NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2022, AND 2021
(Expressed
in U.S. Dollars)
NOTE
1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Greenpro
Inc. (the “Company”) was incorporated on July 19, 2013, in the state of Nevada, and in 2015 changed its name to Greenpro
Capital Corp. The Company currently provides a wide range of business consulting and corporate advisory services including cross-border
listing advisory services, tax planning, advisory and transaction services, record management services, and accounting outsourcing services.
As part of our business consulting and corporate advisory business segment, our subsidiary, Greenpro Venture Capital Limited (“GVCL”)
provides a business incubator for start-up and high growth companies during their critical growth period and focuses on investments in
select start-up and high growth potential companies. In addition to our business consulting and corporate advisory business segment,
we operate another business segment that focuses on the acquisition and rental of real estate properties held for investment and the
and sale of real estate properties held for sale. Our focus is on companies located in South-East Asia and East Asia including Hong Kong,
the People’s Republic of China (“PRC”), Malaysia, Thailand, and Singapore.
Going
Concern
The
accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets
and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial
statements, for the year ended December 31, 2022, the Company incurred a net loss of $6,262,188 and net cash used in operating activities
of $2,402,769. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year
of the date that the financial statements are issued. The financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
The
Company’s ability to continue as a going concern is dependent upon improving its profitability and the continuing financial support
from its major shareholders. Management believes the existing shareholders or external financing will provide the additional cash to
meet the Company’s obligations as they become due. No assurance can be given that any future financing, if needed, will be available
or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company can obtain additional financing,
if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its
stockholders, in the case of equity financing.
Certain
effects of reverse stock split
On
July 19, 2022, the Company filed a Certificate of Change with the Secretary of State of the State of Nevada (the “Certificate of
Change”) to effect a reverse split of the Company’s Common Stock at a ratio of 10-for-1 (the “Reverse Stock Split”),
effective as of July 28, 2022. On that date, every 10 issued and outstanding shares of the Company’s Common Stock were automatically
converted into one outstanding share of Common Stock. As a result of the Reverse Stock Split, the number of the outstanding shares of
Common Stock decreased from 78,671,688 (pre-split) shares to 7,875,813 (post-split) shares. In addition, by reducing the number of outstanding
shares, the Company’s loss per share in all prior periods increased by a factor of 10. The Reverse Stock Split affected all shares
of Common Stock outstanding immediately prior to the effective time of the Reverse Stock Split. In addition, the Reverse Stock Split
effected a reduction in the number of shares of Common Stock issuable upon the exercise of the warrants outstanding immediately prior
to the effectiveness of the Reverse Stock Split, resulting in a reduction from 53,556 (pre-split) shares to 5,356 (post-split) shares
(see Note 11).
No
fractional shares are issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to receive fractional
shares because they hold a number of pre-reverse stock split shares of the Company’s Common Stock not evenly divisible by 10, in
lieu of a fractional share, are entitled the number of shares rounded up to the nearest whole share. The Company will issue one whole
share of the post-Reverse Stock Split Common Stock to any stockholder who otherwise would have received a fractional share as a result
of the Reverse Stock Split.
The
Reverse Stock Split affected all holders of Common Stock uniformly and did not affect any stockholder’s percentage of ownership
interest. The par value of the Company’s Common Stock remained unchanged at $0.0001 per share and the number of authorized shares
of Common Stock remained the same after the Reverse Stock Split.
As
the par value per share of the Company’s Common Stock remained unchanged at $0.0001 per share, the change in the Common Stock recorded
at par value has been reclassified to additional paid-in-capital on a retroactive basis. All references to shares of Common Stock and
per share data for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted to
reflect the Reverse Stock Split on a retroactive basis.
COVID-19
pandemic
Our
business, financial condition and results of operations may be materially adversely affected by global health epidemics, including the
recent COVID-19 outbreak.
Outbreaks
of epidemic, pandemic, or contagious diseases such as COVID-19, could have an adverse effect on our business, financial condition, and
results of operations. The spread of COVID-19 from China to other countries has resulted in the World Health Organization declaring the
outbreak of COVID-19 as a global pandemic. The international stock markets reflect the uncertainty associated with the slow-down in the
global economy and the reduced levels of international travel experienced since the beginning of January 2020, large declines in oil
prices and the significant decline in the Dow Industrial Average at the end of February and beginning of March 2020 was largely attributed
to the effects of COVID-19.
More
specifically our business was affected to a large extent by a shut-down of operations both for ourselves and our clients for much of
the whole year of 2020. Total revenue for the year ended December 31, 2022, was $3,673,997 compared to $2,949,780 for the same period
in 2021. The increase in total revenue was mainly derived from the sale of real estate properties during the first quarter and third
quarter of 2022, respectively. When nation-wide shutdowns were mandated the first half of 2020, there was a corresponding decline in
demand for our business services. When business gradually resumed beginning the first half of 2021, we saw a corresponding increase in
orders of our business services.
The
full extent of the financial impact of the COVID-19 pandemic cannot be reasonably estimated at this time as the pandemic is still ongoing.
The extent to which the COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity of the coronavirus and its variants and the actions taken globally
to contain the coronavirus or treat its impact, the efficacy of vaccines on COVID-19 and its variants, among others. Existing insurance
coverage may not provide protection for all costs that may arise from all such possible events.
Additionally,
the COVID-19 pandemic may also affect our overall ability to react timely to mitigate the impact of this event and may hamper our efforts
to contact our service providers and advisors and to provide our investors with timely information and comply with our filing obligations
with the SEC, especially in the event of office closures, stay-in-place orders and a ban on travel or quarantines. We are still assessing
our business operations and the impact COVID-19 may have on our results and financial condition in the future, but there can be no assurance
that this analysis will enable us to avoid part or all of any impact from the spread of COVID-19 or its consequences, including downturns
in business sentiment generally or in our sector in particular.
Basis
of presentation and principles of consolidation
The
consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and a majority-owned subsidiary
which the Company controls and entities for which the Company is the primary beneficiary. For those consolidated subsidiaries where the
Company’s ownership is less than 100%, the outside shareholders’ interests are shown as noncontrolling interests in equity.
Acquired businesses are included in the consolidated financial statements from the dates of acquisition. The accompanying consolidated
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.
All inter-company accounts and transactions have been eliminated in consolidation.
Use
of estimates
The
preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates
and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates include certain
assumptions related to, among others, the allowance for doubtful accounts receivable, impairment analysis of real estate assets and other
long-term assets including goodwill, estimates inherent in recording purchase price allocation, valuation allowance on deferred income
taxes, the assumptions used in the valuation of the derivative liability, and the accrual of potential liabilities. Actual results may
differ from these estimates.
Revenue
recognition
The
Company follows the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers. ASC 606 creates
a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying
the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining
the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each
performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will
collect the consideration it is entitled to in exchange for the services it transfers to its clients (see Note 2).
Cash,
cash equivalents, and restricted cash
Cash
consists of funds on hand and held in bank accounts. Cash equivalents includes demand deposits placed with banks or other financial institutions
and all highly liquid investments with original maturities of three months or less, including money market funds. Restricted cash represents
cash restricted for the loan collateral requirements as defined in a loan agreement, and the minimum paid-up share capital requirement
for insurance brokers specified under the Insurance Ordinance of Hong Kong.
On
December 31, 2022, cash included funds held by employees of $11,464 was to facilitate payment of expenses in local currencies or to facilitate
third-party online payment platforms which the Company had not set up a corporate account, such as WeChat Pay or Alipay.
As
of December 31, 2021, no cash of the Company was held by employees.
SCHEDULE
OF CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
| | |
2022 | | |
2021 | |
| | |
As of December 31, | |
| | |
2022 | | |
2021 | |
| Cash, cash equivalents, and restricted cash | |
| | | |
| | |
| Denominated in United States Dollar | |
$ | 2,234,242 | | |
$ | 4,137,396 | |
| Denominated in Hong Kong Dollar | |
| 1,201,076 | | |
| 895,820 | |
| Denominated in Chinese Renminbi | |
| 381,012 | | |
| 151,311 | |
| Denominated in Malaysian Ringgit | |
| 85,940 | | |
| 154,044 | |
| Denominated in Euro | |
| 9,200 | | |
| - | |
| Denominated in Singapore Dollar | |
| 65 | | |
| - | |
| Cash, cash equivalents, and restricted cash | |
$ | 3,911,535 | | |
$ | 5,338,571 | |
Accounts
receivable, net
Accounts
receivable is recorded at the invoiced amount less an allowance for any uncollectible accounts. Management reviews the adequacy of the
allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management also periodically
evaluates individual customer’s financial condition, credit history and the current economic conditions to make an adjustment to
the allowance when it is considered necessary. Account balances are charged off against the allowance after all means of collection have
been exhausted and the potential for recovery is considered remote.
SCHEDULE
OF ACCOUNTS RECEIVABLES
| | |
2022 | | |
2021 | |
| | |
As of
December 31, | |
| | |
2022 | | |
2021 | |
| Accounts receivable, gross | |
$ | 195,214 | | |
$ | 163,957 | |
| Less: Allowance for doubtful accounts | |
| (25,677 | ) | |
| (133,356 | ) |
| Accounts receivable, net | |
$ | 169,537 | | |
$ | 30,601 | |
Property
and equipment, net
Property
and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on the straight-line basis over the following
estimated useful lives:
SCHEDULE
OF PROPERTY AND EQUIPMENT USEFUL LIFE
| Categories |
|
Estimated
useful life |
| Office
leasehold |
|
27
years |
| Furniture
and fixtures |
|
3
- 10 years |
| Office
equipment |
|
3
- 10 years |
| Leasehold
improvement |
|
Over
the shorter of estimated useful life or term of lease |
Office
leasehold represents three adjoining office units used by the Company located in a commercial building in Shenzhen, China. The office
leasehold is subject to a land lease with a term of 27 years and is being depreciated over the remaining lease term. Expenditures for
maintenance and repairs are expensed as incurred. Depreciation, classified as an operating expense, was $111,707 and $120,707 for the
years ended December 31, 2022 and 2021, respectively.
Management
assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may
not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from
the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment
loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2022 and 2021, the Company determined
there were no indicators of impairment of its property and equipment.
Real
estate held for sale
Real
estate held for sale is reported at the lower of carrying amount or fair value, less estimated costs to sell. The cost of real estate
held for sale includes the purchase price of property, legal fees, improvement costs to the building structure, and other acquisition
costs. We actively market all properties that are designated as held for sale. Real estate held for sale is not depreciated.
In
conducting its reviews for indicators of impairment, the Company evaluates, among other things, the margins on units already sold within
the project, margins on units under contract but not closed (none as of December 31, 2022), and projected margins on future unit sales.
The Company pays close attention to discern if the real estate held for sale is moving at a slower than expected pace or where margins
are trending downward. For the years ended December 31, 2022 and 2021, the Company determined there were no indicators of impairment
of its real estate held for sale.
Real
estate held for investment, net
Real
estate held for investment is stated at cost less accumulated depreciation. Depreciation is calculated on the straight-line basis over
the following estimated useful lives:
SCHEDULE
OF REAL ESTATE HELD FOR INVESTMENT USEFUL LIFE
| Categories |
|
Estimated
useful life |
| Office
leasehold |
|
50
years |
| Furniture
and fixtures |
|
3
– 10 years |
| Office
equipment |
|
3
– 10 years |
| Leasehold
improvement |
|
Shorter
of the estimated useful life or term of lease |
Office
leasehold represents three office units owned by the Company located in two commercial buildings in Kuala Lumpur, Malaysia.
