NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2016 AND 2015
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
1. ORGANIZATION AND DESCRIPTION OF
BUSINESS
Wincash Apolo Gold & Energy, Inc. (“the
Company”) was incorporated in March of 1997 under the laws of the State of Nevada primarily for the purpose of acquiring
and developing mineral properties.
On September 17, 2014, the Company terminated
the Asset Sale & Purchase Agreements with Mr. Tang and Mr. Hu for the acquisition of 24% and 29% equity interest and assets
in Everenergy, respectively due to neither Mr. Tang, Mr. Hu or Everenergy had complied various terms and conditions of the Asset
Sale & Purchase Agreement. On the same day, the Board of Directors approved the cancellation of the total 19,000,000 shares
of restricted common stock at the current market value of $0.12 per share. On October 21, 2014, 11,000,000 shares were returned
and effectively cancelled and the Company continues to pursue the return and cancellation of the remaining 8,000,000 shares. For
the year ended June 30, 2015, the Company could not recover the $1,000,000 cash payment and a total investment loss of $6,670,000
was resulted.
On February 13, 2015, the Company disposed
its 100% equity interest in Apolo Gold Direct Limited (formerly known as Apolo Gold & Energy Asia Limited) to Mr. Tommy Tsap,
the Chief Executive Officer (“CEO”) and director of the Company, Mr. Tsap Wai Ping, the brother of the CEO and China
Yi Gao Gold Trader Co., Limited, a company incorporated in Hong Kong, for a consideration of $100. For the year ended June, 30,
2015, there was no gain or loss recognized on the disposal of a subsidiary.
On June 18, 2015, the Company filed an Amendment
to its Articles of Incorporation with the Nevada Secretary of State to change its name from Apolo Gold & Energy, Inc. to Wincash
Apolo Gold & Energy, Inc.
The Company will continue to anticipate potential
mineral property exploration and other energy related investments. As of June 30, 2016, the Company does not hold any mineral
property exploration claims.
2. GOING CONCERN UNCERTAINTIES
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the
discharge of liabilities in the normal course of business for the foreseeable future.
As of June 30, 2016, the Company suffered
the accumulated deficits of $16,050,826 from prior years and suffered from a working capital deficit of $75,460. The continuation
of the Company as a going concern is dependent upon the continuing financial support from its stockholders or external financing.
Management believes the existing stockholders will provide the additional cash to meet with the Company’s obligations as
they become due. However, there can be no assurance that the Company will be able to obtain sufficient funds to meet its obligations.
These factors raise substantial doubt about
the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities
that may result in the Company not being able to continue as a going concern.
WINCASH APOLO GOLD
& ENERGY, INC.
NOTES TO FINANCIAL
STATEMENTS
FOR THE YEARS ENDED
JUNE 30, 2016 AND 2015
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
3. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of presentation
The accompanying financial statements are
prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
Use of estimates
Management uses estimates and assumptions
in preparing these financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts
of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheet, and the reported revenue
and expenses during the periods reported. Actual results may differ from these estimates.
Cash and cash equivalents
Cash and cash equivalents are carried at cost
and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments
with an original maturity of three months or less as of the purchase date of such investments.
Stock-based compensation
The Company adopts FASB Accounting Standards
Codification Topic 718,
Compensation – Stock Compensation
(“ASC Topic 718”) using the fair value method.
Under ASC Topic 718, the stock-based compensation is measured using the Black-Scholes Option-Pricing model on the date of grant
under the modified prospective method. The fair value of stock-based compensation that are expected to vest are recognized using
the straight-line method over the requisite service period.
Income taxes
Income taxes are determined in accordance
with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, 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 basis. Deferred tax assets and liabilities are measured
using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected
to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for
how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or
expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when
it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially
and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon
ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
Net loss per share
The Company calculates net loss per share
in accordance with ASC Topic 260,
“Earnings per Share.”
Basic loss per share is computed by dividing the net
loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed similar
to basic loss per share except that the denominator is increased to include the number of additional common shares that would
have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.
WINCASH APOLO GOLD & ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2016 AND 2015
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
Related parties
Parties, which can be a corporation or individual,
are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant
influence over the other party in making financial and operating decisions. Companies are also considered to be related if they
are subject to common control or common significant influence.
Fair value of financial instruments
The carrying value of the Company’s
financial instruments: cash and cash equivalents, prepayments, other payables and accrued liabilities, and amount due to a director
approximate at their fair values because of the short-term nature of these financial instruments.
The Company also follows the guidance of the
ASC Topic 820-10, “
Fair Value Measurements and Disclosures
” (“ASC 820-10”), with respect to financial
assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes
the inputs used in measuring fair value as follows:
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Level 1: Observable
inputs such as quoted prices in active markets;
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Level 2: Inputs,
other than the quoted prices in active markets, that are observable either directly or indirectly; and
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Level 3: Unobservable
inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
|
Fair value estimates are made at a specific
point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and
involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions
could significantly affect the estimates.
Foreign currency translation
Transactions denominated in currencies other
than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the
transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into
the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are
recorded in the statement of operations.
The reporting currency of the Company is United
States Dollars (“US$”) and the accompanying financial statements have been expressed in US$.
Recent accounting pronouncements
FASB issues various Accounting Standards Updates
relating to the treatment and recording of certain accounting transactions. On June 10, 2014, the Financial Accounting Standards
Board issued Accounting Standards Update (ASU) No. 2014-10,Development Stage Entities (Topic 915) - Elimination of Certain Financial
Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates
the concept of a development stage entity (DSE) entirely from current accounting guidance. The Company has elected adoption of
this standard, which eliminates the designation of DSEs and the requirement to disclose results of operations and cash flows since
inception.
