|
Buying
trips
|
|
|
--
|
|
Corporate
|
|
|
--
|
|
|
|
$
|
--
|
|
Identifiable
assets:
|
|
|
|
|
Transaction
sales
|
|
$
|
--
|
|
Trade
shows
|
|
|
102,945
|
|
Buying
trips
|
|
|
--
|
|
|
|
$
|
102,945
|
|
Net sales
as reflected above consist of sales to unaffiliated customers only as there were
no significant inter-segment sales for the period from May 24, 2007 to May 31,
2007.There were no significant capital expenditures for the period from May 24,
2007 to May 31, 2007.
There was
no significant concentration on net segment sales for the period from May 24,
2007 to May 31, 2007.
Trade
Show revenue relates to the Company's Las Vegas, Nevada, and China
show.
Exhibit
2.1
ASSIGNMENT
AND ASSUMPTION
and
MANAGEMENT
AGREEMENT
This
Assignment and Assumption and Management Agreement (this “Agreement) is made and
entered into on May 24, 2007, by and among the following parties
(each, a “Party” and collectively, the “Parties”): ASAP Show, Inc., a
Nevada corporation (the “Company”), ASAP Holdings, Inc., a Nevada corporation
(the “Subsidiary”) and Frank Yuan (the “Manager”)..
WHEREAS,
the Company is
engaged in the business of organizing trade shows and other business activities
further described below (the “Business”); and
WHEREAS,
the Company operates the Business on leased premises located at 4349 Baldwin
Ave., Unit A, El Monte, CA (the “Premises”);
and
WHEREAS,
the Company has
caused the Subsidiary to be formed and organized as the Company’s wholly owned
subsidiary; and
WHEREAS,
the
Company desires to transfer all of the assets of the Business to the Subsidiary
and to cause the Subsidiary to assume all liabilities and obligations of the
Business accrued as of the time of Closing, as more fully described
herein; and
WHEREAS,
on the date of and
immediately following the closing of the transactions contemplated by this
Agreement, the Company intends to consummate the closing of a share
purchase and merger pursuant to the terms of a Share Purchase and Merger
Agreement dated May 24, 2007 (the “Merger Agreement”) by and among the Company,
Sino-American Petroleum Group, Inc. and others; and
WHEREAS
, as a condition to
consummation of the merger pursuant to the Merger Agreement, the Manager, who is
the sole officers of the Company, must resign from his position in management of
the Company; and
WHEREAS,
the Subsidiary wishes
to engage the Manager, and the Manager wishes to be engaged, to manage and
operate the business of the Subsidiary, effective at the Time of Closing
(defined herein) and upon the terms and conditions set forth
herein;
NOW, THEREFORE, in
consideration of the mutual promises made herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, agree as
follows:
ARTICLE
1
:
TRANSFER AND
ASSIGNMENT OF ASSETS
The
“Business” includes four related segments, including the production of trade
shows, the provision of private internet sourcing networks for the Company’s
retail partners, the provision of a purchasing platform allowing US buyers to
purchase merchandise produced overseas, and a logistics warehouse providing
storage, shipping, and billing services for overseas
manufacturers. On the terms and subject to the conditions herein
expressed, Company hereby sells, conveys, transfers, assigns, sets over and
delivers to Subsidiary at the Time of Closing (as defined in Section 4.1), and
Subsidiary assumes and accepts, all of the assets, rights and interests,
tangible and intangible, of every kind, nature and description, then owned,
possessed or operated by Company and used in the operation of the Business,
wheresoever situate (collectively, the “Assets”), including without limitation
the following:
1.1
Machinery
and Equipment
. All machinery, equipment,
computers and computer hardware, office furniture and fixtures, and other fixed
or tangible assets;
1.2
Inventories
. All inventories, including
without limitation merchandise, materials, component parts, production and
office supplies, stationery and other imprinted material, promotional materials,
and business records;
1.3
Licenses
and Permits
. All licenses, permits and
authorizations used by the Company to own and operate all of the Assets , to
conduct the Business and to occupy the Premises for the purpose of conducing the
Business thereon;
1.4
Intangible
Property
. All
intangible assets of Company which are transferable including, but not limited
to, customer and supplier lists, privileges, permits, licenses, software and
software licenses, certificates, commitments, goodwill, registered and
unregistered patents, trademarks, service marks and trade names, and
applications for registration thereof and the goodwill associated
therewith, including without limitation the exclusive right to use the name ASAP
Show or derivations thereof in the Business, the right to receive mail related
to the Business and the Assets which is addressed to the Company, and the right
to telephone numbers used at the Premises in the Business;
1.5
Cash
and Accounts Receivable.
All accounts receivable,
deposit accounts, cash and cash equivalents and securities owned by the Company
including, without limitation, the cash proceeds of the Share Purchase received
by the Company pursuant to the Merger Agreement;
1.6
Contract
Rights
. All
rights and benefits of or in favor of Company resulting or arising from any
contracts, purchase orders, sales orders, forward commitments for goods or
services, leases (including security deposits held by the landlord pursuant to
the lease of the Premises), franchise or license agreements, beneficial
interests in covenants not to compete or confidentiality covenants, the rights
of Company related to any other agreements whatsoever which arise out of the
operation of the Business; and
1.7
Claims.
Claims made in lawsuits and other
proceedings filed by the Company, judgments and settlements in the Company’s
favor, rights to refunds, including rights to and claims for federal and state
income and franchise tax refunds and refunds of other taxes paid based upon or
measured by the income of the Business prior to the Closing, and insurance
policies and rights accrued thereunder.
ARTICLE
2
:
ASSUMPTION OF
LIABILITIES
2.1
Scope
of Liabilities Assumed.
Subsidiary shall assume, pay, perform or discharge any and all debts,
liabilities or obligations of any nature of Company, whether contingent or fixed
and whether known or unknown, arising from the ownership or operation of the
Assets or the Business and the occupation of the Premises which have accrued at
the Time of Closing including, without limitation, all obligations of the
Company to the Manager arising in connection with the line of credit in the
maximum amount of $1,100,000 extended by the Manager to the Company; and
Subsidiary shall promptly provide for payment, performance and discharge of the
same in accordance with their terms.
ARTICLE
3
:
COLLECTION OF
ACCOUNTS RECEIVABLE
3.1
Right
to Collect.
Following the closing, Subsidiary shall
have the right to collect the accounts receivables of the Company and to settle,
compromise, sue for collection, or take any action whatsoever with respect to
the receivables. Company shall cooperate with Subsidiary in
notifying customers as to any payment instructions or change of address that
Subsidiary may wish to communicate to the customers. In the event
Company receives payment of any receivable transferred to the Subsidiary, it
shall promptly endorse such payment and deliver it over to the
Subsidiary.
ARTICLE
4
:
THE
CLOSING
4.1
The
Closing
. The
closing of the transactions contemplated in this Agreement (“Closing”) shall
take place simultaneously with the closing of the transactions contemplated
under the Merger Agreement. The effective time of closing
is referred to herein as the “Time of Closing.”
4.2
Deliveries
by Company.
At
Closing, Company shall deliver to Subsidiary, in addition to all other items
specified elsewhere in this Agreement, the following:
(a)
Such instruments of sale, conveyance,
transfer, assignment, endorsement, direction or authorization as will be
required or as may be desirable to vest in Subsidiary, its successors and
assigns, all right, title and interest in and to the Assets, subject to any and
all mortgages, pledges, liens, encumbrances, equities, charges, conditional sale
or other title retention agreements, assessments, covenants, restrictions,
reservations, commitments, obligations, or other burdens or encumbrances of any
nature whatsoever that exist at the Time of Closing;
(b)
All of the files, documents, papers,
agreements, books of account and records pertaining to the Assets and the
Business;
(c)
Actual possession and operating control
of the Assets; and
(d)
To the extent required, the consents of
third parties to the assignment and transfer of any of the
Assets.
4.3
Deliveries
by Subsidiary.
At Closing, the Subsidiary
shall deliver to the Company, any instruments, in addition to this
Agreement, as the Company deems necessary or desirable fully to secure the
assumption by the Subsidiary, its successors and assigns, of all liabilities and
obligations of the Company, as described Section 2.1 hereof.
ARTICLE
5
:
COVENANTS ON AND
SUBSEQUENT TO THE CLOSING DATE
On and
after the Closing Date, Subsidiary and Company (as the case may be) covenant as
follows:
5.1
Pay
Creditors
. Following the Closing,
Subsidiary shall pay all payables and other obligations of Company assumed
hereunder by the Subsidiary, as such obligations become due in the ordinary
course of business.
5.2
Lawsuits.
Without limiting the
generality of Section 2.01, following the Closing, the Subsidiary shall continue
the defense of any and all lawsuits or other claims filed or threatened against
the Company, including the cross complaint filed against the Company by Maureen
Storch et al and the claim for indemnification threatened by Cyber Merchants
Exchange, Inc.
5.3
Insurance
Policies
. Subsidiary shall name the
Company as an additional insured on all insurance policies transferred by the
Company or any other insurance policies covering the period prior to the Time of
Closing.
5.4
Right
to Inspect Records
.
The Subsidiary shall permit the Company
and its agents to have reasonable access to the books and accounts of the
Subsidiary (at the expense of the Company) for the purpose of filing tax
returns, preparing filings required by the Securities and Exchange Commission,
and all other legitimate purposes.
5.5
Execution
of Further Documents
. Upon the request of
either party, the other party shall execute, acknowledge and deliver all such
further acts, deeds, bills of sale, assignments, assumptions, undertakings,
transfers, conveyances, title certificates, powers of attorney and assurances as
may be required , in the case of Subsidiary, to convey and transfer to, and vest
in, Subsidiary all of Company’s right, title and interest in the Assets, and in
the case of the Company, to secure the assumption of the Company’s obligations
and liabilities arising as of the Time of Closing.
ARTICLE
6
: MANAGEMENT
AND OPERATION OF SUBSIDIARY
6.1
Titles
.
The Subsidiary hereby engages the
Manager to manage and operate its business. The Board of Directors of
the Subsidiary shall consist of the following individuals: Frank
Yuan, Charles Rice, Deborah Shamaley and James Vandeberg (the
“Board”). In addition, the Manager shall serve as the sole officer of
the Subsidiary and shall have the following titles: President, Chief
Executive Officer, Chief Financial Officer and Secretary.
6.2
Duties
.
The Manager agrees that he
will manage and operate the business of the Subsidiary to the best of his
abilities and will devote such time and effort as necessary to fulfill his
duties under this Agreement. In addition to his general
duties, the Manager shall use all reasonable efforts to cause a registration
statement for a public offering and sale of the common stock of the Subsidiary
(“Registration Statement”) to be filed with the Securities and Exchange
Commission (“SEC”) and declared effective.
6.3
Management
of Subsidiary
. The Company agrees that
the Board and the Manager will have exclusive authority over the operations of
the Subsidiary, except that the Company shall be entitled to intervene in the
event that a breach of the covenants in this Agreement or any conduct by the
Board or the Manager in the course of operating the Subsidiary threatens the
Company with material harm or material liability of any kind. (In any
such event, the Company shall be entitled to remove the Board and Manager as
directors and officers of the Subsidiary and to elect a new Board of
Directors.) The Manager shall maintain such books and records
of the operations of the Subsidiary as are required by the Rules of the SEC, and
shall prepare quarterly and annual financial statements promptly so as to permit
the Company to file periodic reports with the SEC according to SEC
Rules
6.4
Company’s
Covenants; Spin Off of Subsidiary.
The Company shall not cause
any funds or assets of the Subsidiary to be paid or transferred to the Company,
nor shall the Company cause the Subsidiary to issue any capital stock of any
class or series or any options, warrants or rights to acquire capital stock of
the Subsidiary whether for additional consideration or on
conversion. Subject to the provisions of the Nevada Revised Statutes,
the Company agrees that, immediately upon the declaration of effectiveness of
the Registration Statement, it shall declare a dividend in the form of all of
the shares of common stock of the Subsidiary, and that such dividend shall be
payable to the holders of common stock of the Company (and not to holders of any
other class of stock of the Company).
ARTICLE
7
:
INDEMNIFICATION
7.1
Indemnification
by Company
. From and after the
Closing, the Company shall indemnify and save Subsidiary, its officers and
directors, and their respective successors, assigns, heirs and legal
representatives (“Subsidiary Indemnitees”) harmless from and against any and all
losses, claims, damages, liabilities, costs, expenses or deficiencies including,
without limitation, actual attorneys’ fees and other costs and expenses incident
to proceedings or investigations or the defense or settlement of any claim
incurred by or asserted against any Subsidiary Indemnitee due to or resulting
from a violation or default by Company with respect to any of Company’s
covenants, obligations or agreements hereunder or any losses or
expenses incurred in connection with, or payments by Subsidiary of, any debts,
obligations or liabilities of Company arising after the Time
of Closing.