Depreciation,
classified as cost of rental, was $29,001 and $31,688 for the years ended December 31, 2022, and 2021, respectively.
Management
assesses the carrying value of real estate held for investment whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to
result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an
impairment loss is recognized to write down the asset to its estimated fair value. For the years ended December 31, 2022 and 2021, the
Company determined there were no indicators of impairment of its real estate held for investment.
Intangible
assets, net
Amortizable
identifiable intangible assets are stated at cost less accumulated amortization and represent certain trademarks registered in USA, Hong
Kong, China, and Singapore.
Amortization
is calculated on the straight-line basis over the following estimated useful lives:
SCHEDULE
OF INTANGIBLE ASSETS ESTIMATED LIFE
| Categories |
|
Estimated
useful life |
| Trademarks |
|
10
years |
Amortization
expense for the years ended December 31, 2022, and 2021 was $718 and $723, respectively.
The
Company follows ASC 360 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts.
For the years ended December 31, 2022, and 2021, the Company determined there were no indicators of impairment of intangible assets (see
Note 7).
Goodwill
Goodwill
is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business
combination. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually, and will be tested
for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired.
An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated
fair value of the reporting unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill.
The Company’s policy is to perform an annual impairment testing for its reporting units on December 31, of each fiscal year.
During
2022, the Company determined there was an indicator of impairment, so an impairment of goodwill of $263,247 was made and its goodwill
was revalued at $82,561 as of December 31, 2022. For the year ended December 31, 2021, the Company determined there was no indicator
of impairment, so no impairment was made (see Note 7).
Impairment
of long-lived assets
Long-lived
assets primarily include real estate held for investment, property and equipment and intangible assets. In accordance with the provision
of ASC 360, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually in the fourth quarter of
each year, or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate. The
recoverability of long-lived assets is measured at the reporting unit level. If the total of the expected undiscounted future net cash
flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount
of the asset.
As
of December 31, 2022, and 2021, the Company determined there was no indicator of impairment of its real estate held for investment and
its property and equipment, respectively.
Investments
Investments
in equity securities
The
Company accounts for its investments that represent less than 20% ownership, and for which the Company does not have the ability to exercise
significant influence, using ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and
Financial Liabilities. The Company measure investments in equity securities without a readily determinable fair value using a measurement
alternative that measures these securities at the cost method minus impairment, if any, plus or minus changes resulting from observable
price changes on a non-recurring basis. Gains and losses on these securities are recognized in other income and expenses.
On
December 31, 2022, the Company had total twenty-seven (27) investments in equity securities without readily determinable fair values,
all were related party investments with aggregate value of $5,406,106. In which, eleven (11) investments in equity securities without
readily determinable fair values were also related party investments, all were fully impaired and with $nil value (see Note 6).
On
December 31, 2021, the Company had total twenty-seven (27) investments in equity securities without readily determinable fair values,
all were related party investments with aggregate value of $9,621,935. In which, ten (10) investments in equity securities without readily
determinable fair values were also related party investments, all were fully impaired and with $nil value (see Note 6).
Leases
Prior
to January 1, 2019, the Company accounted for leases under ASC 840, Accounting for Leases. Effective January 1, 2019, the Company adopted
the guidance of ASC 842, Leases, which requires an entity to recognize a right-of-use asset and a lease liability for virtually all leases.
The implementation of ASC 842 did not have a material impact on the Company’s consolidated financial statements and did not have
a significant impact on our liquidity or on our compliance with our financial covenants associated with our loans. The Company adopted
ASC 842 using a modified retrospective approach. As a result, the comparative financial information has not been updated and the required
disclosures prior to the date of adoption have not been updated and continue to be reported under the accounting standards in effect
for those periods. The adoption of ASC 842 on January 1, 2019 resulted in the initial recognition of operating lease right-of-use assets
of $582,647, lease liabilities for operating leases of $582,647, and a zero cumulative-effect adjustment to accumulated deficit (see
Note 8).
Derivative
financial instruments
Derivative
financial instruments consist of financial instruments that contain a notional amount and one or more underlying variables such as interest
rate, security price, variable conversion rate or other variables, require no initial net investment and permit net settlement. The derivative
financial instruments may be free-standing or embedded in other financial instruments. The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. The Company follows the provision
of ASC 815, Derivatives and Hedging for derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the
statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities
or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet
as current or non-current based on whether net-cash settlement of the derivative instrument could be required within 12 months of the
balance sheet date. At each reporting date, the Company reviews its convertible securities to determine that their classification is
appropriate.
Income
taxes
The
Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred
tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred
taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more
likely than not these items will either expire before the Company is able to realize their benefits, or that future deductibility is
uncertain.
The
Company conducts major businesses in Hong Kong, China and Malaysia, and is subject to tax in these jurisdictions. As a result of its
business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.
Net
loss per share
Basic
net loss per share is computed by dividing the net loss available to common stockholders by the weighted average number of common shares
outstanding during the period. Diluted net loss per share is calculated by dividing the net loss by the weighted average number of common
shares outstanding, adjusted for the dilutive effect of outstanding Common Stock equivalents.
On
December 31, 2022, and 2021, the only outstanding Common Stock equivalents were warrants of 5,356 potentially dilutive shares outstanding
that have been excluded from the calculation of weighted average shares as the effect would have been anti-dilutive and therefore basic
and diluted net loss per share were the same.
Foreign
currencies translation
The
reporting currency of the Company is the United States Dollars (“US$”) and the accompanying consolidated financial statements
have been expressed in US$. In addition, the Company’s operating subsidiaries maintain their books and records in their respective
local currency, which consists of Malaysian Ringgit (“MYR”), Renminbi (“RMB”) and Hong Kong Dollars (“HK$”),
which is also the respective functional currency of subsidiaries.
In
general, for consolidation purposes, if a subsidiary’s functional currency other than US$, its assets and liabilities are translated
into US$ using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the
period. Any gains or losses resulting from translation of financial statements of a foreign subsidiary are recorded as a separate component
of accumulated other comprehensive loss within equity.
Translation
of amounts from each foreign currency of the Company into US$ has been made at the following exchange rates for the respective periods:
SCHEDULE
OF FOREIGN CURRENCIES TRANSLATION
| | |
2022 | | |
2021 | |
| | |
As of and for the years ended
December 31, | |
| | |
2022 | | |
2021 | |
| Period-end MYR : US$1 exchange rate | |
| 4.40 | | |
| 4.17 | |
| Period-average MYR : US$1 exchange rate | |
| 4.41 | | |
| 4.14 | |
| Period-end RMB : US$1 exchange rate | |
| 6.91 | | |
| 6.36 | |
| Period-average RMB : US$1 exchange rate | |
| 6.75 | | |
| 6.44 | |
| Period-end HK$ : US$1 exchange rate | |
| 7.81 | | |
| 7.80 | |
| Period-average HK$ : US$1 exchange rate | |
| 7.83 | | |
| 7.77 | |
Comprehensive
income or loss
Comprehensive
income or loss is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances
from non-owner sources. The Company’s accumulated other comprehensive income or loss consists of cumulative foreign currency translation
adjustments.
Fair
value of financial instruments
The
Company follows the guidance of the ASC 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
|
The
Company believes the carrying amount reported in the balance sheet for cash and cash equivalents, accounts receivable, prepaids and other
current assets, accounts payable and accrued liabilities, deferred costs of revenue and deferred revenue, and due from or due to related
parties, approximate their fair values because of the short-term nature of these financial instruments.
As
of December 31, 2022, and 2021, the Company’s balance sheet includes Level 3 liabilities comprised of the fair value of derivative
liabilities of $1 and $9,935, respectively (see Note 9).
The
following table sets forth a summary of the changes in the estimated fair value of our derivative during the years ended December 31,
2022, and 2021:
SCHEDULE
OF FAIR VALUE OF EMBEDDED DERIVATIVE LIABILITIES
| | |
2022 | | |
2021 | |
| | |
As of and for the years ended, | |
| | |
2022 | | |
2021 | |
| Fair value at beginning of year | |
$ | 9,935 | | |
$ | 1,189,786 | |
| Derivative liability associated with convertible notes issued during the year | |
| - | | |
| 10,839,240 | |
| Reclassification of conversion option related to a convertible note to additional paid in capital | |
| - | | |
| (5,745,520 | ) |
| Fair value gains of derivative liability associated with convertible note | |
| - | | |
| (6,203,520 | ) |
| Fair value gains of derivative liability associated with warrants | |
| (9,934 | ) | |
| (70,051 | ) |
| Fair value at end of year | |
$ | 1 | | |
$ | 9,935 | |
Concentrations
of risks
For
the year ended December 31, 2022, three customers accounted for 28% (10%, 9% and 9%, respectively) of the Company’s revenue, and
three customers accounted for 84% (57%, 20% and 7%, respectively) of the Company’s accounts receivable at year-end.
For
the year ended December 31, 2021, three customers accounted for 26% (12%, 8% and 6%, respectively) of the Company’s revenue, and
three customers accounted for 56% (40%, 10% and 6%, respectively) of the Company’s accounts receivable at year-end.
For
the year ended December 31, 2022, no vendor accounted for 10% or more of the Company’s cost of revenues, and three vendors accounted
for 59% (29%, 19% and 11%, respectively) of the Company’s accounts payable at year-end.
For
the year ended December 31, 2021, no vendor accounted for 10% or more of the Company’s cost of revenues, and three vendors accounted
for 65% (47%, 9% and 9%, respectively) of the Company’s accounts payable at year-end.
Exchange
rate risk
The
Company’s reporting currency is US$ but its major revenues and costs, and a significant portion of its assets and liabilities are
also denominated in MYR, RMB or HK$. As a result, the Company is exposed to a foreign exchange risk as its revenues and the results of
operations may be affected by fluctuations in the exchange rate between US$ and MYR, US$ and RMB or US$ and HK$. If MYR, RMB or HK$ depreciates
against US$, the values of its revenues and assets in MYR, RMB or HK$ may decline accordingly when in translation to the Company’s
reporting currency, as its financial statements are presented in US$. The Company does not hold any derivative or other financial instruments
that may expose it to a substantial market risk.
Risks
and uncertainties
Substantially
all the Company’s services are conducted in Hong Kong, China, Malaysia, Thailand, Taiwan, and the South-East Asia region. The Company’s
operations are subject to various political and economic risks, including the risks of restrictions on transfer of funds, export duties,
quotas and embargoes, changing taxation policies, and political conditions and governmental regulations, and the adverse impact of the
coronavirus outbreak.
Recent
accounting pronouncements
In
August 2020, the FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging
– Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU reduces the number of accounting models for convertible debt
instruments and convertible preferred stock and amends the guidance for the derivatives scope exception for contracts in an entity’s
own equity to reduce form-over-substance-based accounting conclusions. In addition, this ASU improves and amends the related earnings
per share guidance. This standard became effective for the Company beginning on January 1, 2022. Adoption is either a modified retrospective
method or a fully retrospective method of transition. The Company adopted this guidance effective January 1, 2022, and the adoption of
this standard did not have a material impact on its consolidated financial statements.
