UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 10-K

 

(Mark One)

 

[X]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 2017 OR
     
[  ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________TO _______________

 

Commission file number: 000-27791

 

Wincash Apolo Gold & Energy, Inc.
(Exact name of small business issuer in its charter)

 

Nevada   98-0412805
State or other jurisdiction of   I.R.S. Employer
incorporation or organization   Identification No.

 

20/F, EIB Centre, 40-44 Bonham Strand    
 Sheung Wan, Hong Kong     -
 (Address of principal executive offices)   (Zip Code)

 

Issuer’s telephone number: (852) 2516 5060

 

Securities Registered Under Section 12(b) of the Exchange Act: None

 

Securities Registered Under Section 12(g) of the Exchange Act:

 

Common Stock, $0.001 par value
(Title of class)

 

Indicate by check mark if the registrant is well-known seasoned issuer, as defined in Rule 405 of the Securities Act Yes [  ] No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [X] No [  ]

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [  ]

 

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of the issuer’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Seethe definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ]   Accelerated filer [  ]
Non-accelerated filer (Do not check if a smaller reporting company) [  ]   Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [X] No [  ]

 

State issuer’s revenues for most recent fiscal year: Nil

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates. As of June 30, 2017, the aggregate market value of the voting and non-voting common equity held by non-affiliates is based on 3,664,974 shares and the average bid and asked price of $0.099 per share is $362,832.

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 26,137,387 shares of Common Stock as of September 11, 2017.

 

Documents Incorporated by Reference: None

 

NOTE REGARDING FORWARD LOOKING STATEMENTS

 

Except for statements of historical fact, certain information contained herein constitutes “forward-looking statements,” including without limitation statements containing the words “believes,” “anticipates,” “intends,” “expects” and words of similar import, as well as all projections of future results. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results or achievements of the Company to be materially different from any future results or achievements of the Company expressed or implied by such forward-looking statements. Such factors include, but are not limited to the following: the Company’s lack of an operating history, the Company’s minimal level of revenues and unpredictability of future revenues; the Company’s future capital requirements to develop additional property within the defined claim; the risks associated with rapidly changing technology; the risks associated with governmental regulations and legal uncertainties; and the other risks and uncertainties described under “Description of Business - Risk Factors” in this Form 10-KSB. Certain of the Forward-looking statements contained in this annual report are identified with cross-references to this section and/or to specific risks identified under “Description of Business - Risk Factors”.

 

 

 

     
 

 

  Page
   
PART I  
   
ITEM 1. Description of Business 3
Item 1A. Risk factors 4
Item 1B. Unresolved Staff Comments 5
Item 2. Description of Property 5
Item 3. Legal Proceedings 5
Item 4. Mine Safety Disclosures 5
   
PART II  
   
Item 5. Market for Common Equity and Related Stockholder Matters 5
Item 6. Selected Financial Data 6
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation 6
Item 7a. Quantitative and qualitative disclosures about market risk 9
Item 8. Financial Statements and Supplementary Data 10
Item 9. Changes in and disagreements with accountants on accounting and financial disclosure 21
Item 9a. Controls and procedures 21
   
PART III  
   
Item 10. Directors, executive officers, promoters and control persons; compliance with section 16(a) of the Exchange Act 23
Item 11. Executive compensation 25
Item 12. Security Ownership of Certain Beneficial Owners and Management 28
Item 13. Certain Relationships and Related Transactions 28
Item 14. Principal Accountant Fees And Services 29
Item 15. Exhibits and Financial Statement Schedules 29
   
SIGNATURES 30

 

  2  
 

 

PART 1

 

ITEM 1. DESCRIPTION OF BUSINESS.

 

History

 

Apolo Gold & Energy Inc, (the “Company”) was incorporated in March 1997 under the laws of the State of Nevada as Apolo Gold Inc., for the purpose of financing and operating precious metals concessions. In May 2005, the Company amended its articles of incorporation to change the name of the Company from Apolo Gold Inc. to Apolo Gold & Energy Inc.

 

After incorporation in 1997 the Company focused on precious metals opportunities in Latin and South America. Shortly thereafter the Company formed a subsidiary, Compania Minera Apologold, C.A. a corporation, and on May 18, 1999 the Venezuela subsidiary entered into an agreement with Empresa Proyectos Mineros Goldma, C.A. in Caracas Venezuela, to acquire the diamond and gold mining concession in Southern Venezuela known as Codsa 13, located in the Gran Sabana Autonomous Municipality, State of Bolivar, Venezuela. This project was subsequently cancelled in August 2001 because of poor testing results. The subsidiary company in Venezuela has been dormant since 2001 and will not be reactivated.

 

On April 16, 2002, the Company executed an agreement with Pt. Metro Astatama, of Jakarta, Indonesia, for the mining rights to a property known as Nepal Umbar Picung (“NUP”), which is located west of Bandar Lampung, on the island of Sumatra, Indonesia. NUP has a KP, Number KW. 098PP325, which is a mineral tenement license for both Exploration and Exploitation. All KP’s must be held by an Indonesian entity.

 

The “NUP” is 733.9 hectares in size and Apolo had an 80% interest. These claims are owned privately by citizens of Indonesia and are not crown granted claims. Apolo was entitled to recover all of its development costs on the “NUP” including property payments before the partner with 20% can participate.

 

The total purchase price for “NUP” was $375,000, of which payments amounting to $250,000 had been made. After various exploration programs including different drilling programs failed to yield sufficient positive results, the Company discussed various options with the property owner and decided to terminate its agreement with the NUP property and return all exploration rights to the property owners.

 

On December 11, 2013, the Company acquired 70% interest in three gold exploration claims located in China’s Xinjiang Province from Yinfu Gold Corp. (“Yinfu”). The Company issued six million shares of restricted common stocks for the claims.

 

On December 23, 2013, the Company acquired 24% equity interest in Jiangxi Everenergy New Material Co., Ltd. (“Everenergy”). The consideration was settled by the issuance of eight-million restricted common stocks at a deemed price of $0.375 per share, plus $1-million in cash. Additionally, on February 19, 2014, the Company acquired an additional 29% equity interest in Everenergy. The consideration was settled with the issuance of 11-million restricted common stock at a deemed price of $0.45 per share.

 

On September 17, 2014, the Company cancelled both transactions with Everenergy and had requested return of the $1-million payment and all the shares. The 11-million shares issued were effectively cancelled on October 21, 2014. The remaining 8-million shares issued are in the process of cancellation and the $1 million paid for the acquisition was written off as investment loss.

 

On January 19, 2015, the Company and Yinfu reached a mutual agreement to terminate the acquisition of the 70% interest in the three gold exploration claims in the PRC. On February 3, 2015, all six million shares of restricted common stock had been returned by the wholly owned subsidiary of Yinfu and cancelled by the Company.