7.2
Indemnification
by Subsidiary and Manager
. From and after the
Closing, the Subsidiary and the Manager shall, jointly and severally, indemnify
and save Company, its officers and directors, and their respective successors,
assigns, heirs and legal representatives (“Company Indemnitees”) harmless from
and against any and all losses, claims, damages, liabilities, costs, expenses or
deficiencies including, without limitation, actual attorneys’ fees and other
costs and expenses incident to proceedings or investigations or the defense or
settlement of any claim, incurred by or asserted against any Company Indemnitee
due to or resulting from a violation or default by Subsidiary with respect to
any of Subsidiary’s covenants, obligations or agreements hereunder and any
losses or expenses incurred in connection with, or payments by Company of the
debts, liabilities and obligations assumed by the Subsidiary hereunder or the
debts, liabilities and obligations of, the Subsidiary arising after the Time of
Closing.
7.3
Indemnification
Procedures
.
(a)
The party seeking indemnification
(“Indemnified Party”) shall give the indemnifying party (“Indemnifying Party”)
notice (a “Claim Notice”) of its indemnification claim which notice shall (i) be
in writing, (ii) include the basis for the indemnification, and (iii) include
the amount Indemnified Party believes is the amount to be indemnified, if
reasonably possible.
(b)
Indemnifying Party shall be
deemed to accept Indemnified Party’s claim unless, within twenty (20) business
days after receipt of any Claim Notice, Indemnifying Party delivers to
Indemnified Party notice of non-acceptance of the indemnification claim, which
must (a) be in writing and (b) include the basis for the
disagreement.
(c)
The parties shall attempt in good
faith to resolve any issues concerning liability and the amount of such claim
and any issues which they cannot resolve within thirty (30) days after delivery
of the notice of non-acceptance pursuant to Section 7.3(b) shall be settled by
arbitration in accordance with the rules of the American Bar Association, by a
sole arbitrator located in California or such other location as the parties
shall agree, whose determination shall be final and binding on the parties
hereto. The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. §§ 1-16, and judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction
thereof. The arbitrator shall have the authority to award legal fees,
arbitration costs and other expenses, in whole or in part, to the prevailing
party.
ARTICLE
8
: MISCELLANEOUS
8.1
Benefit
. This Agreement shall be
binding upon, and inure to the benefit of, the Parties hereto and their
respective successors, assignees, heirs and legal
representatives.
8.2
Governing
Law
. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Nevada.
8.3
Amendment,
Modification and Waiver
. Any Party
hereto may waive in writing any term or condition contained in this Agreement
and intended to be for its benefit; provided, however, that no waiver by any
Party, whether by conduct or otherwise, in any one or more instances, shall be
deemed or construed as a further or continuing waiver of any such term or
condition. Each amendment, modification, supplement or waiver shall
be in writing and signed by the Party or Parties to be
charged.
8.4
Entire
Agreement
. This
Agreement and the exhibits, schedules and other documents expressly provided
hereunder or delivered herewith represent the entire understanding of the
parties.
8.5
Notices
.
All notices and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given or made as follows:
(a) If
sent by reputable overnight air courier (such as Federal Express), 2 business
days after being sent;
(b) If
sent by facsimile transmission, with a copy mailed on the same day in the manner
provided in clause (a) above, when transmitted and receipt is confirmed by the
fax machine; or
(c)
If
otherwise actually personally delivered, when delivered.
All
notices and other communications under this Agreement shall be sent or delivered
as follows:
If to the
Company, to:
Huakang Zhou
18 Kimberly Court
East Hanover, NJ 07936
Telephone: 973-462-8777
Facsimile: 973-966-8870
with a
copy to (which shall not constitute notice):
|
Robert
Brantl, Esq.
|
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52
Mulligan Lane
|
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Irvington,
NY 10533
|
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Telephone: 914-693-3026
|
If to the
Subsidiary or the Manager, to:
ASAP, Inc.
c/o Frank Yuan
4349 Baldwin Ave., Unit A
El Monte, CA 91731
|
Telephone: 626-636-2530
Ext. 109
|
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Facsimile: 626-636-2536
|
|
with
a copy to (which shall not constitute
notice):
|
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James
Vanderberg, Esq.
|
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The
Otto Law Group, PLLC
|
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601
Union St., Suite 4500
|
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Seattle,
WA 98101
|
|
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Telephone: 206-262-9545
Ext. 215
|
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Facsimile: 206-262-9513
|
Each
Party may change its address by written notice in accordance with this
Section.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on
May 24, 2007.
ASAP
Show, Inc.
By:
/s/ Frank S.
Yuan
Frank
Yuan, Chief Executive Officer
ASAP
Holdings, Inc.
By:
/s/ Frank S.
Yuan
Frank
Yuan, Chief Executive Officer
MANAGER:
/s/ Frank S.
Yuan
Frank
Yuan
Exhibit
3.2
Bylaws
of
ASAP
EXPO, INC.
SECTION
1 – OFFICES
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4
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SECTION
2 – SHAREHOLDERS
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4
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2.1
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4
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2.2
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4
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2.3
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4
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2.4
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4
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2.5
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4
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2.6
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4
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2.7
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4
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2.8
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4
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2.9
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5
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2.10
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5
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2.11
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5
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2.12
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5
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2.13
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5
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2.14
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5
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SECTION
3 – BOARD OF DIRECTORS
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6
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3.1
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6
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3.2
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6
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3.3
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6
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3.4
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6
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3.5
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6
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3.6
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6
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3.6.1
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6
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3.6.2
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6
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3.6.3
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6
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3.6.4
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7
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3.6.5
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7
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3.6.6
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7
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3.7
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7
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3.7.1
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7
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3.7.2
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7
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3.8
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7
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3.9
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7
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3.10
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7
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3.11
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7
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3.12
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8
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3.13
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8
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3.14
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8
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3.15
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8
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3.15.1
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8
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3.15.2
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8
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3.15.3
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8
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3.15.4
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8
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3.16
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8
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SECTION
4 – OFFICERS
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9
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4.1
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9
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4.2
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9
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4.3
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9
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4.4
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9
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4.5
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9
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4.6
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9
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4.7
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9
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4.8
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9
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4.9
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9
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4.10
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10
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SECTION
5 – CONTRACTS, LOANS, CHECKS AND DEPOSITS
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10
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5.1
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10
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5.2
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10
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5.3
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10
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5.4
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10
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SECTION
6 – CERTIFICATES FOR SHARES AND THEIR TRANSFER
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10
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6.1
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10
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6.2
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10
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6.3
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10
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6.4
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10
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6.5
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11
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6.6
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11
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SECTION
7 – BOOKS AND RECORDS
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11
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SECTION
8 – ACCOUNTING YEAR
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11
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SECTION
9 – SEAL
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11
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SECTION
10 – INDEMNIFICATION
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12
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10.1
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12
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10.2
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12
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10.3
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12
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10.4
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12
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10.5
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12
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10.6
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12
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10.7
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12
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10.8
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13
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SECTION
11 – LIMITATION OF LIABILITY
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13
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SECTION
12 – AMENDMENTS
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13
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SECTION
1. OFFICES
The
principal office of the corporation shall be located at the principal place of
business or such other place as the Board of Directors (“
Board
”) may
designate. The corporation may have such other offices as the Board
may designate or as the business of the corporation may require.
SECTION
2. STOCKHOLDERS
The
annual meeting of the stockholders to elect Directors and transact such other
business as may properly come before the meeting shall be held on a date not
more than 180 days after the end of the corporation’s fiscal year, such date and
time to be determined by the Board.
Special
meetings of the stockholders of the corporation for any purpose may be called at
any time by the Board of Directors or, if the Directors in office constitute
fewer than a quorum of the Board of Directors, by the affirmative vote of a
majority of all the Directors in office, but such special meetings may not be
called by any other person or persons.
Stockholders
may participate in any meeting of the stockholders by any means of communication
by which all persons participating in the meeting can hear each other during the
meeting. Participation by such means shall constitute presence in
person at a meeting.
Except as
otherwise provided in these Bylaws, all meetings of stockholders, including
those held pursuant to demand by stockholders, shall be held on such date and at
such time and place designated by or at the direction of the Board.
Written
notice stating the place, day and hour of the meeting and, in the case of a
special meeting, the purpose or purposes for which the meeting is called shall
be given by or at the direction of the Board, the Chairman of the Board, the
President or the Secretary to each stockholder entitled to notice of or to vote
at the meeting not less than 10 nor more than 60 days before the meeting, except
that notice of a meeting to act on a plan of merger or share exchange, the sale,
lease, exchange or other disposition of all or substantially all of the
corporation’s assets other than in the regular course of business or the
dissolution of the corporation shall be given not less than 20 or more than 60
days before such meeting. If an annual or special stockholders’
meeting is adjourned to a different date, time or place, no notice of the new
date, time or place is required if they are announced at the meeting before
adjournment. If a new record date for the adjourned meeting is or
must be fixed, notice of the adjourned meeting must be given to stockholders
entitled to notice of or to vote as of the new record date.
Such
notice may be transmitted by mail, private carrier, personal delivery,
telegraph, teletype or communications equipment that transmits a facsimile of
the notice. If those forms of written notice are impractical in the
view of the Board, the Chairman of the Board, the President or the Secretary,
written notice may be transmitted by an advertisement in a newspaper of general
circulation in the area of the corporation’s principal office. If
such notice is mailed, it shall be deemed effective when deposited in the
official government mail, first-class postage prepaid, properly addressed to the
stockholder at such stockholder’s address as it appears in the corporation’s
current record of stockholders. Notice given in any other manner
shall be deemed effective when dispatched to the stockholder’s address,
telephone number or other number appearing on the records of the
corporation. Any notice given by publication as herein provided shall
be deemed effective five days after first publication.
Whenever
any notice is required to be given by a stockholder under the provisions of
these Bylaws, the Articles of Incorporation or the Nevada Private Corporations
Law, a waiver of notice in writing, signed by the person or persons entitled to
such notice and delivered to the corporation, whether before or after the date
and time of the meeting or before or after the action to be taken by consent is
effective, shall be deemed equivalent to the giving of such
notice. Further, notice of the time, place and purpose of any meeting
will be deemed to be waived by any stockholder by attendance in person or by
proxy, unless such stockholder at the beginning of the meeting objects to
holding the meeting or transacting business at the meeting.
For the
purpose of determining stockholders entitled (a) to notice of or to vote at any
meeting of stockholders or any adjournment thereof, (b) to receive payment of
any dividend, or (c) in order to make a determination of stockholders for
any other purpose, the Board may fix a future date as the record date for any
such determination. Such record date shall be not more than 60 days,
and, in case of a meeting of stockholders, not less than 10 days, prior to the
date on which the particular action requiring such determination is to be
taken. If no record date is fixed for the determination of
stockholders entitled to notice of or to vote a meeting, the record date shall
be the day immediately preceding the date on which notice of the meeting is
first given to stockholders. Such a determination shall apply to any
adjournment of the meeting unless the Board fixes a new record date, which it
shall do if the meeting is adjourned to a date more than 120 days after the date
fixed for the original meeting. If no record date is set for the
determination of stockholders entitled to receive payment of any stock, dividend
or distribution (other than one involving a purchase, redemption or other
acquisition of the corporation’s shares), the record date shall be the date the
Board authorizes the stock dividend or distribution.
At least
10 days before each meeting of stockholders, an alphabetical list of the
stockholders entitled to notice of such meeting shall be made, arranged by
voting group and by each class or series of shares, with the address of and
number of shares held by each stockholder. This record shall be kept
at the principal office of the corporation for 10 days prior to such meeting,
and shall be kept open at such meeting, for the inspection of any stockholder or
any stockholder’s agent or attorney.
Except
with respect to any greater requirement contained in the Articles of
Incorporation or the Nevada Private Corporations Law, one-third of the votes
entitled to be cast on a matter by the holders of shares that, pursuant to the
Articles of Incorporation or the Nevada Private Corporations Law, are entitled
to vote and be counted collectively upon such matter, represented in person or
by proxy, shall constitute a quorum of such shares at a meeting of
stockholders. If less than the required number of such votes are
represented at a meeting, a majority of the votes so represented may adjourn the
meeting from time to time. Any business may be transacted at a
reconvened meeting that might have been transacted at the meeting as originally
called, provided a quorum is present or represented at such
meeting. Once a share is represented for any purpose at a meeting
other than solely to object to holding the meeting or transacting business, it
is deemed present for quorum purposes for the remainder of the meeting and any
adjournment (unless a new record date is or must be set for the adjourned
meeting), notwithstanding the withdrawal of enough stockholders to leave less
than a quorum.
If a
quorum is present, action on a matter other than the election of Directors shall
be approved if the votes cast in favor of the action by the shares entitled to
vote and be counted collectively upon such matter exceed the votes cast against
such action by the shares entitled to vote and be counted collectively thereon,
unless the Articles of Incorporation or the Nevada Private Corporations Law
requires a greater number of affirmative votes. Whenever the Nevada
Private Corporations Law permits a corporation’s bylaws to specify that a lesser
number of shares than would otherwise be required shall suffice to approve an
action by stockholders, these Bylaws hereby specify that the number of shares
required to approve such an action shall be such lesser number.
