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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 2011
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
COMMISSION FILE NO. 000-21477
ASPI, INC.
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(EXACT NAME OF REGISTRANT SPECIFIED IN ITS CHARTER)
DELAWARE 27-0514566
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(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
7609 RALSTON ROAD
ARVADA, COLORADO 80002
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(303) 421-8127
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities to be registered pursuant to Section 12(g) of the Act: COMMON STOCK,
$0.01 PAR VALUE
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes |_| No |X|
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X|
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of
the Exchange Act. (check one):
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller reporting company |X|
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes |_| No |X|
The aggregate market value of the voting common stock held by non-affiliates of
the Registrant on October 7, 2011 was approximately $5,820 based upon the
reported closing sale price of such shares on the Over the Counter Bulletin
Board for that date. As of October 7, 2011, there were 73,879,655 shares
outstanding of which 582,013 shares were held by non-affiliates.
TABLE OF CONTENTS
ITEM DESCRIPTION PAGE
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PART I
Item 1. Business 1
Item 1A. Risk Factors 5
Item 1B. Unresolved Staff Comments 8
Item 2. Description of Properties 9
Item 3. Legal Proceedings 9
Item 4. Removed and Reserved. 9
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters, and Issuer Purchases of Equity Securities 9
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and Analysis of Financial Condition 11
and Results of Operations
Item 7A. Quantative and Qualiative Disclosures About Market Risk 14
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements with Accountants on Accounting 29
and Financial Disclosure
Item 9A. Controls and Procedures 29
Item 9B. Other Information 30
PART III
Item 10. Directors, Executive Officers and Corporate Governance 31
Item 11. Executive Compensation 33
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 34
Item 13. Certain Relationships and Related Transactions and Director
Independence 35
Item 14. Principal Accountant Fees and Services 36
Item 15. Exhibits and Financial Statement Schedules 37
FORWARD-LOOKING STATEMENTS
IN ADDITION TO HISTORICAL INFORMATION, SOME OF THE INFORMATION PRESENTED IN THIS
ANNUAL REPORT ON FORM 10-K CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 (THE"REFORM
ACT"). ALTHOUGH ASPI, INC. ("ASPI" OR THE "COMPANY", WHICH MAY ALSO BE REFERRED
TO AS "WE", "US" OR "OUR") BELIEVES THAT ITS EXPECTATIONS ARE BASED ON
REASONABLE ASSUMPTIONS WITHIN THE BOUNDS OF ITS KNOWLEDGE OF ITS BUSINESS AND
OPERATIONS: THERE CAN BE NO ASSURANCE THAT ACTUAL RESULTS WILL NOT DIFFER
MATERIALLY FROM OUR EXPECTATIONS. SUCH FORWARD-LOOKING STATEMENTS ARE SUBJECT TO
RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE ANTICIPATED, INCLUDING BUT NOT LIMITED TO, OUR ABILITY TO REACH
SATISFACTORILY NEGOTIATED SETTLEMENTS WITH OUR OUTSTANDING CREDITORS, RAISE DEBT
AND, OR, EQUITY TO FUND NEGOTIATED SETTLEMENTS WITH OUR CREDITORS AND TO MEET
OUR ONGOING OPERATING EXPENSES AND MERGE WITH ANOTHER ENTITY WITH EXPERIENCED
MANAGEMENT AND OPPORTUNITIES FOR GROWTH IN RETURN FOR SHARES OF OUR COMMON STOCK
TO CREATE VALUE FOR OUR SHAREHOLDERS. CAUTIONARY STATEMENTS REGARDING THE RISKS,
UNCERTAINTIES AND OTHER FACTORS ASSOCIATED WITH THESE FORWARD-LOOKING STATEMENTS
ARE DISCUSSED UNDER "RISK FACTORS" IN THIS FORM 10-K. YOU ARE URGED TO CAREFULLY
CONSIDER THESE FACTORS, AS WELL AS OTHER INFORMATION CONTAINED IN THIS FORM 10-K
AND IN OUR OTHER PERIODIC REPORTS AND DOCUMENTS FILED WITH THE SEC.
PART I
ITEM 1. BUSINESS
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COMPANY HISTORY AND OVERVIEW
ASPI, Inc. ("Company" or "APSI") was formed in Delaware in September 29, 2008.
On May 21, 2009, ASPI merged with Aspeon, Inc. (Aspeon) and A08 Holdings, Inc.
(A08) to reorganize into a holding company structure under which ASPI would
survive as the holding company by merger with Aspeon and A08. After the merger,
holders of Aspeon common stock received an equivalent number of shares of ASPI,
and such shares have the same rights, privileges and preferences as the shares
of the common stock of Aspeon. Prior to the reorganization, ASPI and A08 were
wholly-owned subsidiaries of Aspeon. Also on June 30, 2009, ASPI sold A08 to and
unrelated third party for nominal consideration.
We have two wholly-owned subsidiaries, Mega Action Limited ("Mega"), a British
Virgin Island Corporation, and Prestige Prime Office, Limited (Prestige), a Hong
Kong Special Administrative Region Corporation (collectively referred to as the
"Company", "we", "our", or "us".)
The Company operates primarily as an office service provider, in Hong Kong,
through its wholly-owned subsidiary, Prestige. Prestige provides office space
that is fully furnished, equipped and staffed, located at premier addresses in
central business districts with convenient access to airports and public
transportation. Services include advanced communication system, network access,
updated IT and world-class administrative support, as well as a full menu of
business services and facilities, such as meeting rooms and video conferencing.
PRESTIGE PRIME OFFICE, LTD. ACQUISITION
Effective June 30, 2010, ASPI entered into an Acquisition Agreement with
Prestige Prime Office, Ltd. Under the Agreement, ASPI acquired all of the issued
and outstanding common stock of Prestige Prime Office, LTD. ("Prestige"), a Hong
Kong Special Administrative Region Corporation. As a result of the acquisition,
Prestige became a wholly-owned subsidiary of ASPI.
-1-
In exchange for $50,000 cash and 60,000,000 restricted shares of the common
stock of ASPI, ASPI acquired 100% all of the 4,000,000 issued and outstanding
shares of the common stock of Prestige.
Prestige had one sole shareholder, Mr. Yeung Cheuk Hung. As a result of the
acquisition, Mr. Yeung became the majority shareholder of ASPI holding
approximately 81.21% of the issued and outstanding common stock of ASPI. Prior
to the transaction with Prestige, the Company had nominal assets and
liabilities, and 13,879,655 shares outstanding of common stock. The Company has
accounted for the transaction with Prestige as a reverse merger followed up with
a recapitalization whereby no goodwill is recorded. Accordingly, the historical
financial information included in these financial statements are that of
Prestige.
MEGA ACTION LIMITED
During the year ended June 30, 2010, the Company incorporated a subsidiary, Mega
Action Limited, a BVI corporation (the "Subsidiary"). Two of the Company's
directors, Yuen Ling Look and Siu Lun Tong, act as directors of Mega Action
Limited.
In consideration of $1.00, Mega Action Limited issued the Company one share of
Mega Action Limited ("Mega"). There is only one share of Mega share issued and
outstanding. Mega is a wholly owned Subsidiary of the Company. Mega Action will
operate as the eastern operations management division of the Company.
LEASEHOLD ACQUISITION
On September 8, 2011, Prestige entered into an Agreement with Huge Earn
Investments Limited ("Huge Earn") to purchase certain leaseholds in exchange for
25,000,000 of shares of the Company's restricted common stock and a $450,000
promissory note with anticipated due date of six months from issuance. The
promissory note will not accrue interest. It is anticipated the transfer of
leases will occur on October 1, 2011.
The leasehold is approximately 4,419 square feet and includes 24 offices and 2
conference rooms. At the time of the exchange approximately 15 offices have been
leased out and Huge Earn holds approximately $57,725 in deposits from these
leases which will be credited against the balance of the $450,000 promissory
note upon transfer to Prestige.
As part of the transaction, Prestige will enter into a new 3 year lease
agreement for the space, from October 1, 2011 through September 30, 2013.
BUSINESS
ASPI's current goal is to be a serviced office provider through its wholly-owned
subsidiary, Prestige Prime Office Ltd. in Hong Kong.
The office space provided by Prestige is fully furnished, equipped and staffed,
located at addresses in central business districts with convenient access to
airports or public transportation. Services to be provided include advanced
communication systems, network access, updated IT and world-class administrative
support, as well as a full menu of business services and facilities, such as
meeting rooms and video conferencing.
Prestige intends to provide services that will support the growing trend of
mobile and at home working. Supporting workers at home and on the road with
services such as Virtual Office and Virtual PA, providing dedicated business
addresses as their business base, as well as mail and call handling services.
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Executives across business sectors, geographic locations, and from every size
organization, seek to more effectively manage business risk, maximize their
financial resources, and increase their flexibility to accommodate growth and
the dynamic changes in the market.
Companies of all sizes can use the Company's solutions to reduce costs and
remove the burden of property ownership and management, but at the same time
have a workplace to suit whenever and wherever they want to work.
MARKET OPPORTUNITY
COST EFFECTIVE
Businesses are increasingly looking at office space requirements as a strategic
component of their business plan.
Through serviced office space, clients are free to run their business without
the financial or management burden that comes with traditional office rental.
Prestige provides offices that are equipped and ready for use. All the clients
need to do is to is move in. Clients are not required to shop for and purchase
office equipment and furniture, make telecommunications arrangements, etc.
FLEXIBILITY
Workplace outsourcing enables companies to seize new market opportunities
because the office infrastructure is already in place, which is particularly
beneficial when businesses are setting up offices in emerging markets.
The flexible rental length, from 1 week up to 1 year, minimizes the risk and
complications of exploring a new market or business opportunities.
GATEWAY
Attributing to Hong Kong's location and monetary system, companies set up in
Hong Kong are provided a gateway to develop business in Mainland China. Because
of this advantage, it's expected that more and more companies will locate
businesses in Hong Kong. Prestige is able to provide flexibility and efficiency
to companies which are new to the region.