 

  3  
 

 

On February 13, 2015, the Company disposed its 100% equity interest in Apolo Gold Direct Limited (formerly known as Apolo Gold & Energy Asia Limited) to (i) Mr. (Tommy) Tsap Wai Ping, the Chief Executive Officer (“CEO”) and director of the Company, who acquired 50% equity interest, (ii) Mr. Kelvin Chak Wai Man, a relative of the CEO of the Company, who acquired 40% equity interest, and (iii) China Yi Gao Gold Trader Co., Limited, a company incorporated in Hong Kong, which acquired the remaining 10% equity interest, for a consideration of $100.

 

On June 18, 2015, the Company filed an Amendment to its Articles of Incorporation with the Nevada Secretary of State to change its name from Apolo Gold & Energy, Inc. to Wincash Apolo Gold & Energy, Inc.

 

On December 1, 2015, the Board of Directors of the Company approved the issuance of 200,000 shares of restricted common stock at $0.08 per share for the rendering of consulting services of $16,000 in a service period of twelve months commencing from December 2015. For the year ended June 30, 2016, the Company amortized $9,333 to the operations using the straight-line method. As of June 30, 2016, no shares were issued and the $16,000 for this obligation was recorded as stock payable.

 

On July 27, 2017, the Company issued 1,811,429 common shares as settlement of $126,800 in advances made by the director of the Company, as well, the Company issued 462,495 common shares as settlement of $32,375 in advances made by the former director of the Company.

 

The Company continues to pursue opportunities in the natural resource industry and will consider the acquisition of any other business opportunity in order to enhance value for our shareholders.

 

Government Regulation

 

The Company was aware of environmental requirements in the operation of a concession. The Company is comfortable with the requirements and regulations and will abide by them.

 

ITEM 1A. Risk Factors

 

1. The Company has no record of earnings. It is also subject to all the risks inherent in a developing business enterprise including lack of cash flow, and no assurance of recovery of precious metals.

 

2. The Company’s success and possible growth will depend on its ability to develop or acquire new business operations. It continues to explore opportunities but has yet to secure an opportunity that is acceptable.

 

3. Liquidity and need for additional financing is a concern for the Company. At the present time, the Company does not have sufficient cash to finance its operations. The Company is dependent on the ability of its management team to obtain the necessary working capital to operate successfully. There is no assurance that the Company will be able to obtain additional capital as required or if the capital is available, to obtain it on terms favorable to the Company. The Company may suffer from a lack of liquidity in the future that could impair its production efforts and adversely affect its results of operations.

 

4. Competition is more in the area of ability to sell at world prices that the Company cannot control, and the Company competes for access to the world markets with its products.

 

5. The Company is wholly dependent at the present upon the personal efforts and abilities of its Officers and Directors, who exercise control over the day-to-day affairs of the Company.

 

6. There are currently 26,137,387 common shares outstanding at September 11, 2017 out of a total authorized capital of 300,000,000 shares. This is after giving effect of the cancellation of 11,000,000 common shares for the acquisition of 29% interest in Everenergy and cancellation of 6,000,000 common shares for the three mineral properties. The Company continues to pursue the return of 8,000,000 shares from the cancelled acquisition of the additional 24% interest in Everenergy. The Board of Directors has the power to issue such shares, subject to Shareholder approval, in some instances.

 

  4  
 

 

7. There are no dividends anticipated by the Company.

 

Company’s Office

 

The Company’s office is at 20/F, EIB Centre, 40-44 Bonham Strand, Sheung Wan, Hong Kong. Its telephone number is 852-2516-5060.

 

ITEM 1B - Unresolved Staff Comments

 

Not applicable

 

ITEM 2 - Description of Property

 

None

 

ITEM 3 - Legal Proceedings

 

The Company is not a party to any pending or threatened litigation and to its knowledge, no action, suit or proceedings has been threatened against its officers and its directors.

 

ITEM 4 - Mine Safety Disclosures

 

None

 

PART II

 

ITEM 5 - Market for Common Equity and Related Stockholder Matters

 

The Company’s common stock has been quoted on the National Association of Securities Dealers’ Over-the-Counter market since May 17, 2000. There is no other public trading market for the Company’s equity securities.

 

The following table summarizes trading in the Company’s common stock, as provided by quotations published by the OTC Bulletin Board for the periods as indicated. The quotations reflect inter-dealer prices without retail mark-up, markdown or commission, and may not represent actual transactions.

 

Quarter Ended   High Bid     Low Bid  
Jun 30, 2016   $ 0.10     $ 0.06  
Sep 30, 2016   $ 0.10     $ 0.06  
Dec 31, 2016   $ 0.07     $ 0.05  
Mar 31, 2017   $ 0.10     $ 0.07  
Jun 30, 2017   $ 0.10     $ 0.06  

 

As of August 1, 2017, there were 219 holders of record of the Company’s common stock. That does not include the number of beneficial holders whose stock is held in the name of broker-dealers or banks.

 

The Company has not paid, and, in the foreseeable future, the Company does not intend to pay any dividends.

 

Equity Compensation Plan Information

 

The Company has no existing Equity Compensation Plan and all options granted under previous plans have been exercised, expired or cancelled.

 

  5  
 

 

ITEM 6 - Selected Financial Data

 

As a smaller business issuer, the Company is not required to include this Item.

 

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations/Plan of Operation

 

General Overview

 

Apolo Gold & Energy Inc. (“Company”) was incorporated in March 1997 under the laws of the State of Nevada. Its objective was to pursue mineral properties in South America, Central America, North America and Asia. The Company incorporated a subsidiary - Compania Minera Apologold, C.A in Venezuela to develop a gold/diamond mining concession in Southeastern Venezuela. Project was terminated in August 2001, due to poor testing results and the property abandoned. This subsidiary company has been inactive since 2001 and will not be reactivated.

 

On April 16, 2002, the Company announced the acquisition of the mining rights to a property known as the Napal Gold Property, (“NUP”). This property is located 48 km south-west of Bandar Lampung, Sumatra, Indonesia. The property consisted of 733.9 hectares and possessed a Production Permit (a KP) # KW. 098PP325.

 

The terms of the Napal Gold Property called for a total payment of $375,000 US over a six-year period of which a total of $250,000 have been made to date. Company paid $250,000 over the past 5 years and subsequent to the year ended June 30, 2008 the Company terminated its agreement on the NUP property and returned all exploration rights to the owner.

 

On December 11, 2013, the Company acquired 70% interest in three gold exploration claims located in China’s Xinjiang Province from Yinfu Gold Corp. (“Yinfu”). The Company issued 6,000,000 shares of restricted common stock for the claims at $0.20 per share for the consideration of $1,200,000. On January 19, 2015, the Company and Yinfu reached a mutual agreement to terminate the acquisition at the current market value of $0.10 per share and therefore an investment loss of $600,000 was resulted. On February 3, 2015, all 6,000,000 shares of restricted common stock were returned and effectively cancelled.