In
June 2016, the FASB issued ASU No. 2016-13, Credit Losses - Measurement of Credit Losses on Financial Instruments (“ASC 326”).
The standard significantly changes how entities will measure credit losses for most financial assets, including accounts and notes receivables.
The standard will replace today’s “incurred loss” approach with an “expected loss” model, under which companies
will recognize allowances based on expected rather than incurred losses. Entities will apply the standard’s provisions as a cumulative-effect
adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The standard is
effective for interim and annual reporting periods beginning after December 15, 2022. The Company is currently assessing the impact of
adopting this standard on the Company’s financial statements and related disclosures.
Other
recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public
Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s
present or future financial statements.
NOTE
2 - REVENUE FROM CONTRACTS WITH CUSTOMERS
The
Company’s revenues consist of revenue from provision of business consulting and corporate advisory services (“service revenue”),
and revenue from leasing or trading of real estate properties (“real estate revenue”).
Revenue
from services
For
certain service contracts, we assist or provide advisory to clients in capital market listings (“listing services”), our
services provided to clients are considered as our performance obligations. Revenue and expenses are deferred until the performance obligation
is complete and collectability of the consideration is probable. For service contracts where the performance obligation is not completed,
deferred costs of revenue are recorded as incurred and deferred revenue is recorded for any payments received on such yet to be completed
performance obligations. On an ongoing basis, management monitors these contracts for profitability and when needed may record a liability
if a determination is made that costs will exceed revenue.
For
other services such as company secretarial, accounting, financial analysis, insurance brokerage services, and other related services
(“non-listing services”), the Company’s performance obligations are satisfied, and the related revenue is recognized,
as services are rendered. For contracts in which we act as an agent, the Company reports revenue net of expenses paid.
The
Company offers no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves
against service revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining a client contract.
Revenue
from leasing of real estate properties
Rental
revenue represents lease rental income from the Company’s tenants. The tenants pay in accordance with the terms in the lease agreements
and the Company recognizes the income ratably over the lease term as this is the most representative of the pattern in which the benefit
is expected to be derived from the underlying asset.
Revenue
from trading of real estate properties
The
Company follows the guidance of ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC
610-20”), which applies to sales or transfers to noncustomers of nonfinancial assets. Generally, the Company’s sales of its
real estate properties are considered a sale of a nonfinancial asset. Under ASC 610-20, the Company derecognizes its asset and recognizes
a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer.
During
the year ended December 31, 2022, the Company recognized revenue from the sale of three units of commercial property held for sale, while
there was no property sold during 2021.
Cost
of revenues
Cost
of service revenue primarily consists of employee compensation and related payroll benefits, company formation costs, and other professional
fees directly attributable to the services rendered.
Cost
of rental revenue primarily includes costs associated with repairs and maintenance, property management fees, insurance, depreciation,
and other related administrative costs. Utility expenses are paid directly by tenants.
Cost
of real estate properties sold primarily consists of the purchase price of property, legal fees, improvement costs to the building structure,
and other acquisition costs. Selling and advertising costs are expensed as incurred.
The
following tables provide information about disaggregated revenue based on revenue by service lines and revenue by geographic area:
SCHEDULE
OF DISAGGREGATED REVENUE
| |
|
2022 |
|
|
2021 |
|
| | |
For the years ended December 31, | |
| | |
2022 | | |
2021 | |
| Revenue by service lines: | |
| | | |
| | |
| Corporate advisory – non-listing services | |
$ | 1,419,843 | | |
$ | 1,848,200 | |
| Corporate advisory – listing services | |
| 1,305,623 | | |
| 972,750 | |
| Rental of real estate properties | |
| 108,495 | | |
| 128,830 | |
| Sale of real estate properties | |
| 840,036 | | |
| - | |
| Total revenue | |
$ | 3,673,997 | | |
$ | 2,949,780 | |
| |
|
2022 |
|
|
2021 |
|
| |
|
For
the years ended December 31, |
|
| |
|
2022 |
|
|
2021 |
|
| Revenue
by geographic area: |
|
|
|
|
|
|
|
|
| Hong
Kong |
|
$ |
2,046,846 |
|
|
$ |
1,573,606 |
|
| Malaysia |
|
|
397,705 |
|
|
|
601,336 |
|
| China |
|
|
1,229,446 |
|
|
|
774,838 |
|
| Total
revenue |
|
$ |
3,673,997 |
|
|
$ |
2,949,780 |
|
Deferred
costs of revenue
For
a service contract where the performance obligation is not completed, deferred costs of revenue is recorded for any costs incurred in
advance of the performance obligation.
Deferred
revenue
For
a service contract where the performance obligation is not completed, deferred revenue is recorded for any payments received in advance
of the performance obligation.
As
of December 31, 2022, and 2021, deferred costs of revenue or deferred revenue is classified as current assets or current liabilities
and totaled, respectively:
SCHEDULE
OF DEFERRED REVENUE COST
| | |
2022 | | |
2021 | |
| | |
As of
December 31, | |
| | |
2022 | | |
2021 | |
| Current assets | |
| | | |
| | |
| Deferred costs of revenue | |
$ | 168,605 | | |
$ | 123,293 | |
| | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Deferred revenue | |
$ | 1,834,244 | | |
$ | 2,006,696 | |
Changes
in deferred revenue during 2022 and 2021 are as follows:
SCHEDULE
OF CHANGES IN DEFERRED REVENUE
| | |
2022 | | |
2021 | |
| | |
As of and for the years ended
December 31, | |
| | |
2022 | | |
2021 | |
| Deferred revenue, beginning of year | |
$ | 2,006,696 | | |
$ | 1,634,075 | |
| New contract liabilities | |
| 1,133,171 | | |
| 1,616,633 | |
| Performance obligations satisfied | |
| (1,305,623 | ) | |
| (1,244,012 | ) |
| Deferred revenue, end of year | |
$ | 1,834,244 | | |
$ | 2,006,696 | |
NOTE
3 - PROPERTY AND EQUIPMENT, NET
SCHEDULE
OF PROPERTY AND EQUIPMENT NET
| | |
2022 | | |
2021 | |
| | |
As of December 31, | |
| | |
2022 | | |
2021 | |
| Property and equipment | |
| | | |
| | |
| Office leasehold | |
$ | 3,008,413 | | |
$ | 3,270,668 | |
| Furniture and fixtures | |
| 52,058 | | |
| 53,372 | |
| Office equipment | |
| 62,148 | | |
| 61,894 | |
| Leasehold improvement | |
| 92,566 | | |
| 95,152 | |
| Property and equipment, gross | |
| 3,215,185 | | |
| 3,481,086 | |
| Less: Accumulated depreciation | |
| | | |
| | |
| Accumulated depreciation, beginning of year | |
| (620,881 | ) | |
| (474,001 | ) |
| Depreciation for the year | |
| (125,486 | ) | |
| (136,273 | ) |
| Disposal or write-off | |
| - | | |
| 1,601 | |
| Effect of changes in exchange rate | |
| 44,749 | | |
| (12,208 | ) |
| Accumulated
depreciation, end of year | |
| (701,618 | ) | |
| (620,881 | ) |
| Property and equipment, net | |
$ | 2,513,567 | | |
$ | 2,860,205 | |
Office
leasehold under property and equipment represents three adjoining office units owned and used by the Company located in a commercial
building in Shenzhen, China. The office leasehold is subject to a 50-year land lease with a remaining term of 22 years and is being depreciated
over the remaining lease term.
Depreciation
for property and equipment, classified as an operating expense, was $125,486 and $136,273 for the years ended December 31, 2022, and
2021, respectively.
NOTE
4 - REAL ESTATE HELD FOR SALE
On
December 31, 2022, and 2021, real estate held for sale was valued $1,659,207 and $2,205,839, respectively. Real estate held for sale
represents multiple units in a building located in Hong Kong.
For
the year ended December 31, 2022, the Company sold three units for $840,036, with original cost of $408,813 and other costs of sale of
$164,530. In 2021, there was no property was sold.
The
property was developed for resale on a “unit by unit” basis and is stated at the lower of cost or estimated fair value, less
estimated costs to sell. Real estate held for sale represents properties for which a committed plan to sell exists and an active program
to market such properties has been initiated.
NOTE
5 - REAL ESTATE HELD FOR INVESTMENT, NET
SCHEDULE
OF REAL ESTATE HELD FOR INVESTMENT, NET
| | |
2022 | | |
2021 | |
| | |
As of December 31, | |
| | |
2022 | | |
2021 | |
| Real estate held for investment | |
| | | |
| | |
| Office leasehold | |
$ | 780,518 | | |
$ | 824,828 | |
| Furniture and fixtures | |
| 51,721 | | |
| 54,658 | |
| Office equipment | |
| 16,534 | | |
| 17,472 | |
| Leasehold improvement | |
| 70,906 | | |
| 74,931 | |
| Real estate held for investment, gross | |
| 919,679 | | |
| 971,889 | |
| Less: Accumulated depreciation | |
| | | |
| | |
| Accumulated depreciation, beginning of year | |
| (254,066 | ) | |
| (230,481 | ) |
| Depreciation for the year | |
| (29,001 | ) | |
| (31,688 | ) |
| Effect of changes in exchange rate | |
| 13,611 | | |
| 8,103 | |
| Accumulated depreciation, end of year | |
| (269,456 | ) | |
| (254,066 | ) |
| Real estate held for investment, net | |
$ | 650,223 | | |
$ | 717,823 | |
Real
estate held for investment represents the Company’s three office units located in two commercial buildings in Malaysia. One of
the adjoining office units in one building is rented to an unrelated tenant, and one office unit in another building is used by the Company.
Depreciation
for real estate held for investment, included in the cost of rental revenue, was $29,001 and $31,688 for the years ended December 31,
2022, and 2021, respectively.
NOTE
6 - OTHER INVESTMENTS
SCHEDULE OF OTHER INVESTMENTS
| |
|
As
of December 31, |
|
| |
|
2022 |
|
|
2021 |
|
| Investment
in equity securities without readily determinable fair values of affiliates: |
|
|
|
|
|
|
|
|
| (1)
Greenpro Trust Limited (a related party) |
|
$ |
11,981 |
|
|
$ |
51,613 |
|
| (2)
Other related parties |
|
|
5,394,125 |
|
|
|
9,570,322 |
|
| Total |
|
$ |
5,406,106 |
|
|
$ |
9,621,935 |
|
Equity
securities without readily determinable fair values are investments in privately held companies without readily determinable market values.
The Company adopted the guidance of ASC 321, Investments - Equity Securities, which allows an entity to measure investments in equity
securities without a readily determinable fair value using a measurement alternative that measures these securities at cost minus impairment,
if any, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investment of
same issuer (the “Measurement Alternative”). The fair value of equity securities without readily determinable fair values
that have been remeasured due to impairment are classified within Level 3. Management assesses each of these investments on an individual
basis. Additionally, on a quarterly basis, management is required to make a qualitative assessment of whether the investment is impaired.
The Company believes all the invested equity securities
are without readily determinable values even certain of the equity securities are listed in the over the counter (OTC) market, as their
securities are not actively traded on a securities exchange registered with the U.S. Securities and Exchange Commission (SEC) or in the
OTC market.
For
the year ended December 31, 2022, the Company recognized impairment of $4,208,029 for six of its total investments in equity securities
without readily determinable fair values. For the year ended December 31, 2021, the Company recognized impairment of $5,349,600 for one
of its total investments in equity securities without readily determinable fair values.
