Item 1. Description of Business
Forward-looking Statements
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "will", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable laws, including the securities laws of the United States, we do not intend to update any of the forward-looking statements so as to conform these statements to actual results.
As used in this annual report, the terms "we", "us", "our", “the Company”, and "Asia Interactive" mean Asia Interactive Media Inc., unless otherwise indicated.
All dollar amounts refer to US dollars unless otherwise indicated. China's national currency is the “¥” or “RMB”.
Our Business
We were incorporated on February 9, 2000 in the State of Nevada, to engage in any lawful corporate undertaking, including, but not limited to, selected mergers and acquisitions. We filed a Certificate of Amendment with the Secretary of State of the State of Nevada on February 23, 2007 and changed our name to China Interactive Media, Inc. On March 22, 2007, we filed a Certificate of Amendment with the Secretary of State and changed our name to Asia Interactive Media Inc. We currently maintain a mailing address at Level 30, Bank of China Tower, 1 Garden Road, Central, Hong Kong, and our telephone number is 011-852-9836-2643. We do not have any subsidiaries.
We are in the developmental stage since inception and have very little operations to date. We are a “shell company” defined in Rule 405 under the Securities Act of 1933 and Rule 12b-2 under the Securities Exchange Act of 1934.
We are currently negotiating to enter into a joint venture agreement with Live Interactive Technology Limited to co-develop and co-market an employment search website, www.fiva.cn. Live Interactive is a Chinese company which has a special focus on providing website development services for internet job search engines. In addition to engaging in negotiations with Live Interactive, we have lend them money and provided them with some business development consulting services at no cost. We are also reviewing other businesses for potential acquisition.
On February 9, 2007, CIBT Education Group Inc., a related party, loaned to us, $150,000 in exchange for an 8% convertible promissory note due February 9, 2009 in connection with its divestiture plan. CIBT Education Group is a public company listed on the TSX Venture Exchange. Toby Chu and Tim Leong are officers and directors of CIBT Education Group. Both Mr. Chu and Mr. Leong have served on our Board of Directors since January 15, 2007. Additionally, from January 15, 2007 to July 23, 2007, Mr. Chu served as our President and Chief Executive Officer and Mr. Leong served as our Chief Financial Officer and Secretary. We had intended to acquire Irix Design Group Inc., an internet based marketing company and wholly-owned subsidiary of CIBT Education Group. Our negotiations with CIBT Education Group were stalled, however, because we were unable to reach an agreement with CIBT Education Group regarding the valuation of Irix Design Group. Though we may resume our negotiations with CIBT Education Group regarding the acquisition, we do not currently foresee being able to successfully negotiate our purchase of Irix Design Group.
Material Agreements
As of November 16, 2007, we entered into a new bridge loan agreement with Live Interactive Technology Ltd. to replace our three bridge loan agreements with Live Interactive respectively dated on February 16, 2007, July 10, 2007 and September 1, 2007. Pursuant to the new bridge loan agreement, we agreed lend Live Interactive a maximum of approximately $195,000 (¥1,500,000). We may lend the money to Live Interactive in one or more sub-loans. The date and amount of each sub-loan will be agreed by both parties. The sum of all outstanding sub-loans made by us to Live Interactive will constitute the “principal sum”. The principal sum will be due on the earlier of (i) ten days after the closing of the acquisition of Live Interactive by us; or (ii) three months from the date which a sub-loan is actually wired to the bank account designated by Live Interactive. Live Interactive will pay no interest on the principal sum as long as the principal sum is paid in full on or before the due date. In the event that Live Interactive does not pay us the full principal sum by the due date, then Live Interactive shall begin to pay interest from the due date until the principal sum is paid in full at a rate of 15% per annum. As at December 31, 2007, Live Interactive owned us an aggregate of $152,966, including accrued interest, under this agreement.
On February 9, 2007 we entered into an 8% convertible promissory note with CIBT Education Group Inc., a related party, whereby CIBT Education Group loaned us $150,000 due on February 9, 2009. In accordance with the convertible promissory note, before February 9, 2009 CIBT Education Group has the right to convert all, or a portion of, the loan principal amount of the convertible promissory note into our common shares at a conversion price of $0.01 per share. If CIBT Education Group converts all of their shares, they will receive 15,000,000 of our common shares which will equal 69% of our issued and outstanding common shares as at March 26, 2008. As at December 31, 2007, we owed CIBT Education Group an aggregate of $160,258 including accrued interest.
Development
On January 15, 2007 Toby Chu, Tim Leong and Allen Chu were appointed as directors. On January 26, 2007, Amy Ng resigned as our President and director and we appointed Toby Chu as President and Chief Executive Officer and Tim Leong as our Secretary and Chief Financial Officer.
On February 9, 2007 we entered into an 8% convertible promissory note with CIBT Education Group Inc., a related party, whereby CIBT Education Group loaned us $150,000 due on February 9, 2009.
On March 22, 2007 we changed our name from “China Interactive Media Inc.” to Asia Interactive Media Inc.”
On July 23, 2007 Toby Chu resigned as our President and Chief Executive Officer and Tim Leong resigned as our Chief Financial Officer and Secretary. On the same day we appointed Ken Ng as our President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer, and we appointed Wayne Lio as our Chief Operating Officer. We agreed to pay a monthly salary of approximately $2,200 to Mr. Lio. There is no monthly salary for Ken Ng. Toby Chu, Tim Leong and Allen Chu continue as our directors.