 

On December 23, 2013, the Company acquired 24% interest in Jiangxi Everenergy New Material Co., Ltd. (“Everenergy”) for a consideration of $4,000,000. The consideration was settled with the issuance of 8,000,000 shares of restricted common stock at a deemed price of $0.375 per share, plus $1,000,000 in cash.

 

On February 19, 2014, the Company acquired an additional 29% interest in Everenergy for a consideration of $4,950,000. The consideration was settled with the issuance of 11,000,000 shares of restricted common stock at a deemed price of $0.45 per share.

 

On September 17, 2014, the Company cancelled both transactions with Everenergy at the current market value of $0.12 per share and requested the return of $1,000,000 cash payment. The 11,000,000 shares were effectively cancelled on October 21, 2014 and the remaining 8,000,000 shares are to be cancelled. For the year ended June 30, 2015, the Company could not recover the $1,000,000 cash payment and therefore a total investment loss of $6,670,000 was resulted.

 

On February 13, 2015, the Company disposed its 100% equity interest in Apolo Gold Direct Limited (formerly known as Apolo Gold & Energy Asia Limited) to (i) Mr. Tommy Tsap Wai Ping, who acquired 50% equity interest. Mr. Tsap Wai Ping became the Chief Executive Officer (“CEO”) and director of the Company on December 1, 2015. (ii) Mr. Kelvin Chak Wai Man, the former president, CEO and director of the Company and a relative of the current CEO of the Company, acquired 40% equity interest, and (iii) China Yi Gao Gold Trader Co., Limited, a company incorporated in Hong Kong, which acquired the remaining 10% equity interest, for a consideration of $100.

 

  6  
 

 

On June 4, 2015, the Company issued 6,000,000 shares of restricted common stock at $0.10 per share for the rendering of business and strategic consulting services of $600,000 in a service period of twelve months commencing from June 2015. For the years ended June 30, 2016 and 2015, the Company amortized $550,000 and $50,000, respectively to the operations using the straight-line method.

 

On June 9, 2015, the Company issued 400,000 shares of restricted common stock at $0.10 per share for the rendering of administrative consulting services of $40,000. As of June 9, 2015, the current market value was $0.10 per share.

 

On June 18, 2015, the Company filed an Amendment to its Articles of Incorporation with the Nevada Secretary of State to change its name from Apolo Gold & Energy, Inc. to Wincash Apolo Gold & Energy, Inc.

 

On June 26, 2015, the Board of Directors of the Company approved to issue 340,000 shares of restricted common stock at $0.15 per share to settle a debt of $51,000 owed to the Chief Executive Officer and director of the Company. All 340,000 shares were issued subsequently on July 2, 2015. As of June 26, 2015, the current market value was $0.16 per share.

 

On December 1, 2015, the Board of Directors of the Company approved the issuance of 200,000 shares of restricted common stock at $0.08 per share for the rendering of consulting services of $16,000 in a service period of twelve months commencing from December 2015. For the year ended June 30, 2016, the Company amortized $9,333 to the operations using the straight-line method.

 

On July 27, 2017, the Company issued 1,811,429 common shares as settlement of $126,800 in advances made by the director of the Company, as well, the Company issued 462,495 common shares as settlement of $32,375 in advances made by the former director of the Company.

 

The Company continues to pursue opportunities in the natural resource industry and will consider the acquisition of any other business opportunity in order to enhance value for our shareholders.

 

Results of Operations - Year ended June 30, 2017 compared to year ended June 30, 2016

 

REVENUES: The Company had no revenues in the past fiscal years.

 

EXPENSES:

 

During the fiscal year ended June 30, 2017 and June 30, 2016, the Company had no exploration costs. Total expenses for the year ended June 30, 2017 amounted to $84,835 compared to $614,505 for the year ended June 30, 2016, a decrease of $529,670. The decrease is mainly attributable to the lower stock based compensation.

 

For the year ended June 30, 2017, the Company incurred consulting and professional fees of $30,000 (2016 – $11,020), general & administrative expenses of $48,168 (2016 - $44,152) and stock-based compensation of $6,667 (2016 - $559,333).

 

There were no additional or extraordinary expenses incurred in the current year ended June 30, 2017 as the Company focused its efforts in seeking out a resource project that would be beneficial to shareholders.

 

The Company continues to carefully control its expenses, and intends to seek additional financing both for potential business opportunities it may develop. There is no assurance that the Company will be successful in its attempts to raise additional capital.

 

The Company has no employees in its head office at the present time other than its Officers and Directors, and engages personnel through consulting agreements where necessary as well as outside attorneys, accountants and technical consultants.

 

  7  
 

 

Cash and cash equivalents as of June 30, 2017 was $9,630 compared to $8,993 in 2016 and the Company recognizes it may not have sufficient funds to conduct its affairs. It fully intends to seek financing by way of loans, private placements or a combination of both in the coming months. The Company is dependent on its directors to provide necessary funding when required.

 

LIQUIDITY AND CAPITAL RESOURCES

 

Cash Used in Operating Activities

 

Net cash used in operating activities for the year ended June 30, 2017 was $81,863 as compared to $39,710 for the comparable year ended in 2016. The cash used in operating activities are mainly attributed from the net loss of $84,835 for the year ended June 30, 2017.

 

Cash Used in Investing Activities

 

Net cash used in investing activities for the years ended June 30, 2017 and 2016 were $nil.

 

Cash Provided by Financing Activities

 

Net cash provided by financing activities for the years ended June 30, 2017 and 2016 was $82,500 and $34,300, respectively. The cash provided by financing activities for the years ended June 30, 2017 and 2016 were advances from the director of the Company.

 

The Company has financed its development to date by way of sale of common stock and with loans from directors/shareholders of the Company. At September 11, 2017, the Company had 26,137,387 shares of common stock outstanding, and has raised total capital since inception in excess of $7,500,000.

 

The Company has limited financial resources at June 30, 2017 with cash and cash equivalents of $9,630 and $8,993 as of June 30, 2017 and 2016, respectively.

 

Other payables and accrued liabilities as of June 30, 2017 amounted to $47,567 compared to $43,067 as of June 30, 2016.

 

As of June 30, 2017, the amount due to a director was $126,800. As of June 30, 2016, the amount due from a director was $44,300. The amounts were unsecured, interest free and repayable on demand. Subsequent to the year ended June 30, 2017, the Company issued 1,811,429 shares to a director as settlement of $126,800 advances to the Company. The Company issued 462,495 shares to a former director of the Company as settlement of $32,375 in funds advanced.

 

While the Company continues to seek out additional capital, there is no assurance that they will be successful in completing this necessary financing. The Company recognizes that it is dependent on the ability of its management team to obtain the necessary working capital required.

