NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
1.
|
ORGANIZATION
AND BUSINESS
|
Ho
Wah Genting Group Limited (“HWGG”), a Nevada corporation (formerly Computron, Inc.) through Ho Wah Genting Group SDN
BHD (“Malaysia HWGG”), a Malaysia company and our wholly owned subsidiary, is engaged to promote travel and entertainment
services to members to our partnering resorts and cruises in the Asia region and develop and invest in real estate property.
On
September 2, 1985, Malaysia HWGG was incorporated under the laws of Malaysia as a private company limited by shares with the name
“Ho Wah Genting Holdings SDN. BHD” for the purpose of functioning as a holding company to obtain ownership interests
in Malaysian businesses across various industries. Throughout the years, we have expanded our business operations and undergone
multiple name changes and restructuring to fit our evolving business objectives. First on February 17, 1989, the company changed
its name to “Ho Wah Genting Group (M) SDN. BHD.” On October 2, 1990, the company changed its name to “Ho Wah
Genting Group SDN. BHD.” On December 22, 1990 its name was changed to “Ho Wah Genting Group Berhad” and was
converted to a public company limited by shares. Lastly, on January 18, 1995, the company converted back into a private company
limited by shares and changed its name to “Ho Wah Genting Group Sdn. Bhd.”
From
1985 to 2005, Malaysia HWGG was involved in wire and cable, taxi, travel agent and tour bus charterers and general insurance agent
services. In August 2006, Malaysia HWGG shifted its operations to primarily focus on commercial and residential property investment
by purchasing a condominium in Kuala Lumpur, Malaysia and renting it out for revenue.
In
2015, Malaysia HWGG entered the travel and entertainment services business by launching the Exclusive Travel Membership program
in Malaysia.
On
June 25, 2015, Malaysia HWGG acquired 65% of the equity interests of Beedo SDN BHD (“Beedo”). On July 7, 2015, Beedo
increased its issued and paid-up shares from 2,500 to 1,000,000. HWGG acquired an additional 508,375 shares on that date, making
its balance of shares 510,000 and effectively diluting its shareholding in Beedo from 65% to 51%. Beedo is mainly engaged in the
provision of information technology services. On August 12, 2016, HWGG completed the disposal of its subsidiary, Beedo, by wholly
transferring the shares it owns to a related party, Dato’ Lim Hui Boon, for the consideration of $ 118,881 (RM 510,000).
HWGG
Property Sdn Bhd was incorporated in March 24, 2015. In January 11, 2017, the company acquired 67% of HWGG Property Sdn Bhd for
a consideration of approximately $16 (RM67). HWGG Property Sdn Bhd business activity is in property investment and property development.
REVERSE
MERGER
On
October 28, 2016, Computron acquired all the issued and outstanding shares of Malaysia HWGG, a privately held Malaysia corporation,
pursuant to the Share Exchange Agreement and Malaysia HWGG became the wholly owned subsidiary of Computron in a reverse merger,
or the Merger. Pursuant to the Merger, all of the issued and outstanding shares of Malaysia HWGG common stock were converted,
at an exchange ratio of 0.56-for-1, into an aggregate of 799,680,000 (560,000 pre-forward split) shares of Computron common stock
and Malaysia HWGG became a wholly owned subsidiary of Computron. The holders of Computron’s common stock as of immediately
prior to the Merger held an aggregate of 200,375,532 (140,319 pre-forward split) shares of Computron’s common stock. The
accompanying financial statements share and per share information has been retroactively adjusted to reflect the exchange ratio
in the Merger. Subsequent to the Merger, Computron’s name was changed from “Computron, Inc.” to “Ho Wah
Genting Group Limited.”.
On
November 4, 2016, we completed and closed a share exchange (the “Share Exchange”) under a Share Exchange Agreement
(the “Share Exchange Agreement”) of the same date by and among us, Malaysia HWGG and the shareholders of Malaysia
HWGG pursuant to which Malaysia HWGG became a wholly owned subsidiary of ours. In the Share Exchange, all of the outstanding shares
of Malaysia HWGG were converted into shares of our Common Stock.