As
stockholder may vote by proxy executed in writing by the stockholder or by his
or her attorney-in-fact or agent. Such proxy shall be effective when
received by the Secretary or other officer or agent authorized to tabulate
votes. A proxy shall become invalid 11 months after the date of its
execution, unless otherwise provided in the proxy. A proxy with
respect to a specified meeting shall entitle its holder to vote at any
reconvened meeting following adjournment of such meeting but shall not be valid
after the final adjournment.
Except as
provided in the Articles of Incorporation, each outstanding share entitled to
vote with respect to a matter submitted to a meeting of stockholders shall be
entitled to one vote upon such matter.
Each
stockholder entitled to vote in an election of Directors may vote, in person or
by proxy, the number of shares owned by such stockholder for as many persons as
there are Directors to be elected and for whose election such stockholder has a
right to vote. Stockholders shall not have the right to cumulate
their votes. Unless otherwise provided in the Articles of
Incorporation, the candidates elected shall be those receiving the largest
number of votes cast, up to the number of Directors to be elected.
Any
action that may be or is required to be taken at a meeting of the stockholders
may be taken without a meeting if one or more written consents describing the
action taken shall be signed by stockholders holding of record or otherwise
entitled to vote in the aggregate not less than the minimum number of votes that
would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote on the action were present and voted. The
Board may fix a record date, which record date shall not precede the date upon
which the resolution fixing the record date is adopted by the Board, and which
date shall not be more than 10 days after the date upon which the resolution
fixing the record date is adopted by the Board. If not otherwise
fixed by the Board, the record date for determining stockholders entitled to
take action without a meeting is the date the first stockholder consent is
delivered to the corporation. A stockholder may withdraw a consent
only by delivering a written notice of withdrawal to the corporation prior to
the time that consents sufficient to authorize taking the action have been
delivered to the corporation. Every written consent shall bear the
date of signature of each stockholder who signs the consent. A
written consent is not effective to take the action referred to in the consent
unless, within 60 days of the earliest dated consent delivered to the
corporation, written consents signed by a sufficient number of stockholders to
take action are delivered to the corporation. Unless the consent
specifies a later effective date, actions taken by written consent of the
stockholders are effective when (a) consents sufficient to authorize taking
the action are in possession of the corporation and (b) the period of
advance notice required by the Articles of Incorporation to be given to any
nonconsenting or nonvoting stockholders has been satisfied. Any such
consent shall be inserted in the minute book as if it were the minutes of a
meeting of the stockholders.
SECTION
3. BOARD OF DIRECTORS
All
corporate powers shall be exercised by or under the authority of, and the
business and affairs of the corporation shall be managed under the direction of,
the Board, except as may be otherwise provided in these Bylaws, the Articles of
Incorporation or the Nevada Private Corporations Law.
The Board
of Directors shall be composed of not less than one nor more than nine
Directors. The specific number of Directors shall be set by
resolution of the Board of Directors or, if the Directors in office constitute
fewer than a quorum of the Board of Directors, by the affirmative vote of a
majority of all the Directors in office. The number of Directors of
this corporation may be increased or decreased from time to time in the manner
provided by the Articles of Incorporation, but no decrease in the number of
Directors shall have the effect of shortening the term of any incumbent
Director. Absent his or her death, resignation or removal, a Director
shall continue to serve despite the expiration of the Director’s term until his
or her successor shall have been elected and qualified or until there is a
decrease in the number of Directors. Directors need not be
stockholders of the corporation or residents of the state of Nevada, and need
not meet any other qualifications.
An annual
Board meeting shall be held without notice immediately after and at the same
place as the annual meeting of stockholders. By resolution the Board,
or any committee designated by the Board, may specify the time and place for
holding regular meetings without notice other than such resolution.
Special
meetings of the Board or any committee designated by the Board may be called by
or at the request of the Chairman of the Board, the President, the Secretary or,
in the case of special Board meetings, any one-third or more of the Directors in
office and, in the case of any special meeting of any committee designated by
the Board, by its Chairman. The person or persons authorized to call
special meetings may fix any place for holding any special Board or committee
meeting called by them.
Members
of the Board or any committee designated by the Board may participate in a
meeting of such Board or committee by, or conduct the meeting through the use
of, any means of communication by which all Directors participating in the
meeting can hear each other during the meeting. Participation by such
means shall constitute presence in person at a meeting.
Notice of
a special Board or committee meeting stating the place, day and hour of the
meeting shall be given to a Director in writing or orally. Neither
the business to be transacted at nor the purpose of any special meeting need be
specified in the notice of such meeting.
If notice
is given by personal delivery, the notice shall be delivered to a Director at
least two days before the meeting.
If notice
is delivered by mail, the notice shall be deposited in the official government
mail at least five days before the meeting, properly addressed to a Director at
his or her address shown on the records of the corporation, with postage thereon
prepaid.
If notice
is given by private carrier, the notice shall be dispatched to a Director at his
or her address shown on the records of the corporation at least three days
before the meeting.
If a
notice is delivered by wire or wireless equipment that transmits a facsimile of
the notice, the notice shall be dispatched at least two days before the meeting
to a Director at his or her telephone number or other number appearing on the
records of the corporation.
If notice
is delivered by telegraph, the notice shall be delivered to the telegraph
company for delivery to a Director at his or her address shown on the records of
the corporation at least three days before the meeting.
If notice
is delivered by orally, by telephone or in person, the notice shall be
personally given to the Director at least two days before the
meeting.
Whenever
any notice is required to be given to any Director under the provisions of these
Bylaws, the Articles of Incorporation or the Nevada Private Corporations Law, a
waiver thereof in writing, signed by the person or persons entitled to such
notice and delivered to the corporation, whether before or after the date and
time of the meeting, shall be deemed equivalent to the giving of such
notice. Neither the business to be transacted at nor the purpose of
any regular or special meeting of the Board or any committee designated by the
Board need be specified in the waiver of notice of such meeting.
A
Director’s attendance at or participation in a Board or committee meeting shall
constitute a waiver of notice of such meeting, unless the Director at the
beginning of the meeting, or promptly upon his or her arrival, objects to
holding the meeting or transacting business at such meeting and does not
thereafter vote for or assent to action taken at the meeting.
A
majority of the number of Directors fixed by or in the manner provided in these
Bylaws shall constitute a quorum for the transaction of business at any Board
meeting but, if less than a majority are present at a meeting, a majority of the
Directors present may adjourn the meeting from time to time without further
notice. A majority of the number of Directors composing any committee
of the Board, as established and fixed by resolution of the Board, shall
constitute a quorum for the transaction of business at any meeting of such
committee but, if less than a majority are present at a meeting, a majority of
such Directors present may adjourn the committee meeting from time to time
without further notice.
If a
quorum is present when the vote is taken, the act of the majority of the
Directors present at a Board or committee meeting shall be the act of the Board
or such committee, unless the vote of a greater number is required by these
Bylaws, the Articles of Incorporation or the Nevada Private Corporations
Law.
A
Director of the corporation who is present at a Board or committee meeting at
which any action is taken shall be deemed to have assented to the action taken
unless (a) the Director objects at the beginning of the meeting, or promptly
upon the Director’s arrival, to holding the meeting or transacting any business
at such meeting, (b) the Director’s dissent or abstention from the action taken
is entered in the minutes of the meeting, or (c) the Director delivers written
notice of the Director’s dissent or abstention to the presiding officer of the
meeting before its adjournment or to the corporation within a reasonable time
after adjournment of the meeting. The right of dissent or abstention
is not available to a Director who votes in favor of the action
taken.
Any
action that could be taken at a meeting of the Board or of any committee created
by the Board may be taken without a meeting if one or more written consents
setting forth the action so taken are signed by each of the Directors or by each
committee member either before or after the action is taken and delivered to the
corporation. Action taken by written consent of Directors without a
meeting is effective when the last Director signs the consent, unless the
consent specifies a later effective date. Any such written consent
shall be inserted in the minute book as if it were the minutes of a Board or a
committee meeting.
Any
Director may resign from the Board or any committee of the Board at any time by
delivering either oral tender of resignation at any meeting of the Board or any
committee, or written notice to the Chairman of the Board, the President, the
Secretary or the Board. Any such resignation is effective upon
delivery thereof unless the notice of resignation specifies a later effective
date and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
At a
meeting of stockholders called expressly for that purpose, one or more members
of the Board, including the entire Board, may be removed with or without cause
(unless the Articles of Incorporation permits removal for cause only) by the
holders of the shares entitled to elect the Director or Directors whose removal
is sought if the number of votes cast to remove the Director exceeds the number
of votes cast not to remove the Director.
If a
vacancy occurs on the Board, including a vacancy resulting from an increase in
the number of Directors, the Board may fill the vacancy, or, if the Directors in
office constitute fewer than a quorum of the Board, they may fill the vacancy by
the affirmative vote of a majority of all the Directors in
office. The stockholders may fill a vacancy only if there are no
Directors in office. A Director elected to fill a vacancy shall serve
only until the next election of Directors by the stockholders.
The
Board, by resolution adopted by the greater of a majority of the Directors then
in office and the number of Directors required to take action in accordance with
these Bylaws, may create standing or temporary committees, including an
Executive Committee, and appoint members from its own number and invest such
committees with such powers as it may see fit, subject to such conditions as may
be prescribed by the Board, the Articles of Incorporation, these Bylaws and
applicable law. Each committee must have one or more members, and the
Board may designate one or more Directors as alternate members who may replace
any absent or disqualified member at any committee meeting, with all such
members and alternate members to serve at the pleasure of the
Board.
Each
Committee shall have and may exercise all the authority of the Board to the
extent provided in the resolution of the Board creating the committee and any
subsequent resolutions adopted in like manner, except that no such committee
shall have the authority to: (i) approve or adopt, or recommend to the
stockholders, any action or matter expressly required by the Articles of
Incorporation or the Nevada Private Corporations Law to be submitted to
stockholders for approval or (ii) adopt, amend or repeal any bylaw of the
corporation.
All
committees shall keep regular minutes of their meetings and shall cause them to
be recorded n books kept for that purpose.
The Board
may remove any member of any committee elected or appointed by it but only by
the affirmative vote of the greater of a majority of Directors then in office
and the number of Directors required to take action in accordance with these
Bylaws.
By Board
resolution, Directors and committee members may be paid either expenses, if any,
of attendance at each Board or committee meeting, or a fixed sum for attendance
at each Board or committee meeting, or a stated salary as Director or a
committee member, or a combination of the foregoing. No such payment
shall preclude any Director or committee member from serving the corporation in
any other capacity and receiving compensation therefore.
SECTION
4. OFFICERS
The
officers of the corporation shall be those officers appointed from time to time
by the Board or by any other officer empowered to do so. The Board shall have
sole power and authority to appoint executive officers. As used
herein, the term “
executive
officer
” shall mean the President, the chief financial officer and any
other officer designated by the Board as an executive officer. The
Board or the President may appoint such other officers to hold office for such
period, have such authority and perform such duties as may be
prescribed. The Board may delegate to any other officer the power to
appoint any subordinate officers and to prescribe their respective terms of
office, authority and duties. Any two or more offices may be held by
the same person. Unless an officer dies, resigns or is removed from
office, he or she shall hold office until his or her successor is
appointed.
Any
officer may resign at any time by delivering written notice to the
corporation. Any such resignation is effective upon delivery, unless
the notice of resignation specifies a later effective date, and, unless
otherwise specified, the acceptance of such resignation shall not be necessary
to make it effective.
Any
officer may be removed by the Board at any time, with or without
cause. An officer or assistant officer, if appointed by another
officer, may be removed at any time, with or without cause, by any officer
authorized to appoint such officer or assistant officer.
The
appointment of an officer does not itself create contract rights.
If
appointed, the Chairman of the Board shall perform such duties as shall be
assigned to him or her by the Board from time to time, and shall preside over
meetings of the Board and stockholders unless another officer is appointed or
designated by the Board as Chairman of such meetings.
If
appointed, the President shall be the chief executive officer of the corporation
unless some other offices is to designated by the Board, shall preside over
meetings of the Board and stockholders in the absence of a Chairman of the
Board, and, subject to the Board’s control, shall supervise and control all the
assets, business and affairs of the corporation. In general, the
President shall perform all duties incident to the office of President and such
other duties as are prescribed by the Board from time to time. If no
Secretary has been appointed, the President shall have responsibility for the
preparation of minutes of meetings of the Board and stockholders and for
authentication of the records of the corporation.
In the
event of the death of the President or his or her inability to act, the Vice
President (or if there is more than one Vice President, the Vice President who
was designated by the Board as the successor to the President, or if no Vice
President is so designated, the Vice President first elected to such office)
shall perform the duties of the President, except as may be limited by
resolution of the Board, with all the powers of and subject to all the
restrictions upon the President. Vice Presidents shall perform such
other duties as from time to time may be assigned to them by the President or by
or at the direction of the Board.