On January 8, 2008 we completed several private placements and raised an aggregate of $649,299. We issued 599,808 common shares at $0.22 per share for cash proceeds of $131,958. We issued 54,250 common shares at $0.50 per share for cash proceeds of $27,125. Also, we issued 980,433 units at $0.50 per unit for cash proceeds of $490,216. Each unit consists of one common share and one share purchase warrant entitling the holder to purchase one additional common share at a price of $1.00 per share until January 8, 2009.
Intellectual Property
We have not filed for any protection of our trademark for Asia Interactive. We do not own any intellectual property as of March 26, 2008.
Research and Development
We have not spent any amounts on research and development activities since our inception.
Employees
As of March 26, 2008, we have no part time or full time employees. Our Chief Operating Officer works full time as an independent contractor. We do not have a written agreement with him. Our other directors and officers work part time as independent contractors and work in the areas of business development and management. They currently contribute approximately 5 hours a week to our business. We currently engage independent contractors in the areas of accounting, auditing and legal services.
Legislation and Government Regulation
Securities Exchange Act of 1934, as amended, (the "1934 Act"). Sections 13 and 15(d) of the 1934 Act requires companies subject thereto to provide certain information about significant acquisitions, including certified financial statements for the company acquired, covering one, two, or three years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare such statements may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by us. Acquisition prospects that do not have or are unable to obtain the required audited statements may not be appropriate for acquisition so long as the reporting requirements of the 1934 Act are applicable.
SEC Shell Company Rules. On June 29, 2005, the SEC adopted final rules amending the Form S-8 and the Form 8-K for shell companies. These rules were published in the Federal Register on July 21, 2005 and were made effective as of August 22, 2005, except for an amendment to Item 5.06 of the Form 8-K that became effective on November 5, 2005. The amendments expand the definition of a shell company to be a company with no or nominal operations, assets consisting of cash and cash equivalents, or assets consisting of any amount of cash and cash equivalents and nominal other assets. Shell companies, as a result of these rule changes:
1. are now prohibited from using Form S-8 (the abbreviated registration statement used to register securities issued under employee benefit plans) until 60 days after it ceases to be a shell company;
2. must include current Form 10 information, including audited financial statements in the Form 8-K that the shell company files to report an event that causes it to cease being a shell company;
3. must file financial statements within four days about the transaction; and
4. where an operating company acquires a shell company and the operating company survives the transaction; the operating company will have acquired control of the shell for purposes of the definition of "succession" under the final rules and the operating company, as the surviving entity, will be required to file a Form 8-K under Item 5.01.
Prior to the new rules, financial statements of the acquired private company were not required to be filed on Form 8-K until 75 days after completion of the merger or acquisition. Also, detailed information about the business and management of the acquired private company was not required until the reporting company filed its next annual report on Form 10-K. As a result, securities of the new entity could be traded for up to 75 days with investors having little or no access to vital information about the acquired private company. These rule changes will add additional cost onto completing a merger or acquisition transaction and may make us less attractive as a means of going public.
Sarbanes-Oxley Act of 2002. On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (the “SOA”). The SOA imposes a wide variety of new requirements on both U.S. and non-U.S. companies, that file or are required to file periodic reports with the SEC under the Securities Exchange Act of 1934. Many of these new requirements will affect us and our board of directors. For instance, under the SOA we are required to:
form an audit committee in compliance with the SOA;
our chief executive office and chief financial officer are required to certify our financial statements;
ensure our directors and senior officers are required to forfeit all bonuses or other incentive-based compensation and profits received from the sale of our securities in the twelve month period following initial publication of any of our financial statements that later require restatement;
disclose any off-balance sheet transactions as required by the SOA;
prohibit all personal loans to directors and officers;
ensure directors, officers and 10% holders file their Forms 4's within two days of a transaction;
adopt a code of ethics and file a Form 8-K whenever there is a change or waiver of this code; and
ensure our auditor is independent as defined by the SOA.
The SOA has required us to review our current procedures and policies to determine whether they comply with the SOA and the new regulations promulgated thereunder. We will continue to monitor our compliance with all future regulations that are adopted under the SOA and will take whatever actions are necessary to ensure that we are in compliance.
Investment Company Act of 1940. Although we are subject to regulation under the Securities Act of 1933 and the Securities Exchange Act of 1934, we believe Asia Interactive will not be subject to regulation under the Investment Company Act of 1940 insofar as we are not engaged in the business of investing or trading in securities. In the event that we engage in a business combination which results in us holding passive investment interests in a number of entities, we could be subject to regulation under the Investment Company Act of 1940. In such an event, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the SEC as to the status of Asia Interactive under the Investment Company Act of 1940 and, consequently, any violation of such Act would subject us to material adverse consequences. Asia Interactive presently believes it is exempt from the Investment Company Act of 1940 via Regulation 3a-2 thereto.
Investment Advisor Act of 1940. We are not an "investment adviser" under the Federal Investment Adviser Act of 1940, which classification would involve a number of negative considerations. Accordingly, we do not and will not furnish or distribute advice, counsel, publications, writings, analysis or reports to anyone relating to the purchase or sale of any securities within the language, meaning and intent of Section 2(a)(11) of the Investment Adviser Act of 1940, 15 U.S.C.
Environmental Law. To the extent which environmental compliance may be necessary, we do not anticipate any significant compliance expense.
Item 1A.
Item 1A. Risk Factors
Not Applicable.
Item 1B.
Item 1B. Unresolved Staff Comments
None.
Item 2.