In
addition, the Company recorded its equity securities without readily determinable fair values at cost. For these cost method investments,
we recorded as other investments in our consolidated balance sheets. We reviewed all our cost method investments quarterly to determine
if impairment indicators were present; however, we were not required to determine fair value of these investments unless impairment indicators
exist. When impairment indicators exist, we generally adopt the valuation methods allowed under ASC820 Fair Value Measurement to evaluate the fair values of our
cost method investments approximated or exceeded their carrying values.
As
of December 31, 2022, the carrying value of our cost method investments aggregated $5,406,106.
On
December 31, 2022, and 2021, the carrying values of equity securities without readily determinable fair values are as follows:
SCHEDULE OF CARRYING VALUES OF EQUITY SECURITIES WITHOUT READILY DETERMINABLE FAIR VALUES
| | |
2022 | | |
2021 | |
| | |
As of December 31, | |
| | |
2022 | | |
2021 | |
| Equity securities without readily determinable fair values | |
| | | |
| | |
| Original cost | |
$ | 15,547,014 | | |
$ | 15,545,764 | |
| Unrealized gains (losses) | |
| - | | |
| - | |
| Provision for impairment or decline in value | |
| (10,131,858 | ) | |
| (5,923,829 | ) |
| Forfeiture, disposal or write-off | |
| (9,050 | ) | |
| - | |
| Equity securities without readily determinable fair values, net | |
$ | 5,406,106 | | |
$ | 9,621,935 | |
For
the years ended December 31, 2022, and 2021, the Company recognized an impairment loss of other investments of $4,208,029 and $5,349,600,
respectively.
During
2022, one of the investments in equity securities without readily determinable fair values was partially forfeited by $1,650, two of
the investments were written off in aggregate by $7,000 and one of the investments was sold at cost for $400.
Acquisition
of other investments during 2022
ACT
Wealth Academy Inc.
On
February 21, 2022, our subsidiary, Greenpro Venture Capital Limited (“GVCL”) entered into a subscription agreement with ACT
Wealth Academy Inc., a Nevada corporation, which provides training, seminars, and events in the academic fields (“ACT Wealth”).
Pursuant to the agreement, GVCL acquired 6,000,000 shares of common stock of ACT Wealth at a price of $600 or $0.0001 per share.
As
of December 31, 2022, the Company recorded the investment in ACT Wealth at a historical cost of $600 under other investments.
REBLOOD
Biotech Corp.
On
April 1, 2022, GVCL entered into a subscription agreement with REBLOOD Biotech Corp., a Nevada corporation, which is principally in provision
of health management and biotechnology services (“REBLOOD”). Pursuant to the agreement, GVCL acquired 1,000,000 shares of
common stock of REBLOOD at a price of $100 or $0.0001 per share.
As
of December 31, 2022, the Company recorded the investment in REDBLOOD at a historical cost of $100 under other investments.
Best2bid
Technology Corp.
On
June 9, 2022, GVCL entered into a subscription agreement with Best2bid Technology Corp., a Nevada corporation, which provides an online
bidding cum e-commerce platform enabling participants to auction or sell their merchandise to bidders (“Best2bid”). Pursuant
to the agreement, GVCL acquired 5,500,000 shares of common stock of Best2bid at a price of $550 or $0.0001 per share.
As
of December 31, 2022, the Company recorded the investment in Best2Bid at a historical cost of $550 under other investments.
Forfeiture,
write-off, or disposal of other investments during 2022
(a)
Forfeiture
Agape
ATP Corporation |
On
April 14, 2017, our wholly owned subsidiary, Greenpro Venture Capital Limited (“GVCL”) acquired 17,500,000 shares of common
stock of Agape ATP Corporation, a Nevada corporation (“Agape”), par value of $0.0001 per share, for $1,750. Agape is principally
engaged in provision of health and wellness products and advisory services to clients in Malaysia. As of December 31, 2021, GVCL holds
approximately 5% of the total outstanding shares of Agape and recognized the investment at historical cost of $1,750 under other investments.
On
January 21, 2022, GVCL entered into a forfeiture agreement with Agape. Pursuant to the agreement, GVCL agreed to transfer 16,500,000
shares out of its total invested 17,500,000 shares of common stock of Agape to Agape for nil consideration. As a result, GVCL holds approximately
1% of the total outstanding shares of Agape and recognized a loss on forfeiture of other investment of $1,650.
As
of December 31, 2022, GVCL owns 1,000,000 shares of common stock of Agape and recognized our investment in Agape under a historical cost
of $100 or $0.0001 per share.
72
Technology Group Limited
On
July 13, 2021, GVCL entered into a subscription agreement with 72 Technology Group Limited, a Cayman Islands media corporation based
in China which provides digital marketing services using 5G and AI technology (“72 Technology”). Pursuant to the agreement,
GVCL acquired 600,000 shares of common stock of 72 Technology at a price of $6,000 or $0.01 per share. Our investment in 72 Technology
was recognized at historical cost of $6,000 under other investments.
During
2022, 72 Technology decided to discontinue its IPO plan and upon mutual agreement, the IPO service agreement entered between 72 Technology
and the Company was terminated.
In
consideration of 72 Technology’s discontinuity of IPO plan and dormant status, we decided to write off our investment in 72 Technology.
For
the year ended December 31, 2022, we recorded a loss from written off of investment of $6,000, and as of December 31, 2022, we had no
investment in 72 Technology.
Fruita
Bio Limited
On
September 27, 2021, GVCL entered into a subscription agreement with Fruita Bio Limited., a British Virgin Islands corporation with major
business operations in Thailand, is principally engaged in production of bio-degradable packaging materials (“Fruita”). Pursuant
to the agreement, GVCL acquired 10,000,000 ordinary shares of Fruita at a price of $1,000 or $0.0001 per share. Our investment in Fruita
was recognized at historical cost of $1,000 under other investments.
During
2022, Fruita decided to discontinue its IPO plan and upon mutual agreement, the IPO service agreement entered between Fruita and the
Company was terminated.
In
consideration of Fruita’s discontinuity of IPO plan and dormant status, we decided to write off our investment in Fruita.
For
the year ended December 31, 2022, we recorded a loss from written off of investment of $1,000, and as of December 31, 2022, we had no
investment in Fruita.
Pentaip
Technology Inc.
On
December 29, 2020, GVCL entered into a subscription agreement with Pentaip Technology Inc., a Nevada corporation (“PTI”)
to acquired 4,000,000 shares of common stock of PTI at a price of $400 or $0.0001 per share, representing 10% of the issued and outstanding
shares of PTI. PTI uses artificial intelligence (“AI”) to provide investors and traders with financial data. Our investment
in PTI was recognized at historical cost of $400 under other investments.
On
December 16, 2022, GVCL agreed with Pentaip’s repurchase request, sold back our 4,000,000 owned PTI shares to PTL at $400. We received
cash of $400 from PTI in exchange for our return of PTI shares.
As
of December 31, 2022, we had no investment in PTI.
Impairment
of other investments during 2022
Greenpro
Trust Limited
On
March 30, 2015, our wholly owned subsidiary, Greenpro Resources Limited, a British Virgin Islands company (“GRBVI”) acquired
300,000 shares, representing approximately 8% of the issued and outstanding shares of Greenpro Trust Limited, a Hong Kong company (“GTL”),
from its shareholders at a price of HK$300,000 (approximately $38,710) or HK$1 per share. GTL is principally engaged in provision of
trusteeship, custodial and fiduciary services to clients in Hong Kong.
On
April 13, 2016, another wholly owned subsidiary of the Company, Asia UBS Global Limited, a Belize company (“AUB”) acquired
100,000 shares, representing approximately 3% of the issued and outstanding shares of GTL for HK$100,000 (approximately $12,903) or HK$1
per share.
The
Company indirectly has an aggregate of approximately 11% interest in GTL with an investment value of $51,613. Messrs. Lee and Loke are
common directors of GTL and the Company.
During
2021, there was no indicator of impairment and hence, our investment value in GTL was $51,613 as of December 31, 2021.
As
of December 31, 2022, the net asset value (“NAV”) of GTL was $107,835 and according to the Company’s 11% interest in
GTL’s NAV, our investment was valued approximately $11,981. Hence, the Company recorded an impairment loss of $39,632 for the year
ended December 31, 2022.
As
of December 31, 2022, our investment in GTL was revalued at $11,981.
First
Bullion Holdings, Inc.
On
October 19, 2020, GVCL entered into a stock purchase and option agreement with Mr. Tang Ka Siu Johnny and First Bullion Holdings Inc.
(“FBHI”). FBHI, a British Virgin Islands company, operates the businesses of banking, payment gateway, credit cards, debit
cards, money lending, crypto trading and securities token offerings, with corporate offices in the Philippines and Hong Kong. Pursuant
to the agreement, GVCL agreed to acquire 10% of the issued and outstanding shares of FBHI for a purchase price of $1,000,000 by issuing
approximately 68,587 shares of the Company’s restricted Common Stock to Mr. Tang, which was based on the average closing price
of the Company’s Common Stock for the five trading days preceding the date of the agreement.
Pursuant
to the agreement, Mr. Tang and FBHI also granted to GVCL an option for 180 days following the date of the agreement to purchase an additional
8% of the issued and outstanding shares of FBHI, at an agreed valuation of FBHI equal to $20,000,000. In consideration of acquisition
of the option, GVCL agreed to issue 25,000 shares of the Company’s restricted Common Stock to Mr. Tang, which shall constitute
partial payment for the option should GVCL elect to exercise the option.
On
December 11, 2020, the Company issued 68,587 shares of its restricted Common Stock to two designees of Mr. Tang at $14.58 per share to
acquire 10% of the issued and outstanding shares of FBHI for a purchase price of $1,000,000 and issued 25,000 shares of its restricted
Common Stock at $364,500 or $14.58 per share in partial consideration of the additional 8% shareholdings of FBHI.
On
February 17, 2021, GVCL exercised its option and FBHI issued to GVCL 160,000 ordinary shares of FBHI, comprising the additional 8% of
the shares sold under the agreement valued at $20,000,000.
On
February 26, 2021, the Company issued an additional 34,259 shares of its restricted Common Stock to two designees of Mr. Tang at $27
per share (valued at approximately $925,000).
As
of December 31, 2021, GVCL, in aggregate, holds 360,000 ordinary shares of FBHI, representing 18% of the total issued and outstanding
shares of FBHI. The investment was recognized at historical cost of $2,289,500 under other investments.
As
of December 31, 2022, GVCL, the fair value of FBHI was appraised by an independent appraiser, Ravia Global Appraisal Advisory Limited
(the “Appraiser”) and according to our 18% interest in FBHI, our investment was valued approximately $246,000. The depreciation
of FHBI’s fair value was mainly due to a significant decrease of its revenue. Hence, the Company recorded an impairment loss of
$2,043,500 for the year ended December 31, 2022.
As
of December 31, 2022, our investment in FBHI was revalued at $246,000.
Ata
Plus Sdn. Bhd.