If
appointed, the Secretary shall be responsible for preparation of minutes of the
meetings of the Board and stockholders, maintenance of the corporation records
and stock registers, and authentication of the corporation’s records, and shall
in general perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him or her by the President or by
or at the direction of the Board. In the absence of the Secretary, an
Assistant Secretary may perform the duties of the Secretary.
If
appointed, the Treasurer shall have charge and custody of and be responsible for
all funds and securities of the corporation, receive and give receipts for
moneys due and payable to the corporation from any source whatsoever, and
deposit all such moneys in the name of the corporation in banks, trust companies
or other depositories selected in accordance with the provisions of these
Bylaws, and in general perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be assigned to him or
her by the President or by or at the direction of the Board. In the
absence of the Treasurer, an Assistant Treasurer may perform the duties of the
Treasurer.
The
salaries of the officers shall be fixed from time to time by the Board or by any
person or persons to whom the Board has delegated such authority. No
officer shall be prevented from receiving such salary by reason of the fact that
he or she is also a Director of the corporation.
SECTION
5. CONTRACTS, LOANS, CHECKS AND DEPOSITS
The Board
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute and deliver any instrument in the name of and on behalf of
the corporation. Such authority may be general or confined to
specific instances.
No loans
shall be contracted on behalf of the corporation and no evidences of
indebtedness shall be issued in its name unless authorized by a resolution of
the Board. Such authority may be general or confined to specific
instances.
All
checks, drafts or other orders for the payment of money, notes or other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, or agent or agents, of the corporation and in such
manner as is from time to time determined by resolution of the
Board.
All funds
of the corporation not otherwise employed shall be deposited from time to time
to the credit of the corporation in such banks, trust companies or other
depositories as the Board may authorize.
SECTION
6. CERTIFICATES FOR SHARES AND THEIR TRANSFER
No shares
of the corporation shall be issued unless authorized by the Board, or by a
committee designated by the Board to the extent such committee is empowered to
do so.
Certificates
representing shares of the corporation shall be signed, either manually or in
facsimile, by the President or any Vice President and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary and shall
include on their face written notice of any restrictions that may be imposed on
the transferability of such shares. All certificates shall be
consecutively numbered or otherwise identified.
The stock
transfer books shall be kept at the principal office at the corporation or at
the office of the corporation’s transfer agent or registrar. The name
and address of each person to whom certificates for shares are issued, together
with the class and number of shares represented by each such certificate and the
date of issue thereof, shall be entered on the stock transfer books of the
corporation. The person in whose name shares stand on the books of
the corporation shall be deemed by the corporation to be the owner thereof for
all purposes.
Except to
the extent that the corporation has obtained an opinion of counsel acceptable to
the corporation that transfer restrictions are not required under applicable
securities laws, or has otherwise satisfied itself that such transfer
restrictions are not required, all certificates representing shares of the
corporation shall bear a legend on the face of the certificate, or on the
reverse of the certificate if a reference to the legend is contained on the
face, which reads substantially as follows:
|
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “
ACT
”), OR APPLICABLE
STATE SECURITIES LAWS, AND NO INTEREST MAY BE SOLD, DISTRIBUTED, ASSIGNED,
OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (A) THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS COVERING ANY SUCH TRANSACTION INVOLVING SAID SECURITIES,
(B) THIS CORPORATION RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER
OF THESE SECURITIES SATISFACTORY TO THIS CORPORATION STATING THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION, OR (C) THIS CORPORATION OTHERWISE
SATISFIES ITSELF THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION.
|
The
transfer of shares of the corporation shall be made only on the stock transfer
books of the corporation pursuant to authorization or document of transfer made
by the holder of record thereof or by his or her legal representative, who shall
furnish proper evidence of authority to transfer, or by his or her
attorney-in-fact authorized by power of attorney duly executed and filed with
the Secretary of the corporation. All certificates surrendered to the
corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificates for a like number of shares shall have been
surrendered and canceled.
In the
case of a lost, destroyed or damaged certificate, a new certificate may be
issued in its place upon such terms and indemnity to the corporation as the
Board may prescribe.
The
corporation shall:
(a) Keep
as permanent records minutes of all meetings of its stockholders and the Board,
a record of all actions taken by the stockholders or the Board without a
meeting, and a record of all actions taken by a committee of the Board
exercising the authority of the Board on behalf of the corporation.
(b)
Maintain appropriate accounting records.
(c)
Maintain a record of its stockholders, in a form that permits preparation of a
list of the names and addresses of all stockholders, in alphabetical order by
class of shares showing the number and class of shares held by each; provided,
however, such record may be maintained by an agent of the
corporation.
(d)
Maintain its records in written form or in another form capable of conversion
into written form within a reasonable time.
(e) Keep
a copy of the following records at its principal office:
1.
the Articles of Incorporation and all amendments thereto as currently in
effect;
2.
these Bylaws and all amendments thereto as currently in
effect;
3. the minutes of all meetings of stockholders and
records of all action taken by stockholders without a meeting, for the past
three years
4.
the corporation’s financial statements for the past three years;
5.
all written communications to stockholders generally within the past three
years;
6.
a list of the names and business addresses of the current Directors and
officers; and
7.
the most recent annual report delivered to the Nevada Secretary of
State.
The
accounting year of the corporation shall be the calendar year, provided that if
a different accounting year is at any time selected by the Board for purposes of
federal income taxes, or any other purpose, the accounting year shall be the
year so selected.
The Board
may provide for a corporate seal that shall consist of the name of the
corporation, the state of its incorporation, and the year of its
incorporation.
SECTION
10. INDEMNIFICATION
Each
person who was, is or is threatened to be made a party to or is otherwise
involved (including, without limitation, as a witness) in any threatened,
pending or completed action, suit, claim or proceeding, whether civil, criminal,
administrative or investigative and whether formal or informal (hereinafter
“
proceedings
”), by
reason of the fact that he or she is or was a Director or officer of the
corporation or, that being or having been such a Director or officer of the
corporation, he or she is or was serving at the request of the corporation as a
Director, officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
(hereafter an “
indemnitee
”), whether the
basis of a proceeding is alleged action in an official capacity or in any other
capacity while serving as such a Director, officer, partner, trustee, employee
or agent, shall be indemnified and held harmless by the corporation against all
losses, claims, damages (compensatory, exemplary, punitive or otherwise),
liabilities and expenses (including attorneys’ fees, costs, judgments, fines,
ERISA excise taxes or penalties, amounts to be paid in settlement and any other
expenses) actually and reasonably incurred or suffered by such indemnitee in
connection therewith and such indemnification shall continue as to an indemnitee
who has ceased to be a Director or officer of the Company or a Director,
officer, partner, trustee, employee or agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise and
shall insure to the benefit of the indemnitee’s heirs, executors and
administrators. Except as provided in subsection 10.4 of this Section
with respect to proceedings seeking to enforce rights to indemnification, the
corporation shall indemnify any such indemnitee in connection with a proceeding
(or part thereof) initiated by such indemnitee only if a proceeding (or part
thereof) was authorized or ratified by the Board. The right to
indemnification conferred in this Section shall be a contract
right.
No
indemnification shall be provided to any such indemnitee for acts or omissions
of the indemnitee (a) if the indemnitee did not (i) act in good faith
and in a manner the indemnitee reasonably believed to be in or not opposed to
the best interests of the corporation, and (ii) with respect to any
criminal action or proceeding, have reasonable cause to believe the indemnitee’s
conduct was unlawful or (b) if the corporation is otherwise prohibited by
applicable law from paying such indemnification. Notwithstanding the
foregoing, if Section 78.7502 or any successor provision of the Nevada Private
Corporations Law is hereafter amended, the restrictions on indemnification set
forth in this subsection 10.2 shall be as set forth in such amended statutory
provision.
The right
to indemnification conferred in this Section shall include the right to be paid
by the corporation the expenses reasonably incurred in defending any proceeding
in advance of its final disposition (hereinafter an “advancement of expenses”).
An advancement of expenses shall be made upon delivery to the corporation of an
undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee,
to repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal that such
indemnitee is not entitled to be indemnified.
If a
claim under subsection 10.1 or 10.3 of this Section is not paid in full by the
corporation within 60 days after a written claim has been received by the
corporation, except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be 20 days, the indemnitee may at any
time thereafter bring suit against the corporation to recover the unpaid amount
of the claim. If successful in whole or in part, in any such suit or
in a suit brought by the corporation to recover an advancement of expenses
pursuant to the terms of the undertaking, the indemnitee shall be entitled to be
paid also the expense of litigating such suit. The indemnitee shall
be presumed to be entitled to indemnification under this Section upon submission
of a written claim (and, in an action brought to enforce a claim for an
advancement of expenses, when the required undertaking has been tendered to the
corporation) and thereafter the corporation shall have the burden of proof to
overcome the presumption that the indemnitee is so entitled.
The right
to indemnification and the advancement of expenses conferred in this Section
shall not be exclusive of any other right that any person may have or hereafter
acquire under any statute, provision of the Articles of Incorporation or Bylaws
of the corporation, general or specific action of the Board or stockholders,
contract or otherwise.
The
corporation may maintain insurance, at its expense, to protect itself and any
Director, officer, partner, trustee, employee or agent of the corporation or
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise against any expense, liability or loss, whether or not the
corporation would have the authority or right to indemnify such person against
such expense, liability or loss under the Nevada Private Corporations Law or
other law. The corporation may enter into contracts with any
Director, officer, partner, trustee, employee or agent of the corporation in
furtherance of the provisions of this section and may create a trust fund, grant
a security interest, or use other means (including, without limitation, a letter
of credit) to ensure the payment of such amounts as may be necessary to effect
indemnification as provided in this Section.
In
addition to the rights of indemnification set forth in subsection 10.1, the
corporation may, by action of the Board, grant rights to indemnification and
advancement of expenses to employees and agents or any class or group of
employees and agents of the corporation (a) with the same scope and effect as
the provisions of this Section with respect to indemnification and the
advancement of expenses of Directors and officers of the corporation; (b)
pursuant to rights granted or provided by the Nevada Private Corporations Law;
or (c) as are otherwise consistent with law.
Any
person who, while a Director or officer of the corporation, is or was serving
(a) as a Director, officer, employee or agent of another corporation of which a
majority of the shares entitled to vote in the election of its directors is held
by the corporation or (b) as a partner, trustee or otherwise in an executive or
management capacity in a partnership, joint venture, trust, employee benefit
plan or other enterprise of which the corporation or a majority owned subsidiary
of the corporation is a general partner or has a majority ownership shall
conclusively be deemed to be so serving at the request of the corporation and
entitled to indemnification and the advancement of expenses under subsections
10.1 and 10.3 of this Section.
SECTION
11. LIMITATION OF LIABILITY
To the
full extent that the Nevada Private Corporations Law, as they exist on the date
hereof or may hereafter be amended, permit the limitation or elimination of the
liability of any person who would be considered an indemnitee under subsection
10.1 of Section 10, an indemnitee of the Company shall not be liable to the
Company or its stockholders for monetary damages for conduct in the capacity
based upon which such person is considered an indemnitee. Any
amendments to or repeal of this Section 11 shall not adversely affect any right
or protection of any indemnitee of the Company for or with respect to any acts
or omissions of such indemnitee occurring prior to such amendment or
repeal.
These
Bylaws may be altered, amended or repealed and new Bylaws may be adopted by the
Board, except that the Board may not repeal or amend any Bylaw that the
stockholders have expressly provided, in amending or repealing such Bylaw, may
not be amended or repealed by the Board. The stockholders may also
alter, amend and repeal these Bylaws or adopt new Bylaws. All Bylaws
made by the Board may be amended, repealed, altered or modified by the
stockholders.
The
foregoing Bylaws were adopted by the Board as of April 13, 2007.
/s/ Frank S.
Yuan
Print
Name:
Frank S.
Yuan
Title:
President
Exhibit
10.2
AGREEMENT
AND PLAN OF MERGER
by
and among
ASAP
Show, Inc.
CRI
Acquisition Corp.
and
Sino-American
Petroleum Group, Inc.
Dated
as of May 24, 2007
SHARE
PURCHASE AND MERGER AGREEMENT
Share Purchase and Merger Agreement
(the “
Agreement
”)
dated as of May 24, 2007 by and among ASAP Show Inc., a corporation
formed under the laws of the State of Nevada (“
ASAP
”), CRI Acquisition Corp.,
a corporation newly formed under the laws of the State of Delaware and a wholly
owned subsidiary of ASAP (the “
Merger Sub
”), Sino-American
Petroleum Group, Inc.
,
a
corporation formed under the laws of the State of Delaware (“
Yili Oil
”), and the
individuals who are identified on the signature pages of this Agreement as the
“
Investors.”
ASAP,
the Merger Sub, Yili Oil and each of the Investors are referred to herein
individually as a “
Party
” and collectively as the
“
Parties
.”