Item 2. Properties
We currently maintain a mailing address at Level 30, Bank of China Tower, 1 Garden Road, Central, Hong Kong, which is the address of Amy Ng, the sibling of Ken Ng, our President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer. To our knowledge, Ms. Ng also has dispositive and voting control with respect to securities held by Tokay Sequoia Management Company Ltd., our significant shareholder. We do not pay for the use of this mailing address. We do not believe that we will need to maintain an office at any time in the foreseeable future in order to carry out our plan of operations.
Item 3.
Item 3. Legal Proceedings
As of March 26, 2008, there are no material pending legal proceedings (other than ordinary routine litigation incidental to our business) to which we are a party or of which any of our properties is the subject. Also, our management is not aware of any legal proceedings contemplated by any governmental authority against us.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5.
Item 5. Market for Common Equity and Related Stockholder Matters
Market Information
Our common stock is not traded on any exchange. We intend to apply for quotation of our common stock on the OTC Bulletin Board. However, we cannot guarantee that we will obtain a listing. There is no trading activity in our securities and there can be no assurance that a regular trading market for our common stock will ever be developed.
A market maker sponsoring a company's securities is required to obtain a listing of the securities on any of the public trading markets, including the OTC Bulletin Board. If we are unable to obtain a market maker for our securities, we will be unable to develop a trading market for our common stock. We may be unable to locate a market maker that will agree to sponsor our securities. Even if we do locate a market maker, there is no assurance that our securities will be able to meet the requirements for a quotation or that the securities will be accepted for listing on the OTC Bulletin Board.
We intend to apply for listing of the securities on the OTC Bulletin Board, but there can be no assurance that we will be able to obtain this listing. The OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers in stocks. OTC Bulletin Board stocks are traditionally smaller companies that do not meet the financial and other listing requirements of a regional or national stock exchange.
Holders
As of March 26, 2008, there were 71 holders of record of our common stock.
Dividends
For the two most recent fiscal years we have not paid any dividends on our common shares and do not expect to declare or pay any dividends on our common shares in the foreseeable future. Payment of any dividends will depend upon future earnings, if any, our financial condition, and other factors as deemed relevant by our Board of Directors.
Equity Compensation Plans
As of March 25, 2008, we did not have any equity compensation plans.
Recent Sales of Unregistered Securities
We have not made any previously unreported from September 30, 2007 to December 31, 2007.
Item 6.
Item 6. Selected Financial Data
Not applicable.
Item 7.
Item 7. Management's Discussion and Analysis or Plan of Operation
The following discussion should be read in conjunction with our consolidated financial statements, including the notes thereto, appearing elsewhere in this Form 10-K. The discussions of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.
Results of Operations
Revenue
Since February 9, 2000 (date of inception) to December 31, 2007, we have not generated any revenues. We had total assets of $736,478, total liabilities of $200,984, and an accumulated deficit of $150,934 as of December 31, 2007.
We anticipate that we will not earn any revenues during the current fiscal year or in the foreseeable future, as we do not have any operations and are presently engaged in seeking acquisitions, mergers, joint ventures or other strategic transactions. We anticipate that we will incur substantial losses over the next two years.
Net Loss
Since February 9, 2000 (date of inception) to December 31, 2007, we have incurred net losses of $150,934. Our net loss increased $57,372 from $39,217 for the fiscal year ended December 31, 2006 to $96,589 for the same period in 2007. The increase in net loss was a result of increased day to day operating activities.
Our net loss per share was $0.02 for the fiscal year ended December 31, 2007 compared to $0.01 for the same period in 2006.
Expenses
From February 9, 2000 (date of inception) to December 31, 2007, we accumulated total operating expenses of $150,934. Our total operating expenses increased $57,372 or 146% to $96,589 for the fiscal year ended December 31, 2007 from $39,217 for the same period in 2006. Our operating expenses consists entirely of general and administrative expenses which include cost of travel, meals and entertainment, office maintenance, communication expenses (cellular, internet, fax, and telephone), office supplies, courier and postage costs, salaries and professional fees.
The increase in our total expenses was mainly due to increased professional fees and management fees. The increase in professional fees was due to additional legal and auditing services provided and an increased cost in accounting services. The increase in our management fees was due to the engagement of our Chief Operating Officer.
Plan of Operations
We are currently negotiating to enter into a joint venture agreement with Live Interactive to co-develop and co-market an employment search website, www.fiva.cn. In addition to engaging in negotiations with Live Interactive, we have loaned it funds to sustain its operations and provided it with business development consulting services at no cost. We had intended to acquire Irix Design Group Inc., an internet based marketing company and wholly-owned subsidiary of CIBT Education Group Inc., a related party. Our negotiations with CIBT Education Group were stalled, however, because we were unable to reach an agreement with CIBT Education Group regarding the valuation of Irix Design Group. Though we may resume our negotiations with CIBT Education Group in the next 12 months regarding the acquisition, we do not currently foresee being able to successfully negotiate our purchase of Irix Design Group.
We entered into a new bridge loan agreement with Live Interactive on November 16, 2007 to replace our previous three bridge loan agreements with Live Interactive respectively dated on February 16, 2007, July 10, 2007 and September 1, 2007. Pursuant to the new bridge loan agreement, we have agreed to lend to Live Interactive a maximum of approximately $195,000 (¥1,500,000). We may lend the money to Live Interactive in one or more sub-loans. As at December 31, 2007, Live Interactive owned us an aggregate of $152,966, including accrued interest, under this agreement.