COMPANY RIGHTSIZING
The current economic conditions have led to a chain reaction of company
downsizing in order to reduce cost. Most of the companies are left with a
minimum number of staff. These companies need an office space that can flexibly
fit their company size and budget. While the traditional rental office creates
abundant space and heavy capital commitments, compromising companies' liquidity,
the serviced office on the other hand provides an optimum office space at a
minimized cost, and the flexibility for company downsizing or company expansion.
FULL SUPPORT
In a serviced office, clients don't need to physically own, install, hire or
manage any aspect of a traditional office environment. Clients only pay for what
is needed, as it is used. For companies serious about time and cash flow, the
serviced office concept provides the ability to focus on strategy and
operations.
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Prestige provides a range of Workstyle Solutions, providing customers with the
offices, services, and products they require according to whether they are
predominantly in the office, work from home or are regular travelers.
COMPETITION
There are approximately 50 serviced office providers in Hong Kong offering a
varying scale of services. Most of the centers' occupancy are at 80%. Under the
recent economy, some of the providers are expanding to meet the increasing
demand, namely SBC, set up in 1995, and Jumpstart, set up in 2002, have 8 and 6
centers, respectively, in Hong Kong.
PRESTIGE'S COMPETITIVE ADVANTAGE
o Exclusive location and rate
The business center is located in the central business area
and Prestige can offer clients a competitive rate because of
the rental agreement with the landlord. The rate is expected
to be 10%-15% lower than the market rate.
o Professional support
From setting up an office, to holding a meeting or doing any
administrative chores, Prestige's staff makes having and
running a workplace simple. To meet new business needs, there
is constant upgrade of employees' skills as technology and new
standards evolve.
o Flexibility
Prestige offers a wide choice of contract periods. And the
clients can, without binding, upgrade the room or transfer the
office to any of our locations, without penalty.
o Cost effective
Prestige helps set up an office at the lowest cost possible.
Reserving facilities and office support services at short
notice and using them with 10-minute increments so as to avoid
the additional charges inherent of an hourly system. Clients
only pay for what they use.
o Smart technology
IP phone and Internet-based offices allow clients to work
remotely, reserve facilities and services on the Internet,
confirm invoice details online etc. There are regular update
and upgrades of the systems to meet the ever changing needs
and provide a convenient and user-friendly platform for the
customers.
o Ongoing development
Prestige works to make continuous investments to improve
efficiency and provide clients enhanced services and
innovative technology at reasonable rates.
BUSINESS DEVELOPMENT & FUTURE PROSPECTS
PHASE-IN APPROACH
The Company has a full plan of development that is put into place through
different phases. A phase-in approach allows the Company to stabilize cash flow.
Also, the experience from running the first center will provide the Company with
the necessary experiences that can be used to improve quality and lower costs as
it opens new centers.
-4-
THE FIRST CENTER
The first center is composed of two units at Silvercord, No.30 Canton Road,
Tsimshatsui, which is a premier commercial building in Hong Kong. The center is
on one floor and occupies approximately 5,000 square feet.
INTELLECTUAL PROPERTY
We do not hold any patents or patent applications.
EMPLOYEES
As of June 30, 2011, we had 8 employees, employed solely by our wholly-owned
subsidiary, Prestige. The Company's officers do not have employment agreements
at this time. We feel that are relations with our employees are in good
standing.
ITEM 1A. RISK FACTORS
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You should be aware that there are various risks associated with our business,
and us, including the ones discussed below. You should carefully consider these
risk factors, as well as the other information contained in this Form 10-K, in
evaluating us and our business.
WE HAVE LIMITED WORKING CAPITAL AND LIMITED CASH FUNDS.
At June 30, 2011, we have total current assets of $77,319, of which $26,506 is
cash on hand. At June 30, 2011, we have total current liabilities of $703,598.
We have a working capital deficit of $(626,279) at June 30, 2011. During the
year ended June 30, 2011, we recognized revenues of $193,491 but recognized a
net loss of $457,901.
We have limited funds, and such funds may not be adequate to carry out the
business plan. Our cash inflows from our operating activities are not enough to
cover the costs incurred by our operational activities. The ultimate success of
our business may depend upon our ability to raise additional capital. We have
investigated the availability, source, or terms that might govern the
acquisition of additional capital. If additional capital is needed, there is no
assurance that funds will be available from any source or, if available, that
they can be obtained on terms acceptable to us. If not available, our operations
will be limited to those that can be financed with its modest capital.
RISING EXPENSES AT BOTH THE PROPERTY AND THE COMPANY LEVEL COULD REDUCE OUR CASH
FLOWS.
Our serviced offices will be subject to operating risks common to offices in
general, any or all of which may reduce revenues and cash flows. If any property
is not substantially occupied or if services are being paid in an amount that is
insufficient to cover operating expenses, we could be required to expend funds
with respect to operating expenses. The serviced offices are subject to
increases in utility costs, operating expenses, insurance costs, repairs and
maintenance and administrative expenses. We could be required to pay some or all
of those costs which would reduce our income and cash available for expansion
plans.
-5-
TERMINATIONS COULD REDUCE OUR REVENUES
Our success depends upon the occupancy levels, the rental income and the
operating expenses of our properties and our company. We may be unable to fill
office space at 100% or we may lose clients as their companies expand in size
and no longer need a serviced office. These events and others could cause us to
recognize less revenue.
FLUCTUATION IN THE VALUE OF THE HONG KONG DOLLAR MAY HAVE A MATERIAL ADVERSE
EFFECT ON OUR FINANCIAL STATEMENTS.
Our operations are located in Hong Kong and as such our financial activities are
done in Hong Kong Dollars. In accordance with United States Generally Accepted
Accounting Procedures (US GAAP) our financial statements are reported in U.S.
Dollars. The value of the Hong Kong Dollar against the U.S. dollar may fluctuate
and is affected by, among other things, changes in political and economic
conditions. An appreciation of the Hong Kong dollar against the U.S. dollar
could result in foreign currency translation losses for financial reporting
purposes when we translate our Hong Kong denominated liabilities into U.S.
Dollars, as the U.S. Dollar would likely be our reporting currency.
ASPI IS A HOLDING COMPANY, AND THERE ARE LIMITATIONS ON OUR ABILITY TO RECEIVE
DISTRIBUTIONS FROM OUR SUBSIDIARIES.
We conduct all of our operations through our wholly-owned subsidiaries and are
dependent upon dividends or other intercompany transfers of funds from our
subsidiaries to meet our obligations. Moreover, our subsidiaries are currently
limited in their ability to pay dividends or make distributions to us. We cannot
make any assurances that we will be able to fund the operations of the parent
company in such manner.
OUR SUCCESS DEPENDS SUBSTANTIALLY ON THE CONTINUED RETENTION OF CERTAIN KEY
PERSONNEL AND OUR ABILITY TO HIRE AND RETAIN QUALIFIED PERSONNEL IN THE FUTURE
TO SUPPORT OUR GROWTH.
If one or more of our senior executives or other key personnel are unable or
unwilling to continue in their present positions, we may not be able to replace
them easily or at all. As a result, our business may be disrupted and our
financial condition and results of operations may be materially and adversely
affected. While we depend on the abilities and participation of our current
management team generally, we have a particular reliance upon Ms. Look, our
Chief Executive Officer and Chief Financial Officer. The loss of the services of
Ms. Look for any reason could significantly impact our business and results of
operations.
OUR OFFICERS AND DIRECTORS MAY HAVE CONFLICTS OF INTEREST WHICH MAY NOT BE
RESOLVED FAVORABLY TO US.
Certain conflicts of interest may exist between us and our officers and
directors. Our Officers and Directors have other business interests to which
they devote their attention and may be expected to continue to do so although
management time should be devoted to our business. As a result, conflicts of
interest may arise that can be resolved only through exercise of such judgment
as is consistent with fiduciary duties to us.
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BECAUSE INSIDERS CONTROL OUR ACTIVITIES, THAT MAY CAUSE US TO ACT IN A MANNER
THAT IS MOST BENEFICIAL TO THEM AND NOT TO OUTSIDE SHAREHOLDERS WHICH COULD
CAUSE US NOT TO TAKE ACTIONS THAT OUTSIDE INVESTORS MIGHT VIEW FAVORABLY.
Mr. Yeung Cheuk Hung, an affiliate of the Company, owns approximately 81% of our
issued and outstanding common stock (after the Huge Earnings Leasehold
Acquisition, he will hold approximately 61%). As a result, Mr. Yeung effectively
controls all matters requiring stockholder approval, including the election of
directors, the approval of significant corporate transactions, such as mergers
and related party transactions. These insiders also have the ability to delay or
perhaps even block, by their ownership of our stock, an unsolicited tender
offer. This concentration of ownership could have the effect of delaying,
deterring or preventing a change in control of our company that you might view
favorably.
LOSS OF CONTROL BY OUR STOCKHOLDERS MAY OCCUR UPON ISSUANCE OF ADDITIONAL
SHARES.
We may issue additional shares, in the future, as consideration for cash,
assets, or services out of our authorized but unissued common stock that would,
upon issuance, represent a majority of our voting power and equity. The result
of such an issuance would be those new stockholders and management would control
us, and persons unknown could replace our management at this time. Such an
occurrence would result in a greatly reduced percentage of ownership of us by
our current stockholders.
We will be issuing 25,000,000 shares of our restricted stock as part of a
leasehold acquisition, discussed on page 2, after the issuance of such shares,
this shareholder will hold approximately 25% of the issued and outstanding
common stock, approximately 98,879,655 shares.
THE REGULATION OF PENNY STOCKS BY SEC AND FINRA MAY HAVE AN EFFECT ON THE
TRADABILITY OF OUR SECURITIES.
Our securities are currently listed on the Over the Counter Bulletin Board and
the Pink Sheets. Our shares are subject to a Securities and Exchange Commission
rule that imposes special sales practice requirements upon broker-dealers who
sell such securities to persons other than established customers or accredited
investors. For purposes of the rule, the phrase "accredited investors" means, in
general terms, institutions with assets in excess of $5,000,000, or individuals
having a net worth in excess of $1,000,000 or having an annual income that
exceeds $200,000 (or that, when combined with a spouse's income, exceeds
$300,000). For transactions covered by the rule, the broker-dealer must make a
special suitability determination for the purchaser and receive the purchaser's
written agreement to the transaction prior to the sale. Consequently, the rule
may affect the ability of broker-dealers to sell our securities and also may
affect the ability of purchasers in this offering to sell their securities in
any market that might develop therefore.
