# RTB Digital, Inc.: Form 10-Q for the period ended Sep 30, 2017

- Company: [RTB Digital, Inc.](/companies/rtb.md) (CIK 1419275)
- Form: 10-Q
- Filed: 2017-11-15
- Accepted by EDGAR: Nov 15, 2017, 17:16 ET
- Period: 2017-09-30
- Accession: 0001185185-17-002407
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1419275/000118518517002407/asapexpo10q093017.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1419275/000118518517002407/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2017-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2017-07-01 to 2017-09-30 | $306.2k | us-gaap:Revenues |
| Revenue | 9 months, 2017-01-01 to 2017-09-30 | $1.2m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2017-07-01 to 2017-09-30 | $42.4k | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2017-01-01 to 2017-09-30 | $436.1k | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2017-07-01 to 2017-09-30 | $263.8k | us-gaap:GrossProfit |
| Gross profit | 9 months, 2017-01-01 to 2017-09-30 | $743.1k | us-gaap:GrossProfit |
| Operating income | 3 months, 2017-07-01 to 2017-09-30 | $51.5k | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2017-01-01 to 2017-09-30 | $138.3k | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2017-07-01 to 2017-09-30 | $7.4k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2017-01-01 to 2017-09-30 | $26.7k | us-gaap:InterestExpense |
| Income tax | 3 months, 2017-07-01 to 2017-09-30 | $21.9k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2017-01-01 to 2017-09-30 | $60.9k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2017-07-01 to 2017-09-30 | $22.2k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2017-01-01 to 2017-09-30 | $55.9k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2017-07-01 to 2017-09-30 | $0.00 | us-gaap:EarningsPerShareBasicAndDiluted |
| Diluted EPS | 9 months, 2017-01-01 to 2017-09-30 | $0.00 | us-gaap:EarningsPerShareBasicAndDiluted |
| Operating cash flow | 9 months, 2017-01-01 to 2017-09-30 | $194.2k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2017-01-01 to 2017-09-30 | $7.2k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2017-09-30 | $37.6k | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2017-09-30 | $57.9k | us-gaap:AssetsCurrent |
| Total assets | at 2017-09-30 | $139.6k | us-gaap:Assets |
| Current liabilities | at 2017-09-30 | $245.7k | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2017-09-30 | $697.6k | us-gaap:Liabilities |
| Long-term debt | at 2017-09-30 | $17.3k | us-gaap:LongTermDebtNoncurrent |
| Current portion of debt | at 2017-09-30 | $4.0k | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2017-09-30 | −$557.9k | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 13,967 characters.

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the audited financial statements and the related notes thereto included elsewhere in this annual report for the period ended December 31, 2016. This annual report contains certain forward-looking statements and the Company's future operating results could differ materially from those discussed herein. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.

### OVERVIEW

ASAP Expo ("ASAP" or "The Company" or "Our" or "We") mission is to be the bridge between China and the Western world. ASAP is a holding company that assists Chinese institutional and high net worth individuals with acquisition advisory and asset management of U.S. hotels.

Our investors include AVIC International USA, Junson Capital, Urban Commons, Sky Harbor Management, Shenzhen New World, American Curvet, and USA Heritage.

From August 2010 until now, our group has provided consulting services regarding purchasing 20 hotels primarily in California, Florida, Colorado, Connecticut, Georgia and Michigan. Hotel brands include Marriott, Hilton, Westin, Doubletree by Hilton, Four Points by Sheraton, and Holiday Inn. We are one of the most active hotel buyers in the market.

ASAP believes we will continue this growth for the next couple of years, taking advantage of current below replacement cost assets with reasonable cap rates and value-add opportunities in the current U.S. hotel market.

### RESULTS OF OPERATIONS

### Revenues

Since the Company's primary business is based upon potential transactions in real estate, the Company is subject to variance in revenues due to investors sentiment towards real estate.

Substantially all of our revenues are in the form of consulting fees collected from our clients, usually negotiated on a transaction-by-transaction basis. The company's consulting fees primarily consist of revenue derived from transaction commission received from acquisition advisory. The company earns the consulting fees by sourcing the deal, underwriting financials, coordinating due diligence on all contracts, recommending lenders, hiring third party property management companies, and negotiating franchise agreements. Another revenue source for the company includes asset management fees, which consist of supervision of daily, weekly, and monthly operating results of the hotel, review of capital expenditure requests, communication with lenders, negotiating personal and real property tax assessments, and most importantly, oversight on brand relations.