On February 9, 2007 we entered into an 8% convertible note with CIBT Education Group Inc., a related party, whereby CIBT Education Group loaned us $150,000. In accordance with the convertible note, before February 9, 2009 CIBT Education Group has the right to convert all, or a portion of, the loan principal amount of the adaptable note into our common shares at a conversion price of $0.01 per share. If CIBT Education Group converts the entire convertible note, they will receive 15,000,000 of our common shares, which will equal approximately 69% of our current issued and outstanding common shares as of March 26, 2008. As at December 31, 2007, a total of $160,258, including accrued interest, was due to CIBT Education Group.
If we are successful in entering into a joint venture agreement with Live Interactive, we will incur additional costs for personnel and expansion of business. In order for us to attract and retain quality personnel, our management anticipates it will need to offer competitive salaries, issue common stock to consultants and employees, and grant stock options to future employees.
We estimate that our expenses over the next 12 months (beginning March 2008) will be approximately $1,250,000 as listed in the table below. These estimates will change significantly if we cease our current operations or if we acquire other businesses.
We plan to raise capital through private placements, loans or possibly a direct offering to carry out our business plan. However, there is no assurance that we can receive enough capital to meet our cash requirements.
We are reviewing other businesses for potential acquisitions on an ongoing basis. We anticipate that our business will incur significant losses in the next two years. We believe that our success depends on the completion of our proposed acquisitions, joint ventures or other strategic transactions, and our ability to develop our acquired businesses.
Liquidity and Capital Resources
As of December 31, 2007, we had total current assets of $583,512, total current liabilities of $40,726, and a working capital surplus of $542,786. As of December 31, 2007 we had cash of $583,512 in our bank accounts. Our book tangible assets were $535,494 or $0.08 per share as of December 31, 2007. Our net loss of $150,934 from February 9, 2000 (date of inception) to December 31, 2007 was mostly funded by our equity financing.
During the fiscal year ended December 31, 2007, we raised $648,300 from the sale of our common stock compared to $nil for the same period in 2006. During the fiscal year ended December 31, 2007, we received a loan of $150,000 under the 8% convertible note from CIBT Education Group Inc., a related party. The increase in cash during the fiscal year ended December 31, 2007 was $583,512, mainly due to the sale of our common stock for cash.
On January 8, 2008 we issued 599,808 common shares at $0.22 per share for cash proceeds of $131,958. We issued 54,250 common shares at $0.50 per share for cash proceeds of $27,125. Also, we issued 980,433 units at $0.50 per unit for cash proceeds of $490,216. Each unit consists of one common share and one share purchase warrant entitling the holder to purchase one additional common share at a price of $1.00 per share until January 8, 2009.
We used net cash of $225,046 in operations activities for the fiscal year ended December 31, 2007 compared to $nil during the same period in 2006. For the fiscal year ended December 31, 2007, we received net cash of $808,558 from financing activities compared to $nil received in net cash from financing activities for the same period in 2006. We currently do not have any investing activities. During the fiscal year ended December 31, 2007, our monthly cash requirement was approximately $19,000.
Our current ratio was 14 as at December 31, 2007. While we are currently in good short-term financial standing, we anticipate that we will not generate any revenues in the near future and we do not anticipate enough positive internal operating cash flow until we can generate substantial revenues, which may take the next few years to fully realize. There is no assurance we will achieve profitable operations.
We anticipate that our expenses over the next 12 months (beginning March 2008) will be approximately $1,250,000. As of December 31, 2007, we had cash of $583,512 on hand. The balance of our cash requirements for the next 12 months was approximately $667,000. We intend to meet the balance of our cash requirements for the next 12 months through external sources: a combination of debt financing and equity financing through private placements. We currently do not have any arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. We may not raise sufficient fund to fully carry out our business plan.
We intend to raise an additional financing of approximately $180,000 through private placements or possibly through a registered direct offering in order to acquire other businesses. There is no assurance that any financing will be available or if available, on terms that will be acceptable to us.
Going Concern
We are a development stage company and have generated no revenues. We have not had any operating activities since our inception. We cannot guarantee we will be successful in our future business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources.
Our operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. We are seeking equity financing to provide for the capital required to fully carry out our business plan. A critical component of our operating plan impacting our continued existence is our ability to obtain additional capital through additional equity and/or debt financing.
Obtaining additional financing will be subject to a number of factors including market conditions, investor acceptance of our business plan and investor sentiment. These factors may make the timing, amount, terms and conditions of additional financing unattractive or unavailable to us. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our operations. If we are unable to raise additional financing, we will have to significantly reduce our spending, delay or cancel planned activities or substantially change our current corporate structure. In such an event, we intend to implement expense reduction plans in a timely manner. However, these actions would have material adverse effects on our business, revenues, operating results, and prospects, resulting in a possible failure of our business. If we raise funds through equity or convertible securities, our existing stockholders may experience dilution and our stock price may decline.
We have never generated any revenues and incurred significant operating losses from operations. We anticipate we will continue to experience net negative cash flows from operations and will be required to obtain additional financing to fund operations through equity securities’ offerings and debt financing to the extent necessary to provide working capital. Our continuation as a going concern is dependent upon our ability to generate sufficient cash flow from stockholders or other outside sources to sustain operations and meet our obligations on a timely basis and ultimately to attain profitability. We have limited capital with which to pursue our business plan. There can be no assurance that our future operations will be significant and profitable, or that we will have sufficient resources to meet our objectives.
These factors raise substantial doubt about our ability to continue as a going concern. Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months. The financial statements do not include any adjustments that might result from the uncertainty about our ability to continue our business. If we are unable to obtain additional financing from outside sources and eventually produce enough revenues, we may be forced to sell our assets, curtail or cease our operations.