In addition, the Securities and Exchange Commission has adopted a number of
rules to regulate "penny stocks." Such rules include Rules 3a51-1, 15g-1, 15g-2,
15g-3, 15g-4, 15g-5, 15g-6, 15g-7, and 15g-9 under the Securities and Exchange
Act of 1934, as amended. Because our securities constitute "penny stocks" within
the meaning of the rules, the rules would apply to us and to our securities. The
rules may further affect the ability of owners of Shares to sell our securities
in any market that might develop for them.
Shareholders should be aware that, according to the Securities and Exchange
Commission, the market for penny stocks has suffered in recent years from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
-7-
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
OUR STOCK WILL IN ALL LIKELIHOOD BE THINLY TRADED AND AS A RESULT YOU MAY BE
UNABLE TO SELL AT OR NEAR ASK PRICES OR AT ALL IF YOU NEED TO LIQUIDATE YOUR
SHARES.
The shares of our common stock may be thinly-traded on the OTC Bulletin Board,
meaning that the number of persons interested in purchasing our shares of common
stock at or near ask prices at any given time may be relatively small or
non-existent. This situation is attributable to a number of factors, including
the fact that we are a small company which is relatively unknown to stock
analysts, stock brokers, institutional investors and others in the investment
community that generate or influence sales volume, and that even if we came to
the attention of such persons, they tend to be risk-averse and would be
reluctant to follow an unproven, early stage company such as ours or purchase or
recommend the purchase of our shares of common stock until such time as we
became more seasoned and viable. As a consequence, there may be periods of
several days or more when trading activity in our shares of common stock is
minimal or non-existent, as compared to a seasoned issuer which has a large and
steady volume of trading activity that will generally support continuous sales
without an adverse effect on Securities price. We cannot give you any assurance
that a broader or more active public trading market for our shares of Common
Stock will develop or be sustained, or that any trading levels will be
sustained. Due to these conditions, we can give investors no assurance that they
will be able to sell their shares of common stock at or near ask prices or at
all if you need money or otherwise desire to liquidate your shares of common
stock of our Company.
RULE 144 SALES IN THE FUTURE MAY HAVE A DEPRESSIVE EFFECT ON OUR STOCK PRICE.
All of the outstanding shares of common stock held by our present officers,
directors, and affiliate stockholders are "restricted securities" within the
meaning of Rule 144 under the Securities Act of 1933, as amended. As restricted
Shares, these Shares may be resold only pursuant to an effective registration
statement or under the requirements of Rule 144 or other applicable exemptions
from registration under the Act and as required under applicable state
securities laws. Rule 144 provides in essence that a person who has held
restricted securities for six months may, under certain conditions, sell every
three months, in brokerage transactions, a number of Shares that does not exceed
the greater of 1.0% of a company's outstanding common stock or the average
weekly trading volume during the four calendar weeks prior to the sale. There is
no limit on the amount of restricted securities that may be sold by a
nonaffiliate after the owner has held the restricted securities for a period of
six months. A sale under Rule 144 or under any other exemption from the Act, may
have a depressive effect upon the price of the common stock in any market that
may develop.
WE DO NOT ANTICIPATE PAYING CASH DIVIDENDS ON OUR COMMON STOCK
We do not anticipate paying any cash dividends on our common stock in the
foreseeable future.
ITEM 1B. UNRESOLVED STAFF COMMENTS
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None
-8-
ITEM 2. DESCRIPTION OF PROPERTIES
---------------------------------
Our mailing address is 7609 Ralston Road, Arvada, Colorado.
Our wholly-owned subsidiary, Prestige operates from Silvercord, No.30 Canton
Road, Tsimshatsui, which is a premier commercial building in Hong Kong. The
center is located on one floor and occupies approximately 5,000 square feet. We
pay an annual rental rate of $213,780.
ITEM 3. LEGAL PROCEEDINGS
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To the best of our knowledge and belief, there is no pending legal action
against the Company.
ITEM 4. REMOVED AND RESERVED.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
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The following table sets forth the range of high and low sales prices for the
Company's common stock for each of the fiscal quarters for the past two years as
reported on the OTC Bulletin Board. These prices represent inter-dealer prices
without adjustments for mark-up, mark-down, or commission and do not necessarily
reflect actual transactions.
Our common stock's trading symbol is "ASZP".
HIGH LOW
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Year Ended June 30, 2011:
September 30, 2010 $0.11 $0.05
December 31, 2010 0.10 0.05
March 31, 2011 0.05 0.05
June 30, 2011 0.05 0.05
Year Ended June 30, 2010:
September 30, 2009 $0.25 $0.01
December 31, 2009 0.25 0.04
March 31, 2010 0.25 0.04
June 30, 2010 0.20 0.05
HOLDERS. As of June 30, 2011, there were approximately 130 holders of record of
the common stock. We believe that we have approximately 2,000 beneficial owners
of our common stock. In many instances, a registered stockholder is a broker or
other entity holding shares in street name for one or more customers who
beneficially own the shares.
Our transfer agent is Mountain Share Transfer, Inc., 1625 Abilene Drive,
Broomfield, Colorado, 80020. Mountain Share Transfer's telephone number is
303-460-1149.
DIVIDENDS. We have not paid or declared cash distributions or dividends on our
common stock and do not intend to pay cash dividends in the foreseeable future.
Future cash dividends will be determined by our board of directors based upon
our earnings, financial condition, capital requirements and other relevant
factors.
-9-
RECENT SALES OF UNREGISTERED SECURITIES
We made the following unregistered sales of our securities from July 1, 2009
through June 30, 2011.
DATE OF ISSUANCE TITLE OF SECURITIES NUMBER OF SHARES CONSIDERATION HOLDER
---------------- ------------------- ---------------- ------------------- --------------------
5/6/10 Common Stock 10,000,000 $100,000 Top Growth Holdings
Group, Inc.
6/30/10 Common Stock 60,000,000 4,000,000 shares of Yeung Cheuk Hung
Prestige
EXEMPTION FROM REGISTRATION CLAIMED
All of the sales by us of our unregistered securities were made in reliance upon
Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act"). The
entity and individual listed above that purchased the unregistered securities
were existing shareholders, known to us and our management, through pre-existing
business relationships, as long standing business associates. The entity was
provided access to all material information, which it requested, and all
information necessary to verify such information and was afforded access to our
management in connection with the purchases. The purchaser of the unregistered
securities acquired such securities for investment and not with a view toward
distribution, acknowledging such intent to us. All certificates or agreements
representing such securities that were issued contained restrictive legends,
prohibiting further transfer of the certificates or agreements representing such
securities, without such securities either being first registered or otherwise
exempt from registration in any further resale or disposition.
ITEM 6. SELECTED FINANCIAL AND OPERATING DATA
----------------------------------------------
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item.
-10-
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
--------------------------------------------------------------------------------
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED HEREIN. IN CONNECTION WITH, AND
BECAUSE WE DESIRE TO TAKE ADVANTAGE OF, THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995, WE CAUTION READERS REGARDING
CERTAIN FORWARD LOOKING STATEMENTS IN THE FOLLOWING DISCUSSION AND ELSEWHERE IN
THIS REPORT AND IN ANY OTHER STATEMENT MADE BY, OR ON OUR BEHALF, WHETHER OR NOT
IN FUTURE FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. FORWARD-LOOKING
STATEMENTS ARE STATEMENTS NOT BASED ON HISTORICAL INFORMATION AND WHICH RELATE
TO FUTURE OPERATIONS, STRATEGIES, FINANCIAL RESULTS OR OTHER DEVELOPMENTS.
FORWARD LOOKING STATEMENTS ARE NECESSARILY BASED UPON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND OUR CONTROL AND MANY
OF WHICH, WITH RESPECT TO FUTURE BUSINESS DECISIONS, ARE SUBJECT TO CHANGE.
THESE UNCERTAINTIES AND CONTINGENCIES CAN AFFECT ACTUAL RESULTS AND COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN ANY FORWARD LOOKING
STATEMENTS MADE BY, OR ON OUR BEHALF. WE DISCLAIM ANY OBLIGATION TO UPDATE
FORWARD-LOOKING STATEMENTS.
THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM'S REPORT ON THE COMPANY'S
FINANCIAL STATEMENTS AS OF JUNE 30, 2011, AND FOR EACH OF THE YEARS IN THE
TWO-YEAR PERIOD THEN ENDED, INCLUDES A "GOING CONCERN" EXPLANATORY PARAGRAPH,
THAT DESCRIBES SUBSTANTIAL DOUBT ABOUT THE COMPANY'S ABILITY TO CONTINUE AS A
GOING CONCERN.
PLAN OF OPERATION
ASPI's strategy is to be a serviced office provider through its wholly-owned
subsidiary, Prestige Prime Office Ltd. in Hong Kong.
The office space provided is fully furnished, equipped and staffed, located at
premier addresses in central business districts with convenient access to
airports and public transportation. Services include advanced communication
systems, network access, updated IT and world-class administrative support, as
well as a full menu of business services and facilities, such as meeting rooms
and video conferencing.
Prestige intends to provide services that will support the growing trend of
mobile and at home working. Supporting workers at home and on the road with
services such as Virtual Office and Virtual PA, providing dedicated business
addresses as their business base, as well as mail and call handling services.
On September 8, 2011, Prestige entered into an Agreement with Huge Earn
Investments Limited ("Huge Earn") to purchase certain leaseholds in exchange for
25,000,000 of shares of the Company's restricted common stock and a $450,000
promissory note with anticipated due date of six months from issuance. The
promissory note will not accrue interest. It is anticipated the transfer of
leases will occur on October 1, 2011.
The leasehold is approximately 4,419 square feet and includes 24 offices and 2
conference rooms. At the time of the exchange approximately 15 offices have been
leased out and Huge Earn holds approximately $57,725 in deposits from these
leases which will be credited against the balance of the $450,000 promissory
note upon transfer to Prestige.