Reverse
Stock Split
On
July 12, 2017, the Board of Directors of Ho Wah Genting Group Limited (“ HWGG “) authorized and approved an amendment
(the “ Amendment “) to HWGG’s Amended and Restated Articles of Incorporation, which authorized a two-to-one
reverse stock split (the “Reverse Split”) of HWGG’s outstanding common stock, par value $0.0001 per share, with
a record date of July 14, 2017 (the “ Record Date “). In connection with the reverse stock split, the Board of Directors
of HWGG, also authorized and approved a related increase in the par value of the HWGG common stock from $0.0001 per share to $0.0002
per share. We expect that the Reverse Stock Split will (i) increase the marketability and liquidity of our common stock, as market
price no longer deemed as micro penny stock (below $0.01); (ii) address the reluctance of brokerage firms and institutional investors
to recommend lower-priced stocks to their clients or to hold in their own portfolios; and (iii) enable us to strengthen the quotation
of our common stock on the OTC Markets, Inc. QB Tier.
On
August 9, 2017 we received approval from the Financial Industry Regulatory Authority (“FINRA”) to effectuate the Reverse
Split at the open of business on August 11, 2017.
HO
WAH GENTING GROUP LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
In
connection with the Share Exchange and pursuant to the Split-Off Agreement (defined below), we transferred our pre-Share Exchange
assets and liabilities to our pre-Share Exchange majority stockholder, in exchange for the surrender by him and cancellation of
5,000,000 shares of our Common Stock.
Under
generally accepted accounting principles in the United States, (“U.S. GAAP”) because Malaysia HWGG’s former
stockholders received the greater portion of the voting rights in the combined entity and Malaysia HWGG’s senior management
represents all of the senior management of the combined entity, the Merger was accounted for as a recapitalization effected by
a share exchange, wherein Malaysia HWGG is considered the acquirer for accounting and financial reporting purposes. The assets
and liabilities of Malaysia HWGG have been brought forward at their book value and no goodwill has been recognized. Accordingly,
the assets and liabilities and the historical operations that are reflected in Malaysia HWGG’s consolidated financial statements
are those of Malaysia HWGG and are recorded at the historical cost basis of Malaysia HWGG.
|
2.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Basis
of presentation
The
accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in the United States of America (“U.S. GAAP”) for interim financial information article 8 of Regulation
S-X.
This
basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned,
and expenses and losses are recognized when incurred. The Company’s financial statements are expressed in U.S. dollars.
Principles
of consolidation
The
unaudited consolidated financial statements include the accounts of HWGG and its subsidiary, Beedo, collectively referred to within
as the Company. All material intercompany accounts, transactions, and profits have been eliminated in consolidation.
Use
of estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.
Foreign
currency translation and transactions
The
functional currency of the Company is the Malaysian Ringgit (“MYR”) and reporting currency of the Company is the United
States Dollar (“USD”). The financial statements of the Company are translated into USD using the exchange rate as
of the balance sheet date for assets and liabilities and average exchange rate for the year for income and expense items. Translation
gains and losses are recorded in accumulated other comprehensive income or loss as a component of shareholders’ equity.
Cash
and cash equivalents
The
Company considers highly-liquid investments with maturities of three months or less, when purchased, to be cash equivalents.
HO
WAH GENTING GROUP LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Investments
The
Company invests its excess cash primarily in equity instruments of high-quality corporate issuers listed on the Main Board of
Bursa Malaysia. Such securities are classified as short-term investments and are valued at the last reported sales price on the
balance sheet date. If no sale price was reported on that date, they are valued at the last reported bid price. Changes in the
value of these investments are recognized as unrealized gain or loss in the statement of income.
Fair
value of financial instruments
FASB
ASC 820, “Fair Value Measurement,” specifies a hierarchy of valuation techniques based upon whether the inputs to
those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent
sources (observable inputs). In accordance with ASC 820, the following summarizes the fair value hierarchy:
Level
1 Inputs – Unadjusted quoted market prices for identical assets and liabilities in an active market that the Company has
the ability to access.
Level
2 Inputs – Inputs other than the quoted prices in active markets that are observable either directly or indirectly.
Level
3 Inputs – Inputs based on prices or valuation techniques that are both unobservable and significant to the overall fair
value measurements.