Off-Balance Sheet Arrangements
As of December 31, 2007, we had no off balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the US. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities., We evaluate these estimates on an on-going basis, including those related to customer programs and incentives, bad debts, inventories, investments, intangible assets, income taxes, warranty obligations, impairment or disposal of long-lived assets, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We consider the following accounting policies to be both those important to the portrayal of our financial condition and that require the subjective judgment:
Foreign Currency Translation
Our functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 “Foreign Currency Translation”, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. We have not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
Financial Instruments
The fair value of financial instruments, which include cash, accounts payable, accrued liabilities and due to related party, were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. Foreign currency transactions are primarily undertaken in Canadian dollars. The financial risk is the risk to our operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, we do not use derivative instruments to reduce our exposure to foreign currency risk.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data
All financial statements meeting the requirements of Article 8 of Regulation S-X and the supplementary financial information required by Item 302 of Regulation S-K, together with the Report of Certified Public Accountant thereon, are included in Item 15 of this Report commencing on page.
Item 9.
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
Since inception, we have had no changes in or disagreements with our accountants. Our audited financial statements for the fiscal years ended December 31, 2007 and 2006 have been included in this annual report in reliance upon Thomas J. Harris, Certified Public Accountant, as an expert in accounting and auditing.
Item 9A.
Item 9A. Controls and Procedures
Not Applicable.
Item 9A(T). Controls and Procedures
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Because of our inherent limitations, our internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of our internal control over financial reporting as of December 31, 2007. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework.
Management conducted a walk through of the procedures and controls documented in this memo or relied on personal knowledge where no walk through was possible in order to test the effectiveness of the Company’s ICFR.
Management believes that the Company’s ICFR are currently ineffective at preventing or detecting a material misstatement in the financial statements because the following material weaknesses exist:
1. The accounts payable and expenses may be overstated because there is lack of segregation of duties and therefore the Company is susceptible to fraud.
2. Cash management may be a problem because the person in charge of writing cheques also reconciles the bank account. The cash in our bank account is a relatively small but material amount and is susceptible to misappropriation.
3. There are no preventative and detective IT systems in place to prevent and/or detect fraud other than password protection. There no software based accounting controls in place to prevent double entries, monitor performance, etc.
4. There is a lack of entity wide controls establishing a “tone at the top”, including no audit committee, no policy on fraud and no code of ethics. A whistleblower policy is not necessary given the small size of the organization.
The recommendations to remediate these deficiencies are as follows:
1. Hire an external accountant to record transactions and prepare the financial statements. The information should be sent to the accountant by someone who is not in control of the bank account.
2. Obtain quotes for prevention and detection software in order to protect against fraud.
3. Consider purchasing basic accounting software to record accounting transactions and print cheques. However, a basic accounting program may not be GAAP compliant and may not provide an adequate audit trail. The Company needs to evaluate all options.
4. Adopt a corporate records and document retention policy to ensure that all significant records are kept for the appropriate amount of time as required by law.
5. Appoint a minimum of two independent directors to the board of directors and then implement an audit committee to review all financial statements and SEC filings and oversee the development of corporate policies.
This 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 Securities and Exchange Commission that permit the company to provide only management's report in this annual report.
We did not change our internal control over financial reporting during our last fiscal quarter of 2007 in connection with the results of Management’s report, nor have we made any changes to our internal control over financial reporting as of March 31, 2008.
Item 9B.
Item 9B. Other Information
None.
PART III
Item 10.
Item 10. Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.
All directors of our company hold office until the next annual meeting of the shareholders or until their successors have been elected and qualified. The officers of our company are appointed by our Board of Directors and hold office until their death, resignation or removal from office.
The following table sets forth the name, age, and position of our executive officers and directors as of December 31, 2007.
(1) CIBT Education Group Inc. is a related party and a public company under the symbol “CPT” on the TSX Venture Exchange and “CBTGF” on the OTC Bulletin Board.
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee, indicating the principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Ken Ng, President, CEO, CFO, Secretary, and Treasurer
Ken Ng has been our President, CEO, CFO, Secretary and Treasurer since July 23, 2007. He manages our international business relations, business development, as well as legal and financial matters. From 2002 to present, Mr. Ng has been the Vice President of Pacifico Management Consultants, a company in the business of E-Commerce and software development.
Since 1991, Mr. Ng has owned and operated a number of business ventures throughout his career, ranging from start-up companies to well-established corporations, including ANO Office Automation, a computer technology company with over 60 employees. Mr. Ng has invested in several China based companies from 1997 to 2004. His wealth of knowledge and experience in dealing with China was instrumental in helping EssentialPay, an electronic payment services company, establish partnerships in China. Mr. Ng graduated from the British Columbia Institute of Technology in 1989 with a diploma of Electronic Engineering.
Toby Chu, Director
Toby Chu has been a director since January 15, 2007 and was our President and Chief Executive Officer from January 26, 2007 to July 23, 2007. Since 1994 to present Toby Chu has been the President, CEO and director of CIBT Education Group Inc., a related party and company primarily focusing on the education and training business in China. From March 1995 to November 1996 Toby Chu worked as a senior manager at Central Foods, Inc., a company in the business of food distribution. Mr. Chu has a diploma in business administration from Vancouver Community College in Vancouver, Canada.