As part of the transaction, Prestige will enter into a new 3 year lease
agreement for the space, from October 1, 2011 through September 30, 2013.
-11-
At June 30, 2011, we have total current assets of $77,319, of which $26,506 is
cash on hand. At June 30, 2011, we have total current liabilities of $703,598.
We have a working capital deficit of $(626,279) at June 30, 2011. The Company
will need substantial additional capital to support its continuing operations.
The Company has had minimal revenues. The Company has NO committed source for
any funds as of the date hereof. In the event funds cannot be raised when
needed, the Company may not be able to continue to carry out its business plan,
may never be able to grow its revenues and operations, and could fail in
business as a result of these uncertainties.
The Company may borrow money to finance its future operations, although it does
not currently contemplate doing so. Any such borrowing will increase the risk of
loss to the investor in the event the Company is unsuccessful in repaying such
loans.
RESULTS OF OPERATIONS
THE FISCAL YEAR ENDED JUNE 30, 2011 COMPARED TO THE FISCAL YEAR ENDED JUNE 30,
2010
REVENUE
During the year ended June 30, 2011 and 2010, we recognized $193,491 and
$24,920, respectively in revenue from the serviced office operations of our
wholly-owned subsidiary, Prestige. The cost of such revenues was $61,217 and
$54,126, respectively. There was an increase of $168,571 in revenue as a result
of the increase in the number of clients we provide virtual office services to.
Management anticipates that the Company will see a moderate increase in revenue
in the first part of the next fiscal year resulting from the leasehold
acquisition activities during the first quarter of fiscal year 2012.
During the year ended June 30, 2011, we recognized a gross profit of $132,274
compared to a gross loss of ($29,206) during the year ended June 30, 2010.
OPERATIONAL (INCOME) EXPENSES
During the year ended June 30, 2011, we recognized operational expenses of
$590,176 compared to operational expenses of $429,135 for the year ended June
30, 2010. The $161,041 increase in operational expenses was a result of a
$44,261 increase in general and administrative expenses, a $79,963 increase in
salary expenses and a $36,815 increase in depreciation expense. The increase in
general and administrative expenses was the result of recognizing the operating
expenses of our subsidiaries for fiscal year 2011. The increase in salary
expenses is a result of the Company's increase operational activities.
PROVISION FOR INCOME TAXES
No provision for income taxes was required in the fiscal years ended June 30,
2011 and 2010 as we had sufficient carried forward tax losses to offset the
profit arising in these periods.
NET LOSS
During the year ended June 30, 2011, we recognized a net loss of $457,901
compared to a net loss of $458,370 during the year ended June 30, 2010. The
decrease of $469 in net losses was a result of the $168,571 increase in revenues
offset by a $168,102 increase in operational and other expenses.
-12-
LIQUIDITY AND CAPITAL
As of June 30, 2011, we had total current assets of $77,319, consisting of
$26,506 in cash, customer deposits of $39,295 and prepayments of $11,518. At
June 30, 2011, we had total liabilities of $703,598, all current. Total current
liabilities consisted of accounts payable of $34,693, accrued liabilities of
$263,378 prepayments from clients of $50,121 and related parties advances of
$355,406. The Company has a working capital deficit of $(626,279).
GOING CONCERN
In our Annual Report on Form 10-K for the fiscal years ended June 30, 2011 and
2010, the Report of the Independent Registered Public Accounting Firm included
an explanatory paragraph that describes substantial doubt about our ability to
continue as a going concern. Our financial statements for the year ended June
30, 2011 have been prepared on a going concern basis, which contemplates the
realization of assets and the settlement of liabilities and commitments in the
normal course of business. We reported an accumulated deficit of $(1,137,635)
and a working capital deficit of $(626,279) as of June 30, 2011.
Consequently, we are now dependent on raising additional equity and /or, debt to
meet our ongoing operating expenses. There is no assurance that we will be able
to raise the necessary equity and, or debt that we will need to fund our ongoing
operating expenses.
For the year ended June 30, 2011, net cash used in operations was $190,584,
compared to $291,348 for the year ended June 30, 2010, a decrease of $100,764.
During the year ended June 30, 2011, the net loss of $457,901 was reconciled for
the non-cash item of depreciation of $86,888.
During the year ended June 30, 2011, we used $8,556 in investing activities,
including the purchase of $8,556 in fixed assets by our wholly-owned subsidiary,
Prestige. During the year ended June 30, 2010, we used $357,909 in investing
activities.
During the year ended June 30, 2011, we received $188,344 from our financing
activities. During the year ended June 30, 2010, we received $684,495 from our
financing activities.
During the years ended June 30, 2011 and 2010, Mr. Yeung Cheuk Hung, the manager
of Prestige and the majority shareholder of the Company, has advanced funds of
$179,884 and $163,745, respectively, to support the operations of Prestige. At
June 30, 2011, the Company owes him $343,629. Such funds are due on demand.
During the year ended June 30, 2011 and 2010, Ms. Look, an officer and director
of the Company and the manager of Mega, advanced funds of $7,710 and $321,
respectively to Mega to support operations. At June 30, 2011, Ms. Look is owed
$8,031. Such funds are due on demand.
During the year ended June 30, 2011 and June 30, 2010, Top Growth Holdings
Group, Inc, an affiliate and entity of which Ms. Look, an officer and director
of the Company, advanced $750 and $2,996, respectively to the Company. Top
Growth Holdings Group, Inc is owed $3,746. Such funds are due on demand.
During the year ended June 30, 2010, the Company did issue a subscription
receivable for $100,000 to issue 10,000,000 shares at $0.01 per share to Top
Growth Holdings Group, Inc., of which Ms. Look, an officer and director of the
Company is a beneficial owner. Prior to year end the receivable was paid for and
the Company issued 10,000,000 shares of its restricted common stock.
-13-
EFFECTS OF INFLATION
Although we cannot accurately anticipate the effect of inflation on our
operations, we do not believe that inflation has had, or is likely in the future
to have, a material effect on our results or financial condition.
CRITICAL ACCOUNTING POLICIES
FOREIGN CURRENCY TRANSLATION
The financial statements of ASPI's wholly-owned subsidiaries, Prestige and Mega
are measured using the local currency (the Hong Kong Dollar (HK$)) as the
functional currency. Assets and liabilities of Prestige and Mega are translated
at exchange rates as of the balance sheet date. Revenues and expenses are
translated at average rates of exchange in effect during the period. The
resulting cumulative translation adjustments have been recorded as a component
of comprehensive income (loss), included as a separate item in shareholders'
equity.
The Company is exposed to movements in foreign currency exchange rates. In
addition, the Company is subject to risks including adverse developments in the
foreign political and economic environment, trade barriers, managing foreign
operations and potentially adverse tax consequences. There can be no assurance
that any of these factors will not have a material negative impact on the
Company's financial condition or results of operations in the future.
REVENUE RECOGNITION
The Company recognizes revenue when it is earned and expenses are recognized
when they occur.
STOCK-BASED COMPENSATION
Beginning January 1, 2006, the Company adopted the provisions of and accounts
for stock-based compensation using an estimate of value in accordance with the
fair value method. Under the fair value recognition provisions of this
statement, stock-based compensation cost is measured at the grant date based on
the fair value of the award and is recognized as expense on a straight-line
basis over the requisite service period, which generally is the vesting period.
The Company elected the modified-prospective method, under which prior periods
are not revised for comparative purposes. The valuation method applies to new
grants and to grants that were outstanding as of the effective date and are
subsequently modified.
ITEM 7A. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
------------------------------------------------------------------
As a "smaller reporting company" as defined by Item 10 of Regulation S-K, we are
not required to provide information required by this Item.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
---------------------------------------------------
Our financial statements and supplementary data are included herein commencing
on page 15.
-14-
De Joya Griffith & Company, LLC
---------------------------------------------
CERTIFIED PUBLIC ACCOUNTANTS & CONSULTANTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To The Board of Directors and Stockholders
ASPI, Inc.
We have audited the accompanying consolidated balance sheets of ASPI, Inc. and
subsidiaries as of June 30, 2011 and 2010, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
years ended June 30, 2011 and 2010. Management is responsible for these
financial statements. Our responsibility is to express an opinion on the
financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide 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 ASPI, Inc. and subsidiaries as
of June 30, 2011 and 2010, and the results of its operations and its cash flows
for each of the years ended June 30, 2011 and 2010, in conformity with
accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has incurred recurring losses from operations, which
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
As discussed in Note 1, the financial statements of ASPI, Inc. as of June 30,
2010, and for the year then ended were audited by other auditors who are no
longer registered with the Public Company Accounting Oversight Board.
Accordingly, the financial statements as of and for the year ended June 30, 2010
have been restated by us as more fully described in Note 1.
De Joya Griffith & Company, LLC
/s/ De Joya Griffith & Company, LLC
Henderson, NV
October 5, 2011
--------------------------------------------------------------------------------
2580 Anthem Village Drive, Henderson, NV 89052
Telephone (702) 563-1600 * Facsimile (702) 920-8049
-15-
ASPI, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2010
2011 (RESTATED)
--------------------------------
ASSETS
Current assets
Cash and cash equivalents $ 26,506 $ 36,468
Prepaid expenses and other current assets 50,813 53,191
--------------------------------
Total current assets 77,319 89,659
Property and equipment, net of $136,756 and $49,921
accumulated depreciation, respectively 229,709 307,988
--------------------------------
Total assets $ 307,028 $ 397,647
================================
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable 34,693 24,233
Accrued liabilities 263,378 129,201
Prepayments, clients 50,121 16,707
Advances, related parties 355,406 167,062
--------------------------------
Total current liabilities 703,598 337,203
Total liabilities 703,598 337,203
--------------------------------
Stockholders' equity (deficit)
Preferred stock, $0.01 par value: 25,000,000 shares authorized, no shares - -
issued and outstanding.