The Company has reviewed all recently issued,
but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected
to cause a material impact on its financial condition or the results of its operations.
WINCASH APOLO GOLD & ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2016 AND 2015
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
4. AMOUNT DUE TO A DIRECTOR
As of June 30, 2016 and 2015, the director
of the Company has advanced $44,300 and $10,000, respectively for the payment of administrative expenses. The amount is unsecured,
bears no interest and is payable upon demand. Imputed interest is considered insignificant.
5. COMMON STOCK
On September 17, 2014, the Board of Directors
approved the cancellation of the total 19,000,000 shares of restricted common stocks issued for the acquisition of equity interest
in Everenergy at a current market value of $0.12 per share. The 11,000,000 shares issued to Mr. Hu were effectively cancelled
on October 21, 2014 and the Company continues to pursue the return and cancellation of the remaining 8,000,000 shares.
On February 12, 2015, the Company issued 700,000
shares of restricted common stock at $0.10 per share to settle a debt of $70,000 owed to the Chief Executive Officer and director
of the Company. As of February 12, 2015, the current market value was $0.10 per share.
On June 4, 2015, the Company issued 6,000,000
shares of restricted common stock at $0.10 per share for the rendering of business and strategic consulting services of $600,000
in a service period of twelve months commencing from June 2015. For the years ended June 30, 2016 and 2015, the Company amortized
$550,000 and $50,000, respectively to the operations using the straight-line method.
On June 9, 2015, the Company issued 400,000
shares of restricted common stock at $0.10 per share for the rendering of administrative consulting services of $40,000. As of
June 9, 2015, the current market value was $0.10 per share.
On June 26, 2015, the Board of Directors of
the Company approved to issue 340,000 shares of restricted common stock at $0.15 per share to settle a debt of $51,000 owed to
the Chief Executive Officer and director of the Company. All 340,000 shares were issued subsequently on July 2, 2015. As of June
26, 2015, the current market value was $0.16 per share.
On December 1, 2015, the Board of Directors
of the Company approved to issue 200,000 shares of restricted common stock at $0.08 per share for the rendering of consulting
services of $16,000 in a service period of twelve months commencing from December 2015. For the year ended June 30, 2016, the
Company amortized $9,333 to the operations using the straight-line method. As of June 30, 2016, the shares have not been issued
and $16,000 for this obligation was recorded as stock payable.
There were no stock options, warrants or other
potentially dilutive securities outstanding as at June 30, 2016 and 2015.
As of June 30, 2016, there were 21,872,118
shares of common stock issued and outstanding.
WINCASH APOLO GOLD
& ENERGY, INC.
NOTES TO FINANCIAL
STATEMENTS
FOR THE YEARS ENDED
JUNE 30, 2016 AND 2015
(Currency expressed
in United States Dollars (“US$”), except for number of shares)
6. INCOME TAX
For the years ended June 30, 2016 and 2015,
the local (United States) and foreign components of loss before income taxes were comprised of the following:
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For the years ended June 30,
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2016
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2015
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Tax jurisdictions from:
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- Local
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$
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(614,505
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)
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$
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(7,521,068
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)
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- Foreign
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-
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(28,408
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)
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|
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|
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Loss before income tax
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$
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(614,505
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)
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$
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(7,549,476
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)
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The provision for income taxes
consisted of the following:
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For
the years ended June 30,
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2016
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2015
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Current:
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- Local
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$
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-
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$
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-
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- Foreign
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-
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|
|
-
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Deferred:
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|
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- Local
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-
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|
|
|
-
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- Foreign
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-
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-
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$
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-
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$
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-
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The Company is registered in the State of
Nevada and is subject to the tax laws of the United States of America. As of June 30, 2016, the operations in the United States
of America incurred $16,050,826 of cumulative net operating losses which can be carried forward to offset future taxable income.
The net operating loss carryforwards begin to expire in the year 2017 through 2035, if unutilized. The Company has provided for
a full valuation allowance of $4,012,706 against the deferred tax assets on the expected future tax benefits from the net operating
loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.
Management believes that it is more likely
than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full
valuation allowance against its deferred tax assets of $4,012,706 as of June 30, 2016. During the year ended June 30, 2016, the
valuation allowance increased by $153,626, primarily relating to net operating loss carryforwards from the various tax regime.
7. RELATED PARTY TRANSACTIONS
On December 1, 2015, the Company approved
the issuance of 100,000 shares of restricted common stock at $0.08 per share to an officer of the Company. For the year ended
June 30, 2016, the Company amortized $4,667 to the operations using the straight-line method. As of June 30, 2016, these shares
have not been issued and recorded as part of the stock payable.
For the years ended June 30, 2016 and 2015,
the Company paid $17,650 and $15,000, respectively to a company controlled by an officer of the Company for accounting services.
The related party transactions are generally
transacted in an arm-length basis at the current market value in the normal course of business.
8. COMMITMENTS AND CONTINGENCIES
As of June 30, 2016, the Company has no commitments
or contingencies involved.
9. SUBSEQUENT EVENTS
In accordance with ASC Topic 855, “
Subsequent Events “, which establishes general standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred
after June 30, 2016 up through the date the Company issued the audited financial statements. During the period, there was no subsequent
events that required recognition or disclosure.