Tim Leong, Director
Tim Leong has been our director since January 15, 2007 and was our Chief Financial Officer from January 26, 2007 to July 23, 2007. Since 1995 to present Tim Leong has been the Chief Financial Officer of CIBT Education Group Inc., a related party and company primarily focusing on the education and training business in China. Before 1995 Mr. Leong worked as Senior Manager at Dyke & Howard, Chartered Accountants and worked as an auditor at Price Waterhouse Chartered Accountants. Mr. Leong has a bachelor degree from Simon Fraser University in British Columbia, Canada, and he is a Charted Accountant in British Columbia.
Allen Chu, Director
We appointed Allen Chu to our Board of Directors on January 15, 2007. From May 1994 to November 2007 Allen Chu was a director of CIBT Education Group Inc., a related party. From March 2006 to present he has served as a network controller for Keywest Networks, a technological service company. From November 2000 to April 2001 he was self-employed as a technical support consultant for Seanix Technology, a company in the business of technology supplies and services. Allen Chu earned his Bachelor of Science degree in Computer Science from the University of British Columbia, and his Bachelor of Arts degree in Economics from the University of Alberta.
Wayne Lio, Chief Operating Officer
Wayne Lio serves full time as our Chief Operating Officer, while he is currently pursuing his MBA degree from the University of Wales (England). From 2005 to 2007, Mr. Lio served as a Principal Consultant and Analyst at Convoy Asset Management Ltd. of Hong Kong, a company in the business of financial planning and mutual funds. From 2000 to 2005, Mr. Lio was a Senior Officer at Hutchison Telecom in Macau providing technical services and support to clients. Mr. Lio started his career in 1995 after studying at the British Columbia Institute of Technology.
Director Nominees
We do not have a nominating committee. The Board of Directors, sitting as a Board, selects individuals to stand for election as members of the Board. Since the Board of Directors does not include a majority of independent directors, the decision of the Board as to director nominees is made by persons who have an interest in the outcome of the determination. The Board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Unless otherwise determined, not less than 90 days prior to the next annual Board of Directors' meeting at which the slate of Board nominees is adopted, the Board will accept written submissions of proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee’s qualifications to serve as a director; and a statement as to why the shareholder submitting the proposed nominee believes that the nomination would be in the best interests of shareholders. If the proposed nominee is not the same person as the shareholder submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a résumé supporting the nominee's qualifications to serve on the Board of Directors, as well as a list of references.
The Board identifies director nominees through a combination of referrals from different people, including management, existing Board members and security holders. Once a candidate has been identified, the Board reviews the individual's experience and background and may discuss the proposed nominee with the source of the recommendation. If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of management's slate of director nominees submitted to shareholders for election to the Board.
Among the factors that the Board considers when evaluating proposed nominees are their knowledge of, and experience in business matters, finance, capital markets and mergers and acquisitions. The Board may request additional information from the candidate prior to reaching a determination. The Board is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.
Audit Committee
The functions of the Audit Committee are currently carried out by our Board of Directors. Our Board of Directors has determined that we do not have an audit committee financial expert on our Board of Directors carrying out the duties of the Audit Committee. The Board of Directors has determined that the cost of hiring a financial expert to act as a director of us and to be a member of the Audit Committee or otherwise perform Audit Committee functions outweighs the benefits of having a financial expert on the Audit Committee.
Significant Employees
Other than the senior officers described above, we do not expect any other individuals to make a significant contribution to our business.
Family Relationships
Toby Chu and Allen Chu are brothers. Other than this relationship, there are no family relationships among our officers, directors or persons nominated for such positions.
No Legal Proceedings
None of our directors, executive officers, promoters or control persons have been involved in any of the following events during the past five years:
any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or
being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Section 16(a) Beneficial Ownership Compliance Reporting
Section 16(a) of the Securities Exchange Act of 1934 requires a company’s directors and officers, and persons who own more than ten-percent (10%) of the company’s common stock, to file with the Securities and Exchange Commission reports of ownership on Form 3 and reports of change in ownership on Forms 4 and 5. Such officers, directors and ten-percent stockholders are also required to furnish the company with copies of all Section 16(a) reports they file. Based solely on our review of the copies of such forms received by us and on written representations from certain reporting persons, we believe that all Section 16(a) reports applicable to our officers, directors and ten-percent stockholders with respect to the fiscal year ended December 31, 2007 were filed. However, some were filed late.
Code of Ethics
We have not yet adopted a code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions because we have not yet finalized the content of such a code.
Item 11.
Item 11. Executive Compensation
The following table sets forth, as of December 31, 2007, compensation awarded to our Chief Executive Officer (CEO), and to other persons serving as executive officers whose salary and bonus for such year exceeded $100,000 (collectively, the “Named Executive Officers”) for the last two completed fiscal years.
(1) Toby Chu served as President and Chief Executive Officer from January 15, 2007 to July 23, 2007. Mr. Chu is currently serves on our Board of Directors.
(2) Tim Leong served as our Chief Financial Officer and Secretary from January 15, 2007 to July 23, 2007. Mr. Leong currently serves on our Board of Directors.
(3) Represents fees of $6,000 per month earned by Wayne Lio’s for his services as Chief Operations Officer from August to December 31, 2007. Of the $30,000 earned, $11,250 has been paid and the balance of $11,220 is payable.
(4) Amy Ng was our director, President, CEO and CFO from February 24, 2006 to January 26, 2007.
We do not have any management or consulting agreements. We made no grants of stock options or stock appreciation rights since our inception to December 31, 2007.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof.
Compensation Committee
We currently do not have a compensation committee of the Board of Directors. The Board of Directors as a whole determines executive compensation.