Common stock, $0.01 par value: 100,000,000 shares authorized 738,797 738,797
73,879,655 shares issued and outstanding, respectively
Other comprehensive income 2,268 1,381
Accumulated deficit (1,137,635) (679,734)
--------------------------------
Total stockholders' equity (deficit) (396,570) 60,444
--------------------------------
Total liabilities and stockholders' equity (deficit) $ 307,028 $ 397,647
================================
See accompanying notes to consolidated financial statements.
-16-
ASPI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
JUNE 30,
2011 2010
(RESTATED)
------------------------------
Revenue $ 193,491 $ 24,920
Cost of revenue 61,217 54,126
------------------------------
Gross profit (loss) 132,274 (29,206)
Operating expenses
General and administrative 503,288 379,063
Depreciation 86,888 50,072
------------------------------
Total operating (income) expenses 590,176 429,135
------------------------------
Loss from operations (457,902) (458,341)
Other income (expense)
Interest and other income 1 10
Interest expense - (39)
------------------------------
Total other income (expense) 1 (29)
------------------------------
Net loss $ (457,901) $ (458,370)
==============================
Other comprehensive income
Foreign currency translation adjustment 887 1,381
------------------------------
Total comprehensive income $ (457,014) $ (456,989)
==============================
Loss per common share- basic:
Net loss $ (0.01) $ (0.08)
==============================
Weighted average common shares outstanding:
Basic 73,879,655 5,386,504
==============================
See accompanying notes to consolidated financial statements.
-17-
ASPI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
ADDITIONAL ACCUMULATED
COMMON STOCK PAID - IN ACCUMULATED COMPREHENSIVE
SHARES AMOUNT CAPITAL DEFICIT PROFIT / (LOSS) TOTAL
------------------ ----------- ------------- ----------------- ----------------- ------------
BALANCE, JUNE 30 2009 (RESTATED) - $ - $ - $ - $ - $ -
Issuance of founder shares 60,000,000 600,000 - (86,160) - 513,840
Issuance of acquisition shares 13,879,655 138,797 - (135,204) - 3,593
Foreign currency translation - - - - 1,381 1,381
Net loss - - - (458,370) - (458,370)
------------------ ----------- ------------- ----------------- ----------------- ------------
BALANCE, JUNE 30 2010 (RESTATED) 73,879,655 738,797 - (679,734) 1,381 60,444
Foreign currency translation - - - - 887 887
Net loss - - - (457,901) - (457,901)
------------------ ----------- ------------- ----------------- ----------------- ------------
BALANCE, JUNE 30 2011 73,879,655 $ 738,797 $ - $ (1,137,635) $ 2,268 $ (396,570)
================== =========== ============= ================= ================= ============
See accompanying notes to consolidated financial statements.
-18-
ASPI, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2011 AND 2010
JUNE 30,
2011 2010
(RESTATED)
-----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (457,901) $ (458,370)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation 86,888 50,072
Changes in operating assets and liabilities:
Prepaid expenses, trade, and deposits 2,378 (53,191)
Accounts payable and accrued liabilities 144,637 153,433
Prepayments from clients 33,414 16,708
-----------------------------
Total cash flow used in operating activities (190,584) (291,348)
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of assets (8,556) (357,909)
-----------------------------
Total cash flow used in investing activities (8,556) (357,909)
CASH FLOW FROM FINANCING ACTIVITIES
Advances from officers and directors 188,344 167,062
Proceeds from common stock - 517,433
-----------------------------
Total cash flow provided by financing activities 188,344 684,495
Effect of exchange rate changes on cash 834 1,230
-----------------------------
NET CHANGE IN CASH (9,962) 36,468
CASH AT BEGINNING OF PERIOD 36,468 -
-----------------------------
CASH AT END OF PERIOD $ 26,506 $ 36,468
=============================
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash paid for interest $ - $ -
-----------------------------
Cash paid for income tax $ - $ -
-----------------------------
NON- CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued pursuant to reverse merger $ - $ 738,797
-----------------------------
See accompanying notes to consolidated financial statements.
-19-
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the Years Ended June 30, 2011 and 2010
NOTE 1 -BASIS OF PRESENTATION, BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------------------------------
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of ASPI,
Inc, a Delaware corporation, its wholly-owned subsidiaries, Mega Action Limited
("Mega"), a British Virgin Island Corporation, and Prestige Prime Office,
Limited (Prestige), a Hong Kong Special Administrative Region Corporation
(collectively referred to as the "Company"). All significant intercompany
accounts and transactions have been eliminated in consolidation.
RESTATEMENT
Upon completion of the Company's 2011 financial statements, accounting errors
were discovered that required the restatement of amounts previously reported.
Additionally, during 2011, it was determined that the acquisition of our
subsidiary Prestige Prime Offices, Ltd was accounted for incorrectly. The
acquisition was originally accounted for under the purchase method with a
subsequent impairment of goodwill. Instead, the acquisition should have been
recognized as a reverse merger. Further restatements resulted from recognizing
vacation accruals.
The following is a summary of the impact of these restatements on the Company's
Consolidated Balance Sheet at June 30, 2010:
JUNE 30, 2010
---------------------------------------------------------
AS PREVIOUSLY ERROR
REPORTED CORRECTION AS RESTATED
-------------------- -------------- ---------------
Accrued liabilities $ 127,218 $ 1,983 (b) $ 129,201
Total current liabilities $ 335,220 $ 1,983 (b) $ 337,203
Common stock, $0.01 par value $ 700,100 $ 38,697 (a) $ 738,797
Additional paid in capital $ 1 $ (1) (a) --
Other comprehensive income $ 77 $ 1,304 (a) $ 1,381
Accumulated deficit $ (637,750) $ (41,984) (a) $ (679,734)
-------------------- -------------- ---------------
Total stockholders' equity (deficit) $ 62,427 $ (1,983) (a) $ 60,444
------------------
(a) To correct certain errors discovered upon completion of the Company's
2011 financial statements, primarily consisting of adjustment to
properly recognize the reverse merger.
(b) To correctly accrue for unpaid vacation expenses.
-20-
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the Years Ended June 30, 2011 and 2010
The following is a summary of the impact of these restatements on the Company's
Consolidated Statements of Operations for the fiscal years ended June 30, 2010:
YEAR ENDED JUNE 30, 2010
----------------------------------------------------------------------
AS PREVIOUSLY ERROR
REPORTED CORRECTION AS RESTATED
------------------------ ------------------- --------------------
General and administrative $ 423,667 $ (46,587) (a) $ 379,063
$ 1,983 (b)
Net loss $ (502,974) $ 46,587 (a) $ (458,370)
$ (1,983) (b)
------------------
(a) To correct certain errors discovered upon completion of the Company's
2011 financial statements, primarily consisting of adjustment to
properly recognize the reverse merger.
(b) To correctly accrue for unpaid vacation expenses.
The following is a summary of the impact of these restatements on the Company's
Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2010:
YEAR ENDED JUNE 30, 2010
---------------------------------------------------
AS PREVIOUSLY ERROR
REPORTED CORRECTION AS RESTATED
--------------- ------------- -------------
Net loss $ (502,974) $ 46,587 (a) $ (458,370)
$ (1,983) (b)
Depreciation $ 49,921 $ 151 (a) $ 50,072
Prepayments, trades, and deposits $ (53,091) $ (100) (a) $ (53,191)
Accounts payable and accrued liabilities $ 151,450 $ 1,983 (b) $ 153,433
Total cash flow used in operating activities $ (337,986) $ 46,638 (a) $ (291,348)
$ -- (b)
Payments for and proceeds from sale of subsidiaries $ (50,000) $ 50,000 (a) $ --
Total cash flow provided by investing activities $ (407,909) $ 50,000 (a) $ (357,909)
Proceeds from sales of common stock $ 613,841 $ (96,408) (a) $ 517,433
Total cash flow provided by financing activities $ 780,903 $ (96,408) (a) $ 684,495
Effect of exchange rate changes on cash $ 1,460 $ (230) (a) $ 1,230
------------------
(a) To correct certain errors discovered upon completion of the Company's
2011 financial statements, primarily consisting of adjustment to
properly recognize the reverse merger.
(b) To correctly accrue for unpaid vacation expenses.
-21-
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the Years Ended June 30, 2011 and 2010
The following is a summary of the impact of these restatements on the Company's
Consolidated Statements of Stockholders' Equity (Deficit) for the fiscal years
ended June 30, 2010 and 2009:
AS PREVIOUSLY ERROR
REPORTED CORRECTION AS RESTATED
----------------- -------------- --------------
Balance June 30, 2009 - Accumulated Deficit $ (85,482,835) $ 85,482,835 (a) $ --
Balance June 30, 2009 - Common Stock $ 222,756 $ (222,756) (a) $ --
Balance June 30, 2009 - Accumulated Comprehensive Income $ 71,867 $ (71,867) (a) $ --
Net profit - 2009 $ 5,813,638 $ (5,813,638) (a) $ --
Balance June 30, 2010 - Accumulated Deficit $ (502,974) $ (174,777) (a) $ (679,734)
$ (1,983) (b)
Balance June 30, 2010 - Common Stock $ 922,756 $ (183,959) (a) $ 738,797
Balance June 30, 2010 - Accumulated Comprehensive Income $ 80 $ 1,301 (a) $ 1,381
Net loss - 2010 $ (502,974) $ 46,587 (a) $ (458,370)
$ (1,983) (b)
------------------
(a) To correct certain errors discovered upon completion of the Company's
2011 financial statements, primarily consisting of adjustment to
properly recognize the reverse merger.
(b) To correctly accrue for unpaid vacation expenses.
COMPANY HISTORY
ASPI, Inc. ("Company" or "APSI") was formed in Delaware in September 29, 2008.
On May 21, 2009, ASPI merged with Aspeon, Inc. (Aspeon) and A08 Holdings, Inc.
(A08) to reorganize into a holding company structure under which ASPI would
survive as the holding company by merger with Aspeon and A08. After the merger,
holders of Aspeon common stock received an equivalent number of shares of ASPI,
and such shares have the same rights, privileges and preferences as the shares
of the common stock of Aspeon. Prior to the reorganization, ASPI and A08 were
wholly-owned subsidiaries of Aspeon. Also on June 30, 2009, ASPI sold A08 to and
unrelated third party for nominal consideration.