On
July 8, 2020, GVCL entered into an acquisition agreement with all the eight shareholders of Ata Plus Sdn. Bhd., a company incorporated
in Malaysia and a Recognized Market Operator (RMO) by the Securities Commission of Malaysia (“APSB”). Pursuant to the agreement,
GVCL agreed to acquire 15% of the issued and outstanding share of APSB for a purchase price of $749,992. The purchase price was paid
by the Company issuing to the shareholders approximately 45,731 shares of the Company’s restricted Common Stock, which was based
on the average closing price of the Company’s Common Stock for the five trading days preceding the date of the agreement, $16.4
per share, on November 18, 2020.
As
of December 31, 2021, GVCL holds 15% of APSB’s issued and outstanding shares of common stock and recognized our investment in APSB
at historical cost of $749,992 under other investments.
As
of December 31, 2022, the fair value of APSB was appraised by an independent appraiser, Ravia Global Appraisal Advisory Limited (the
“Appraiser”) and according to our 15% interest in APSB, our investment was valued approximately $736,000. Hence, the Company
recorded an impairment loss of $13,992 for the year ended December 31, 2022.
New
Business Media Sdn. Bhd.
On
November 1, 2020, GVCL entered into an acquisition agreement with Ms. Lee Yuet Lye and Mr. Chia Min Kiat, shareholders of New Business
Media Sdn. Bhd. New Business Media Sdn. Bhd. is a Malaysia company involved in operating a Chinese media portal, which provides digital
news services focusing on Asian capital markets (“NBMSB”). NBMSB is one of the biggest Chinese language digital business
news networks in Malaysia and has readers from across Southeast Asia.
Pursuant
to the agreement, both Ms. Lee and Mr. Chia have agreed to sell to GVCL an 18% equity stake in NBMSB in consideration of a new issuance
of 25,759 shares of the Company’s restricted Common Stock, valued at $411,120 or $15.96 per share. The consideration was derived
from an agreed valuation of NBMSB of $2,284,000, based on its assets including customers, fixed assets, cash and cash equivalents, liabilities
as of November 1, 2020.
As
of December 31, 2021, GVCL recognized the investment in NBMSB at historical cost of $411,120 under other investments.
As
of December 31, 2022, the fair value of NBMSB was appraised by an independent appraiser, Ravia Global Appraisal Advisory Limited (the
“Appraiser”) and according to our 18% interest in NBMSB, our investment was valued approximately $82,000. The depreciation
of NBMSB’s fair value was mainly due to its significant drop of revenue. Hence, the Company recorded an impairment loss of $329,120
for the year ended December 31, 2022.
As
of December 31, 2022, our investment in NBMSB was revalued at $82,000.
Adventure
Air Race Company Limited
On
December 21, 2020, GVCL entered into a subscription agreement with Adventure Air Race Company Limited, a company incorporated in Nevada,
is principally engaged in promoting and managing an air race series (“AARC”). Pursuant to the agreement, GVCL acquired 2,000,000
shares of common stock of AARC at a price of $200 or $0.0001 per share.
On
December 22, 2020, GVCL entered another subscription agreement with AARC to acquire an additional 996,740 shares of common stock of AARC
at a price of $249,185 or $0.25 per share.
As
of December 31, 2021, GVCL, in aggregate, holds approximately 4% of the issued and outstanding shares of AARC and recognized the investment
in AARC at historical cost of $249,385 under other investments.
As
of December 31, 2022, GVCL holds approximately 4% interest of AARC. The Company made a provision of impairment of $249,385 for our investment
in AARC for the year ended December 31, 2022, and impaired our investment in AARC to nil as of December 31, 2022. The provision of full
impairment was due to AARC’s failure in provision of its updated financial condition and performance for evaluation.
Innovest
Energy Fund
On
February 11, 2021, Greenpro Resources Limited, a subsidiary of the Company (“GRL”) entered into a subscription agreement
with Innovest Energy Fund, a global multi-asset fund incorporated in the Cayman Islands, is principally engaged in developing a multi-faceted
suite of products and services for the crypto currency industry and economy (the “Fund”). Pursuant to the agreement, GRL
agreed to subscribe for $7,206,000 worth of Class B shares of the Fund by issuing 300,000 shares of the Company’s restricted Common
Stock, valued at $7,206,000 to the Fund.
On
April 7, 2021, the Company issued 300,000 shares of its restricted Common Stock to the Fund and issued 6,000 shares of its restricted
Common Stock to a designee of the Fund as a subscription fee of $144,120 ($24.02 per share) associated with the Fund.
On
December 31, 2021, GRL determined that the value of its investment in the Fund based on the closing stock price of the Company’s
Common Stock was impaired. Hence, an impairment loss of $5,349,600 was recorded for the year ended December 31, 2021, and the investment
in the Fund was revalued at $1,856,400 as of December 31, 2021.
On
December 31, 2022, GRL made a further impairment of $1,532,400 and revalued the investment in the Fund at $324,000 based on the closing
stock price of our Common Stock as of December 31, 2022.
NOTE
7 - INTANGIBLE ASSETS AND GOODWILL
Intangible
assets, net
SCHEDULE OF INTANGIBLE ASSETS
| Intangible assets | |
2022 | | |
2021 | |
| | |
As of December 31, | |
| Intangible assets | |
2022 | | |
2021 | |
| Trademarks | |
$ | 7,253 | | |
$ | 7,253 | |
| Customer lists | |
| 344,500 | | |
| 344,500 | |
| Insurance agency license | |
| 129,032 | | |
| 129,032 | |
| Total intangible assets, gross | |
| 480,785 | | |
| 480,785 | |
| Less: Accumulated amortization | |
| | | |
| | |
| Accumulated amortization, beginning of year | |
| (478,160 | ) | |
| (477,418 | ) |
| Amortization for the year | |
| (718 | ) | |
| (723 | ) |
| Effect of changes in exchange rate | |
| (7 | ) | |
| (19 | ) |
Accumulated
amortization, end of year | |
| (478,885 | ) | |
| (478,160 | ) |
| Intangible assets, net | |
$ | 1,900 | | |
$ | 2,625 | |
As
of December 31, 2022, our intangible assets totaled $480,785 and included $7,253 of trademarks acquired by Greenpro Resources (HK) Limited
(“GRHK”) during the years of 2013 to 2018, $344,500 of customer lists from the acquisition of Ace Corporation Services Limited
(“Ace”, renamed to Falcon Corporate Services Limited on August 26, 2016) in 2015, and $129,032 of an insurance agency license
from the acquisition of Sparkle Insurance Brokers Limited (“Sparkle”, renamed to Greenpro Sparkle Insurance Brokers Limited
on April 4, 2019) on January 2, 2019, respectively.
On
December 31, 2022, the customer lists from Ace and the insurance agency license from Sparkle had been fully amortized. The Company’s
management conducted the annual impairment test and concluded that it is more likely than not the estimated fair value of the trademarks
of GRHK was more than their carrying amount, and no impairment loss was indicated. As a result, no impairment was recorded.
Amortization
expense for intangible assets for the years ended December 31, 2022, and 2021 was $718 and $723, respectively.
Amortization
for each year following December 31, 2022, is as follows:
SCHEDULE OF AMORTIZATION EXPENSE OF INTANGIBLE ASSETS
| Year ending December 31, | |
Trademarks | |
| 2023 | |
$ | 718 | |
| 2024 | |
| 718 | |
| 2025 and thereafter | |
| 464 | |
| Total | |
$ | 1,900 | |
As
of December 31, 2022, the accumulated amortization of intangible assets was $478,885, and the net value of intangible assets was $1,900.
Goodwill
The
Company’s goodwill consisted of $319,726 from its acquisition of Falcon Secretaries Limited (“FASL”, renamed to Falcon
Accounting & Secretaries Limited on February 25, 2020) in 2015 and $26,082 from its acquisition of Greenpro Capital Village Sdn.
Bhd. (“GCVSB”) in 2021, respectively. As a result, the Company’s goodwill totaled $345,808.
Goodwill
is not amortized but tested for any indicator of impairment annually.
During
2022, the Company conducted the annual impairment test and concluded that there was no indicator of impairment for the goodwill derived
from the acquisition of GCVSB, as the net asset value (“NAV”) of GCVSB was greater than the value of the goodwill as of December
31, 2022.
During
2022, the Company conducted another impairment test and concluded that there was an indicator of impairment for the goodwill derived
from the acquisition of FASL, as the NAV of FASL is lesser than the value of the goodwill as of December 31, 2022. Therefore, an impairment
loss of $263,247 was made and the goodwill was revalued at $56,479.
As
of December 31, 2022, the value of Company’s goodwill was $82,561.
NOTE
8 - OPERATING LEASES
As
of December 31, 2022, the Company has three separate operating lease agreements for one office space in Hong Kong with a term of two
years, one office space in Kuala Lumpur and another office space in Labuan both with a term of one year, respectively. Other than these
three separate leases, the Company does not have other leases. Leases with an initial term of 12 months or less are not recorded on the
balance sheet. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is
recognized on a straight-line basis over the lease term.
Operating
lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease
payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent
our obligation to make lease payments arising from the lease. Generally, the implicit rate of interest (“discount rate”)
in arrangements is not readily determinable and the Company utilizes its incremental borrowing rate in determining the present value
of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit
rating would be. The operating lease ROU asset includes any lease payments made and excludes lease incentives.
The
components of operating lease cost and supplemental cash flow information related to leases are as follows:
SCHEDULE OF COMPONENTS OF LEASE EXPENSE AND SUPPLEMENTAL CASH FLOW INFORMATION
| | |
2022 | | |
2021 | |
| | |
For the years ended December 31, | |
| | |
2022 | | |
2021 | |
| Lease Cost | |
| | | |
| | |
| Operating lease cost (included in general and administrative expenses in the Company’s statement of operations for measurement of lease liabilities) | |
$ | 85,989 | | |
$ | 154,562 | |
| | |
| | | |
| | |
| Other Information | |
| | | |
| | |
| Cash paid for amounts included in the measurement of lease liabilities | |
$ | 91,919 | | |
$ | 149,204 | |
| Weighted average remaining lease term – operating leases (in years) | |
| 0.21 | | |
| 1.21 | |
| Average discount rate – operating leases | |
| 4.0 | % | |
| 4.0 | % |
The
supplemental balance sheet information related to leases is as follows:
SCHEDULE OF SUPPLEMENTAL BALANCE SHEET INFORMATION RELATED TO LEASES
| | |
2022 | | |
2021 | |
| | |
As of
December 31, | |
| | |
2022 | | |
2021 | |
| Non-current assets | |
| | | |
| | |
| Right-of-use assets | |
$ | 17,510 | | |
$ | 101,221 | |
| | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Operating lease liabilities | |
$ | 18,725 | | |
$ | 89,636 | |
| Operating lease liabilities, current | |
$ | 18,725 | | |
$ | 89,636 | |
| Non-current liabilities | |
| | | |
| | |
| Operating lease liabilities | |
$ | - | | |
$ | 18,760 | |
| Operating lease liabilities, non-current | |
$ | - | | |
$ | 18,760 | |
Maturity
of the Company’s lease liabilities is as follows:
SCHEDULE OF MATURITIES OF LEASE LIABILITIES
| | |
Lease liabilities | |
| Year Ended December 31, | |
| | |
| 2023 | |
| 18,829 | |
| Total lease payments | |
| 18,829 | |
| Less: Imputed interest | |
| (104 | ) |
| Present value of lease liabilities | |
$ | 18,725 | |
For
the years ended December 31, 2022, and 2021, the Company’s total lease expenses were $112,904 and $179,101, respectively.