Compensation of Directors
We reimburse our directors for expenses incurred in connection with attending board meetings but did not pay director's fees or other cash compensation for services rendered as a director in the year ended December 31, 2007.
We have no standard arrangement pursuant to which our directors are compensated for their services in their capacity as directors. The Board of Directors may award special remuneration to any director undertaking any special services on behalf of our company other than services ordinarily required of a director. No director received and/or accrued any compensation for his services as a director, including committee participation and/or special assignments.
Change of Control
As of March 26, 2008 we had no pension plans or compensatory plans or other arrangements which provide compensation on the event of termination of employment or change in control of us.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of March 26, 2008 by: (i) each of our directors; (ii) each of our named executive officers; and (iii) each person or group known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.
(1) The number and percentage of shares beneficially owned is determined under of the SEC and the information is not necessarily indicative of beneficial ownership any other purpose.
Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares which individual has the right to acquire within 60 days through the exercise of any stock or other right. The persons named in the table have sole voting and investment with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained the footnotes to this table.
(2) Based on 6,634,491 shares of our common stock issued and outstanding as of March 26, 2008.
(3) Based on 6,634,491 shares of common stock issued and outstanding as of March 26, 2008 plus the 15,000,000 commons shares issuable upon conversion of the convertible promissory note.
(4) Ken Ng is our President, CEO and CFO, Secretary and Treasurer.
(5) Toby Chu is our director.
(6) Tim Leong is our director.
(7) Allen Chu is our director.
(8) Wayne Lio is our Chief Operating Officer.
(9) To our knowledge, Amy Ng has a voting and dispositive control with respect to securities owned by Tokay Sequoia Management Company Ltd. Amy Ng and Ken Ng, our President, CEO, CFO, Secretary and Treasurer, are siblings.
(10) Our director, Toby Chu is President of CIBT Education Group Inc. Our director, Tim Leong is CEO and CFO of CIBT Education Group Inc.
Item 13.
Item 13. Certain Relationships, Related Transactions and Director Independence
At December 30, 2007, we are indebted to Tokay Sequoia Management Company Ltd., our significant shareholder, in the amount of $17,312, representing expenses paid on our behalf. This amount is non-interest bearing, unsecured and has no specific terms of repayment.
Other than as described above, we have not entered into any transactions with our officers, directors, persons nominated for these positions, beneficial owners of 5% or more of our common stock, or family members of these persons wherein the amount involved in the transaction or a series of similar transactions exceeded the lesser of $120,000 or 1% of the average of our total assets for the last three fiscal years.
Item 14.
Item 14. Principal Accountant Fees and Services.
Audit and Non-Audit Fees
The following table represents fees for the professional audit services and fees billed for other services rendered by our current auditor, Thomas J. Harris, for the audit of our annual financial statements for the year ended December 31, 2006 and 2007 and any other fees billed for other services rendered by Thomas J. Harris during these periods. All fees are paid by US dollars.
Since our inception, our Board of Directors, performing the duties of the Audit Committee, reviews all audit and non-audit related fees at least annually. The Board of Directors as the Audit Committee pre-approved all audit related services in the fiscal 2007.
PART IV
Item 15.
Item 15. Exhibits and Financial Statement Schedules
(a) (1) Financial Statements
See “Index to Financial Statements” set forth on page.
(a) (2) Financial Statement Schedules
None. The financial statement schedules are omitted because they are inapplicable or the requested information is shown in our financial statements or related notes thereto.
Exhibit Exhibit
NumberDescription
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
Asia Interactive Media Inc.
(Registrant)
/s/ Ken Ng
Date: March 31, 2008 Ken Ng
President, Chief Executive Officer,
Chief Financial Officer, Secretary, Treasurer
Pursuant to the requirements of the Exchange Act this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
ASIA INTERACTIVE MEDIA, INC
Vancouver, B.C., Canada
We have audited the balance sheets of ASIA INTERACTIVE MEDIA, INC. a development stage company, as at DECEMBER 31, 2007, the statements of earnings and deficit, stockholders’ deficiency and cash flows for the period from inception February 9, 2000 to DECEMBER 31, 2007. Theses financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards accepted in the United States of America. Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ASIA INTERACTIVE MEDIA, INC a development stage company, as of December 31, 2007 and the results of its operations and its cash flows for the period then ended in conformity with generally accepted accounting principles accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the company will continue as a going concern. As discussed in Note 2, the company’s significant operating losses, working capital deficiency and need for new capital raise 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.
Thomas J Harris, CPA March 12, 2008
(The Accompanying Notes are an Integral Part of the Financial Statements)
(The Accompanying Notes are an Integral Part of the Financial Statements)
(The Accompanying Notes are an Integral Part of the Financial Statements)
(The Accompanying Notes are an Integral Part of the Financial Statements)
Asia Interactive Media Inc. (previously Black Gardenia Corp.)
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in U.S. Dollars)
December 31, 2007
1. Nature of Business and Continuance of Operations
Black Gardenia Corp, herein “the Company”, was incorporated on February 9, 2000 pursuant to the Laws of the State of Nevada, USA. The Company has no business operations and is considered a development stage company, as defined by Statement of Financial Accounting Standard (“SFAS”) No. 7 “Accounting and Reporting by Development Stage Enterprises”. On March 22, 2007 the Company changed its name to “Asia Interactive Media Inc.”
The financial statements have been prepared using generally accepted accounting principles in the United States of America applicable for a going concern which assumes that the Company will realize its assets and discharge its liabilities in the ordinary course of business. The Company has never generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. At December 31, 2007, the Company had a working capital surplus of $736,478 and has accumulated losses of $150,934 since its inception. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. It is management’s plan to seek additional capital through equity and/or debt financings. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.