PREAMBLE
WHEREAS
, ASAP and Yili Oil
have determined that a business combination between them is advisable and in the
best interests of their respective companies and stockholders and presents an
opportunity for their respective companies to achieve long-term strategic and
financial benefits;
WHEREAS,
the Investors are
affiliated with Yili Oil, and wish to purchase certain convertible preferred
shares of ASAP (the “
Series A
Convertible Shares,”
as further defined herein
)
for cash (the “
Share Purchase
”);
WHEREAS
, ASAP has proposed to
acquire Yili Oil pursuant to a merger transaction whereby, pursuant to the terms
and subject to the conditions of this Agreement, Yili Oil shall become a wholly
owned subsidiary of ASAP through the merger of Yili Oil with and into the Merger
Sub (the “
Merger
”);
and
WHEREAS
, in the Merger, all
issued and outstanding shares of capital stock of Yili Oil held by the Investors
shall be cancelled and converted into the right to receive 200,000 Series A
Convertible Shares of ASAP (the “
Merger Shares”)
which Shares,
together with the Series A Convertible Shares purchased in the Share Purchase,
shall represent 99.00 % of the voting power of ASAP after the
Merger;
NOW, THEREFORE
, in
consideration of the premises and the mutual covenants, representations and
warranties contained herein, the Parties, intending to be legally bound, hereby
agree as follows:
CERTAIN
DEFINITIONS
As used
in this Agreement, the following terms shall have the meanings set forth
below:
“
Applicable Law
” means any
domestic or foreign law, statute, regulation, rule, policy, guideline or
ordinance applicable to the businesses of the Parties, the Merger and/or the
Parties.
“
DGCL”
means Delaware General
Corporation Law.
“Knowledge”
means, in the case
of ASAP or Yili Oil, a particular fact or other matter of which its Chief
Executive Officer or the Chief Financial Officer is actually aware or which a
prudent individual serving in such capacity could be expected to discover or
otherwise become aware of in the course of conducting a reasonable review or
investigation of the corporation and its business and
affairs.
“
Lien
” means, with respect to
any property or asset, any mortgage, lien, pledge, charge, security interest,
claim, encumbrance, royalty interest, any other adverse claim of any kind in
respect of such property or asset, or any other restrictions or limitations of
any nature whatsoever.
“
Material Adverse Effect
” with
respect to any entity or group of entities means any event, change or effect
that has or would have a materially adverse effect on the financial condition,
business or results of operations of such entity or group of entities, taken as
a whole.
“
Person
” means any individual,
corporation, partnership, trust or unincorporated organization or a government
or any agency or political subdivision thereof.
“
Surviving Entity
” shall mean
Yili Oil as the surviving entity in the Merger as provided in Section
1.04.
“
Tax
” (and, with correlative
meaning, “
Taxes
” and
“
Taxable
”)
means:
(i) any
income, alternative or add-on minimum tax, gross receipts tax, sales tax, use
tax, ad valorem tax, transfer tax, franchise tax, profits tax, license tax,
withholding tax, payroll tax, employment tax, excise tax, severance tax, stamp
tax, occupation tax, property tax, environmental or windfall profit tax, custom,
duty or other tax, impost, levy, governmental fee or other like assessment or
charge of any kind whatsoever together with any interest or any penalty,
addition to tax or additional amount imposed with respect thereto by any
governmental or Tax authority responsible for the imposition of any such tax
(domestic or foreign), and
(ii) any
liability for the payment of any amounts of the type described in clause (i)
above as a result of being a member of an affiliated, consolidated, combined or
unitary group for any Taxable period, and
(iii) any
liability for the payment of any amounts of the type described in clauses (i) or
(ii) above as a result of any express or implied obligation to indemnify any
other person.
“
Tax Return
” means any return,
declaration, form, claim for refund or information return or statement relating
to Taxes, including any schedule or attachment thereto, and including any
amendment thereof.
ARTICLE
I
THE
TRANSACTIONS
SECTION
1.01 THE SHARE
PURCHASE
(a) Prior
to the Closing of the Share Purchase and Merger, ASAP shall file with the
Secretary of State of Nevada a Certificate of Designation of Series A
Convertible Preferred Stock
(
the
“Series A Convertible Shares”)
in the form annexed hereto as
Schedule
1.01(a)
. On the Closing Date (defined herein), the Share
Purchase shall be consummated, in which the Investors shall purchase from ASAP
an aggregate of one hundred thousand (100,000) Series A Convertible Shares for
cash consideration of Six Hundred Thousand and 00/100 Dollars
($600,000.00). The amount to be paid by and the number of
Series A Convertible Shares to be distributed to each Investor is set forth in
Schedule
1.01(b).
(b) The
Parties intend that the issuance of the Series A Convertible Shares to the
Investors pursuant to the Share Purchase shall be exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) of the Securities
Act and the rules and regulations promulgated thereunder.
SECTION
1.02 THE
MERGER.
Upon the
terms and subject to the conditions set forth in this Agreement and in
accordance with the DGCL, at the Effective Time (as hereinafter
defined), all Yili Oil Shares (as hereinafter defined) shall be cancelled and
converted into the right to receive the Merger Shares. In connection
therewith, the following terms shall apply:
(a)
Exchange
Agent
. Robert Brantl, Esq., counsel for Yili Oil, shall
act as the exchange agent (the “
Exchange Agent
”) for the
purpose of exchanging Yili Oil Shares for the Merger Shares. At
or prior to the Closing, ASAP shall deliver to the Exchange Agent the Merger
Shares.
(b)
Conversion of
Securities
.
(i)
Conversion of Yili Oil
Securities
. At the Effective Time, by virtue of the Merger and
without any action on the part of ASAP, Yili Oil or the Merger Sub, or the
holders of any of their respective securities:
(A) Each
of the issued and outstanding shares of common stock of Yili Oil (the “
Yili Oil Shares
”) immediately
prior to the Effective Time shall be converted into and represent the right to
receive, and shall be exchangeable for, that number of Series A Convertible
Shares of ASAP as shall be determined by dividing 200,000 by the number of then
issued and outstanding Yili Oil Shares.
(B) All
Yili Oil Shares shall no longer be outstanding and shall automatically be
canceled and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Shares to be issued pursuant to
this Section 1.02(b)(i)(A) upon the surrender of such certificate in accordance
with Section 1.08, without interest. No fractional shares may be
issued; but each fractional share that would result from the Merger will be
rounded to the nearest number of whole shares.
(C) The
Merger Shares, together with the Series A Convertible Shares acquired in the
Share Purchase, (I) shall represent 99.00%, on a fully diluted basis, of the
voting power of all classes of issued and outstanding stock of ASAP at the
Effective Time, after giving effect to the Merger, and (II) shall be convertible
into 99.00% of the common stock of ASAP on a fully diluted basis at any time
after the consummation of the spin-off transaction described in the Operating
Subsidiary Agreement (as defined in Section 5.01 (d) hereof).
(ii)
Conversion of Merger Sub
Stock
. At the Effective Time, by virtue of the Merger and
without any action on the part of Yili Oil, ASAP, the Merger Sub, or the holders
of any of their respective securities, each share of capital stock of Merger Sub
outstanding immediately prior to the Effective Time shall be converted into one
share of the common stock of the Surviving Entity and the shares of common stock
of the Surviving Entity so issued in such conversion shall constitute the only
outstanding shares of capital stock of the Surviving Entity and the Surviving
Entity shall be a wholly owned subsidiary of ASAP.
(c)
Exemption from
Registration
. The Parties intend that the issuance of the
Merger Shares to the Investors shall be exempt from the registration
requirements of the Securities Act pursuant to Section 4(2) of the Securities
Act and the rules and regulations promulgated thereunder.
SECTION
1.03 CLOSING.
The
closing of the Share Purchase and the Merger (the “
Closing
”) will take place at
the offices of Robert Brantl, Esq., counsel for Yili Oil, within one (1)
business day following the satisfaction or waiver of the conditions precedent
set forth in Article V or at such other date as ASAP and Yili Oil shall agree
(the “
Closing Date
”),
but in any event no later than June 30, 2007 unless extended by a written
agreement of ASAP and Yili Oil.
SECTION
1.04 MERGER;
EFFECTIVE TIME.
At the
Effective Time and subject to and upon the terms and conditions of this
Agreement, Merger Sub shall, and ASAP shall cause Merger Sub to, merge with and
into Yili Oil in accordance with the provisions of the DGCL, the separate
corporate existence of Merger Sub shall cease and Yili Oil shall continue as the
Surviving Entity. The Effective Time shall occur upon the filing with
the Secretary of State of the State of Delaware of a Certificate of Merger,
executed in accordance with the applicable provisions of the DGCL (the “
Effective
Time
”). The date on which the Effective Time occurs is
referred to as the “
Effective
Date
.” Provided that this Agreement has not been terminated
pursuant to Article VI, the Parties will cause the Certificate of Merger to be
filed as soon as practicable after the Closing.
SECTION
1.05 EFFECT OF THE
MERGER.
The
Merger shall have the effect set forth in Title 8, Section 259 of the
DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the properties, rights, privileges, powers
and franchises of Yili Oil and Merger Sub shall vest in the Surviving Entity,
and all debts, liabilities and duties of Yili Oil and Merger Sub shall become
the debts, liabilities and duties of the Surviving Entity.
SECTION
1.06
|
CERTIFICATE
OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
|
|
Pursuant
to the Merger:
(a) The
Certificate of Incorporation and Bylaws of Yili Oil as in effect immediately
prior to the Effective Time shall be the Certificate of Incorporation and Bylaws
of the Surviving Entity immediately following the Merger.
(b) The
directors and officers of the Yili Oil immediately prior to the Merger shall be
the directors and officers of the Surviving Entity subsequent to the
Merger.
SECTION
1.07
|
|
RESTRICTIONS
ON RESALE
|
(a) The
Series A Convertible Shares issued pursuant to the Share Purchase and the Merger
Shares will not be registered under the Securities Act, or the securities laws
of any state, and cannot be transferred, hypothecated, sold or otherwise
disposed of until: (i) a registration statement with respect to such
securities is declared effective under the Securities Act, or (ii) ASAP receives
an opinion of counsel for the Investors, reasonably satisfactory to counsel for
ASAP, that an exemption from the registration requirements of the Securities Act
is available.
The
certificates representing the Merger Shares which are being issued to the
Investors shall contain a legend substantially as follows:
“THE
SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH
RESPECT THERETO IS DECLARED EFFECTIVE UNDER SUCH ACT, OR ASAP SHOW, INC.
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO COUNSEL
FOR ASAP SHOW, INC. THAT AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT IS AVAILABLE.”
SECTION
1.08 EXCHANGE OF
CERTIFICATES.
(a) EXCHANGE
OF CERTIFICATES. After the Effective Time, the Investors shall be
required to surrender all their Yili Oil Shares to the Exchange Agent, and the
Investors shall be entitled upon such surrender to receive in exchange therefor
certificates representing the proportionate number of Merger Shares into which
the Yili Oil Shares theretofore represented by the stock transfer forms so
surrendered shall have been exchanged pursuant to this
Agreement. Until so surrendered, each outstanding certificate which,
prior to the Effective Time, represented Yili Oil Shares shall be deemed for all
corporate purposes, subject to the further provisions of this Article I, to
evidence the ownership of the number of whole Merger Shares for which such Yili
Oil Shares have been so exchanged. No dividend payable to holders of
Merger Shares of record as of any date subsequent to the Effective Time shall be
paid to the owner of any certificate which, prior to the Effective Time,
represented Yili Oil Shares, until such certificate or certificates representing
all the relevant Yili Oil Shares, together with a stock transfer form, are
surrendered as provided in this Article I or pursuant to letters of transmittal
or other instructions with respect to lost certificates provided by the Exchange
Agent.
(b) FULL
SATISFACTION OF RIGHTS. All Merger Shares for which the Yili Oil
Shares shall have been exchanged pursuant to this Article I shall be deemed to
have been issued in full satisfaction of all rights pertaining to the Yili Oil
Shares.
(c) EXCHANGE OF
CERTIFICATES. All certificates representing Yili Oil Shares converted
into the right to receive Merger Shares pursuant to this Article I shall be
furnished to ASAP subsequent to delivery thereof to the Exchange Agent pursuant
to this Agreement.
(d) CLOSING
OF TRANSFER BOOKS. On the Effective Date, the stock transfer book of
Yili Oil shall be deemed to be closed and no transfer of Yili Oil Shares shall
thereafter be recorded thereon.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF ASAP
ASAP and
, where applicable, the Merger Sub hereby jointly and severally represent and
warrant to Yili Oil and to the Investors, as of the date of this Agreement, as
of the Closing Date and as of the Effective Time, as follows:
SECTION
2.01 ORGANIZATION,
STANDING AND POWER.
ASAP is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Nevada, and has corporate power and authority to conduct
its business as presently conducted by it and to enter into and perform this
Agreement and to carry out the transactions contemplated by this
Agreement. Merger Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and has
corporate power and authority to enter into and perform this Agreement and to
carry out the transactions contemplated by this Agreement.