ASC
820 requires the use of observable market data, when available, in making fair value measurements. When inputs used to measure
fair value fall within different levels of the hierarchy, the level within which the fair value measurement is categorized is
based on the lowest level input that is significant to the fair value measurements. Valuation techniques used need to maximize
the use of observable inputs and minimize the use of unobservable inputs. As of September 30, 2017 and December 31, 2016, short
term investments classified as held-for-trading were required to be reported at fair value on a recurring basis. Carrying values
of non-derivative financial instruments, including cash, accounts receivables, payables and accrued liabilities, approximate their
fair values due to the short term nature of these financial instruments. There were no changes in methods or assumptions during
the periods presented.
Property
and equipment, net
Property
and equipment are carried at cost less accumulated depreciation. Depreciation is calculated on a straight-line basis over the
following estimated useful lives:
Leasehold
building
|
50
years
|
|
|
Computer
and software
|
5
years
|
|
|
Furniture
and fixtures
|
5
years
|
|
|
Leasehold
improvement
|
10
years
|
Revenue
recognition
The
Company provides rental, Information technology and junket operation services to customer. The Company has recognized lease revenue
based upon its annual rental over the life of the operating lease. Lease revenue is recognized using the straight-line method
in accordance with ASC Topic 970-605, “Real Estate – General – Revenue Recognition” (“ASC Topic
970-605”). Revenue from the provision of information technology services is recognized when (a) there is persuasive evidence
that an arrangement exists, (b) delivery has occurred, (c) the vendor’s fee is fixed or determinable and (d) collectability
is probable in accordance with ASC Topic 985-605, “Software – Revenue Recognition” (“ASC 985-605”).
Junket operation revenue is recognized when service is performed, vendor’s fee is fixed or determinable and collectability
is probable.
HO
WAH GENTING GROUP LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Income
taxes
Current
income taxes are provided for in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized
when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the combined financial
statements.Net operating loss carry forwards and credits are applied using enacted statutory tax rates applicable to future years.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that a
portion of or all of the deferred tax assets will not be realized. The components of the deferred tax assets and liabilities are
individually classified as current and non-current based on their characteristics.
The
impact of an uncertain income tax position on the income tax return is recognized at the largest amount that is more-likely-than-not
to be sustained upon audit by the relevant tax authority. An uncertain income tax position will not be recognized if it has less
than a 50% likelihood of being sustained. Interest and penalties on income taxes are classified as a component of the provisions
for income taxes. The Company did not recognize any income tax due to uncertain tax positions or incur any interest and penalties
related to potential underpaid income tax expense as of September 30, 2017 and December 31, 2016, respectively.
Comprehensive
loss
Comprehensive
loss includes net loss and cumulative foreign currency translation adjustments and is reported in the Consolidated Statement of
income and comprehensive loss.
Loss
per share
The
loss per share is computed using the weighted average number of shares outstanding during the fiscal years. For the three and
nine months ended September 30, 2017 and 2016, there is no dilutive effect due to net loss for the periods.
Segment
reporting
ASC
Topic 280 requires use of the “management approach” model for segment reporting. The management approach model is
based on the way a company’s management organizes segments within the company for making operating decisions and assessing
performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any
other manner in which management disaggregates a company. During the periods ended September 30, 2017, the Company operated in
three reportable business segments: (1) investment property holding which generates rental income from the leasing out of its
leasehold building, (2) exclusive travel membership (ETM) and junket operations (3) information technology services, which generates
revenue from the provision of information technology services..
The
others which comprise of general operating and administrative expenses, and other income/expenses not directly attributable to
the sources of revenue of the Company for the three and nine months ended September 30, 2017 and 2016.
Related
party transactions
A
related party is generally defined as:
(i)
any person that holds the Company’s securities including such person’s immediate families,
(ii)
the Company’s management,
(iii)
someone that directly or indirectly controls, is controlled by or is under common control with the Company, or
(iv)
anyone who can significantly influence the financial and operating decisions of the Company.
HO
WAH GENTING GROUP LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A
transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related
parties.