NOTE
9 - DERIVATIVE LIABILITIES
SCHEDULE OF DERIVATIVE LIABILITIES
| | |
As of December 31, | |
| | |
2022 | | |
2021 | |
| Fair value of warrants | |
$ | 1 | | |
$ | 9,935 | |
Warrants
On
June 12, 2018, warrants exercisable into 53,556 shares of the Company’s Common Stock were issued as placement agent fees related
to the Company’s sale of Common Stock (see Note 11). The strike price of warrants issued by the Company is denominated in US dollars.
As a result, the warrants are not considered indexed to the Company’s own stock, and the Company characterized the fair value of
the warrants as a derivative liability upon issuance. The derivative liability is re-measured at the end of every reporting period with
the change in value reported in the statement of operations.
On
July 19, 2022, the Company filed a Certificate of Change with the Secretary of State of the State of Nevada (the “Certificate of
Change”), to effect a reverse split of the Company’s Common Stock at a ratio of 10-for-1 (the “Reverse Stock Split”),
effective as of July 28, 2022. The Reverse Stock Split effected a reduction in the number of shares of Common Stock issuable upon the
exercise of the warrants outstanding immediately prior to the effectiveness of the Reverse Stock Split. As a result of the Reverse Stock
Split, the number of the outstanding warrants exercisable into the Company’s Common Stock was reduced from 53,556 (pre-split) shares
to 5,356 (post-split) shares (see Note 11).
Warrant
activity including the number of shares and the exercise price per share has been adjusted for all periods presented in this Annual Report
to reflect the Reverse Stock Split effected on July 28, 2022, on a retroactive basis.
The
derivative liabilities were valued using the Black-Scholes-Merton valuation model with the following assumptions:
SCHEDULE OF ESTIMATED DERIVATIVE LIABILITIES AT FAIR VALUE ASSUMPTIONS
| | |
As of December 31, | |
| | |
2022 | | |
2021 | |
| Risk-free interest rate | |
$ | 3.97 | % | |
$ | 1.9 | % |
| Expected volatility | |
| 168 | % | |
| 174 | % |
| Expected life (in years) | |
| 0.4 years | | |
| 1.4 years | |
| Expected dividend yield | |
| 0.00 | % | |
| 0.00 | % |
| Fair value of warrants | |
$ | 1 | | |
$ | 9,935 | |
The
risk-free interest rate is based on the yield available on U.S. Treasury securities. The Company estimates volatility based on the historical
volatility of its Common Stock. The expected life of the warrants is based on the expiration date of the warrants. The expected dividend
yield was based on the fact the Company has not paid dividends to common shareholders in the past and does not expect to pay dividends
to common shareholders in the future.
For
the year ended December 31, 2022, the Company recognized a gain of $9,934 associated with the revaluation of above derivative liability.
NOTE
10 - STOCKHOLDERS’ EQUITY
Our
authorized capital consists, of 600,000,000 shares, of which 500,000,000 shares are designated as shares of Common Stock, par value $0.0001
per share, and 100,000,000 shares are designated as shares of preferred stock, par value $0.0001 per share. No shares of preferred stock
are currently outstanding. Shares of preferred stock may be issued in one or more series, each series to be appropriately designated
by a distinguishing letter or title, prior to the issuance of any shares thereof. The voting powers, designations, preferences, limitations,
restrictions, relative, participating, options and other rights, and the qualifications, limitations, or restrictions thereof, of the
preferred stock are to be determined by the Board of Directors before the issuance of any shares of preferred stock in such series.
Reverse
stock split in 2022
On
July 19, 2022, the Company filed a Certificate of Change with the Secretary of State of the State of Nevada (the “Certificate of
Change”), to effect a reverse split of the Company’s Common Stock at a ratio of 10-for-1 (the “Reverse Stock Split”),
effective as of July 28, 2022. On that date, every 10 issued and outstanding shares of the Company’s Common Stock were automatically
converted into one outstanding share of Common Stock.
The
Reverse Stock Split affected all holders of Common Stock uniformly and did not affect any stockholder’s percentage of ownership
interest. The par value of the Company’s Common Stock remained unchanged at $0.0001 per share and the number of authorized shares
of Common Stock remained the same after the Reverse Stock Split.
As
the par value per share of the Company’s Common Stock remained unchanged at $0.0001 per share, the change in the Common Stock recorded
at par value has been reclassified to additional paid-in-capital on a retroactive basis. All references to shares of Common Stock and
per share data for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted to
reflect the Reverse Stock Split on a retroactive basis.
During
2022, the Company did not any issue any shares of its Common Stock.
Below
set forth the information for the Company’s issuance of Common Stock during 2021:
Shares
issued for acquisitions
On
February 26, 2021, the Company issued 34,259 shares of its restricted Common Stock at $27 per share to two designees of the shareholder
of First Bullion Holdings Inc. (“FBHI”), valued at approximately $925,000 for settling the balance consideration of acquisition
of additional 8% shareholdings in FBHI.
On
April 7, 2021, the Company subscribed for $7,206,000 worth of Class B shares of Innovest Energy Fund (the “Fund”) by issuance
of 300,000 shares of the Company’s restricted Common Stock at $24.02 per share to the Fund at a subscription of $7,206,000.
On
July 19, 2021, the Company redeemed 347,000 shares out of total 504,750 shares of preferred stock from 25 preferred stock shareholders
of Greenpro Capital Village Sdn. Bhd. by issuance of 7,953 shares of the Company’s restricted Common Stock valued at $69,191 or
$8.7 per share.
Shares
issued from conversion of promissory notes
On
April 16, 2021, the Company issued 70,474 shares of its restricted Common Stock to Streeterville Capital, LLC (“Streeterville”)
at a conversion price of $10 per share for settlement of the principal balance of $670,000 and accrued interest of $34,738, respectively
of the convertible note issued on October 13, 2020. The market price of the Company’s Common Stock was $23.3 per share, or at a
total value of $1,642,040, on April 16, 2021.
On
July 14, 2021, the Company issued 23,266 shares of its restricted Common Stock to Streeterville at a conversion price of $7.52175 per
share for settlement of the partial principal of the convertible note issued on January 8, 2021, amounted $175,000. The market price
of the Company’s Common Stock was $10.1 per share, or at a total value of $234,986, on July 14, 2021.
On
July 26, 2021, the Company issued 28,150 shares of its restricted Common Stock to Streeterville at a conversion price of $6.21675 per
share for settlement of the partial principal of the convertible note issued on January 8, 2021, amounted $175,000. The market price
of the Company’s Common Stock was $9.3 per share, or at a total value of $261,793, on July 26, 2021.
On
August 5, 2021, the Company issued 56,299 shares of its restricted Common Stock to Streeterville at a conversion price of $6.21675 per
share for settlement of the partial principal of the convertible note issued on January 8, 2021, amounted $350,000. The market price
of the Company’s Common Stock was $8.697 per share, or at a total value of $489,637, on August 5, 2021.
On
August 12, 2021, the Company issued 64,342 shares of its restricted Common Stock to Streeterville at a conversion price of $6.21675 per
share for settlement of the partial principal of the convertible note issued on February 11, 2021, amounted $400,000. The market price
of the Company’s Common Stock was $8.101 per share, or at a total value of $521,237, on August 12, 2021.
On
August 20, 2021, the Company issued 337,500 shares of its restricted Common Stock to Streeterville at a conversion price of $6.21675
per share for settlement of the partial principal of the convertible note issued on February 11, 2021, amounted $2,098,153. The market
price of the Company’s Common Stock was $7.599 per share, or at a total value of $2,564,662, on August 20, 2021.
On
August 24, 2021, the Company issued 337,000 shares of its restricted Common Stock to Streeterville at a conversion price of $6.21675
per share for settlement of the partial principal of the convertible note issued on February 11, 2021, amounted $2,095,045. The market
price of the Company’s Common Stock was $9.164 per share, or at a total value of $3,088,268, on August 24, 2021.
On
August 31, 2021, the Company issued 170,967 shares of its restricted Common Stock to Streeterville at a conversion price of $6.21675
per share for settlement of the balance of principal of $960,000 and accrued interest of $102,857 of the convertible note issued on January
8, 2021. The market price of the Company’s Common Stock was $9.573 per share, or at a total value of $1,636,664, on August 31,
2021.
On
August 31, 2021, the Company issued 107,500 shares of its restricted Common Stock to Streeterville at a conversion price of $6.21675
per share for settlement of the partial principal of the convertible note issued on February 11, 2021, amounted $668,301. The market
price of the Company’s Common Stock was $9.573 per share, or at a total value of $1,029,097, on August 31, 2021.
On
October 6, 2021, the Company issued 22,730 shares of its restricted Common Stock to Streeterville at a conversion price of $4.3995 per
share for settlement of the partial principal of the convertible note issued on February 11, 2021, amounted $100,000. The market price
of the Company’s Common Stock was $6.761 per share, or at a total value of $153,676, on October 6, 2021.
On
October 8, 2021, the Company issued 104,273 shares of its restricted Common Stock to Streeterville at a conversion price of $4.3995 per
share for settlement of the balance of principal of $154,989 and accrued interest of $303,758, respectively of the convertible note issued
on February 11, 2021. The market price of the Company’s Common Stock was $6.811 per share, or at a total value of $710,200, on
October 8, 2021.
Shares
issued for expenses
On
April 7, 2021, the Company issued 6,000 shares of its restricted Common Stock to a designee of the Innovest Energy Fund (the “Fund”)
as subscription fee of $144,120 ($24.02 per share) associated with the Fund.
On
November 17, 2021, the Company issued 20,000 shares of its restricted Common Stock valued at $10.404 per share, or a total of $208,080
for marketing expense to an investor relations agent, Mr. Dennis Burns.
NOTE
11 – WARRANTS
In
2018, the Company issued warrants exercisable into 53,556 shares of Common Stock at an exercise price of $7.20 per share and will expire
in June 2023. The warrants were fully vested when issued.
On
July 19, 2022, the Company filed a Certificate of Change with the Secretary of State of the State of Nevada (the “Certificate of
Change”), to effect a reverse split of the Company’s Common Stock at a ratio of 10-for-1 (the “Reverse Stock Split”),
effective as of July 28, 2022. The Reverse Stock Split effected a reduction in the number of shares of Common Stock issuable upon the
exercise of the warrants outstanding immediately prior to the effectiveness of the Reverse Stock Split. As a result of the Reverse Stock
Split, the number of the outstanding warrants exercisable into the Company’s Common Stock was reduced from 53,556 (pre-split) shares
to 5,356 (post-split) shares (see Note 9) and the exercise price of the warrants was adjusted from $7.2 (pre-split) per share to $72
(post-split) per share.
Warrant
activity including the number of shares and the exercise price per share has been adjusted for all periods presented in this Annual Report
to reflect the Reverse Stock Split effected on July 28, 2022, on a retroactive basis.