 

While in the pursuit of additional working capital, the Company is also very active in reviewing other resource development opportunities and will continue with these endeavors.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements, financings or other relationships.

 

Contractual Obligations and Commitments

 

As of June 30, 2017, we did not have any contractual obligations and commitments.

 

  8  
 

 

Critical Accounting Policies

 

Our significant accounting policies are described in the notes to our financial statements for the year ended June 30, 2017, and are included elsewhere in this annual report on Form 10-K

 

INFLATION

 

Inflation has not been a factor during the fiscal year ended June 30, 2017. While inflationary forces are showing some signs of increasing in the next year, it is not considered a factor in capital expenditures or production activities.

 

REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and fairly reflect our transactions; providing reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; providing reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.

 

In connection with the preparation of this Annual Report on Form 10-K for the year ended June 30, 2017, Management on Internal Control over Financial Reporting is under the supervision of the principal executive officer who is the chief executive officer of the Company. Under his direction, the Company has evaluated the effectiveness of its disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of June 30, 2017. Based on that evaluation, the Principal Executive Officer concluded that Disclosures Controls and Procedures were not effective as of June 30, 2017. Due to limited financial resources available, there is a lack of segregation of duties in financial reporting although the Principal Executive Officer, who also serves as Principal Financial Officer, is an experienced financial executive and professional with professional accreditation.

 

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

 

The Company does not have any market risk sensitive financial instruments for trading or other purposes. All Company cash is held in insured deposit accounts.

 

  9  
 

 

Item 8. Financial Statements and Supplementary Data.

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and Stockholders,

Wincash Apolo Gold & Energy, Inc.

 

We have audited the accompanying balance sheets of Wincash Apolo Gold & Energy, Inc. (the “Company”) as of June 30, 2017 and 2016 and the related statements of operations and comprehensive loss, stockholders’ equity and cash flows for the years ended June 30, 2017 and 2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits include consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2017 and 2016, and the results of its operations and cash flows for the years ended June 30, 2017 and 2016, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred substantial losses, which raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to their planned financing and other matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/Weld Asia Associates

 
WELD ASIA ASSOCIATES  

 

Date: 21 September 2017

Kuala Lumpur, Malaysia

 

  10  
 

 

WINCASH APOLO GOLD & ENERGY, INC.

BALANCE SHEETS

AS OF JUNE 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

    As of June 30,  
    2017     2016  
ASSETS                
Current assets                
Cash and cash equivalents   $ 9,630     $ 8,993  
Prepayments     11,109       2,914  
                 
TOTAL ASSETS   $ 20,739     $ 11,907  
                 
LIABILITIES & STOCKHOLDERS’ DEFICIT                
Current liabilities                
Other payables and accrued liabilities   $ 47,567     $ 43,067  
Amount due to a director     126,800       44,300  
                 
Total liabilities     174,367       87,367  
                 
Commitments and contingencies                
                 
Stockholders’ deficit                
Preferred stock, $0.001 par value; 25,000,000 shares authorized; None issued and outstanding     -       -  
Common stock, $0.001 par value; 300,000,000 shares authorized; 22,072,118 and 21,872,118 shares issued and outstanding as of June 30, 2017 and 2016, respectively     22,072       21,872  
Additional paid-in capital     15,955,079       15,939,279  
Deferred compensation     -       (6,667 )
Stock payable     -       16,000  
Accumulated other comprehensive income     4,882       4,882  
Accumulated deficit     (16,135,661 )     (16,050,826 )
Total stockholders’ deficit     (153,628 )     (75,460 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT   $ 20,739     $ 11,907  

 

See accompanying notes to the financial statements.

 

  11  
 

 

WINCASH APOLO GOLD & ENERGY, INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

    For the years ended June 30,  
    2017     2016  
             
Revenues   $ -     $ -  
Operating expenses                
Stock based compensation     6,667       559,333  
General and administrative expenses     78,168       55,172  
                 
Total operating expenses     84,835       614,505  
                 
Loss before income tax     (84,835 )     (614,505 )
Income tax expense     -       -  
                 
Net loss and comprehensive loss   $ (84,835 )   $ (614,505 )
                 
Net loss per share – Basic and diluted   $ (0.00 )   $ (0.03 )
                 
Weighted average common stock outstanding – Basic and diluted     22,053,488       21,872,118  

 

See accompanying notes to the financial statements.

 

  12  
 

 

WINCASH APOLO GOLD & ENERGY, INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”))

 

    For the years ended June 30,  
    2017     2016  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (84,835 )   $ (614,505 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Stock based compensation     6,667       559,333  
Changes in operating assets and liabilities                
Prepayments     (8,195 )     (2,914 )
Other payables and accrued liabilities     4,500       18,376  
Net cash used in operating activities     (81,863 )     (39,710 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Amount due to a director     82,500       34,300  
Net cash provided by financing activities     82,500       34,300  
                 
NET CHANGE IN CASH AND CASH EQUIVALENTS     637       (5,410 )
Cash and cash equivalents, beginning of year     8,993       14,403  
Cash and cash equivalents, end of year   $ 9,630     $ 8,993  
                 
SUPPLEMENTAL CASH FLOWS INFORMATION                
Income taxes paid   $ -     $ -  
Interest paid   $ -     $ -  

 

See accompanying notes to the financial statements.

 

  13  
 

 

WINCASH APOLO GOLD & ENERGY, INC.

STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

    Common Stock     Additional                 Accumulated
other
          Total  
    Number of     paid-in     Deferred       Stock     comprehensive     Accumulated     stockholders’  
    shares     Amount     capital     compensation     payable     income     deficit     equity  
                                                 
Balance as of July 1, 2015     21,872,118       21,872       15,939,279       (550,000 )     -       4,882       (15,436,321 )     (20,288 )
                                                                 
200,000 shares of stock payable for stock based compensation at $0.08 per share     -       -       -       (16,000 )     16,000       -       -       -  
Amortization of deferred compensation     -       -       -       559,333       -       -       -       559,333  
Net loss     -       -       -       -       -       -       (614,505 )     (614,505 )
Balance as of June 30, 2016     21,872,118     $ 21,872     $ 15,939,279     $ (6,667 )   $ 16,000     $ 4,882     $ (16,050,826 )   $ (75,460 )
                                                                 
Shares issued     200,000       200       15,800       -       (16,000 )     -       -       -  
Amortization of deferred compensation     -       -       -       6,667       -       -       -       6,667  
Net loss     -       -       -       -       -       -       (84,835 )     (84,835 )
Balance as of June 30, 2017     22,072,118     $ 22,072     $ 15,955,079     $ -     $ -     $ 4,882     $ (16,135,661 )   $ (153,628 )

 

See accompanying notes to the financial statements.

 

  14  
 

 

WINCASH APOLO GOLD & ENERGY, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Wincash Apolo Gold & Energy, Inc. (“the Company”) was incorporated in March of 1997 under the laws of the State of Nevada primarily for the purpose of acquiring and developing mineral properties.