Recently
issued accounting pronouncements
Revenue
Recognition:
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments
in ASU 2015-14 defer the effective date of ASU 2014-09 for all entities by one year. Public business entities, certain not-for-profit
entities, and certain employee benefit plans should apply the guidance in ASU 2014-09 to annual reporting periods beginning after
December 15, 2017, including interim reporting periods within that reporting period. Earlier application is permitted only as
of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.
Financial
instrument
: In January 2016, the FASB issued ASU No. 2016-01, “Financial Instruments - Overall (Subtopic 825-10):
Recognition and Measurement of Financial Assets and Financial Liabilities” (“ASU 2016-01”). The standard addresses
certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 is effective for
fiscal years, and interim periods within those years, beginning after December 15, 2017, and early adoption is not permitted.
Accordingly, the standard is effective for us on January 1, 2018. We are currently evaluating the impact that the standard will
have on our consolidated financial statements.
Leases
: In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-2”), which provides guidance
on lease amendments to the FASB Accounting Standard Codification. This ASU will be effective for us beginning in January 1, 2019.
We are currently in the process of evaluating the impact of the adoption of ASU 2016-2 on our consolidated financial statements.
Financial
Instruments - Credit Losses:
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):
The amendments in this Update require a financial asset (or a group of financial assets) measured at amortized cost basis to be
presented at the net amount expected to be collected. The amendments broaden the information that an entity must consider in developing
its expected credit loss estimate for assets measured either collectively or individually. The use of forecasted information incorporates
more timely information in the estimate of expected credit loss, which will be more decision useful to users of the financial
statements. ASU 2016-13 is effective for the Company for fiscal years beginning after December 15, 2019, including interim periods
within those fiscal years. Early adoption is allowed as of the fiscal years beginning after December 15, 2018, including interim
periods within those fiscal years. The Company is still evaluating the effect that this guidance will have on the Company’s
consolidated financial statements and related disclosures.
The
Financial Accounting Standards Board and other entities issued new or modifications to, or interpretations of, existing accounting
guidance during 2017. Management has carefully considered the new pronouncements that altered generally accepted accounting principles
and does not believe that any other new or modified principles will have a material impact on the Company’s reported financial
position or operations in the near term.
|
3.
|
GOING
CONCERN UNCERTAINTIES
|
These
consolidated 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.
For the period ended September 30, 2017, the Company reported a net loss of $669,529 and working capital
deficit of $1,129,552. The Company had an accumulated deficit of $1,202,810 as of September 30, 2017.
HO
WAH GENTING GROUP LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The
continuation of the Company as a going concern is dependent upon improving the profitability and the continuing financial support
from its stockholders or other capital sources. Management believes that the continuing financial support from the existing shareholders
or external debt financing will provide the additional cash to meet the Company’s obligations as they become due.
These
consolidation 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 from the outcome of the Company’s
ability to continue as a going concern.
|
4.
|
HELD
FOR TRADING SECURITIES
|
|
|
Estimated
|
|
|
|
Fair
Value
|
|
|
|
As
of
September 30, 2017
(Unaudited)
|
|
|
As
of
December 31, 2016
|
|
|
|
|
|
|
|
|
Short-term
investments:
|
|
|
|
|
|
|
|
|
Quoted
shares in Malaysia
|
|
$
|
13,457
|
|
|
$
|
12,660
|
|
Realized
gains and realized losses were not significant for either of the three month and nine month ended September 30, 2017. The changes
in value was mainly due to forex implication.
|
5.
|
OTHER
RECEIVABLES, NET
|
Other
receivables consist of the following:
|
|
As
of
September 30,
2017
|
|
|
As
of
December 31,
2016
|
|
|
|
|
|
|
|
|
Other receivables
(1)
|
|
$
|
1,912,624
|
|
|
|
746,386
|
|
Deposits
and Prepayment (2)
|
|
|
37,671
|
|
|
|
1,165
|
|
|
|
$
|
1,950,295
|
|
|
$
|
747,551
|
|
|
(1)
|
Other receivables mainly arising from owing by Silver Rhythm Sdn Bhd. Ho Wah Genting Group Limited has
signed an agreement with Silver Rhythm Sdn Bhd and another deemed related party, to offset Silver Rhythm Sdn Bhd’s owing
of RM8,420,000 with 1,960,912 unit of Vitaxel Group Limited’s shares, a company listed on OTC Market.