BUSINESS
The Company operates primarily as an office service provider through its
wholly-owned subsidiary, Prestige. Prestige provides office space that is fully
furnished, equipped and staffed, located at premier addresses in central
business districts with convenient access to airports or public transportation.
Services include advanced communication systems, network access, updated IT, and
world-class administrative support, as well as a full menu of business services
and facilities, such as meeting rooms and video conferencing.
-22-
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the Years Ended June 30, 2011 and 2010
PRESTIGE PRIME OFFICE, LTD. ACQUISITION
Effective June 30, 2010, ASPI entered into an Acquisition Agreement with
Prestige Prime Office, Ltd. Under the Agreement, ASPI acquired all of the issued
and outstanding common stock of Prestige Prime Office, LTD. ("Prestige"), a Hong
Kong Special Administrative Region Corporation. As a result of the acquisition,
Prestige became a wholly-owned subsidiary of ASPI.
In exchange for $50,000 cash and 60,000,000 restricted shares of the common
stock of ASPI, ASPI acquired 100% all of the 4,000,000 issued and outstanding
shares of the common stock of Prestige.
Prestige had one sole shareholder, Mr. Yeung Cheuk Hung. As a result of the
acquisition, Mr. Yeung became the majority shareholder of ASPI holding
approximately 81.21% of the issued and outstanding common stock of ASPI. Prior
to the transaction with Prestige, the Company had nominal assets and
liabilities, and 13,879,655 shares outstanding of common stock. The Company has
accounted for the transaction with Prestige as a reverse merger followed up with
a recapitalization whereby no goodwill is recorded. Accordingly, the historical
financial information included in these financial statements are that of
Prestige.
MEGA ACTION LIMITED
During the year ended June 30, 2010, the Company incorporated a subsidiary, Mega
Action Limited, a BVI corporation (the "Subsidiary"). Two of the Company's
directors, Yuen Ling Look and Siu Lun Tong, act as directors of the new
Subsidiary.
In consideration of $1.00, Mega Action Limited issued the Company one share of
Mega Action Limited ("Mega Action") common stock. Mega Action is authorized to
issue up to 50,000 shares of a single class with a par value of $1.00. There is
only one share of Mega Action share issued and outstanding. Mega Action is a
wholly owned subsidiary of the Company. Mega Action will operate as the eastern
operations management division of the Company.
SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with an original maturity of
three months or less and money market instruments to be cash equivalents.
The Company minimizes its credit risk associated with cash by periodically
evaluating the credit quality of its primary financial institution. The balance
at times may exceed federally insured limits. At June 30, 2011 and June 30,
2010, the balance did not exceed the federally insured limit.
-23-
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the Years Ended June 30, 2011 and 2010
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is defined as the price that would be received upon sale of an asset
or paid upon transfer of a liability in an orderly transaction between market
participants at the measurement date and in the principal or most advantageous
market for that asset or liability. The fair value should be calculated based on
assumptions that market participants would use in pricing the asset or
liability, not on assumptions specific to the entity. In addition, the fair
value of liabilities should include consideration of non-performance risk
including our own credit risk.
In addition to defining fair value, the standard expands the disclosure
requirements around fair value and establishes a fair value hierarchy for
valuation inputs. The hierarchy prioritizes the inputs into three levels based
on the extent to which inputs used in measuring fair value are observable in the
market. Each fair value measurement is reported in one of the three levels which
is determined by the lowest level input that is significant to the fair value
measurement in its entirety. These levels are:
Level 1 - inputs are based upon unadjusted quoted prices for identical
instruments traded in active markets.
Level 2 - inputs are based upon significant observable inputs other than
quoted prices included in Level 1, such as quoted prices for
identical or similar instruments in markets that are not active,
and model-based valuation techniques for which all significant
assumptions are observable in the market or can be corroborated
by observable market data for substantially the full term of the
assets or liabilities.
Level 3 - inputs are generally unobservable and typically reflect
management's estimates of assumptions that market participants
would use in pricing the asset or liability. The fair values are
therefore determined using model-based techniques that include
option pricing models, discounted cash flow models, and similar
techniques.
The carrying value of the Company's financial assets and liabilities which
consist of cash, accounts payable and advances from related parties in
management's opinion approximate their fair value due to the short maturity of
such instruments. These financial assets and liabilities are valued using level
3 inputs, except for cash which is at level 1. Unless otherwise noted, it is
management's opinion that the Company is not exposed to significant interest,
exchange or credit risks arising from these financial instruments.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed principally on the straight-line method over the
estimated useful life of each type of asset which ranges from three to five
years. Major improvements are capitalized, while expenditures for repairs and
maintenance are expensed when incurred. Upon retirement or disposition, the
related costs and accumulated depreciation are removed from the accounts, and
any resulting gains or losses are credited or charged to income.
REVENUE RECOGNITION
The Company recognizes revenue when it is earned and expenses are recognized
when they occur. The Company recognizes revenue from its office service
operations. Clients pay a monthly fee and such fees are recognized at that time.
-24-
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the Years Ended June 30, 2011 and 2010
FOREIGN CURRENCY TRANSLATION
The financial statements of ASPI's wholly-owned subsidiaries, Prestige and Mega
are measured using the local currency (the Hong Kong Dollar (HK$) is the
functional currency). Assets and liabilities of Prestige and Mega are translated
at exchange rates as of the balance sheet date. Revenues and expenses are
translated at average rates of exchange in effect during the period. The
resulting cumulative translation adjustments have been recorded as a component
of comprehensive income (loss), included as a separate item in the statement of
operations.
The Company is exposed to movements in foreign currency exchange rates. In
addition, the Company is subject to risks including adverse developments in the
foreign political and economic environment, trade barriers, managing foreign
operations, and potentially adverse tax consequences. There can be no assurance
that any of these factors will not have a material negative impact on the
Company's financial condition or results of operations in the future.
NET LOSS PER COMMON SHARE
Basic net loss per common share is calculated by dividing total comprehensive
loss applicable to common shares by the weighted average number of common and
common equivalent shares outstanding during the period. For the years ended June
30, 2011 and 2010, there were no potential common equivalent shares used in the
calculation of weighted average common shares outstanding as the effect would be
anti-dilutive.
STOCK-BASED COMPENSATION
Beginning January 1, 2006, the Company adopted the provisions of and accounts
for stock-based compensation using an estimate of value in accordance with the
fair value method. Under the fair value recognition provisions of this
statement, stock-based compensation cost is measured at the grant date based on
the fair value of the award and is recognized as expense on a straight-line
basis over the requisite service period, which generally is the vesting period.
The Company elected the modified-prospective method, under which prior periods
are not revised for comparative purposes. The valuation method applies to new
grants and to grants that were outstanding as of the effective date and are
subsequently modified.
OTHER COMPREHENSIVE INCOME (LOSS)
The Company recognizes unrealized gains and loss on the Company's foreign
currency translation adjustments as components of other comprehensive income
(loss).
INCOME TAXES
Provision for income taxes represents actual or estimated amounts payable on tax
return filings each year. Deferred tax assets and liabilities are recorded for
the estimated future tax effects of temporary differences between the tax basis
of assets and liabilities and amounts reported in the accompanying balance
sheets, and for operating loss and tax credit carry forwards. The change in
deferred tax assets and liabilities for the period measures the deferred tax
provision or benefit for the period. Effects of changes in enacted tax laws on
deferred tax assets and liabilities are reflected as adjustment to the tax
provision or benefit in the period of enactment.
-25-
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the Years Ended June 30, 2011 and 2010
RECENT ACCOUNTING PRONOUNCEMENTS
In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting
Standard Update (ASU) No. 2011-05, COMPREHENSIVE INCOME (ASC TOPIC
220)--PRESENTATION OF COMPREHENSIVE INCOME. The ASU requires companies to report
comprehensive income, including items of other comprehensive income, for all
periods presented in a single continuous financial statement in the Consolidated
Statements of Operations or split between the Consolidated Statements of
Operations and a separate Consolidated Statements of Other Comprehensive Income.
The ASU is effective for the Company's first quarter of fiscal year 2013. Other
than requiring additional disclosures, the adoption of this new guidance will
not have a material impact on the Company's consolidated financial statements.
There were various other accounting standards and interpretations issued in 2011
and 2010, none of which are expected to have a material impact on the Company's
financial position, operations or cash flows.
NOTE 2 - GOING CONCERN AND MANAGEMENTS' PLANS
---------------------------------------------
The Company's financial statements for the year ended June 30, 2011 have been
prepared on a going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of
business. The Company reported a net loss of $457,901 for the year ended June
30, 2011 and an accumulated deficit of $(1,137,635) at June 30, 2011. At June
30, 2011, the Company had total current assets of $77,319 and total liabilities,
all current of $703,598 for a working capital deficit of $(626,279).
The Company's ability to continue as a going concern may be dependent on the
success of management's plan discussed below. The financial statements do not
include any adjustments relating to the recoverability and classification of
assets or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern.
To the extent the Company's operations are not sufficient to fund the Company's
capital requirements, the Company may attempt to enter into a revolving loan
agreement with financial institutions or attempt to raise capital through the
sale of additional capital stock or through the issuance of debt. At the present
time, the Company does not have a revolving loan agreement with any financial
institution nor can the Company provide any assurance that it will be able to
enter into any such agreement in the future or be able to raise funds through
the further issuance of debt or equity in the Company.
During the 2011 fiscal year, the Company intends to continue its efforts in
growing its office service operations.
-26-
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the Years Ended June 30, 2011 and 2010
NOTE 3 - PROPERTY AND EQUIPMENT
-------------------------------
At June 30, 2011 and 2010, Property and Equipment consisted of:
June 30, 2011 June 30, 2010
-------------------- ---------------------
Furniture and Fixtures $ 256,811 $ 249,741
Office Equipment 93,126 92,280
Computer Equipment 16,528 15,888
-------------------- ---------------------
366,465 357,909
Accumulated Depreciation (136,756) (49,921)
-------------------- ---------------------
Total $ 229,709 $ 307,988
==================== =====================
NOTE 4 - ADVANCES, RELATED PARTIES
----------------------------------
During the years ended June 30, 2011 and 2010, Mr. Yeung Cheuk Hung, the manager
of Prestige and the majority shareholder of the Company, has advanced funds of
$179,884 and $163,745, respectively, to support the operations of Prestige. At
June 30, 2011, the Company owes him $343,629. Such funds are due on demand.