 

On September 17, 2014, the Company terminated the Asset Sale & Purchase Agreements with Mr. Tang and Mr. Hu for the acquisition of 24% and 29% equity interest and assets in Everenergy, respectively due to neither Mr. Tang, Mr. Hu or Everenergy had complied various terms and conditions of the Asset Sale & Purchase Agreement. On the same day, the Board of Directors approved the cancellation of the total 19,000,000 shares of restricted common stock at the current market value of $0.12 per share. On October 21, 2014, 11,000,000 shares were returned and effectively cancelled and the Company continues to pursue the return and cancellation of the remaining 8,000,000 shares. For the year ended June 30, 2015, the Company could not recover the $1,000,000 cash payment and a total investment loss of $6,670,000 was resulted.

 

On February 13, 2015, the Company disposed its 100% equity interest in Apolo Gold Direct Limited (formerly known as Apolo Gold & Energy Asia Limited) to Mr. Tommy Tsap, the Chief Executive Officer (“CEO”) and director of the Company, Mr. Tsap Wai Ping, the brother of the CEO and China Yi Gao Gold Trader Co., Limited, a company incorporated in Hong Kong, for a consideration of $100. For the year ended June, 30, 2015, there was no gain or loss recognized on the disposal of a subsidiary.

 

On June 18, 2015, the Company filed an Amendment to its Articles of Incorporation with the Nevada Secretary of State to change its name from Apolo Gold & Energy, Inc. to Wincash Apolo Gold & Energy, Inc.

 

The Company will continue to anticipate potential mineral property exploration and other energy related investments. As of June 30, 2017, the Company does not hold any mineral property exploration claims.

 

2. GOING CONCERN UNCERTAINTIES

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.

 

As of June 30, 2017, the Company suffered the accumulated deficits of $16,135,661 from current and prior years and suffered from a working capital deficit of $153,628. The continuation of the Company as a going concern is dependent upon the continuing financial support from its stockholders or external financing. Management believes the existing stockholders will provide the additional cash to meet with the Company’s obligations as they become due. However, there can be no assurance that the Company will be able to obtain sufficient funds to meet its obligations.

 

These factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result in the Company not being able to continue as a going concern.

 

  15  
 

 

WINCASH APOLO GOLD & ENERGY, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of presentation

 

The accompanying financial statements are prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).

 

Use of estimates

 

Management uses estimates and assumptions in preparing these financial statements in accordance with US GAAP. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheet, and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates.

 

Cash and cash equivalents

 

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

 

Stock-based compensation

 

The Company adopts FASB Accounting Standards Codification Topic 718, Compensation – Stock Compensation (“ASC Topic 718”) using the fair value method. Under ASC Topic 718, the stock-based compensation is measured using the Black-Scholes Option-Pricing model on the date of grant under the modified prospective method. The fair value of stock-based compensation that are expected to vest are recognized using the straight-line method over the requisite service period.

 

Income taxes

 

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

  16  
 

 

  WINCASH APOLO GOLD & ENERGY, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

Net loss per share

 

The Company calculates net loss per share in accordance with ASC Topic 260, “Earnings per Share.” Basic loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents had been issued and if the additional common shares were dilutive.

 

Related parties

 

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

 

Fair value of financial instruments

 

The carrying value of the Company’s financial instruments: cash and cash equivalents, other payables and accrued liabilities, and amount due to a director approximate at their fair values because of the short-term nature of these financial instruments.

 

The Company also follows the guidance of the ASC Topic 820-10, “ Fair Value Measurements and Disclosures ” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

 

  Level 1: Observable inputs such as quoted prices in active markets;
   
  Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
   
  Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

 

Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

 

Foreign currency translation

 

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

 

The reporting currency of the Company is United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$.

 

  17  
 

 

WINCASH APOLO GOLD & ENERGY, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

Recent accounting pronouncements

 

FASB issues various Accounting Standards Updates relating to the treatment and recording of certain accounting transactions. On June 10, 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-10, Development Stage Entities (Topic 915) - Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation, which eliminates the concept of a development stage entity (DSE) entirely from current accounting guidance. The Company has elected adoption of this standard, which eliminates the designation of DSEs and the requirement to disclose results of operations and cash flows since inception.

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.

 

4. AMOUNT DUE TO A DIRECTOR

 

As of June 30, 2017 and 2016, the director of the Company has advanced $126,800 and $44,300, respectively for the payment of administrative expenses. The amount is unsecured, bears no interest and is payable upon demand. Imputed interest is considered insignificant.

 

5. COMMON STOCK

 

On September 17, 2014, the Board of Directors approved the cancellation of the total 19,000,000 shares of restricted common stocks issued for the acquisition of equity interest in Everenergy at a current market value of $0.12 per share. The 11,000,000 shares issued to Mr. Hu were effectively cancelled on October 21, 2014 and the Company continues to pursue the return and cancellation of the remaining 8,000,000 shares.

 

On February 12, 2015, the Company issued 700,000 shares of restricted common stock at $0.10 per share to settle a debt of $70,000 owed to the Chief Executive Officer and director of the Company. As of February 12, 2015, the current market value was $0.10 per share.

 

On June 4, 2015, the Company issued 6,000,000 shares of restricted common stock at $0.10 per share for the rendering of business and strategic consulting services of $600,000 in a service period of twelve months commencing from June 2015. For the years ended June 30, 2016 and 2015, the Company amortized $550,000 and $50,000, respectively to the operations using the straight-line method.

 

On June 9, 2015, the Company issued 400,000 shares of restricted common stock at $0.10 per share for the rendering of administrative consulting services of $40,000. As of June 9, 2015, the current market value was $0.10 per share.

 

On June 26, 2015, the Board of Directors of the Company approved to issue 340,000 shares of restricted common stock at $0.15 per share to settle a debt of $51,000 owed to the Chief Executive Officer and director of the Company. All 340,000 shares were issued subsequently on July 2, 2015. As of June 26, 2015, the current market value was $0.16 per share.

 

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WINCASH APOLO GOLD & ENERGY, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

On December 1, 2015, the Board of Directors of the Company approved to issue 200,000 shares of restricted common stock at $0.08 per share for the rendering of consulting services of $16,000 in a service period of twelve months commencing from December 2015. In August 2016, all 200,000 shares were issued. For the year ended June 30, 2017, the Company amortized $6,667 to the operations using the straight-line method.

 

There were no stock options, warrants or other potentially dilutive securities outstanding as at June 30, 2017 and 2016.

 

As of June 30, 2017, there were 22,072,118 shares of common stock issued and outstanding.