|
|
(2)
|
Deposits
represented payments for telephone, electricity, water, maintenance fee, rental & utility and parking. Prepayment represented
prepayments for maintenance fee, sinking fund and fire assurance.
|
HO
WAH GENTING GROUP LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
6.
|
PROPERTY
AND EQUIPMENT, NET
|
Property
and equipment, net consist of the following:
|
|
As of
September
30, 2017
|
|
|
As of
December
31, 2016
|
|
|
|
|
|
|
|
|
Leasehold building
|
|
$
|
74,982
|
|
|
$
|
70,543
|
|
Computer and software
|
|
|
6,755
|
|
|
|
3,979
|
|
Furniture and fixtures
|
|
|
781
|
|
|
|
505
|
|
|
|
|
82,518
|
|
|
|
75,027
|
|
|
|
|
|
|
|
|
|
|
Less: Accumulated depreciation
|
|
|
(17,874
|
)
|
|
|
(14,963
|
)
|
|
|
|
|
|
|
|
|
|
Balance at end of period
|
|
$
|
64,644
|
|
|
$
|
60,064
|
|
Depreciation expenses was $1,914 (3 months $654) and $4,886 (3 months $1,043) for the nine months ended
September 30, 2017 and 2016, respectively.
|
7.
|
OTHER
PAYABLES AND ACCRUALS
|
|
|
As of
September
30, 2017
|
|
|
As of
December
31, 2016
|
|
|
|
|
|
|
|
|
Other payables (1)
|
|
|
4,055,316
|
|
|
|
2,440,117
|
|
Accruals
|
|
|
5,237
|
|
|
|
4,454
|
|
|
|
$
|
4,060,553
|
|
|
$
|
2,444,571
|
|
|
(1)
|
Other
payables mainly consist of members redemption balances.
|
The
Company and its subsidiary are Malaysia incorporated companies and required to pay corporate income tax at 24% of taxable income.
Income
tax expenses for the Company are summarized as follows:
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
|
September
30, 2017
|
|
|
September
30, 2016
|
|
|
September
30, 2017
|
|
|
September
30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Malaysian income tax
|
|
$
|
—
|
|
|
$
|
736
|
|
|
$
|
—
|
|
|
$
|
733
|
|
Provision for U.S. income tax
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Malaysian income tax
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Provision for U.S. income tax
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
—
|
|
|
$
|
736
|
|
|
$
|
—
|
|
|
$
|
733
|
|
HO
WAH GENTING GROUP LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Malaysia
Malaysia
HWGG recorded a loss before income tax of $669,529 and $296,911 for the period ended September 30, 2017 and 2016, respectively.
A reconciliation of the provision for income taxes with amounts determined by applying the Malaysian income tax rate of 24% and
24% for the period ended September 30, 2017 and 2016, respectively, to income before income taxes are as follows:
|
|
For the three months ended
|
|
|
For the nine months ended
|
|
|
|
September
30, 2017
|
|
|
September
30, 2016
|
|
|
September
30, 2017
|
|
|
September
30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) before income tax
|
|
$
|
(323,597
|
)
|
|
$
|
(98,437
|
)
|
|
$
|
(549,933
|
)
|
|
$
|
(320,920
|
)
|
Permanent difference
|
|
|
323,597
|
|
|
|
98,425
|
|
|
|
549,933
|
|
|
|
323,864
|
|
Taxable income
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
2,944
|
|
Malaysian income tax rate
|
|
|
24
|
%
|
|
|
24
|
%
|
|
|
24
|
%
|
|
|
24
|
%
|
Current tax expenses
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(736
|
)
|
Less: Valuation allowance
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Income tax expenses
|
|
$
|
—
|
|
|
$
|
(3
|
)
|
|
$
|
—
|
|
|
$
|
(736
|
)
|
United
States of America
HWGG
is a company incorporated in State of Nevada and recorded a loss before income tax of $- and for the period ended September 30,
2017 and 2016, respectively. A reconciliation of the provision for income taxes with amounts determined by applying the United
States Federal income tax rate of 34% for the period ended September 30, 2017 and 2016, respectively, to income before income
taxes are as follows:
|
|
For
the three months ended
|
|
|
For the six ended
|
|
|
|
September
30, 2017
|
|
|
September
30, 2016
|
|
|
September
30, 2017
|
|
|
September
30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit (loss) before income tax
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Permanent difference
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Taxable income
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
USA income tax rate
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
34
|
%
|
|
|
34
|
%
|
Current tax expenses
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Less: Valuation allowance
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Income tax expenses
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
No
deferred tax has been provided as there are no material temporary differences arising during the periods ended September 30, 2017
and 2016.