During the year ended June 30, 2011 and 2010, Ms. Look, an officer and director
of the Company and the manager of Mega, advanced funds of $7,710 and $321,
respectively to Mega to support operations. At June 30, 2011, Ms. Look is owed
$8,031. Such funds are due on demand.
During the year ended June 30, 2010 and 2010, Top Growth Holdings Group, Inc, an
affiliate and entity of which Ms. Look, an officer and director of the Company,
advanced $750 and $2,996, respectively to the Company. At June 30, 2011, Top
Growth Holdings Group, Inc. is owed $3,746. Such funds are due on demand.
NOTE 5 - PREPAYMENTS, CLIENTS
-----------------------------
Clients pay a deposit on the Company's provided services upon entering into a
lease agreement with the Company. Such deposits are recognized by the Company
not only as deposits, but as a corresponding liability. At June 30, 2011 and
2010, the Company had $50,121 and $16,707, respectively in prepayment
liabilities.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
--------------------------------------
Prestige operates from Silvercord, No.30 Canton Road, Tsimshatsui, which is a
premier commercial building in Hong Kong. The center is located on one floor and
occupies approximately 5,000 square feet. We pay an annual rental rate of
$213,780. The Company's minimum annual rent rate is:
Fiscal Year Ended
June 30, Annual Rent
-------- -----------
2012 $195,965
-27-
ASPI, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
For the Years Ended June 30, 2011 and 2010
NOTE 7 - STOCKHOLDERS' EQUITY (DEFICIT)
---------------------------------------
The authorized capital stock of the Company is 100,000,000 shares of common
stock with a $0.01 par value and 25,000,000 shares of preferred stock with a par
value of $0.01 per share. At June 30, 2011 and 2010, the Company had 73,879,655
shares of its common stock issued and outstanding.
During the year end June 30, 2011, the Company did not issue any shares of its
common stock.
On June 30, 2010, the Company issued 60,000,000 restricted shares of the common
stock to the sole equity holder of Prestige Prime Offices, Ltd., Mr. Yeung Cheuk
Hung in exchange for 100% all of the 4,000,000 issued and outstanding shares of
common stock of Prestige, as further described in Note 1.
NOTE 8 - TAXES
--------------
The Company is subject to foreign and domestic income taxes. The Company has had
no income, and therefore has paid no income tax.
Deferred income taxes arise from temporary timing differences in the recognition
of income and expenses for financial reporting and tax purposes. The Company's
deferred tax assets consist entirely of the benefit from net operating loss
(NOL) carry-forwards. The NOL carry forwards expire in various years through
2031. The Company's deferred tax assets are offset by a valuation allowance due
to the uncertainty of the realization of the NOL carry-forwards. NOL
carry-forwards may be further limited by a change in company ownership and other
provisions of the tax laws.
The Company's deferred tax assets, valuation allowance, and change in valuation
allowance are as follows:
Period Ending Estimated NOL Valuation Net Tax
Carry-forward Allowance Benefit
-----------------------------------------------------------------------
Year Ended
June 30, 2011 314,702 (314,702) -
Year Ended
June 30, 2010 159,797 (159,797) -
NOTE 9 - SUBSEQUENT EVENTS
--------------------------
On September 8, 2011, the Company's wholly-owned subsidiary, Prestige entered
into an Agreement to purchase certain leaseholds from an unrelated third party
in exchange for 25,000,000 of shares of the Company's restricted common stock
and a $450,000 promissory note with anticipated due date of six months from
issuance. The promissory note will not accrue interest. It is anticipated the
transfer of leases will occur on October 1, 2011.
-28-
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
--------------------------------------------------------------------------------
CHANGE IN AUDITORS
Larry O'Donnell, CPA, P.C. formerly the independent registered public accountant
for Aspi, Inc., was dismissed as the Company's independent registered public
accountant on November 3, 2010. Effective December 14, 2010, the Public
Accounting Oversight Board ("PCAOB") revoked Larry O'Donnell, CPA, P.C.'s
registration as a registered public accountant.
On November 8, 2010, the Board of the Company approved the engagement of new
auditors, De Joya Griffith & Company, LLC of Henderson, Nevada to be the
Company's independent registered public accountant. No audit committee exists,
other than the members of the Board of Directors.
The action to engage new auditors was approved by the Board of Directors. No
audit committee exists, other than the members of the Board of Directors.
In connection with audit of fiscal years ended June 30, 2011 and 2010 and
through the date of termination of the accountants, no disagreements exist with
the former independent registered public accountant on any matter of accounting
principles or practices, financial statement disclosure, internal control
assessment, or auditing scope of procedure, which disagreements if not resolved
to the satisfaction of the former accountant would have caused them to make
reference in connection with their report to the subject of the disagreement(s).
The audit report from Larry O'Donnell, CPA, PC for the fiscal year ended June
30, 2010, contained an opinion which included a paragraph discussing
uncertainties related to continuation of the Company as a going concern and did
not include an adverse opinion or a disclaimer of opinion or were not qualified
or modified as to uncertainty, audit scope or accounting principles.
ITEM 9A. CONTROLS AND PROCEDURES
--------------------------------
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain a system of disclosure controls and procedures (as defined in
Securities Exchange Act Rules 13a-15(e) and 15d-15(e)) that is designed to
provide reasonable assurance that information that is required to be disclosed
is accumulated and communicated to management timely.
As required by SEC Rule 15d-15(b), our Chief Executive Officer and our Chief
Financial Officer carried out an evaluation under the supervision and with the
participation of our management, of the effectiveness of the design and
operation of our disclosure controls and procedures pursuant to Exchange Act
Rule 15d-14 as of the end of the period covered by this report.
Based on that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that our disclosure controls and procedures are effective in
timely alerting them to material information required to be disclosed in the our
periodic filings with the SEC.
MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management, including the Chief Executive Officer and Chief Financial
Officer is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting, as
defined in Exchange Act Rule 13a-15(f), is a process designed by, or under the
-29-
supervision of, our principal executive and principal financial officers and
effected by our Board of Directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that:
o Pertain to the maintenance of records that in reasonable detail
accurately and fairly reflect the transactions and dispositions of our
assets; Provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial
o statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only
in accordance with authorizations of our management and directors; and
o Provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use of disposition of our assets that
could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.
Our management assessed the effectiveness of our internal control over financial
reporting as of June 30, 2011. Based on this assessment, management believes
that as of June 30, 2011, our internal control over financial reporting is not
effective based on those criteria.
This annual report does not include an attestation report of the Company's
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by the Company's
registered public accounting firm pursuant to temporary rules of the SEC to
provide only management's report in this annual report.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
During our most recent fiscal quarter, there has been no change in our internal
control over financial reporting (as defined in Rule 13a-15(f) or 15d-15(f)
under the Securities Exchange Act) that has materially affected, or is
reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 9B. OTHER INFORMATION
--------------------------
None.
-30-
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
---------------------------------------------------------------
DIRECTORS AND EXECUTIVE OFFICERS
As of June 30, 2011, our directors and officers were:
NAME AGE POSITION
------------------------- --- --------------------------------------
Yuen Ling Look 43 President, Chief Executive Officer,
Chief Financial Officer and Director
Siu Fong Kelly Yeung 41 Director
Siu Lun Tong 48 Director
YUEN LING LOOK
Ms. Look was appointed the Chief Executive Officer, President, Chief Financial
Officer and director of the Company on November 9, 2009. Ms. Look is also a
manager of both Mega and Prestige.
Ms. Look has been employed by La Jacques Fashion Limited for over ten years.
Currently, she is the Chief Administrator, responsible for the accounting and
administrative work. La Jacques Fashion Limited is a garment trading company.
She was educated in Hong Kong and earned a diploma in Business Administration in
1991 from Hong Kong Shue Yan University (formerly called Shue Yan College). She
also completed the Certificate Stage of Association of Chartered Certified
Accountants in 1999.
SIU FONG KELLY YEUNG
Ms. Yeung was appointed a director of the Company on November 9, 2009.
Ms. Yeung graduated from the Primary school in Hong Kong. She then went to
United Kingdom for further studies. In 1988, she finished at Level O. After
graduation, she immediately joined and participated in the operations of
restaurants. She has almost twenty years experience in the beverage industry.
She has been running her own restaurant for over ten years.
SIU LUN TONG
Mr. Tong was appointed a director of the Company on November 9, 2009.
Mr. Tong has been employed by Asian Alliance Garment Limited for more than 15
years. Currently, he is the production manager of Asian Alliance Garment
Limited. At Asian Alliance Garment Limited, he specializes in management and
control of factories and quality. Sportswear and jeans are the main lines of the
company's business.
-31-
COMMITTEES OF THE BOARD OF DIRECTORS
In the ordinary course of business, the board of directors maintains a
compensation committee and an audit committee. At this time, the Company's board
of directors as a whole serves as its compensation committee and audit
committee.
The primary function of the compensation committee is to review and make
recommendations to the board of directors with respect to the compensation,
including bonuses, of our officers.
The functions of the audit committee are to review the scope of the audit
procedures employed by our independent auditors, to review with the independent
auditors our accounting practices and policies and recommend to whom reports
should be submitted, to review with the independent auditors their final audit
reports, to review with our internal and independent auditors our overall
accounting and financial controls, to be available to the independent auditors
during the year for consultation, to approve the audit fee charged by the
independent auditors, to report to the board of directors with respect to such
matters, and to recommend the selection of the independent auditors.
In the absence of a separate audit committee our Board of Directors functions as
the audit committee and performs some of the same functions of an audit
committee, such as recommending a firm of independent certified public
accountants to audit the annual financial statements; reviewing the independent
auditors independence, the financial statements and their audit report; and
reviewing management's administration of the system of internal accounting
controls.