 

6. INCOME TAX

 

For the years ended June 30, 2017 and 2016, the local (United States) and foreign components of loss before income taxes were comprised of the following:

 

    For the years ended June 30,  
    2017     2016  
             
Tax jurisdictions from:                
- Local   $ (84,835 )   $ (614,505 )
- Foreign     -       -  
                 
Loss before income tax   $ (84,835 )   $ (614,505 )

 

The provision for income taxes consisted of the following:

 

      For the years ended June 30,  
      2017       2016  
                 
Current:                
- Local   $ -     $ -  
- Foreign     -       -  
                 
Deferred:                
- Local     -       -  
- Foreign     -       -  
    $ -     $ -  

 

The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of June 30, 2017, the operations in the United States of America incurred $16,135,661 of cumulative net operating losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in the year 2017 through 2036, if unutilized. The Company has provided for a full valuation allowance of $4,033,915 against the deferred tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will not be realized in the future.

 

  19  
 

WINCASH APOLO GOLD & ENERGY, INC.

NOTES TO FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2017 AND 2016

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

Management believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly, the Company provided for a full valuation allowance against its deferred tax assets of $4,033,915 as of June 30, 2017. During the year ended June 30, 2017, the valuation allowance increased by $21,209, primarily relating to net operating loss carryforwards from the various tax regime.

 

7. RELATED PARTY TRANSACTIONS

 

For the years ended June 30, 2017 and 2016, the Company paid $24,000 and $17,650, respectively to a company controlled by an officer of the Company for accounting services.

 

On December 1, 2015, the Company approved to issue 100,000 shares of restricted common stock at $0.08 per share to an officer of the Company. In August 2016, all 100,000 shares were issued to the officer. For the year ended June 30, 2017, the Company amortized $3,333 to the operations using the straight-line method.

 

The related party transactions are generally transacted in an arm-length basis at the current market value in the normal course of business.

 

8. COMMITMENTS AND CONTINGENCIES

 

As of June 30, 2017, the Company has no commitments or contingencies involved.

 

9. SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855, “Subsequent Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated all events or transactions that occurred after June 30, 2017 up through the date the Company issued the audited financial statements.

 

a) On July 27, 2017, the Company issued 1,811,429 common shares as settlement of $126,800 in advances made by the director of the Company.

 

b) On July 27, 2017, the Company issued 462,495 common shares as settlement of $32,375 in advances made by the former director of the Company.

 

  20  
 

 

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

 

None

 

ITEM 9A. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2017 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses in internal control over financial reporting discussed below.

 

Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

 

Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified in this report, we believe that our financial statements contained in our Annual Report on Form 10-K for the year ended June 30, 2017 fairly present our financial condition, results of operations and cash flows in all material respects.

 

Management’s Annual Report on Internal Control Over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.

 

Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of its management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

 

Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect to financial statement preparation and may not prevent or detect material misstatements. In addition, effective internal control at a point in time may become ineffective in future periods because of changes in conditions or due to deterioration in the degree of compliance with our established policies and procedures.

 

  21  
 

 

A material weakness is a significant deficiency, or combination of significant deficiencies, that results in there being a more than remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected.

 

Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of our internal control over financial reporting, as of the Evaluation Date, based on the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its evaluation under this framework, management concluded that our internal control over financial reporting was not effective as of the Evaluation Date.

 

Management assessed the effectiveness of the Company’s internal control over financial reporting as of Evaluation Date and identified the following material weaknesses:

 

Inadequate Segregation of Duties : We have an inadequate number of personnel to properly implement control procedures.

 

Insufficient Written Policies & Procedures: We have insufficient written policies and procedures for accounting and financial reporting.

 

Inadequate Financial Statement Closing Process: We have an inadequate financial statement closing process.

 

Lack of Audit Committee: The lack of a functioning audit committee and lack of a majority of outside directors on the Company’s Board of Directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures.

 

Management is committed to improving its internal controls and will (1) continue to use third party specialists to address shortfalls in staffing and to assist the Company with accounting and finance responsibilities, (2) increase the frequency of independent reconciliations of significant accounts which will mitigate the lack of segregation of duties until there are sufficient personnel and (3) prepare and implement sufficient written policies and checklists for financial reporting and closing processes and (4) may consider appointing outside directors and audit committee members in the future.

 

Management, including our Chief Executive Officer and the Chief Financial Officer, has discussed the material weakness noted above with our independent registered public accounting firm. Due to the nature of this material weakness, there is a more than remote likelihood that misstatements which could be material to the annual or interim financial statements could occur that would not be prevented or detected.

 

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only management’s report in this annual report.

 

Changes in internal control over financial reporting

 

There were no changes in our internal control over financial reporting that occurred during the last quarter ended June 30, 20175 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on the effectiveness of controls and procedures

 

Our management, including our Chief Executive Officer and the Chief Financial Officer, do not expect that the controls and procedures will prevent all potential errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

 

  22  
 

 

PART III

 

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

 

(a) Directors and Executive Officers

 

NAME   POSITION   Date of Position and Term of Office
         
Tommy Tsap   Director, President, Chief Executive Officer   December 1, 2015
         
Edward Low   Chief Financial Officer   December 1, 2015

 

Business Experience

 

Tsap Wai Ping (Tommy Tsap), President, CEO, Secretary, Director

 

Effective December 1, 2015, Mr. Tommy Tsap was appointed President and Chief Executive Officer and Mr. Edward Low has been appointed Chief Financial Officer of the Corporation. They replace Mr. Robert Dinning who submitted his resignation as Director, President and CEO, CFO, and Secretary effective November 15, 2013.

 

Tsap Wai Ping (Tommy Tsap): President, Chief Executive Officer, Secretary, Director. Mr. Tsap is a securities and gold trading professional with extensive experience in the industry. He was the marketing director for HT Securities Ltd., a Hong Kong based broker dealer from August 1995 to July 2000. From July 2000 to September 2005 he was a director at Wintech Securities Ltd., a Hong Kong based brokerage firm specializing in Hong Kong listed stocks. From January 2006 until October 2008, he was the chief advisor at Legarleon International Ltd., a Hong Kong based gold trading firm. He was chief advisor from United Simsen Global Markets Ltd., a Hong Kong based brokerage firm from November 2008 until July 2009. He joined South China Bullion Limited, a gold and futures trading firm in July 2009 as Chief advisor and departed on March 2010. He was appointed as a director at Legarleon Precious Metals Limited from April 2010 and resigned on 27 August 2012. Mr. Tsap, is a citizen of Hong Kong and is a licensed broker with a Series 7 Futures license and a Series 3 Securities license (USNFA). He is based in Hong Kong.

 

Edward Low, Chief Financial Officer

 

Mr. Low, based in Vancouver, Canada, has provided accounting services to public companies for the past 18 years. Currently, Mr. Low serves as CFO for a number of publicly traded companies listed in Canada and the United States.

