NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2017 AND 2016
(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,
2017, 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, 2017, the Company suffered the accumulated deficits of $16,135,661 from current and prior years and suffered from
a working capital deficit of $153,628. The continuation of the Company as a going concern is dependent upon the continuing financial
support from its stockholders or external financing. Management believes the existing stockholders will provide the additional
cash to meet with the Company’s obligations as they become due. However, there can be no assurance that the Company will
be able to obtain sufficient funds to meet its obligations.
These
factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do
not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result in the Company not being able to continue as a going concern.
WINCASH
APOLO GOLD & ENERGY, INC.
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2017 AND 2016
(Currency
expressed in United States Dollars (“US$”), 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.
WINCASH
APOLO GOLD & ENERGY, INC.
NOTES
TO FINANCIAL STATEMENTS
FOR
THE YEARS ENDED JUNE 30, 2017 AND 2016
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
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.
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, 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:
|
Level
1: Observable inputs such as quoted prices in active markets;
|
|
|
|
Level
2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
|
|
|
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$.
WINCASH APOLO GOLD & ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2017 AND 2016
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
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.
4. AMOUNT DUE TO A DIRECTOR
As of June 30, 2017 and 2016, the director
of the Company has advanced $126,800 and $44,300, 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 $0.16 per share.
WINCASH APOLO GOLD & ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2017 AND 2016
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
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. In August 2016, all 200,000 shares were issued.
For the year ended June 30, 2017, the Company amortized $6,667 to the operations using the straight-line method.
There were no stock options, warrants or other
potentially dilutive securities outstanding as at June 30, 2017 and 2016.
As of June 30, 2017, there were 22,072,118
shares of common stock issued and outstanding.
6. INCOME TAX
For the years ended June 30, 2017 and 2016,
the local (United States) and foreign components of loss before income taxes were comprised of the following:
|
|
For the years ended June 30,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Tax jurisdictions from:
|
|
|
|
|
|
|
|
|
- Local
|
|
$
|
(84,835
|
)
|
|
$
|
(614,505
|
)
|
- Foreign
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax
|
|
$
|
(84,835
|
)
|
|
$
|
(614,505
|
)
|
The provision for income taxes consisted of
the following:
|
|
|
For the years ended June 30,
|
|
|
|
|
2017
|
|
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
- Local
|
|
$
|
-
|
|
|
$
|
-
|
|
- Foreign
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
- Local
|
|
|
-
|
|
|
|
-
|
|
- Foreign
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
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, 2017, the operations in the United States of America
incurred $16,135,661 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 2036, if unutilized. The Company has provided for a full valuation
allowance of $4,033,915 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards
as the management believes it is more likely than not that these assets will not be realized in the future.
WINCASH APOLO GOLD & ENERGY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED JUNE 30, 2017 AND 2016
(Currency expressed in United States Dollars
(“US$”), except for number of shares)
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 $4,033,915 as of June 30, 2017. During the year ended June 30, 2017, the
valuation allowance increased by $21,209, primarily relating to net operating loss carryforwards from the various tax regime.
7. RELATED PARTY TRANSACTIONS
For the years ended June 30, 2017 and 2016,
the Company paid $24,000 and $17,650, respectively to a company controlled by an officer of the Company for accounting services.
On December 1, 2015, the Company approved to
issue 100,000 shares of restricted common stock at $0.08 per share to an officer of the Company. In August 2016, all 100,000 shares
were issued to the officer. For the year ended June 30, 2017, the Company amortized $3,333 to the operations using the straight-line
method.
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, 2017, 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, 2017 up through the date the Company issued the audited financial statements.
a) On July 27, 2017, the Company issued 1,811,429
common shares as settlement of $126,800 in advances made by the director of the Company.
b) On July 27, 2017, the Company issued 462,495
common shares as settlement of $32,375 in advances made by the former director of the Company.