CONFLICTS OF INTEREST - GENERAL.
Our directors and officers are, or may become, in their individual capacities,
officers, directors, controlling shareholder and/or partners of other entities
engaged in a variety of businesses. Thus, there exist potential conflicts of
interest including, among other things, time, efforts, and corporate opportunity
involved in participation with such other business entities. While each officer
and director of our business is engaged in business activities outside of our
business, they devote to our business such time as they believe to be necessary.
CONFLICTS OF INTEREST - CORPORATE OPPORTUNITIES
Presently no requirement contained in our Articles of Incorporation, Bylaws, or
minutes which requires officers and directors of our business to disclose to us
business opportunities which come to their attention. Our officers and directors
do, however, have a fiduciary duty of loyalty to us to disclose to us any
business opportunities which come to their attention, in their capacity as an
officer and/or director or otherwise. Excluded from this duty would be
opportunities which the person learns about through his involvement as an
officer and director of another company. We have no intention of merging with or
acquiring an affiliate, associate person or business opportunity from any
affiliate or any client of any such person.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires our Officers and
Directors, and persons who own more than 10% of a registered class of our equity
securities, to file reports of ownership and changes in ownership with the SEC.
Officers, directors, and greater than 10% shareholders are required by SEC
regulation to furnish us with copies of all Section 16(a) forms they file. Based
solely on our review of copies of such reports received, and representations
from certain reporting persons, we believe that, during the fiscal year ended
June 30, 2011, all Section 16(a) filing requirements applicable to our officers,
-32-
directors and greater than 10% beneficial owners were filed in compliance with
all applicable requirements with the exception of Top Growth Holdings Group,
Inc. and Mr. Yeung Cheuk Hung.
CODE OF ETHICS
Due to the limited scope of our current operations, we have not adopted a
corporate code of ethics that applies to our principal executive officer,
principal accounting officer, or persons performing similar function.
ITEM 11. EXECUTIVE COMPENSATION
-------------------------------
The following table sets forth certain information concerning compensation paid
by the Company to its sole officer for the fiscal years ended June 30, 2011,
2010 and 2009 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Nonequity Nonqualified
incentive deferred
Stock Option plan compensation All other
Name & Salary Bonus awards awards compensation earnings compensation Total
Position Year ($) ($) ($) ($) ($) ($) ($) ($)
--------------- -------- --------- --------- --------- -------- --------------- --------------- --------------- ----------
Yuen Ling Look 2011 $-0- $-0- $ -0- $ -0- $ -0- $-0- $-0- $-0-
2010 $-0- $-0- $ -0- $ -0- $ -0- $-0- $-0- $-0-
David J. 2009 $60,000 $-0- $ -0- $ -0- $ -0- $-0- $-0- $60,000
Cutler (2)
---------------
(1) Ms. Look was appointed the President of the Company in November 2009.
Ms. Look does not have a compensation agreement with the Company at
this time.
(2) Includes $60,000 (2008 - $40,000) in fees payable to Burlingham
Corporate Finance, Inc., a company controlled by Mr. Cutler, in
respect of services provided to us by Mr. Cutler.
In January 2009, 2,376,324 shares of restricted common stock, valued at
$392,974, was issued to David Cutler, Aspeon's President and director, and a
corporation controlled by Mr. Cutler, in full settlement of Aspeon's debts to
them. As a loan repayment, this share issuance is not included in the table.
In November 2009, Mr. Cutler resigned as an officer and director of the Company.
EMPLOYMENT AND CONSULTING AGREEMENTS
There were no employment contracts or consulting agreements with our directors
or officers during the fiscal year ended June 30, 2011.
-33-
DIRECTOR COMPENSATON
The following table sets forth certain information concerning compensation paid
to the Company's directors during the year ended June 30, 2011:
Fees Nonqualified
earned or Non-equity deferred
paid in Stock Option incentive plan compensation All other
Name cash awards awards compensation earnings compensation Total
($) ($) ($) ($) ($) ($) ($)
----------------------- ----------- ---------- ----------- ---------------- ---------------- --------------- -------------
Yuen Ling Look $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
Siu Fong Kelly Yeung $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
Siu Lun Tong $ -0- $ -0- $ -0- $ -0- $ -0- $ -0- $ -0-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED SHAREHOLDER MATTERS
--------------------------------------------------------------------------------
The following tables set forth certain information regarding beneficial
ownership of our common stock, as of June 30, 2011, by:
o each person who is known by ASPI to own beneficially more than 5% of
ASPI's outstanding common stock,
o each of ASPI's named executive officers and directors, and
o all executive officers and directors as a group.
Shares of common stock not outstanding but deemed beneficially owned by virtue
of the right of an individual to acquire the shares of common stock within 60
days are treated as outstanding only when determining the amount and percentage
of common stock owned by such individual. Except as noted below the table, each
person has sole voting and investment power with respect to the shares of common
stock shown.
-34-
NUMBER OF PERCENT OF
NAME AND ADDRESS OF BENEFICIAL OWNER SHARES OUTSTANDING(4)
---------------------------------------------------------- -------------- -----------------
Yuen Ling Look (2)
President and Director 13,108,000 17.74%
Top Growth Holdings Group, Inc. (2) 13,108,000 17.74%
Siu Fong Kelly Yeung
Director 0 0%
Siu Lun Tong
Director 0 0%
Yeung Cheuk Hung (3) 60,000,000 81.21%
All executive officers and directors as a group, 3 people. 13,108,000 17.74%
---------------------
(1) The above officers and directors' address is c/o ASPI, Inc. 7609
Ralston Road, Arvada, Colorado, 80002.
(2) Ms. Look is the beneficial owner of Top Growth Holdings Group, Inc.,
which holds 13,108,000 shares of the Company's common stock.
(3) Mr. Hung is a manager of Prestige, the Company's wholly-owned
subsidiary.
(4) Based on 73,879,655 shares of the Company's common stock issued and
outstanding at June 30, 2011.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDERPENDENCE
--------------------------------------------------------------------------------
During the years ended June 30, 2011 and 2010, Mr. Yeung Cheuk Hung, the manager
of Prestige and the majority shareholder of the Company, has advanced funds of
$179,884 and $163,745, respectively, to support the operations of Prestige. At
June 30, 2011, the Company owes him $343,629. Such funds are due on demand.
During the year ended June 30, 2011 and 2010, Ms. Look, an officer and director
of the Company and the manager of Mega, advanced funds of $7,710 and $321,
respectively to Mega to support operations. At June 30, 2011, Ms. Look is owed
$8,031. Such funds are due on demand.
During the year ended June 30, 2011 and 2010, Top Growth Holdings Group, Inc, an
affiliate and entity of which Ms. Look, an officer and director of the Company,
advanced $750 and $2,996, respectively to the Company. At June 30, 2011, Top
Growth Holdings Group, Inc. is owed $3,746. Such funds are due on demand.
During the year ended June 30, 2010, Top Growth Holdings Group, Inc., an entity
of which Ms. Look, an officer and director of the Company is the beneficial
owner of, purchased 10,000,000 shares of the Company's common stock for $100,000
($0.10 per share).
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
-------------------------------------------------
GENERAL. De Joya Griffith & Company, LLC ("De Joya") is the Company's principal
auditing accountant firm. The Company's Board of Directors has considered
whether the provisions of audit services are compatible with maintaining De
Joya's independence. The engagement of our independent registered public
accounting firm was approved by our board of directors functioning as our audit
committee prior to the start of the audit of our consolidated financial
statements for the year ended June 30, 2011.
Prior to October 26, 2010, Larry O'Donnell, CPA P.C. served as our principal
auditing accountant firm.
The following table represents aggregate fees billed to the Company for the
years ended June 30, 2011 and 2010.
Year Ended June 30,
2011 2010
---------------------------- -----------------------
Audit Fees $ 6,175 $3,407
Audit-related Fees $0 $0
Tax Fees $0 $0
All Other Fees $0 $0
---------------------------- -----------------------
Total Fees $ --- $3,407
All audit work was performed by the auditors' full time employees.
During the year ended June 30, 2011, audit fees of $5,675 were paid to De Joya
and fees of $0 were paid to Larry O'Donnell, CPA, PC.
It is the role of the Audit Committee, or in the absence of an audit committee,
the Board of Directors, to consider whether, and determine that, the auditor's
provision of non-audit services would be compatible with maintaining the
auditor's independence.
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS
------------------------------------------
The following documents are filed as a part of this Report.
(i) EXHIBITS.
The following is a complete list of exhibits filed as part of this Form 10-K.
Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.
EXHIBIT
NUMBER DESCRIPTION AND METHOD OF FILING
---------------- --------------------------------------------------------------------------------------------------------
2.1 Agreement and Plan of Merger and Reorganization Into Holding Company**
2.2 Acquisition Agreement By and Among ASPI, Inc. and Prestige Prime Office, Ltd. and Its Shareholders ***
3(i).1 Articles of Incorporation of ASPI, Inc.**
3(i).2 Articles of Incorporation of A08 Holdings, Inc.**
3(ii).1 Bylaws of ASPI, Inc.**
3(ii).2 Bylaws of A08 Holdings, Inc.**
21.1 Subsidiaries of the Registrant*
31.1 Certification of Chief Executive and Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act*
32.1 Certification of Principal Executive and Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act*
-----------
* Filed herewith.
** Filed as an Exhibit to the Current Report on Form 8K filed with the SEC on July 7, 2009.
*** Filed as an Exhibit to the Current Report on Form 8K filed with the SEC on September 10, 2010.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ASPI, INC.
Date: October 12, 2011 By: /s/ Yuen Ling Look
-------------------------------------
Yuen Ling Look, President,
Chief Executive Officer and
Chief Financial Officer
(Principal Accounting Officer)
In accordance with the Securities Exchange Act of 1934, this report has been
signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Dated: October 12, 2011
ASPI, INC.
/s/ Yuen Ling Look
--------------------------------------
Yuen Ling Look, Director
/s/ Siu Fong Kelly Yeung
--------------------------------------
Siu Fong Kelly Yeung, Director
/s/ Siu Lun Tong
--------------------------------------
Siu Lun Tong, Director
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