SECTION
2.02 SUBSIDIARIES
ASAP owns
all of the outstanding capital stock of the Merger Sub and of ASAP, Inc., a
newly formed Nevada corporation (“
Operating
Sub”).
Other than its ownership of the Merger Sub and the
Operating Sub, ASAP does not have an ownership interest in any
Person.
Merger Sub is a
recently formed corporation and prior to the date hereof and through the
Effective Date, Merger Sub shall not conduct any operating business, become a
party to any agreements, or incur any liabilities or obligations. Operating Sub
is a recently formed corporation and prior to the date hereof and through the
date on which the Operating Subsidiary Agreement (defined in Section 5.01 (d)
hereof) becomes effective, Operating Sub shall not conduct any operating
business, become a party to any agreements, or incur any liabilities or
obligations.
SECTION
2.03 CAPITALIZATION.
(a) There are
50,000,000 shares of capital stock of ASAP authorized, consisting of 45,000,000
shares of common stock, $0.001 par value per share (the “
ASAP Common Shares
”),
5,000,000 shares of preferred stock, $0.001 per share (“
ASAP Preferred
Shares”)
. As of the date of this Agreement, there are
8,626,480 ASAP Common Shares issued and outstanding.
(b) The
individuals named in
Schedule
2.03
hereto, collectively, own of record and beneficially 4,658,300 of
the issued and outstanding ASAP Common Shares, constituting fifty-four percent
(54%) of such Shares. No ASAP Common Shares or ASAP Preferred Shares have been
reserved for issuance to any Person, and there are no other outstanding rights,
warrants, options or agreements for the purchase of ASAP Common or Preferred
Shares except as provided in this Agreement.
(c) All
outstanding ASAP Common Shares are validly issued, fully paid, non-assessable,
not subject to pre-emptive rights and have been issued in compliance with all
state and federal securities laws or other Applicable Law. The Series
A Convertible Shares issuable to the Investors pursuant to the Merger and the
Share Purchase will, when issued pursuant to this Agreement, be duly and validly
authorized and issued, fully paid and non-assessable.
SECTION
2.04 AUTHORITY
FOR AGREEMENT.
The
execution, delivery, and performance of this Agreement by each of ASAP and
Merger Sub has been duly authorized by all necessary corporate and shareholder
action, and this Agreement, upon its execution by the Parties, will constitute
the valid and binding obligation of each of ASAP and the Merger Sub,
enforceable against each of them in accordance with and subject to its terms,
except as enforceability may be affected by bankruptcy, insolvency or other laws
of general application affecting the enforcement of creditors'
rights. The execution and consummation of the transactions
contemplated by this Agreement and compliance with its provisions by ASAP and
Merger Sub will not violate any provision of Applicable Law and will not
conflict with or result in any breach of any of the terms, conditions, or
provisions of, or constitute a default under, ASAP's Articles of Incorporation,
Merger Sub’s Certificate of Incorporation, or either of their Bylaws, in each
case as amended, or, in any material respect, any indenture, lease, loan
agreement or other agreement or instrument to which ASAP is a party or by which
it or any of its properties is bound, or any decree, judgment, order, statute,
rule or regulation applicable to ASAP or Merger Sub.
SECTION
2.05 FINANCIAL
CONDITION
The
Annual Report on Form 10-KSB filed by ASAP for the year ended May 31, 2006 and
the Quarterly Report on Form 10-QSB filed by ASAP for the period ended November
30, 2006 (the “SEC Filings”) are true, correct and complete in all material
respects, are not misleading and do not omit to state any material fact which is
necessary to make the statements contained in such public filings not misleading
in any material respect. The financial statements included in the SEC
Filings (the “Financial Statements”) were prepared in accordance with generally
accepted accounting principles and fairly reflect the financial condition of
ASAP as of the dates stated and the results of its operations for the periods
presented.
SECTION
2.06
ABSENCE OF CERTAIN CHANGES OR
EVENTS
.
Since
November 30, 2006, except as reported in the Quarterly Report filed by ASAP with
the Securities and Exchange Commission (“
SEC”)
on Form 10-QSB for the
period ending on that date, and except as contemplated by this
Agreement:
(a) there has
not been any Material Adverse Change in the business, operations, properties,
assets, or condition of ASAP;
(b) ASAP has
not (i) amended its Articles of Incorporation; (ii) declared or made,
or agreed to declare or make, any payment of dividends or distributions of any
assets of any kind whatsoever to stockholders or purchased or redeemed, or
agreed to purchase or redeem, any outstanding capital stock; (iii) made any
material change in its method of management, operation, or accounting; (iv)
entered into any material transaction; or (v) made any accrual or arrangement
for payment of bonuses or special compensation of any kind or any severance or
termination pay to any present or former officer or employee;
(c) ASAP has
not (i) borrowed or agreed to borrow any funds or incurred, or become subject
to, any material obligation or liability (absolute or contingent) except
liabilities incurred in the ordinary course of business; (ii) paid any material
obligation or liability (absolute or contingent) other than current liabilities
reflected in or shown on the most recent ASAP balance sheet, and current
liabilities incurred since that date in the ordinary course of business; (iii)
sold or transferred, or agreed to sell or transfer, any material assets,
properties, or rights, or canceled, or agreed to cancel, any material debts or
claims; or (iv) made or permitted any material amendment or termination of any
contract, agreement, or license to which it is a party.
SECTION
2.07 GOVERNMENTAL AND THIRD PARTY
CONSENTS
No
consent, waiver, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other federal, state, county, local or other foreign governmental authority,
instrumentality, agency or commission or any third party, including a party to
any agreement with ASAP, the Operating Sub or Merger Sub, is required by or with
respect to ASAP, the Operating Sub or Merger Sub in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for such consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
(i) applicable securities laws, or (ii) the Nevada Revised Statues or the
DGCL.
There is
no action, suit, investigation, audit or proceeding pending against, or to the
Knowledge of ASAP, threatened against or affecting, ASAP or the Merger Sub or
the Operating Sub or any of their respective assets or properties before any
court or arbitrator or any governmental body, agency or official.
SECTION
2.09 COMPLIANCE WITH APPLICABLE
LAWS.
To the
Knowledge of ASAP, the business of each of ASAP, the Operating Sub and the
Merger Sub has not been, and is not being, conducted in violation of any
Applicable Law.
SECTION
2.10
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TAX
RETURNS AND PAYMENT
|
ASAP has
duly and timely filed all material Tax Returns required to be filed by it and
has duly and timely paid all Taxes shown thereon to be due. Except as
disclosed in Financial Statements filed by ASAP with the SEC, there is no
material claim for Taxes that is a Lien against the property of ASAP other than
Liens for Taxes not yet due and payable, none of which is
material. ASAP has not received written notification of any audit of
any Tax Return of ASAP being conducted or pending by a Tax authority where an
adverse determination could have a Material Adverse Effect on ASAP, no extension
or waiver of the statute of limitations on the assessment of any Taxes has been
granted by ASAP which is currently in effect, and ASAP is not a party to any
agreement, contract or arrangement with any Tax authority or otherwise, which
may result in the payment of any material amount in excess of the amount
reflected on the above referenced ASAP Financial Statements.
SECTION
2.11 SECURITY
LISTING
ASAP is a
fully compliant reporting company under the Securities Exchange Act of 1934, as
amended (the “
Exchange
Act
”), and all ASAP public filings required under the Exchange Act have
been made. The common stock of ASAP is listed for quotation on the
OTC Bulletin Board. To the Knowledge of ASAP, ASAP has not been
threatened or is not subject to removal of its common stock from the OTC
Bulletin Board.
SECTION
2.12 FINDERS’
FEES
ASAP has
not incurred, nor will it incur, directly or indirectly, any liability for
brokers’ or finders’ fees or agents’ commissions or investment bankers’ fees or
any similar charges in connection with this Agreement or any transaction
contemplated hereby.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF YILI OIL
Yili Oil
hereby represents and warrants to ASAP and to Merger Sub, as of the date of this
Agreement and as of the Effective Time (except as otherwise indicated), as
follows:
SECTION
3.01 ORGANIZATION,
STANDING AND POWER.
Yili Oil
is a privately held corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and has full corporate power
and authority to conduct its business as presently conducted by it and to enter
into and perform this Agreement and to carry out the transactions contemplated
by this Agreement. Yili Oil is duly qualified to do business as a
foreign corporation in each state in which the nature of the business conducted
by it or the character or location of the properties and assets owned or leased
by it make such qualification necessary.
SECTION
3.02 CAPITALIZATION.
There are
100,000,000 shares of Yili Oil capital stock authorized, consisting of
100,000,000 shares of common stock with $.00001 par value (the “
Yili Oil Common
Shares
”). As of the date of this Agreement, there were 30,000
issued and outstanding Yili Oil Common Shares. No Yili Oil Common
Shares have been reserved for issuance to any Person, and there are no
outstanding rights, warrants, options or agreements for the purchase of Yili Oil
Common Shares. No Person is entitled to any rights with respect
to the conversion, exchange or delivery of the Yili Oil Common
Shares. The Yili Oil Common Shares have been issued in compliance
with Applicable Law.
SECTION
3.03 AUTHORITY
FOR AGREEMENT.
The
execution, delivery and performance of this Agreement by Yili Oil has been duly
authorized by all necessary corporate action, and this Agreement constitutes the
valid and binding obligation of Yili Oil and each of the Investors, enforceable
against Yili Oil and each Investor in accordance with its terms, except as
enforceability may be affected by bankruptcy, insolvency or other laws of
general application affecting the enforcement of creditors'
rights. The execution and consummation of the transactions
contemplated by this Agreement and compliance with its provisions by Yili Oil
and each of the Investors will not violate any provision of Applicable Law and
will not conflict with or result in any breach of any of the terms, conditions,
or provisions of, or constitute a default under, Yili Oil’s Certificate of
Incorporation or Bylaws, in each case as amended, or, to the Knowledge of Yili
Oil, in any material respect, any indenture, lease, loan agreement or other
agreement instrument to which Yili Oil or any Investor is a party or by which it
or any of them or any of its or their properties are bound, or any decree,
judgment, order, statute, rule or regulation applicable to Yili Oil or any
Investor.
SECTION
3.04 GOVERNMENTAL
OR THIRD PARTY CONSENT
No
consent, waiver, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other federal, state, county, local or other foreign governmental authority,
instrumentality, agency or commission or any third party, including a party to
any agreement with Yili Oil or any Investor, is required by or with respect to
Yili Oil or any of the Investors in connection with the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby,
except for such consents, waivers, approvals, orders, authorizations,
registrations, declarations and filings as may be required under (i) applicable
securities laws, or (ii) the DGCL.
There is
no action, suit, investigation, audit or proceeding pending against or, to the
Knowledge of Yili Oil, threatened, against or affecting Yili Oil or any of its
material assets or properties before any court or arbitrator or any governmental
body, agency or official.
SECTION
3.06 COMPLIANCE
WITH APPLICABLE LAWS.
To the
Knowledge of Yili Oil, the business of Yili Oil has not been, and is not being,
conducted in violation of any Applicable Law, except for possible violations
which individually or in the aggregate have not had and are not reasonably
likely to have a Material Adverse Effect on Yili Oil.
SECTION
3.07 TAX
RETURNS AND PAYMENT
Yili Oil
has duly and timely filed all material Tax Returns required to be filed by it
and has duly and timely paid all Taxes shown thereon to be due, except as
reflected in Yili Oil Financial Statements heretofore delivered to ASAP and
except for Taxes being contested in good faith. Subject to the
foregoing, to the Knowledge of Yili Oil, except as disclosed in the Yili Oil
Financial Statements, there is no material claim for Taxes that is a Lien
against the property of Yili Oil other than Liens for Taxes not yet due and
payable, none of which is material. Yili Oil has not received written
notification of any audit of any Tax Return of Yili Oil being conducted or
pending by a Tax authority where an adverse determination could have a Material
Adverse Effect on Yili Oil, no extension or waiver of the statute of limitations
on the assessment of any Taxes has been granted by Yili Oil which is currently
in effect, and Yili Oil is not a party to any agreement, contract or arrangement
with any Tax authority or otherwise, which may result in the payment of any
material amount in excess of the amount reflected on the Yili Oil Financial
Statements.
SECTION
3.08 FINDERS’
FEES
Yili Oil
has not incurred, nor will it incur, directly or indirectly, any liability for
brokers’ or finders’ fees or agents’ commissions or investment bankers’ fees or
any similar charges in connection with this Agreement or any transaction
contemplated hereby.