The Company's clients include concentration of two to three main clients. Our concentration of clients does provide a risk for revenue growth. The Company has established strong relationships with our clients. Our business and client relationships, and our culture and philosophy are firmly centered on putting the clients' interests first. We have been building strong reputation in the hospitality industry which is bringing several new potential clients. We expect to have steady revenue stream from our 3 major clients while building new client base for future revenue growth. We believe that our product offerings, asset management services, client diversification, expertise in a property types and national platform have the potential to create a sustainable revenue stream within the U.S. commercial real estate sector.

During the three and nine months ended September 30, 2017, the Company earned consulting fee of $288,160 and $1,117,960 including $278,525 and $579,525 from affiliated companies, respectively, as compared to consulting fee of $198,500 and $1,168,022 for the same periods last year of which $198,500 and $719,572 were from affiliated companies. During the three and nine months ended September 30, 2017, the Company also earned management fee of $18,000 and $61,200, respectively from a new hotel client. The higher consulting fee in the third quarter of 2017 was mainly because the company received a larger amount consulting fee for certain consulting works in the third quarter of 2017. The decrease in consulting fee in the first nine months of 2017 was mainly because the Company closed one big hotel acquisition deal in the second quarter of 2016 and certain consulting fee decreased in 2017.

### Cost of Sales

In the course of providing real estate advisory services and asset management services, the Company pays consulting fees for finding properties and other services that facilitate the closing of deals.

Cost of sales consisting mainly consulting expense, is primarily the result of the commissions and other incentive compensation incurred directly related to acquisition advisory services. Therefore, the fluctuation in revenue will directly impact the cost of sales.

For the three and nine months ended September 30, 2017, the Company incurred consulting expense of $42,400 and $436,100, respectively, for providing advisory services in real estate acquisition as compared to $64,000 and $679,797 for the same periods last year. The lower consulting expenses in the third quarter and the first nine months of 2017 were mainly due to the closing of one big hotel acquisition deal in 2016 mentioned above and certain consulting expense was no longer needed as a hotel project finished in 2017.

### Operating Expenses

General and administrative ("G&A") expenses consist primarily of administrative personnel costs, facilities expenses, and professional fee expenses.

For the three months ended September 30, 2017, G&A expenses decreased by $39,691 or 15.8% to $212,255 compared to $251,946 for the same period last year. The decrease in the third quarter of 2017 was mainly due to lower marketing expense, partly offset by higher payroll expense as one highly paid manager back on payroll during the second quarter of 2017, higher professional fee, higher staff travel expense and a new auto lease,

For the nine months ended September 30, 2017, G&A expenses were largely flat at $604,797 as compared to $610,909 for the same period last year.

### Interest Expense

Interest expense increased to $7,407 during the three months ended September 30, 2017 from $5,870 for the same period last year and increased to $26,737 during the nine months ended September 30, 2017 from $16,049 for the same period last year. The changes in interest expense were mainly due to the changes in average note payable balances.

### Net Income

The Company recorded a net income of $22,155 for the three months ended September 30, 2017 as compared to a net loss of $123,867 for the same period last year. The increase in net income was mainly due to the higher gross profit, lower consulting expense and lower G&A expense, offset by higher income taxes provision.

The Company recorded a net income of $55,913 for the nine months ended September 30, 2017 as compared to a net loss of $123,622 for the same period last year. The increase in net income was mainly due to the higher gross profit, lower consulting expense and lower G&A expense, offset by higher interest expense and higher income taxes provision.

### LIQUIDITY AND CAPITAL RESOURCES

During the next twelve months, ASAP Expo will focus on its real estate transactions to generate additional revenue. With the net revenue from its services, and continuing support from its major shareholders to provide a note payable, management believes ASAP Expo will have enough net working capital to sustain its business for another 12 months.

The forecast of the period of time through which ASAP Expo's financial resources will be adequate to support its operations is a forward-looking statement that involves risks and uncertainties. ASAP Expo's actual funding requirements may differ materially as a result of a number of factors, including unknown expenses associated with the cost of providing real estate advisory, investment banking, and management consulting services.