2. Summary of Significant Accounting Policies
a) Basis of Presentation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s fiscal year-end is December 31.
b) Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
c) Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share". SFAS No. 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive.
d) Comprehensive Loss
SFAS No. 130, “Reporting Comprehensive Income,” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2007 and 2006, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.
e) Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
f) Long-Lived Assets
In accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the carrying value of long-lived assets is reviewed on a regular basis for the existence of facts or circumstances that may suggest impairment. The Company recognizes impairment when the sum of the expected undiscounted future cash flows is less than the carrying amount of the asset. Impairment losses, if any, are measured as the excess of the carrying amount of the asset over its estimated fair value.
Asia Interactive Media Inc. (previously Black Gardenia Corp.)
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in U.S. Dollars)
December 31, 2007
2. Summary of Significant Accounting Policies (continued)
g) Financial Instruments
The fair value of financial instruments, which include cash, accounts payable, accrued liabilities and due to related party, were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. Foreign currency transactions are primarily undertaken in Canadian dollars. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.
h) Income Taxes
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109 “Accounting for Income Taxes” as of its inception. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
i) Foreign Currency Translation
The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with SFAS No. 52 “Foreign Currency Translation”, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
j) Recent Accounting Pronouncements
In September 2006, the FASB issued SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R)”. This statement requires employers to recognize the over funded or under funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. This statement also requires an employer to measure the funded status of a plan as of the date of its year-end statement of financial position, with limited exceptions. The provisions of SFAS No. 158 are effective for employers with publicly traded equity securities as of the end of the fiscal year ending after December 15, 2006. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an interpretation of FASB Statements No. 109”. FIN 48 clarifies the accounting for uncertainty in income taxes by prescribing a two-step method of first evaluating whether a tax position has met a more likely than not recognition threshold and second, measuring that tax position to determine the amount of benefit to be recognized in the financial statements. FIN 48 provides guidance on the presentation of such positions within a classified statement of financial position as well as on derecognition, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.
Asia Interactive Media Inc. (previously Black Gardenia Corp.)
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in U.S. Dollars)
December 31, 2007
2. Summary of Significant Accounting Policies (continued)
j) Recent Accounting Pronouncements
In March 2006, the FASB issued SFAS No. 156, "Accounting for Servicing of Financial Assets, an amendment of FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities". This statement requires all separately recognized servicing assets and servicing liabilities be initially measured at fair value, if practicable, and permits for subsequent measurement using either fair value measurement with changes in fair value reflected in earnings or the amortization and impairment requirements of Statement No. 140. The subsequent measurement of separately recognized servicing assets and servicing liabilities at fair value eliminates the necessity for entities that manage the risks inherent in servicing assets and servicing liabilities with derivatives to qualify for hedge accounting treatment and eliminates the characterization of declines in fair value as impairments or direct write-downs. SFAS No. 156 is effective for an entity's first fiscal year beginning after September 15, 2006. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.
In February 2006, the FASB issued SFAS No. 155, "Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No. 133 and 140", to simplify and make more consistent the accounting for certain financial instruments. SFAS No. 155 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", to permit fair value re-measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No. 155 amends SFAS No. 140, "Accounting for the Impairment or Disposal of Long-Lived Assets", to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No. 155 applies to all financial instruments acquired or issued after the beginning of an entity's first fiscal year that begins after September 15, 2006, with earlier application allowed. The adoption of this statement is not expected to have a material effect on the Company's future reported financial position or results of operations.
3. Loan Receivable
On February 16, 2007, the Company entered into a Bridge Loan Agreement (subsequently amended as of November 16, 2007) with Live-Interactive Technology Ltd. (“Live-Interactive”), a company based in China, whereby the Company agreed to loan funds, to a maximum of $195,000 (RMB1,500,000), to Live-Interactive on an interest-free basis for three months from the date of the loan advance. Interest at 15% per annum is charged on all outstanding amounts after the three month interest-free period. As at December 31, 2007, a total of $152,966, including accrued interest, was owing from Live-Interactive.
4. Loan Payable
On February 9, 2007, the Company entered into a Convertible Promissory Note Agreement with CIBT Education Group Inc. (“CEG”) (previously named Capital Alliance Group Inc.), a company based in Canada, whereby CEG agreed to lend $150,000 to the Company at an interest rate of 8% per annum. The amount is due on February 9, 2009, and at any time before February 9, 2009 CEG has the right to convert all or a portion of the $150,000 into common stock of the Company at a conversion price of $0.01 per share. Upon conversion of the full loan amount CEG would have direct beneficial control of 75% of the Company. As at December 31, 2007, a total of $160,258, including accrued interest, was due to CEG.
5. Related Party Transactions
At December 31, 2007, the Company is indebted to Tokay Sequoia Management Company Ltd., the majority shareholder of the Company, in the amount of $17,312, representing expenses paid on behalf of the Company. This amount is non-interest bearing, unsecured and has no specific terms of repayment.
6. Officers Advances
Mr. Harry Miller, a former officer of the Company (“Mr. Miller”), advanced funds to the Company to pay for operating costs incurred by it. These funds were interest free. The balance due of $14,628 was forgiven by Mr. Miller and recorded as donated capital during the period ended March 31, 2006. Refer to Note 8.
Asia Interactive Media Inc. (previously Black Gardenia Corp.)
(A Development Stage Company)
Notes to the Financial Statements
(Expressed in U.S. Dollars)
December 31, 2007