HO
WAH GENTING GROUP LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
9.
|
RELATED
PARTY TRANSACTIONS
|
As
of September 30, 2017 and December 31, 2016, amounts due from related parties were as follows:
|
|
As of
September
30, 2017
|
|
|
As of
December
31, 2016
|
|
|
|
|
|
|
|
|
Ho Wah Genting Berhad (1)
|
|
$
|
59,256
|
|
|
$
|
544,096
|
|
Ho Wah Genting Holiday Sdn Bhd (2)
|
|
|
37,924
|
|
|
|
—
|
|
Ho Wah Genting Shenzhen Limited (2)
|
|
|
110,612
|
|
|
|
—
|
|
Genting Highlands Taxi Services Sdn Bhd
|
|
|
23,702
|
|
|
|
—
|
|
Vitaxel SDN BHD (2)
|
|
|
655,749
|
|
|
|
585,619
|
|
Vitaxel Online Mall SDN BHD (3)
|
|
|
23,702
|
|
|
|
22,299
|
|
|
|
$
|
910,945
|
|
|
$
|
1,152,014
|
|
The
amounts due from related companies are unsecured, interest-free and repayable on demand.
As
of September 30, 2017 and December 31, 2016, amounts due from directors were as follows:
|
|
As
of
September
30, 2017
|
|
|
As
of
December
31, 2016
|
|
|
|
|
|
|
|
|
|
|
Lim
Chun Hoo (1)
|
|
$
|
8
|
|
|
$
|
23,503
|
|
The
amounts due from a director were unsecured, interest-free and repayable on demand.
As
of September 30, 2017 and December 31, 2016, amounts due to related parties were as follows:
|
|
As of
September
30, 2017
|
|
|
As of
December
31, 2016
|
|
|
|
|
|
|
|
|
Dato’ Lim Boon Hui (1)
|
|
$
|
—
|
|
|
$
|
208,830
|
|
Grande Legacy Inc. (4)
|
|
|
234,908
|
|
|
|
—
|
|
Beedo SDN BHD (2) (3)
|
|
|
52,145
|
|
|
|
57,977
|
|
|
|
$
|
287,053
|
|
|
$
|
266,807
|
|
|
(1)
|
Our
President. Dato Lim Hui Boon, is also the Group President and shareholder of Ho Wah Genting
Berhad
|
|
(2)
|
Lim
Chun Hoo, our Chief Executive Officer, Chief Financial Officer, Chief Operating Officer
and director, is also a director of Ho Wah Genting Holiday Sdn Bhd, Ho Wah Genting Shenzhen
Limited and Beedo SDN BHD. He was also a director of Vitaxel Group Limited, parent company
of its wholly owned subsidiary Vitaxel SDN BHD, until his resignation from that position
on March 31, 2017.
|
|
(3)
|
Liew
Jenn Lim, one of our directors since March 1, 2017, is also a director of Vitaxel Online
Mall Sdn Bhd and Beedo SDN BHD.
|
|
(4)
|
Leong
Yee Ming, one of our directors prior to his resignation on March 1, 2017, is a director
of Grande Legacy Inc.
|
During the periods ended September 30, 2017 and 2016, the Company recognized rental income of $4,144 (3
months $1,381) and $4,414 (3 months $1,381) respectively from Ho Wah Genting Berhad. The president of the Company, Dato’
Lim Hui Boon, is also the Group President of Ho Wah Genting Berhad. In addition, two sons of Dato’ Lim Hui Boon are directors
of Ho Wah Genting Berhad.