A
summary of warrants to purchase Common Stock issued during the years ended December 31, 2022, and 2021 is as follows:
SUMMARY OF WARRANTS ACTIVITY
| | |
Shares | | |
Weighted Average Exercise Price | |
| Balance outstanding as of January 1, 2021 | |
| 5,356 | | |
$ | 72.00 | |
| Granted | |
| - | | |
| - | |
| Exercised | |
| - | | |
| - | |
| Expired/Cancelled | |
| - | | |
| - | |
| Balance outstanding as of December 31, 2021 | |
| 5,356 | | |
| 72.00 | |
| Granted | |
| - | | |
| - | |
| Exercised | |
| - | | |
| - | |
| Expired/Cancelled | |
| - | | |
| - | |
| Balance outstanding and exercisable as of December 31, 2022 | |
| 5,356 | | |
$ | 72.00 | |
As
of December 31, 2022, and 2021, there were 5,356 stock warrants outstanding with no intrinsic value.
NOTE
12 - INCOME TAXES
Provision
for income taxes consisted of the following:
SCHEDULE OF PROVISION FOR (BENEFIT FROM) INCOME TAXES
| | |
For the years ended December 31, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Current: | |
| | | |
| | |
| – Local | |
$ | - | | |
$ | - | |
| – Foreign: | |
| | | |
| | |
| Hong Kong | |
| - | | |
| 2,630 | |
| The PRC | |
| 2,356 | | |
| 2,310 | |
| Malaysia | |
| - | | |
| - | |
| | |
| | | |
| | |
| Deferred: | |
| | | |
| | |
| – Local | |
| - | | |
| - | |
| – Foreign | |
| - | | |
| - | |
| | |
$ | 2,356 | | |
$ | 4,940 | |
A
summary of United States and foreign loss before income taxes was comprised of the following:
SCHEDULE OF LOSS BEFORE INCOME TAXES
| | |
For the years ended December 31, | |
| | |
2022 | | |
2021 | |
| Tax jurisdictions from: | |
| | | |
| | |
| – United States | |
$ | ) | |
$ | ) |
| – Foreign, representing: | |
| | | |
| | |
| Hong Kong | |
| | |
| ) |
| The PRC | |
| | |
| ) |
| Malaysia | |
| ) | |
| ) |
| Labuan | |
| ) | |
| |
| Other (primarily nontaxable jurisdictions) | |
| ) | |
| ) |
| | |
| | | |
| | |
| Loss before income taxes | |
$ | ) | |
$ | ) |
Effective
and Statutory Rate Reconciliation
The
following table summarizes a reconciliation of the Company’s blended statutory income tax rate to the Company’s effective
tax rate as a percentage of income from continuing operations before taxes:
SCHEDULE OF EFFECTIVE INCOME TAX RATE
| | |
For the years ended
December 31, | |
| | |
2022 | | |
2021 | |
| | |
| | |
| |
| Statutory tax rate | |
| 21.0 | % | |
| 21.0 | % |
| Impairment of goodwill, intangible assets, and investments | |
| - | % | |
| - | % |
| Change in income tax valuation allowance | |
| (21.0 | )% | |
| (21.0 | )% |
| Effective tax rate | |
| 0.0 | % | |
| 0.0 | % |
The
effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range
of income tax rates. During the years presented, the Company has several subsidiaries that operate in different countries and are subject
to tax in the jurisdictions in which its subsidiaries operate, as follows:
The
significant components of deferred taxes of the Company are as follows (rounded to the nearest thousand):
SCHEDULE OF COMPONENTS OF DEFERRED TAX ASSETS
| |
|
2022 |
|
|
2021 |
|
| |
|
As of December 31, |
|
| |
|
2022 |
|
|
2021 |
|
| Deferred
tax assets |
|
|
|
|
|
|
|
|
| Impairment
of goodwill, intangible assets, and investments |
|
$ |
832,000 |
|
|
$ |
832,000 |
|
| Financing
costs |
|
|
974,000 |
|
|
|
974,000 |
|
| Operating
lease liability |
|
|
4,000 |
|
|
|
23,000 |
|
| Accounts
receivable allowance |
|
|
5,000 |
|
|
|
28,000 |
|
| Net
operating loss (NOL) carryforwards: |
|
|
|
|
|
|
|
|
| –
United States of America |
|
|
3,918,000 |
|
|
|
3,766,000 |
|
| –
Hong Kong |
|
|
504,000 |
|
|
|
470,000 |
|
| –
The PRC |
|
|
557,000 |
|
|
|
619,000 |
|
| –
Malaysia |
|
|
217,000 |
|
|
|
197,000 |
|
| –
Labuan |
|
|
1,000 |
|
|
|
- |
|
| Gross deferred tax assets |
|
|
|
|
|
|
|
|
| Gross
deferred tax assets |
|
|
7,012,000 |
|
|
|
6,909,000 |
|
| Less:
valuation allowance |
|
|
(7,006,000 |
) |
|
|
(5,804,000 |
) |
| Total
deferred tax assets |
|
|
6,000 |
|
|
|
1,105,000 |
|
| |
|
|
|
|
|
|
|
|
| Deferred
tax liabilities |
|
|
|
|
|
|
|
|
| Change
in fair value of derivative liabilities |
|
|
2,000 |
|
|
|
1,084,000 |
|
| Operating
lease right-of-use asset |
|
|
4,000 |
|
|
|
21,000 |
|
| Total
deferred tax liabilities |
|
|
6,000 |
|
|
|
1,105,000 |
|
| |
|
|
|
|
|
|
|
|
| Net
deferred tax asset (liability) |
|
$ |
- |
|
|
$ |
- |
|
The
Company believes that it is more likely than not that the deferred tax assets will not be fully realized in the future. Accordingly,
the Company provided for a full valuation allowance against its deferred tax assets of $5,197,000 as of December 31, 2022.
For
the year ended December 31, 2022, the valuation allowance increased by $145,000, was primarily related to losses carryforward from various
tax regimes.
United
States of America
The
Company is registered in the State of Nevada and is subject to United States of America tax law.
For
the years ended December 31, 2022, and 2021, the operations in the United States of America incurred a net operating loss (NOL) of $728,000
and $8,056,000, respectively.
As
of December 31, 2022, the cumulative net operating losses (NOLs) were $18,659,000 which can be carried forward to offset future taxable
income. The NOL carryforwards begin to expire in 2037, if unutilized.
Hong
Kong
The
Company’s subsidiaries operating in Hong Kong are subject to the Hong Kong Profits Tax at the statutory income tax rate of 16.5%
on their assessable income for the tax year.
For
the year ended December 31, 2022, the subsidiaries in Hong Kong incurred the aggregate of a net operating income (NOI) of $73,000 and
for the year ended December 31, 2021, the subsidiaries in Hong Kong incurred the aggregate of a net operating loss (NOL) of $347,000.
As
of December 31, 2022, the cumulative net operating losses (NOLs) aggregated for those subsidiaries which have operations in Hong Kong
were $3,055,000. The cumulative NOLs can be carried forward indefinitely to offset future taxable income.
The
PRC
The
Company’s subsidiaries operating in the PRC are subject to the Corporate Income Tax governed by the Income Tax Law of the People’s
Republic of China with a unified statutory income tax rate of 25%.
For
the year ended December 31, 2022, the subsidiaries in the PRC recorded the aggregate of a net operating income (NOI) of $248,000 , while
for the year ended December 31, 2021, the subsidiaries in the PRC recorded the aggregate of a net operating loss (NOL) of $61,000.
As
of December 31, 2022, the subsidiaries operating in the PRC had incurred the aggregate amount of cumulative net operating losses (NOLs)
of $2,229,000 which can be carried forward to offset future taxable income. The NOL carryforwards begin to expire in 2023, if unutilized.
Malaysia
The
Company’s subsidiaries operating in Malaysia are subject to the Malaysia Corporate Tax Laws at a progressive income tax rate starting
from 17% on their assessable income for the tax year.
For
the years ended December 31, 2022, and 2021, the subsidiaries in Malaysia incurred the aggregate of a net operating loss (NOL) of $101,000
and $176,000, respectively.
As
of December 31, 2022, the operations in Malaysia had incurred the aggregate amount of cumulative net operating losses (NOLs) of $1,084,000
which can be carried forward indefinitely to offset taxable income in future.
Labuan
The
Company’s subsidiary operating in Labuan are subject to the Labuan Corporate Tax Laws at a progressive income tax rate starting
from 3% on their assessable income for the tax year.
For
the year ended December 31, 2022, the subsidiary in Labuan incurred the aggregate of a net operating loss (NOL) of $43,000.
As
of December 31, 2022, the operations in Labuan had incurred the aggregate amount of cumulative net operating losses (NOLs) of $43,000
which can be carried forward indefinitely to offset taxable income in future.
The
Company has provided for a full valuation allowance against the deferred tax assets on the expected future tax benefits from all the
Company’s net operating loss carryforwards as the Company believes it is more likely than not that these deferred tax assets will
not be fully realized in the future.
NOTE
13 - RELATED PARTY TRANSACTIONS
SCHEDULE OF DUE FROM RELATED PARTIES
| Accounts receivable from related parties: | |
December 31, 2022 | | |
December 31, 2021 | |
| | |
| | |
| |
| Accounts receivable, net | |
| | | |
| | |
| - Related party B (net of allowance of $1,750 and $41 as of December 31, 2022, and 2021, respectively) | |
$ | 129,250 | | |
$ | 41 | |
| - Related party K (net of allowance of $2 as of December 31, 2022) | |
| 42 | | |
| - | |
| Total | |
$ | 129,292 | | |
$ | 41 | |
| Prepaid
to a related party: |
|
December
31, 2022 |
|
|
December
31, 2021 |
|
| |
|
|
|
|
|
|
|
|
| Prepayment |
|
|
|
|
|
|
|
|
| -
Related party B |
|
$ |
80,000 |
|
|
$ |
- |
|
| Total |
|
$ |
80,000 |
|
|
$ |
- |
|
| Due from related parties: | |
December 31, 2022 | | |
December 31, 2021 | |
| | |
| | |
| |
| Due from related parties | |
| | | |
| | |
| - Related party B | |
$ | 4,708 | | |
$ | 503,361 | |
| - Related party D | |
| 200,000 | | |
| 606,430 | |
| - Related party G | |
| 1,064 | | |
| 1,064 | |
| - Related party H | |
| 60,000 | | |
| 60,000 | |
| Total | |
$ | 265,772 | | |
$ | 1,170,855 | |
The
amounts due from related parties are interest-free, unsecured and have no fixed terms of repayment.
SCHEDULE OF DUE TO RELATED PARTIES
| Due to related parties: | |
December 31, 2022 | | |
December 31, 2021 | |
| | |
| | |
| |
| Due to related parties | |
| | | |
| | |
| - Related party A | |
$ | 47,135 | | |
$ | 29,512 | |
| - Related party B | |
| 2,275 | | |
| 1,513 | |
| - Related party G | |
| - | | |
| 780 | |
| - Related party I | |
| - | | |
| 2,257 | |
| - Related party J | |
| 390,333 | | |
| 701,781 | |
| - Related party K | |
| 8,508 | | |
| 21,440 | |
| Total | |
$ | 448,251 | | |
$ | 757,283 | |
| Due to related parties | |
$ | 448,251 | | |
$ | 757,283 | |
The
amounts due to related parties are interest-free, unsecured and repayable on demand.