 

Committees: Meetings of the Board

 

The Company does not have a separate Compensation Committee, Audit Committee or Nominating Committee. These functions are done by the Board of Directors meeting as a whole. The Company’s Board of Directors held both in person meetings during the fiscal year ended June 30,2017 and meetings by were conducted by telephone. All corporate actions by the Board of Directors were either consented to in writing by all Directors or were agreed to unanimously at a meeting where proper notice had been given and a quorum was present.

 

  23  
 

 

Audit Committee

 

The board of directors has not established an audit committee. The functions of the audit committee are currently performed by the entire board of directors. The Company is under no legal obligation to establish an audit committee and has elected not to do so at this time so as to avoid the time and expense of identifying independent directors willing to serve on the audit committee. The Company may establish an audit committee in the future if the board determines it to be advisable or we are otherwise required to do so by applicable law, rule or regulation.

 

As the board of directors does not have an audit committee, it therefore has no “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-B. except its chief financial officer. In general, an “audit committee financial expert” is an individual member of the audit committee who:

 

understands generally accepted accounting principles and financial statements,
   
is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,
   
has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,
   
understands internal controls over financial reporting, and
   
understands audit committee functions.

 

Board of Directors Independence

 

One of the Company’s directors is “independent” within the meaning of definitions established by the Securities and Exchange Commission or any self-regulatory organization. This director is Tsap Wai, Ping (Tommy Tsap). The Company is not currently subject to any law, rule or regulation requiring that all or any portion of its board of directors include “independent” directors.

 

Director Nominees

 

The Company does not have a nominating committee. The board of directors, sitting as a board, selects those individuals to stand for election as members of our board. Since the board of directors does not include a majority of independent directors, the decision of the board as to director nominees is made by persons who have an interest in the outcome of the determination. The board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Until otherwise determined, not less than 90 days prior to the next annual board of directors’ meeting at which the slate of board nominees is adopted, the board accepts written submissions that include the name, address and telephone number of the proposed nominee, along with a brief statement of the candidate’s qualifications to serve as a director and a statement of why the shareholder submitting the name of the proposed nominee believes that the nomination would be in the best interests of shareholders. If the proposed nominee is not the security holder submitting the name of the candidate, a letter from the candidate agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a resume supporting the nominee’s qualifications to serve on the board of directors, as well as a list of references.

 

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The board identifies director nominees through a combination of referrals, including by management, existing board members and security holders, where warranted. Once a candidate has been identified the board reviews the individual’s experience and background, and may discuss the proposed nominee with the source of the recommendation. If the board believes it to be appropriate, board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of management’s slate of director nominees submitted for shareholders for election to the board.

 

Among the factors that the board considers when evaluating proposed nominees are their experience in the information technology industry, knowledge of and experience with and knowledge of and experience in business matters, finance, capital markets and mergers and acquisitions. The board may request additional information from the candidate prior to reaching a determination. The board is under no obligation to formally respond to all recommendations, although as a matter of practice, it will endeavor to do so.

 

Security Holder Communications with our Board of Directors

 

The Company provides an informal process for security holders to send communications to our board of directors. Security holders who wish to contact the board of directors or any of its members may do so by writing to Wincash Apolo Gold & Energy Inc., at 20/F, EIB Centre, 40-44 Bonham Strand, Sheung Wan, Hong Kong.

 

Correspondence directed to an individual board member is referred, unopened, to that member. Correspondence not directed to a particular board member is referred, unopened, to the President and CEO.

 

Code of Ethics

 

Under the Sarbanes-Oxley Act of 2002 and the Securities and Exchange Commission’s related rules, the Company is required to disclose whether it has adopted a code of ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Company has adopted a code of ethics that applies to its chief executive officer, chief financial officer and other officers, legal counsel and to any person performing similar functions. The Company has made the code of ethics available and intends to provide disclosure of any amendments or waivers of the code within five business days after an amendment or waiver on the Company’s website wwww.apologold.com.

 

Compliance with Section 16(a) of Securities Exchange Act of 1934

 

During the fiscal year ended June 30, 2017 our Directors and Officers have complied with all applicable Section 16(a) filing requirements.

 

Family Relationships

 

There is no family relationship between any Director, executive or person nominated or chosen by the Company to become a Director or executive officer.

 

ITEM 11. EXECUTIVE COMPENSATION

 

Furnish the information required by Item 402 of Regulation S-K (§ 229.402 of this chapter) and paragraph (e)(4) and (e)(5) of Item 407 of Regulation S-K

 

The following table shows for the fiscal years ending June 30, 2017, and 2016, the compensation awarded or paid by the Company to its Chief Executive Officer. No executive officers of the Company had total salary and bonus exceeding $100,000 during such year.

 

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Summary Compensation Table

 

              Annual Compensation     Long Term Compensation
Name and Principle Position     Fiscal Year       Salary
($)
      Other Compensation ($)     Stock Option Awards
(#)
    Value of Stock Option Awards
($)
    All Other Compensation
($)
                                         
Tommy Tsap Wai Ping, CEO     2017       Nil       Nil     Nil     Nil     Nil
Edward Low, CFO     2017       24,000       Nil     Nil     Nil     Nil
                                         
Tommy Tsap Wai Ping, CEO     2016       Nil       Nil     Nil     Nil     Nil
Edward Low, CFO     2016       17,650       8,000     Nil     Nil     Nil

 

Option Grants in Fiscal Years end June 30, 2017 and 2016 was $Nil.

 

Compensation of Directors

 

Standard Arrangements: The members of the Company’s Board of Directors are reimbursed for actual expenses incurred in attending Board meetings.

 

Other Arrangements: There are no other arrangements.

 

Employment Contracts and Termination of Employment, And Change-in-control Arrangements

 

The Company’s CEO does not have employment agreements. The CFO of the Company is contracted until November 30, 2016 and currently is employed on a month-to-month basis

 

Termination of Employment and Change of Control Arrangement

 

There is no compensatory plan or arrangement in excess of $100,000 with respect to any individual named above which results or will result from the resignation, retirement or any other termination of employment with the Company, or from a change in the control of the Company.

 

Compensation Discussion and Analysis

 

The following Compensation Discussion and Analysis (CD&A) provides information on the compensation programs established for our “Named Executive Officers” during our fiscal year ended June 30, 2017. All information provided herein should be read in conjunction with the tables provided below.

 

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Our Board of Directors is responsible for establishing, implementing and monitoring the policies governing compensation for our executives. Currently our Board does not have a compensation committee. Our officers are members of our Board of Directors and are able to vote on matters of compensation. We are not currently under any legal obligation to establish a compensation committee and have elected not to do so at this time. In the future, we may establish a compensation committee if the Board determines it to be advisable or we are otherwise required to do so by applicable law, rule or regulation. During the year ended June 30, 2017 our Board did not employ any outside consultants to assist in carrying out its responsibilities with respect to executive compensation, although we have access to general executive compensation information regarding both local and national industry compensation practices. In future periods we may participate in regional and national surveys that benchmark executive compensation by peer group factors such as company size, annual revenues, market capitalization and geographical location.