During the periods ended September 30, 2017 and 2016, the Company recognized revenues consisting of junket
commission from Ho Wah Genting Holiday SDN BHD was $7,680 and $15,592 respectively, and only for period ended September 30, 2017.
HO
WAH GENTING GROUP LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
From
January 1, 2016 to August 12, 2016, the Company, through its subsidiary Beedo SDN BHD recognized revenue from the provision of
information technology services of $10,361 from Ho Wah Genting Holiday SDN BHD and $41,443 from Vitaxel SDN BHD. Beedo SDN BHD
was disposed of by the Company after August 12, 2016 and stopped earning revenue from the provision of information technology
services.
|
10.
|
EARNINGS
(LOSS) PER SHARE
|
The
Company has adopted ASC Topic No. 260,
“Earnings Per Share,”
(“EPS”) which requires presentation
of basic and diluted EPS on the face of the income statement, and requires a reconciliation of the numerator and denominator of
the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements,
basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock
outstanding during the year.
The
following table sets forth the computation of basic and diluted earnings per share:
|
|
For the three month ended
|
|
|
For the nine month ended
|
|
|
|
September
30, 2017
|
|
|
September
30, 2016
|
|
|
September
30, 2017
|
|
|
September
30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to common shares
|
|
$
|
(249,490
|
)
|
|
$
|
(91,241
|
)
|
|
$
|
(669,529
|
)
|
|
$
|
(314,457
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding (Basic) / (Diluted)
|
|
|
500,027,774
|
|
|
|
200,375,532
|
|
|
|
500,027,774
|
|
|
|
200,375,532
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per share
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
0.00
|
)
|
The
Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
The
Company’s operating businesses are organized based on the business activities from which the Company earns revenues. Our
reported segments for the period ended September 30, 2017 and year ended December 31, 2016 are described as follows:
Investment
property holding
The
Company generates rental income from the leasing out of its leasehold building.
Information
technology services
The
Company generates revenue from the provision of information technology services. This line of business commenced in the year 2015.
This line of business ended on August 12, 2016 when the Company completed the disposal of its subsidiary, Beedo.
Exclusive
Travel Membership
The
company generates revenue from management fee billing on the member 10% for the deposit that put into the account.
Junket
income
The
company generates revenue from junket commission provided by Ho Wah Genting Malaysia Berhad.
Others
These
comprise of general operating and administrative expenses, and other income/expenses not directly attributable to the sources
of revenue of the Company for the periods ended September 30, 2017 and 2016.
The
Company’s reportable segments are managed separately based on the fundamental differences in their operations.
HO
WAH GENTING GROUP LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Information
with respect to these reportable business segments for the periods ended September 30, 2017 and 2016 was as follows:
|
|
For the three months ended
|
|
|
For the nine months
ended
|
|
|
|
September
30, 2017
|
|
|
September
30, 2016
|
|
|
September
30, 2017
|
|
|
September
30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
1,381
|
|
|
$
|
4,414
|
|
|
$
|
4,144
|
|
|
$
|
4,414
|
|
Information technology services
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
ETM and junket operations
|
|
|
—
|
|
|
|
—
|
|
|
|
7,850
|
|
|
|
—
|
|
Others
|
|
|
29,014
|
|
|
|
14,638
|
|
|
|
174,642
|
|
|
|
14,638
|
|
|
|
$
|
30,395
|
|
|
$
|
19,052
|
|
|
$
|
186,636
|
|
|
$
|
19,052
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
—
|
|
|
$
|
3,082
|
|
|
$
|
—
|
|
|
$
|
3,082
|
|
Information technology services
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
ETM and junket operations
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Others
|
|
|
41,494
|
|
|
|
—
|
|
|
|
122,204
|
|
|
|
—
|
|
|
|
$
|
41,494
|
|
|
$
|
3,082
|
|
|
$
|
122,204
|
|
|
$
|
3,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
638
|
|
|
$
|
611
|
|
|
$
|
1,914
|
|
|
$
|
1,583
|
|
Information technology services