The Report of the Company's Independent Registered Public Accounting Firm on our December 31, 2016 financial statements includes an explanatory paragraph stating that the Company has suffered recurring losses from operations and has an accumulated stockholders' deficit, which raises substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

#### Liquidity and Capital Resources

Our working capital for the periods presented is summarized as follows:

|  | As of September 30, 2017 ($) | As of December 31, 2016 ($) |
| --- | ---: | ---: |
| Current assets | $57,857 | $62,369 |
| Current liabilities | 245,726 | 111,196 |
| Working capital | $(187,869) | $(48,827) |

The following table shows cash flows for the periods presented:

|  | Nine Months Ended September 30, 2017 | 2016 |
| --- | ---: | ---: |
| Net cash provided by (used in) operating activities | $194,177 | $(199,319) |
| Net cash provided by (used in) investing activities | 2,093 | 36,515 |
| Net cash provided by (used in) financing activities | (191,449) | 151,128 |
| Net increase (decrease) in cash | $4,821 | $(11,676) |

### Operating Activities

For the nine months ended September 30, 2017, net cash provided by operating activities was $194,177. This was primarily due to a net income of $55,913, adjusted by non-cash related expenses of depreciation of $8,085 and non-cash capital gain of $5,277, then increased by favorable changes in working capital of $135,457. The favorable changes in working capital resulted from an increase in accounts payable and accrued expenses of $75,366 and income tax payable of $60,090.

For the nine months ended September 30, 2016, net cash used in operating activities was $199,319. This was primarily due to a net loss of $123,622, adjusted by non-cash related expenses of depreciation of $7,734, then decreased by unfavorable changes in working capital of $83,431. The unfavorable changes in working capital resulted from a decrease in accounts payable and accrued expenses of $28,176 and decrease in income tax payable of $55,255.

### Investing Activities

For the nine months ended September 30, 2017, net cash provided by investing activities was $2,093. This was primarily due to payment from affiliated company of 9,333, offset by acquisitions of property and equipment of $7,240.

For the nine months ended September 30, 2016, net cash provided by investing activities was $36.515. This was primarily due to payment from affiliated company of 40,170, offset by acquisition of computer of $3,655.

### Financing activities

For the nine months ended September 30, 2017, net cash used in financing activities was $191,449 which was mainly due to net repayment to note payable from officers of $188,683 and payments on auto loan of $2,766.

For the nine months ended September 30, 2016, net cash provided by financing activities was $151,128 which was mainly resulted from net proceeds from note payable from officers of $120,000 and an advance from affiliated company of $40,487, offset by payments on auto loan of $4,088 and payments on equipment loan of $5,271.

### CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported in the our financial statements and the accompanying notes. The amounts of assets and liabilities reported on our balance sheet and the amounts of revenues and expenses reported for each of our fiscal periods are affected by estimates and assumptions, which are used for, but not limited to, the accounting for revenue recognition, stock based compensation and the valuation of deferred taxes. Actual results could differ from these estimates. The following critical accounting policies are significantly affected by judgments, assumptions and estimates used in the preparation of the financial statements:

### Revenue Recognition

Accounting Standards Codification ("ASC") 605, "Revenue Recognition" outlines the basic criteria that must be met to recognize revenue and provide guidance for presentation of revenue and for disclosure related to revenue recognition policies in financial statements filed with Securities and Exchange Commission. Management believes the Company's revenue recognition policies conform to ASC 605.

Revenues are mainly consulting fees. The Consulting fees are recognized when earned. Consulting fees subject to refund are recorded as deferred revenue until the project is completed and the fees are no longer refundable.

### Income Taxes

The Company accounts for income taxes under ASC 740, "Income Taxes." Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Management provides a valuation allowance for significant deferred tax assets when it is more likely than not that such asset will not be recovered.

## Market risk

As filed, 3,621 characters.

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and (ii) is accumulated and communicated to our management, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls and procedures include components of our internal control over financial reporting and, as such, are designed to provide reasonable assurance that such information is accumulated and communicated to our management. Management's assessment of the effectiveness of our internal control over financial reporting is expressed at the level of reasonable assurance that the control system, no matter how well designed and operated, can provide only reasonable, but not absolute, assurance that the control system's objectives will be met (see the section below in this Item 3 entitled *Limitations on the Effectiveness of Internal Controls).*

### Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended) that occurred during the period covered by this Report, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

### Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

Filed Nov 15, 2017.
Source: SEC EDGAR, the filing index for accession 0001185185-17-002407. Last ingested by Listed: Nov 4, 2026, 18:58 ET. No prices; not investment advice.