 

The executive employment market in general is very competitive due to the number of companies with whom we compete to attract and retain executive and other staff with the requisite skills and experience to carry out our strategy and to maintain compliance with multiple Federal and State regulatory agencies. Many of these companies have significantly greater economic resources than our own. Our Board has recognized that our compensation packages must be able to attract and retain highly talented individuals that are committed to our goals and objectives, without at this time paying cash salaries that are competitive with some of our peers with greater economic resources. Our compensation structure is weighted towards equity compensation in the form of options to acquire common stock, which the Board believes motivates and encourages executives to pursue strategic opportunities while managing the risks involved in our current business stage, and aligns compensation incentives with value creation for our shareholders.

 

Components of Our Executive Compensation Program

 

Our executive compensation program incorporates components we believe are necessary in order for the Company to provide a competitive compensation package relative to our peers and to provide an appropriate mix between short-term and long-term cash and non-cash compensation. Elements of our executive compensation are listed below:

 

  Base Salary
     
  Stock Awards
     
  Other benefits available to all employees
     
  Items specific to our President and Chief Executive Officer per an employment agreement

 

Base Salary: At present we do not have a salary structure for employees and executives is based on skill set, knowledge and responsibilities. Base salaries may be established as necessary. During the year ended June 30, 2017 none of our Named Executive Officers received a salary increase.

 

Stock Awards: A portion of compensation paid to our executives is equity based. We believe equity compensation helps align the interests of our executives with the interests of our shareholders. In that regard, our executives’ compensation is subject to downside risk in the event that our common stock price decreases. In addition, we believe stock awards provide incentives to aid in the retention of key executives.

 

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Other Benefits: Our Executive Officers and employees receive no other benefits.

 

Item 12. Security Ownership of Certain Beneficial Owners and Management

 

Class     Beneficial Owner   Position   Amount and Nature of Beneficial Owner     % of Class  
                       
Common     Tommy Tsap   Director, Chairman, CEO     2,000,000       11.95 %
      Edward Low   CFO     400,000       0.01 %

 

Item 13. Certain Relationships and Related Transactions:

 

During the year ended June 30, 2017, the CEO and director of the Company advanced $126,800 (2016 - $44,300) for general expenses and management fees.

 

On February 12, 2015, the Company issued 700,000 shares of restricted common stocks at $0.10 per share to settle a debt of $70,000 owed to the CEO and director of the Company at the current market value of $0.10 per share.

 

On February 13, 2015, the Company disposed its 100% equity interest in Apolo Gold Direct Limited (formerly known as Apolo Gold & Energy Asia Limited) to (i) Mr. Tommy Tsap Wai Ping, the Chief Executive Officer (“CEO”) and director of the Company, who acquired 50% equity interest, (ii) Mr. Kelvin Chak Wai Man, a relative of the CEO of the Company, who acquired 40% equity interest, and (iii) China Yi Gao Gold Trader Co., Limited, a company incorporated in Hong Kong, which acquired the remaining 10% equity interest, for a consideration of $100.

 

On June 4, 2015, the Company issued 2,000,000 shares of restricted common stocks at $0.10 per share for the rendering of business consulting services provided by the brother of the CEO and director of the Company at the current market value of $0.11 per share.

 

On June 9, 2015, the Company issued 200,000 shares of restricted common stocks at $0.10 per share for the rendering of administrative consulting services provided by the Chief Financial Officer of the Company at the current market value of $0.22 per share.

 

On June 26, 2015, the Board of Directors of the Company approved to issue 340,000 shares of restricted common stock at $0.15 per share to settle a debt of $51,000 owed to the CEO and director of the Company at the current market value of $0.16 per share. All 340,000 shares were issued subsequently on July 2, 2015.

 

On December 1, 2015, the Company approved the issuance of 100,000 shares of restricted common stock at $0.08 per share to an officer of the Company. In August 2016, all 100,000 shares were issued to the officer.

 

For the year ended June 30, 2017, the Company paid $24,000 (2016 - $17,750) to a company controlled by an officer of the Company for accounting services.

 

Subsequent to the year ended June 30, 2017, the Company issued 1,811,429 common shares as settlement of $126,800 in advances made by the director of the Company.

 

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Item 14. Principal Accountant Fees And Services

 

Weld Asia Associates is the Company’s independent auditor to examine the financial statements of the Company for the fiscal year ending June 30, 2017.

 

Audit Fees

 

Weld Asia Associates was paid aggregate fees of approximately $15,000 for professional services rendered including (i) the 2017 audit of the Company’s annual financial statements, and (ii) the reviews of the financial statements included in the Company’s quarterly reports on Form 10QSB during the fiscal year of 2017.

 

Audit -Related Fees

 

Weld Asia Associates was not paid any additional fees for the fiscal years ended June 30, 2017 and 2016 for assurance and related services reasonably related to the performance of the audit or review of the Company’s financial statements.

 

Tax Fees

 

Weld Asia Associates was not paid any aggregate fees for the fiscal years ended June 30, 2017 and 2016 for professional services rendered for tax compliance, tax advice and tax planning. This service was not provided.

 

Other Fees

 

Weld Asia Associates was paid no other fees for professional services during the fiscal years ended June 30, 2017 and 2016.

 

Item 15. Exhibits and Financial Statement Schedules

 

A. Exhibits

 

3.1 Articles of Incorporation (Incorporated by reference from Form 10SB)
   
3.2 By-Laws effective May 20, 2005 (Incorporated by reference from Current Report on Form 8-K filed on May 31, 2005
   
3.3 Certificate of Amendment (Incorporated by reference from Annual Report on Form 10KSB filed on August 29, 2005.
   
14 Code of Ethics (Incorporated by reference from Annual Report on Form 10KSB filed on August 30, 2004)
   
16.1 Letter of Williams & Webster, P.S., dated September 16, 2008, regarding change in certifying accountant of Apolo Gold & Energy, Inc. (Incorporated by reference from Current Report on Form 8-K filed on September 16, 2008)
   
31.1 Sarbanes Oxley Section 302 Certification from C.E.O.
   
31.2 Sarbanes Oxley Section 302 Certification from C.F.O.
   
32.1 Sarbanes Oxley Section 906 Certification from C.E.O.
   
32.2 S arbanes Oxley Section 906 Certification from C.F.O .
   
101 Interactive Data Files

 

  29  
 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: September 28, 2017  
   
  /s/ Tommy Tsap
  Tommy Tsap, President/CEO

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Signature   Title Date   Date
         
/s/ Tommy Tsap        
Tommy Tsap   Chairman, President, CEO, Director   September 28, 2017
         
/s/ Edward Low        
Edward Low   Chief Financial Officer   September 28, 2017

 

  30  
 

 

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