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
ETM and junket operations
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Others
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
638
|
|
|
$
|
611
|
|
|
$
|
1,914
|
|
|
$
|
1,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
1,381
|
|
|
$
|
1,332
|
|
|
$
|
4,144
|
|
|
$
|
1,332
|
|
Information technology services
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
ETM and junket operations
|
|
|
—
|
|
|
|
—
|
|
|
|
7,850
|
|
|
|
—
|
|
Others
|
|
|
(250,870
|
)
|
|
|
(140,404
|
)
|
|
|
(681,523
|
)
|
|
|
(298,979
|
)
|
|
|
$
|
(249,489
|
)
|
|
$
|
(139,072
|
)
|
|
$
|
(669,529
|
)
|
|
$
|
(297,647
|
)
|
|
|
September 30, 2017
|
|
|
|
Investment
property
holding
|
|
|
Information
technology
services
|
|
|
Junket
operation
|
|
|
Others
|
|
|
Total
|
|
Identifiable long-lived assets, net
|
|
$
|
58,736
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,908
|
|
|
$
|
64,644
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HO
WAH GENTING GROUP LIMITED
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
December 31, 2016
|
|
|
|
Investment
property
holding
|
|
|
Information
technology
services
|
|
|
Junket
operation
|
|
|
Others
|
|
|
Total
|
|
Identifiable long-lived assets, net
|
|
$
|
56,317
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,747
|
|
|
$
|
60,064
|
|
The
Company does not allocate any operating and administrative expenses, other income/expenses to its reportable segments because
these activities are managed at a corporate level. In addition, the specified amounts for income tax expense are not included
in the measure of segment profit or loss reviewed by the chief operating decision maker and these specified amounts are not regularly
provided to the chief operating decision maker. Therefore, the Company has not disclosed income tax expense for each reportable
segment.
Asset
information by reportable segment is not reported to or reviewed by the chief operating decision maker and, therefore, the Company
has not disclosed asset information for each reportable segment. The Company’s operations are located in Malaysia. All revenues
are derived from customers in Malaysia. All of the Company’s operating assets are located in Malaysia.
|
12.
|
FAIR
VALUE MEASUREMENTS
|
Fair
Value of Financial Assets
The
Company’s financial assets measured at fair value on a recurring basis subject to disclosure requirements at September 30,
2017and December 31, 2016 were as follows:
|
|
Balance at
September 30,
2017
(Unaudited)
|
|
|
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
(Unaudited)
|
|
|
Significant
Other
Observable
Inputs
(Level 2)
(Unaudited)
|
|
|
Significant
Unobserved
Inputs
(Level 3)
(Unaudited)
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted shares in Malaysia
|
|
$
|
13,457
|
|
|
$
|
13,457
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total short-term investments
|
|
|
13,457
|
|
|
|
13,457
|
|
|
|
—
|
|
|
|
—
|
|
Total financial assets measured at fair value
|
|
$
|
13,457
|
|
|
$
|
13,477
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
in Active
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Markets for
|
|
|
Other
|
|
|
Significant
|
|
|
|
Balance at
|
|
|
Identical
|
|
|
Observable
|
|
|
Unobserved
|
|
|
|
December 31,
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
2016
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quoted shares in Malaysia
|
|
$
|
12,660
|
|
|
$
|
12,660
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total short-term investments
|
|
|
12,660
|
|
|
|
12,660
|
|
|
|
—
|
|
|
|
—
|
|
Total financial assets measured at fair value
|
|
$
|
12,660
|
|
|
$
|
12,660
|
|
|
$
|
—
|
|
|
$
|
—
|
|
On October 23, 2017, Ho Wah Genting Group Sdn. Bhd. has signed an agreement with Silver Rhythm Sdn Bhd
and another deemed related party, to offset Silver Rhythm Sdn Bhd’s owing of RM8,420,000 with 1,960,912 unit of shares of
a company listed on OTC Market, following to an arrangement signed between Ho Wah Genting Group Sdn Bhd with Silver Rhythm Sdn
Bhd on July 6, 2017.
On
November 6, 2017, Ho Wah Genting Group Sdn. Bhd. has issued a letter to Vspark Malaysia Sdn. Bhd. to acknowledge that there is
a potential 50:50 joint venture with Vspark Malaysia Sdn. Bhd. to develop the Port Dickson Project. The Port Dickson Project consist
of 182 units of water chalet, 400 units of hotel tower and a cruise entertainment hub.