ARTICLE
IV
CERTAIN
COVENANTS AND AGREEMENTS
SECTION
4.01
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COVENANTS
OF YILI OIL
|
Yili Oil
covenants and agrees that, during the period from the date of this Agreement
until the Closing Date, Yili Oil shall, except as otherwise disclosed in this
Agreement and other than as contemplated by this Agreement or for the purposes
of effecting the Closing pursuant to this Agreement, conduct its business as
presently operated and solely in the ordinary course, and consistent with such
operation, and, in connection therewith, without the written consent of
ASAP:
(a)
|
shall
not amend its Certificate of Incorporation or
Bylaws;
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(b)
|
shall
not pay or agree to pay to any employee, officer or director compensation
that is in excess of the current compensation level of such employee,
officer or director other than salary increases or payments made in the
ordinary course of business or as otherwise provided in any contracts or
agreements with any such employees;
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(c)
|
shall
not merge or consolidate with any other entity or acquire or agree to
acquire any other entity;
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(d)
|
shall
not sell, transfer, or otherwise dispose of any material assets required
for the operations of Yili Oil’s business, except in the ordinary course
of business consistent with past
practices;
|
(e)
|
shall
not declare or pay any dividends on or make any distribution of any kind
with respect to the Yili Oil Shares;
and
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(f)
|
shall
use commercially reasonable efforts to comply with and not be in default
or violation under any known law, regulation, decree or order applicable
to Yili Oil’s business, operations or assets where such violation would
have a Material Adverse Effect on Yili
Oil.
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SECTION
4.02
|
COVENANTS
OF ASAP
|
ASAP
covenants and agrees that, during the period from the date of this Agreement
until the Closing Date, ASAP shall not, other than as contemplated by this
Agreement or for the purposes of effecting the Closing pursuant to this
Agreement, conduct its business as presently operated and solely in the ordinary
course, and consistent with such operation, and, in connection therewith,
without the written consent of Yili Oil:
(a)
|
shall
not amend its Articles of Incorporation or Bylaws, except to create the
Series A Convertible Shares, as provided in Section
1.01;
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(b)
|
shall
not pay or agree to pay to any employee, officer or director compensation
of any kind or amount;
|
(c)
|
shall
not merge or consolidate with any other entity or acquire or agree to
acquire any other entity;
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(d)
|
shall
not create, incur, assume, or guarantee any material indebtedness for
money borrowed except in the ordinary course of business, or create or
suffer to exist any mortgage, Lien or other encumbrance on any
of its material assets;
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(e)
|
shall
not make any material capital expenditure or series of capital
expenditures except in the ordinary course of
business;
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(f)
|
shall
not declare or pay any dividends on or make any distribution of any kind
with respect to ASAP;
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(g)
|
shall
not issue any additional shares of ASAP capital stock or take any action
affecting the capitalization of ASAP or the ASAP Common or Preferred
Shares; and
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(h)
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shall
not grant any severance or termination pay to any director, officer or any
other employees of ASAP.
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SECTION
4.03
COVENANTS OF THE PARTIES
(a)
Tax-free
Reorganization
. The Parties intend that the Merger qualify as
a Tax-free “reorganization” under Sections 368(a) of the Code, as amended, and
the Parties will take the position for all purposes that the Merger shall
qualify as a reorganization under such Section. In addition, the
Parties covenant and agree that they will not engage in any action, or fail to
take any action, which action or failure to take action would reasonably be
expected to cause the Merger to fail to qualify as a Tax-free “reorganization”
under Section 368(a) of the Code, whether or not otherwise permitted by the
provisions of this Agreement;
(b)
Announcement
. Neither
Yili Oil, on the one hand, nor ASAP on the other hand, shall issue any press
release or otherwise make any public statement with respect to this Agreement or
the transactions contemplated hereby without the prior consent of the other
Party (which consent shall not be unreasonably withheld), except as may be
required by applicable law or securities regulation. Upon execution
of this Agreement, ASAP shall issue a press release, which shall be approved by
Yili Oil, and file a Current Report on Form 8-K reporting the execution of the
Agreement.
(c)
Notification of Certain
Matters
. Yili Oil shall give prompt written notice to ASAP,
and ASAP shall give prompt written notice to Yili Oil, of:
(i) The
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be reasonably likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Effective Time; and
(ii) Any
material failure of Yili Oil or any of the Investors on the one hand, or ASAP,
on the other hand, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
(d)
Reasonable Best
Efforts
. Before Closing, upon the terms and subject to the
conditions of this Agreement, the Parties agree to use their respective
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, all things necessary, proper or advisable (subject to
applicable laws) to consummate and make effective the Merger and other
transactions contemplated by this Agreement as promptly as practicable
including, but not limited to:
(i) The
preparation and filing of all forms, registrations and notices required to be
filed to consummate the Share Purchase and the Share Purchase and the Merger,
including without limitation, any approvals, consents, orders, exemptions or
waivers by any third party or governmental entity; and
(ii) The
satisfaction of the Party's conditions precedent to Closing.
(e)
Access to
Information
(i)
Inspection by Yili
Oil
. ASAP will make available for inspection by Yili Oil,
during normal business hours and in a manner so as not to interfere with normal
business operations, all of ASAP’s records (including tax records), books of
account, premises, contracts and all other documents in ASAP’s possession or
control that are reasonably requested by Yili Oil to inspect and examine the
business and affairs of ASAP. ASAP will cause its managerial
employees and regular independent accountants to be available upon reasonable
advance notice to answer questions of Yili Oil concerning the business and
affairs of ASAP. Yili Oil will treat and hold as confidential any
information it receives from ASAP in the course of the reviews contemplated by
this Section 4.03(e). No examination by Yili Oil will, however,
constitute a waiver or relinquishment by Yili Oil of its rights to rely on
ASAP’s or the ASAP Shareholders’ covenants, representations and warranties made
herein or pursuant hereto.
(ii)
Inspection by
ASAP
. Yili Oil will, if requested, make available for
inspection by ASAP, during normal business hours and in a manner so as not to
interfere with normal business operations, all of Yili Oil’s records (including
tax records), books of account, premises, contracts and all other documents in
Yili Oil’s possession or control that are reasonably requested by ASAP to
inspect and examine the business and affairs of Yili Oil. Yili Oil
will cause its managerial employees and regular independent accountants to be
available upon reasonable advance notice to answer questions of ASAP concerning
the business and affairs of Yili Oil. ASAP will treat and hold as
confidential any information it receives from Yili Oil in the course of the
reviews contemplated by this Section 4.03(e). No examination by ASAP
will, however, constitute a waiver or relinquishment by ASAP of its rights to
rely on Yili Oil’s covenants, representations and warranties made herein or
pursuant hereto.
ARTICLE
V
CONDITIONS
PRECEDENT
SECTION
5.01 CONDITIONS
PRECEDENT TO THE PARTIES' OBLIGATIONS.
The
obligations of the Parties as provided herein shall be subject to each of the
following conditions precedent, unless waived in writing by both ASAP and Yili
Oil:
(a)
Consents,
Approvals
. The Parties shall have obtained all necessary
consents and approvals of their respective boards of directors, and all
consents, approvals and authorizations required under their respective charter
documents, and all material consents, including any material consents and
waivers by the Parties’ respective lenders and other third-parties, if
necessary, to the consummation of the transactions contemplated by this
Agreement.
(b)
Shareholder
Approval
. This Agreement and the transactions contemplated
hereby shall have been approved by the shareholders of Yili Oil in accordance
with the applicable provisions of the DGCL and its bylaws.
(c)
Absence of Certain
Litigation
. No action or proceeding shall be threatened or
pending before any governmental entity or authority which, in the reasonable
opinion of counsel for the Parties, is likely to result in a restraint,
prohibition or the obtaining of damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated
hereby.
(d)
Operating Subsidiary
Agreement.
ASAP shall have formed the Operating Sub as its
wholly owned subsidiary and shall have entered into an agreement (the “
Operating Subsidiary
Agreement,”
in the form attached hereto as
Schedule 5.01 (d))
with the
Operating Sub and the individuals identified as “Managers” in the Operating
Subsidiary Agreement
regarding (i) the
transfer to the Operating Sub of all of the assets and liabilities of ASAP, (ii)
the management and operation of the Operating Sub
following the Closing, (iv) the indemnification by the ASAP Principal
Shareholder of ASAP and Yili Oil(and their respective officers, directors and
shareholders) from and against all liabilities of the Operating Sub existing on
the Closing Date or arising thereafter, and (iv) the spinning off of the stock
of the Operating Sub to the holders of ASAP common stock when the
registration statement with respect to the common stock of the Operating Sub has
become effective.
SECTION
5.02
|
CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF
ASAP
|
The
obligations of ASAP on the Closing Date as provided herein shall be subject to
the satisfaction, on or prior to the Closing Date, of the following conditions
precedent, unless waived in writing by ASAP:
(a)
Consents And
Approvals
. Yili Oil shall have obtained all material consents,
including any material consents and waivers by Yili Oil's lenders and other
third parties, if necessary, to the consummation of the transactions
contemplated by this Agreement.
(b)
Representations and
Warranties
. The representations and warranties by Yili Oil in
Article III herein shall be true and accurate in all material respects on and as
of the Closing Date with the same force and effect as though such
representations and warranties had been made at and as of the Closing Date,
except to the extent that any changes therein are specifically contemplated by
this Agreement.
(c)
Performance
. Yili
Oil shall have performed and complied in all material respects with all
agreements to be performed or complied with by it pursuant to this Agreement at
or prior to the Closing.
(d)
Proceedings and
Documents
. All corporate, company and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to ASAP and its counsel, and ASAP and its
counsel shall have received all such counterpart originals (or certified or
other copies) of such documents as they may reasonably request.
(e)
Certificate of Good
Standing
. Yili Oil shall have delivered to ASAP a certificate
as to the good standing of Yili Oil certified by the Secretary of State of the
State of Delaware on or within fourteen (14) business days prior to the Closing
Date.
(f)
Material
Changes
. Except as contemplated by this Agreement, since the
date hereof, Yili Oil shall not have suffered a Material Adverse Effect, and,
without limiting the generality of the foregoing, there shall be no pending
litigation to which Yili Oil is a party which is reasonably likely to have a
Material Adverse Effect on Yili Oil.
(g)
Due
Diligence
. ASAP shall have completed to its own satisfaction
due diligence in relation to Yili Oil, except that this shall cease to be a
condition precedent unless on or prior to March 29, 2007 ASAP shall have
delivered a written notice stating that it is not satisfied with the results of
its due diligence.
(h)
SEC
Filing
. No less than one week prior to the Closing, Yili Oil
shall have delivered to ASAP the financial statements, report of Yili Oil’s
independent registered public accountant, and other information required for
inclusion in the Current Report that ASAP will file with the SEC within four
business days after the Closing.
SECTION
5.03
|
CONDITIONS
PRECEDENT TO THE OBLIGATIONS OF Yili
Oil
|
The
obligations of Yili Oil and the Investors on the Closing Date as provided herein
shall be subject to the satisfaction, on or prior to the Closing Date, of the
following conditions precedent, unless waived in writing by Yili Oil and the
Investors:
(a)
Consents
And Approvals
. ASAP, the Operating Sub
and the Merger Sub shall have obtained all material consents, including any
material consents and waivers of its respective lenders and other third parties,
if necessary, to the consummation of the transactions contemplated by this
Agreement.
(b)
Representations
And Warranties
. The representations and
warranties by ASAP and Merger Sub in Article II herein shall be true and
accurate in all material respects on and as of the Closing Date with the same
force and effect as though such representations and warranties had been made at
and as of the Closing Date, except to the extent that any changes therein are
specifically contemplated by this Agreement.
(c)
Performance
. ASAP and Merger Sub shall
have performed and complied in all material respects with all agreements to be
performed or complied with by it pursuant to this Agreement prior to or at the
Closing.
(d)
Proceedings
And Documents
. All corporate, company and
other proceedings in connection with the transactions contemplated by this
Agreement and all documents and instruments incident to such transactions shall
be reasonably satisfactory in substance and form to Yili Oil and its counsel,
and Yili Oil and its counsel shall have received all such counterpart originals
(or certified or other copies) of such documents as they may reasonably
request.
(e)
Certificates
of Good Standing
. ASAP shall have delivered
to Yili Oil a certificate as to its and the Operating Sub’s good standing in the
State of Nevada, and the Merger Sub shall have delivered to Yili Oil a
certificate as to its good standing in the State of Delaware, in each case
certified by the Secretary of State not more than fourteen (14) business days
prior to the Closing Date.
(f)
Material
Changes
. Except
as contemplated by this Agreement, since the date hereof, neither ASAP, the
Operating Sub nor the Merger Sub shall have suffered a Material
Adverse Effect and, without limiting the generality of the foregoing, there
shall be no pending litigation to which ASAP, the Operating Sub or the Merger
Sub is a party which is reasonably likely to have a Material Adverse Effect on
ASAP, the Operating Sub or the Merger Sub;
(g)
Due
Diligence
. Yili
Oil shall have completed to its own satisfaction due diligence in relation to
ASAP, except that this shall cease to be a condition precedent unless on or
prior to March 29, 2007 Yili Oil shall have delivered a written notice stating
that it is not satisfied with the results of its due
diligence;
(h)
Status of
ASAP
. As at the
Effective Time of the Merger, ASAP (i) shall be a fully compliant reporting
public company under the Exchange Act, and shall be current in all of its
reports required to be filed under the Exchange Act, (ii) shall not have been
threatened or subject to delisting from the OTC Bulletin Board, and (iii) shall
have 8,626,480 ASAP Common Shares outstanding, and there shall be no preferred
stock outstanding nor, except as provided hereunder, any options, warrants or
rights to acquire capital stock of ASAP whether for additional consideration or
on conversion.