SCHEDULE OF INCOME FROM OR EXPENSES TO RELATED PARTIES
| Income from or expenses to related parties: | |
2022 | | |
2021 | |
| | |
For the years ended
December 31, | |
| Income from or expenses to related parties: | |
2022 | | |
2021 | |
| | |
| | |
| |
| Service revenue from related parties | |
| | | |
| | |
| - Related party A | |
$ | 147,269 | | |
$ | 93,718 | |
| - Related party B | |
| 463,304 | | |
| 733,103 | |
| - Related party C | |
| - | | |
| 115 | |
| - Related party D | |
| 30,923 | | |
| 26,512 | |
| - Related party E | |
| 8,865 | | |
| 5,418 | |
| - Related party G | |
| 13,664 | | |
| 1,425 | |
| - Related party I | |
| 1,089 | | |
| 1,158 | |
| - Related party K | |
| 89 | | |
| - | |
| Total | |
$ | 665,203 | | |
$ | 861,449 | |
| Service revenue from related parties | |
$ | 665,203 | | |
$ | 861,449 | |
| | |
| | | |
| | |
| General and administrative expenses to related parties | |
| | | |
| | |
| - Related party A | |
$ | 9,287 | | |
$ | 8,420 | |
| - Related party B | |
| 125,286 | | |
| 3,859 | |
| - Related party D | |
| - | | |
| 643 | |
| - Related party I | |
| 16,334 | | |
| - | |
| - Related party K | |
| 42,895 | | |
| - | |
| Total | |
$ | 193,802 | | |
$ | 12,922 | |
| General and administrative expenses to related parties | |
$ | 193,802 | | |
$ | 12,922 | |
| | |
| | | |
| | |
| Other income from related parties | |
| | | |
| | |
| - Related party B | |
$ | 1,356 | | |
$ | - | |
| - Related party D | |
| 4,494 | | |
| - | |
| Total | |
$ | 5,850 | | |
$ | - | |
| Other income from related parties | |
$ | 5,850 | | |
$ | - | |
| | |
| | | |
| | |
| Other expenses-impairment of related parties | |
| | | |
| | |
| | |
| | | |
| | |
| - Related party B | |
$ | 4,208,029 | | |
$ | 5,349,600 | |
| - Related party D | |
| 606,250 | | |
| - | |
| Total | |
$ | 4,814,279 | | |
$ | 5,349,600 | |
| Other expenses-impairment of related parties | |
$ | 4,814,279 | | |
$ | 5,349,600 | |
Related
party A is under common control of Mr. Loke Che Chan Gilbert, the Company’s CFO, and a major shareholder.
Related
party B represents companies where the Company owns a respective percentage ranging from 1% to 18% interests in those companies.
Related
party C is controlled by a director of some wholly owned subsidiaries of the Company.
Related
party D represents companies that we have determined that we can significantly influence based on our common business relationships.
Related
party E represents companies whose CEO is a consultant to the Company, and who is also a director of Aquarius Protection Fund and a shareholder
of the Company.
Related
party F represents a family member or members of Mr. Loke Che Chan Gilbert, the Company’s CFO, and a major shareholder.
Related
party G is under common control of Mr. Lee Chong Kuang, the Company’s CEO and a major shareholder.
Related
party H represents a company in which we currently have an approximate 48% equity-method investment. On December 31, 2022, and 2021,
amounts due from related party H are unsecured, bear no interest, and are payable upon demand. During 2018, the Company acquired approximately
49% of related party H for total consideration of $368,265. On December 31, 2018, the Company determined that its investments in related
party H was impaired and recorded an impairment of other investments of $368,265.
Related
party I is controlled by a family member of Mr. Lee Chong Kung, the Company’s CEO, and a major shareholder.
Related
party J represents the noncontrolling interest in the Company’s subsidiary that owns its real estate held for sale. The amounts
due to related party J are unsecured, bear no interest, are payable on demand, and related to the initial acquisition of the real estate
held for sale.
Related
party K represents shareholders and directors of the Company. Due to related party K represents expenses paid by the shareholders or
directors to third parties on behalf of the Company, are non-interest bearing, and are due on demand.
NOTE
14 - SEGMENT INFORMATION
ASC
280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with
the Company’s internal organization structure as well as information about services categories, business segments and major customers
in financial statements.
The
Company has two reportable segments that are based on the following business units: service business and real estate business. In accordance
with the “Segment Reporting” Topic of the ASC, the Company’s chief operating decision maker has been identified as
the Chief Executive Officer and President, who reviews operating results to make decisions about allocating resources and assessing performance
for the entire Company.
Existing
guidance, which is based on a management approach to segment reporting, establishes requirements to report selected segment information
quarterly and to report annually entity-wide disclosures about products and services, major customers, and the countries in which the
entity holds material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting”
due to their similar customer base and similarities in economic characteristics; nature of products and services; and procurement, manufacturing,
and distribution processes. The Company operates two reportable business segments:
| ● |
Service
business – provision of corporate advisory and business solution services |
| |
|
| ● |
Real
estate business – trading or leasing of commercial real estate properties in Hong Kong and Malaysia |
The
Company had no inter-segment sales for the years presented. Summarized financial information concerning the Company’s reportable
segments is shown as below:
(a)
By Categories
SCHEDULE OF SUMMARIZED FINANCIAL INFORMATION
| | |
| | | |
| | | |
| | | |
| | |
| | |
For the year ended December 31, 2022 | |
| | |
Real estate business | | |
Service business | | |
Corporate | | |
Total | |
| | |
| | |
| | |
| | |
| |
| Revenues | |
$ | 948,531 | | |
$ | 2,725,466 | | |
$ | - | | |
$ | 3,673,997 | |
| Cost of revenues | |
| (619,426 | ) | |
| (404,077 | ) | |
| - | | |
| (1,023,503 | ) |
| Reversal of write-off notes receivable | |
| | | |
| - | | |
| 200,000 | | |
| 200,000 | |
| Depreciation and amortization | |
| (30,874 | ) | |
| (120,211 | ) | |
| (4,120 | ) | |
| (155,205 | ) |
| Impairment of goodwill | |
| - | | |
| - | | |
| (263,247 | ) | |
| (263,247 | ) |
| Impairment of other receivable | |
| - | | |
| - | | |
| (606,250 | ) | |
| (606,250 | ) |
| Impairment of investments | |
| - | | |
| - | | |
| (4,208,029 | ) | |
| (4,208,029 | ) |
| Net income (loss) | |
| 221,712 | | |
| (620,880 | ) | |
| (5,863,020 | ) | |
| (6,262,188 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Total assets | |
| 1,851,373 | | |
| 5,995,114 | | |
| 7,792,719 | | |
| 15,639,206 | |
| Capital expenditures for long-lived assets | |
$ | - | | |
$ | 3,016 | | |
$ | - | | |
$ | 3,016 | |
| | |
| | | |
| | | |
| | | |
| | |
| | |
For the year ended December 31, 2021 | |
| | |
Real estate business | | |
Service business | | |
Corporate | | |
Total | |
| | |
| | |
| | |
| | |
| |
| Revenues | |
$ | 128,830 | | |
$ | 2,820,950 | | |
$ | - | | |
$ | 2,949,780 | |
| Cost of revenues | |
| (49,778 | ) | |
| (422,908 | ) | |
| - | | |
| (472,686 | ) |
| Reversal of write-off notes receivable | |
| - | | |
| - | | |
| 5,000,000 | | |
| 5,000,000 | |
| Depreciation and amortization | |
| (154,023 | ) | |
| (5,201 | ) | |
| (9,460 | ) | |
| (168,684 | ) |
| Impairment of investment | |
| - | | |
| - | | |
| (5,349,600 | ) | |
| (5,349,600 | ) |
| Loss on extinguishment of notes | |
| - | | |
| - | | |
| (3,521,263 | ) | |
| (3,521,263 | ) |
| Net income (loss) | |
| (34,692 | ) | |
| (6,345,701 | ) | |
| (7,982,839 | ) | |
| (14,363,232 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Total assets | |
| 2,373,236 | | |
| 9,491,903 | | |
| 10,845,542 | | |
| 22,710,681 | |
| Capital expenditures for long-lived assets | |
$ | - | | |
$ | 39,349 | | |
$ | - | | |
$ | 39,349 | |
(b)
By Geography*
| | |
| * | | |
| * | | |
| * | | |
| * | |
| | |
For the year ended December 31, 2022 | | |
| |
| | |
Hong Kong | | |
Malaysia | | |
China | | |
Total | |
| | |
| | |
| | |
| | |
| |
| Revenues | |
$ | 2,046,846 | | |
$ | 397,705 | | |
$ | 1,229,446 | | |
$ | 3,673,997 | |
| Cost of revenues | |
| (659,126 | ) | |
| (221,442 | ) | |
| (142,935 | ) | |
| (1,023,503 | ) |
| Reversal of write-off notes receivable | |
| 200,000 | | |
| - | | |
| - | | |
| 200,000 | |
| Depreciation and amortization | |
| (10,940 | ) | |
| (30,874 | ) | |
| (113,391 | ) | |
| (155,205 | ) |
| Impairment of goodwill | |
| (263,247 | ) | |
| - | | |
| - | | |
| (263,247 | ) |
| Impairment of other receivable | |
| (606,250 | ) | |
| - | | |
| - | | |
| (606,250 | ) |
| Impairment of investments | |
| (4,208,029 | ) | |
| - | | |
| - | | |
| (4,208,029 | ) |
| Loss
on extinguishment of notes | |
| | | |
| | | |
| | | |
| | |
| Net income (loss) | |
| (6,329,749 | ) | |
| (178,618 | ) | |
| 246,179 | | |
| (6,262,188 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Total assets | |
| 10,786,359 | | |
| 1,969,298 | | |
| 2,883,549 | | |
| 15,639,206 | |
| Capital expenditures for long-lived assets | |
$ | - | | |
$ | 1,226 | | |
$ | 1,790 | | |
$ | 3,016 | |
| | |
| * | | |
| * | | |
| * | | |
| * | |
| |
|
For
the year ended December 31, 2021 |
|
|
|
|
| |
|
Hong
Kong |
|
|
Malaysia |
|
|
China |
|
|
Total |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenues |
|
$ |
1,573,606 |
|
|
$ |
601,336 |
|
|
$ |
774,838 |
|
|
$ |
2,949,780 |
|
| Cost
of revenues |
|
|
(136,346 |
) |
|
|
(264,703 |
) |
|
|
(71,637 |
) |
|
|
(472,686 |
) |
| Reversal
of write-off notes receivable |
|
|
5,000,000 |
|
|
|
- |
|
|
|
- |
|
|
|
5,000,000 |
|
| Depreciation
and amortization |
|
|
(14,282 |
) |
|
|
(33,315 |
) |
|
|
(121,087 |
) |
|
|
(168,684 |
) |
| Impairment
of investment |
|
|
(5,349,600 |
) |
|
|
- |
|
|
|
- |
|
|
|
(5,349,600 |
) |
| Loss
on extinguishment of notes |
|
|
(3,521,263 |
)
|
|
|
- |
|
|
|
- |
|
|
|
(3,521,263 |
) |
| Net
income (loss) |
|
|
(14,499,520 |
) |
|
|
199,381 |
|
|
|
(63,093 |
) |
|
|
(14,363,232 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total
assets |
|
|
18,389,057 |
|
|
|
1,295,424 |
|
|
|
3,026,200 |
|
|
|
22,710,681 |
|
| Capital
expenditures for long-lived assets |
|
$ |
30,652 |
|
|
$ |
2,071 |
|
|
$ |
6,626 |
|
|
$ |
39,349 |
|
| * |
Revenues
and costs are attributed to countries based on the location of customers. |