(i)
ASAP
Principal Shareholders’ Holdings
. On the date of Closing,
the individuals listed in Schedule 2.03 shall own at least 4,658,300 ASAP Common
Shares.
(j)
Certificate
of Designation.
The Board of Directors of ASAP shall
have filed in the Office of the Secretary of State of the State of Nevada a
Certification of Designation of the Series A Convertible Shares in the form of
Schedule 1.01(a) hereto.
(k)
ASAP Board
of Directors
. At the Effective Time of
the Merger or in accordance with applicable law, all of the officers and members
of the board of directors of ASAP shall tender their resignations as officers
and directors of ASAP, and the vacancies created on the ASAP board of directors
shall be filled by persons designated by the Board of Directors of Yili
Oil.
(l)
Information
Statement
. No less than ten days prior to the Closing, ASAP
shall have filed with the SEC and mailed to its shareholders of record an
information statement containing the information required by SEC Rule 14f-1,
which shall be provided by Yili Oil.
ARTICLE
VI
TERMINATION
SECTION
6.01 TERMINATION.
This
Agreement may be terminated and the Merger may be abandoned at any time prior to
the Effective Time by:
(a) The mutual
written consent of the Boards of Directors of ASAP and Yili Oil;
(b) Either
ASAP, on the one hand, or Yili Oil, on the other hand, if any governmental
entity or court of competent jurisdiction shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other action
the Parties shall use their commercially reasonable best efforts to lift), which
restrains, enjoins or otherwise prohibits the Share Purchase or the Merger or
the issuance of the Series A Convertible Shares as contemplated herein and such
order, decree, ruling or other action shall have become final and
non-appealable;
(c) ASAP, if
Yili Oil or any of the Investors shall have breached in any material respect any
of its or his representations, warranties, covenants or other agreements
contained in this Agreement, and the breach cannot be or has not been cured
within thirty (30) calendar days after the giving of written notice by ASAP to
Yili Oil, or by ASAP, if it is not satisfied with the results of its due
diligence investigation and it so notifies Yili Oil on or before January
18, 2007;
(d) Yili Oil,
if ASAP shall have breached in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement, and the
breach cannot be or has not been cured within thirty (30) calendar days after
the giving of written notice by Yili Oil to ASAP, or by Yili Oil if it is not
satisfied with the results of its due diligence investigation and it so notifies
ASAP on or before March 29, 2007; or
(e) Without any
action on the part of the Parties if required by Applicable Law or if the
Closing shall not be consummated by June 30, 2007, unless extended by written
agreement of ASAP and Yili Oil.
SECTION
6.02 EFFECT OF TERMINATION.
If this
Agreement is terminated as provided in Section 6.01, written notice of such
termination shall be given by the terminating Party to the other Party
specifying the provision of this Agreement pursuant to which such termination is
made, this Agreement shall become null and void and there shall be no liability
on the part of ASAP, Yili Oil or the Investors,
provided
, however,
that (a) the provisions of Article VII hereof shall survive the
termination of this Agreement; (b) nothing in this Agreement shall
relieve any Party from any liability or obligation with respect to any willful
breach of this Agreement; and (c) termination shall not affect accrued rights or
liabilities of any party at the time of such termination.
ARTICLE
VII
CONFIDENTIALITY
SECTION
7.01 CONFIDENTIALITY
ASAP, on
the one hand, and Yili Oil and the Investors, on the other hand, will keep
confidential all information and documents obtained from the other, including
but not limited to any information or documents provided pursuant to Section
4.03(e) hereof (except for any information disclosed to the public pursuant to a
press release authorized by the Parties); and in the event the Closing does not
occur or this Agreement is terminated for any reason, will promptly return such
documents and all copies of such documents and all notes and other evidence
thereof, including material stored on a computer, and will not use such
information for its own advantage, except to the extent that (i) the information
must be disclosed by law, (ii) the information becomes publicly available by
reason other than disclosure by the Party subject to the confidentiality
obligation, (iii) the information is independently developed without use of or
reference to the other Party’s confidential information, (iv) the information is
obtained from another source not obligated to keep such information
confidential, or (v) the information is already publicly known or known to the
receiving Party when disclosed as demonstrated by written documentation in the
possession of such Party at such time.
ARTICLE
VIII
INDEMNIFICATION
SECTION
8.01 INDEMNIFICATION BY ASAP
ASAP
shall indemnify, defend and hold harmless each of Yili Oil, any subsidiary or
affiliate thereof and each person who is now, or has been at any time prior to
the date hereof or who becomes prior to the Closing, a shareholder, officer,
director or partner of Yili Oil, any subsidiary or affiliate thereof or an
employee of Yili Oil, any subsidiary or affiliate thereof and their respective
heirs, legal representatives, successors and assigns (the “
Yili Oil Indemnified Parties
”)
against all losses, claims, damages, costs, expenses (including reasonable
attorneys’ fees), liabilities or judgments or amounts that are paid in
settlement of or in connection with any threatened or actual third party claim,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of (i) any material breach of this Agreement by
ASAP or any subsidiary or affiliate thereof, including but not limited to
failure of any representation or warranty to be true and correct at or before
the Closing, or (ii) any willful or grossly negligent act, omission
or conduct of any officer, director or agent of ASAP or any subsidiary or
affiliate thereof prior to the Closing, whether asserted or claimed prior to, at
or after, the Closing. Any Yili Oil Indemnified Party wishing to
claim indemnification under this Section 8.01, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify ASAP in writing, but the
failure to so notify shall not relieve ASAP from any liability that it may have
under this Section 8.01, except to the extent that such failure would materially
prejudice ASAP.
SECTION
8.02
|
INDEMNIFICATION
BY YILI OIL
|
Yili Oil
shall indemnify, defend and hold harmless each of ASAP, any subsidiary or
affiliate thereof and each person who is now, or has been at any time prior to
the date hereof or who becomes prior to the Closing, a shareholder, officer,
director or partner of ASAP, any subsidiary or affiliate thereof or an employee
of ASAP, any subsidiary or affiliate thereof and their respective heirs, legal
representatives, successors and assigns (the “
ASAP Indemnified Parties
”)
against all losses, claims, damages, costs, expenses (including reasonable
attorneys’ fees), liabilities or judgments or amounts that are paid in
settlement of or in connection with any threatened or actual third party claim,
action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of (i) any material breach of this Agreement by
Yili Oil, any Investor or any subsidiary or affiliate thereof, including but not
limited to failure of any representation or warranty to be true and correct at
or before the Closing, or (ii) any willful or negligent act, omission or conduct
of any officer, director or agent of Yili Oil or any subsidiary or affiliate
thereof prior to the Closing, whether asserted or claimed prior to, at or after,
the Closing. Any ASAP Indemnified Party wishing to claim
indemnification under this Section 8.02, upon learning of any such claim,
action, suit, proceeding or investigation, shall notify Yili Oil in writing, but
the failure to so notify shall not relieve Yili Oil from any liability that it
may have under this Section 8.02, except to the extent that such failure would
materially prejudice Yili Oil.
SECTION
8.03 INDEMNIFICATION OF EXCHANGE
AGENT
ASAP,
Yili Oil, the Operating Sub and Merger Sub (for the purposes of this Section
8.03, the “
Indemnitors
”)
agree to indemnify the Exchange Agent and his employees and agents
(collectively, the “
Indemnitees
”) against, and
hold them harmless of and from, any and all loss, liability, cost, damage and
expense, including without limitation, reasonable counsel fees, which the
Indemnitees, or any of them, may suffer or incur by reason of any action, claim
or proceeding brought against the Indemnitees, or any one of them, arising out
of or relating in any way to the Exchange Agent’s service in such capacity,
unless such action, claim or proceeding is the result of the willful misconduct
or gross negligence of any of the Indemnitees.
ARTICLE
IX
MISCELLANEOUS
SECTION
9.01 EXPENSES.
Except as
contemplated by this Agreement, all costs and expenses incurred in connection
with this Agreement and the consummation of the transactions contemplated by
this Agreement shall be paid by the Party incurring such expenses.
SECTION
9.02 APPLICABLE
LAW
Except to
the extent that the law of the State of Delaware is mandatorily applicable to
the Merger (which shall be governed by the DGCL), this Agreement shall be
governed by the laws of the State of Nevada, without giving effect to
the principles of conflicts of laws thereof, as applied to agreements entered
into and to be performed in such state.
SECTION
9.03 NOTICES.
All
notices and other communications under this Agreement shall be in writing and
shall be deemed to have been duly given or made as follows:
(a)
If sent by reputable overnight
air courier (such as Federal Express), 2 business days after being
sent;
(b)
If sent by facsimile
transmission, with a copy mailed on the same day in the manner provided in
clause (a) above, when transmitted and receipt is confirmed by the fax machine;
or
(c)
If otherwise actually personally delivered, when delivered.
All
notices and other communications under this Agreement shall be sent or delivered
as follows:
If to
Yili Oil, to:
Huakang Zhou
18 Kimberly Court
East Hanover, NJ 07936
Telephone: 973-462-8777
Facsimile: 973-966-8870
with a
copy to (which shall not constitute notice):
|
Robert
Brantl, Esq.
|
|
52
Mulligan Lane
|
|
Irvington,
NY 10533
|
|
Telephone: 914-693-3026
|
If to
ASAP and/or the Shareholders, to:
Frank Yuan
4349 Baldwin Ave., Unit A
El Monte, CA 91731
|
Telephone: 626-636-2530
Ext. 109
|
|
Facsimile: 626-636-2536
|
|
with
a copy to (which shall not constitute
notice):
|
|
James
Vanderberg, Esq.
|
|
The
Otto Law Group, PLLC
|
|
601
Union St., Suite 4500
|
|
Seattle,
WA 98101
|
|
|
Telephone: 206-262-9545
Ext. 215
|
|
Facsimile: 206-262-9513
|
Each
Party may change its address by written notice in accordance with this
Section.
SECTION
9.04 ENTIRE
AGREEMENT.
This
Agreement (including the documents and instruments referred to in this
Agreement) contains the entire understanding of the Parties with respect to the
subject matter contained in this Agreement, and supersedes and cancels all prior
agreements, negotiations, correspondence, undertakings and communications of the
Parties, oral or written, respecting such subject matter including the Letter of
Intent made by Yili Oil and ASAP on May 16, 2007.
SECTION
9.05 ASSIGNMENT.
Neither
this Agreement nor any of the rights, interests or obligations under this
Agreement shall be assigned by any of the Parties (whether by operation of law
or otherwise) without the prior written consent of the other Parties;
provided
that in no event may
the right to indemnification provided by Article VIII hereto be assigned by any
of the Parties, with or without consent, except by operation of
law. Subject to the immediately foregoing sentence of this Section
9.05, this Agreement will be binding upon, inure to the benefit of and be
enforceable by, the Parties and their respective successors, assigns, heirs and
representatives.
SECTION
9.06 COUNTERPARTS.
This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which shall be considered one and the same
agreement.
SECTION
9.07 NO
THIRD PARTY BENEFICIARIES.
Except as
expressly provided by this Agreement, nothing herein is intended to confer upon
any person or entity not a Party to this Agreement any rights or remedies under
or by reason of this Agreement.
SECTION
9.08
RULES OF
CONSTRUCTION.
The
Parties agree that they have been represented by counsel during the negotiation
and execution of this Agreement and, therefore, waive the application of any
law, regulation, holding or rule of construction providing that ambiguities in
an agreement or other document will be construed against the party drafting such
agreement or document.
IN WITNESS WHEREOF,
the
Parties have duly executed this Agreement as of the date first above
written.
ASAP
SHOW, INC.
By:
|
/s/ Frank
Yuan
|
|
Name:
Frank
Yuan
|
|
Title:
|
Chief
Executive Officer
|
CRI
ACQUISITION CORP.
By:
|
/s/ Frank
Yuan
|
|
Name:
Frank
Yuan
|
|
Title:
|
Chief
Executive Officer
|
SINO-AMERICAN
PETROLEUM GROUP, INC.
By:
/s/ Huakang
Zhou
Name:
|
Huakang
Zhou
|
Title:
|
President
|
INVESTORS:
/s/ Xiao
Hu
_____________________________________
Xiao
Hu
/s/ Xiaojin
Wang
_________________________________
Xiaojin
Wang
/s/s Huakang
Zhou
________________________________
Huakang
Zhou
SCHEDULES:
Schedule
1.01 (a) Certificate of
Designation
Schedule
1.02 (b) Allocation of
Purchased Shares among Investors
Schedule
2.03 ASAP
Majority Shareholders
Schedule
5.01 (d) Operating
Subsidiary Agreement
2
nd
signature page to Share Purchase and Merger Agreement