The accompanying notes are an integral
part of the consolidated financial statements.
NOTES TO FINANCIAL
STATEMENTS
(In U.S. dollars)
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).
Ho Wah Genting 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
US$16 (MYR67). Ho Wah Genting 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-reverse 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-reverse 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.
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 consolidated financial
statements of the Company have been prepared in accordance with U.S. GAAP.
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
For the year ended December 31, 2016,
the consolidated financial statements include the accounts of HWGG, Malaysian HWGG and its subsidiary, Beedo, collectively
referred to within as the Company. 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). Since selling
its interest of Beedo, we no longer participate in the information technology services industry.
Ho Wah Genting Property Sdn Bhd, a 67% owned subsidiary, was
incorporated in Malaysia on March 24, 2015. The Company is primarily engaged in property investment and property development.
In January 11, 2017, the company acquired 67% of HWGG Property Sdn Bhd for a consideration of approximately US$16 (MYR67). Ho
Wah Genting Property Sdn Bhd business activity is in property investment and property development.
Thus, as of and for the year ended December
31, 2017, the consolidated financial statements include the accounts of HWGG, Malaysian HWGG and Ho Wah Genting Property Sdn Bhd.
All material intercompany accounts, transactions,
and profits have been eliminated upon consolidation.
Use of estimates
The preparation of financial statements
in conformity with U.S. GAAP 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. Cash and cash equivalents include cash on hand
and amount on deposit with Malaysia financial institutions, which amounts may at times exceed Malaysia government insured limits.
The Company has not experienced any losses on such accounts and it does not believe it is exposed to any significant credit risk.
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 closing price on the balance sheet date. If no sale price was reported
on that date, they are valued at the last reported trading day closing 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 December 31, 2017 and 2016, the Company has assets measured at fair value on a recurring
basis subject to the disclosure requirements of ASC 820 of $2,544,644 and $12,660 respectively. 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
|
|
|
|
Revenue recognition
The Company provides rental and junket
operation services to customer. 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”). Junket operation revenue
is recognized when service is performed, vendor’s fee is fixed or determinable and collectability is probable.
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.
U.S. Corporate Income Tax
The Company is subject to U.S. corporate income tax on its
taxable income at a rate of up to 21% for taxable years beginning after December 31, 2017 and U.S. corporate income tax on
its taxable income of up to 35% for prior tax years. Recent U.S. federal tax legislation, commonly referred to as the Tax Cuts
and Jobs Act (the “U.S. Tax Reform”), was signed into law on December 22, 2017. The U.S. Tax Reform significantly
modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate
from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions;
migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously
deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate
income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect
to pay the one-time transition tax over eight years, or in a single lump-sum payment. See Note 8 – Income Tax.
To the extent that portions of its U.S. taxable income, such
as Subpart F income or global intangible low-taxed income (“GILTI”), are determined to be from sources outside of
the U.S., subject to certain limitations, the Company may be able to claim foreign tax credits to offset its U.S. income tax liabilities.
Any remaining liabilities are accrued in the Company’s consolidated statements of comprehensive income and estimated tax
payments are made when required by U.S. law.
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.
Comprehensive loss
Comprehensive loss includes net loss and
cumulative foreign currency translation adjustments and is reported in the Combined Statement of 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 years ended December 31, 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 year ended December 31, 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, and (2) exclusive membership and junket operations,
and (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 years ended December 31, 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.
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. We will apply the
new revenue standard beginning January 1, 2018. Each of the revenue streams will has been be analysed in accordance with the new
revenue standard to determine the impact on our consolidated financial statements. We do not expect the new revenue standard to
have a material impact on our consolidated financial statements.
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.
Stock-based
Compensation
: In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation
(Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). ASU 2016-09 changes how companies account
for certain aspects of stock-based awards to employees, including the accounting for income taxes, forfeitures, and statutory
tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for us in the
first quarter of 2018, and earlier adoption is permitted. We are still evaluating the effect that this guidance will have
on our consolidated financial statements and related disclosures.
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.
Statement of
Cash Flows:
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): The amendments in this Update
apply to all entities, including both business entities and not-for-profit entities that are required to present a statement of
cash flows under Topic 230. The amendments in this Update provide guidance on the following eight specific cash flow issues. The
amendments are an improvement to GAAP because they provide guidance for each of the eight issues, thereby reducing the current
and potential future diversity in practice described above. ASU 2016-15 is effective for the Company for fiscal years beginning
after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted, including adoption
in an interim period. The Company is still evaluating the effect that this guidance will have on the Company’s consolidated
financial statements and related disclosures.
In November 2016, the FASB issued ASU
No. 2016-18, Statement of Cash Flows (Topic 230): “Restricted Cash”(“ASU 2016-18”). ASU 2016-18
requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts
generally described as restricted cash or restricted cash equivalents. ASU 2016-18 will become effective for us beginning April
1, 2018, or fiscal 2019. ASU 2016-18 is required to be applied retrospectively. Upon the adoption, amounts described as restricted
cash will be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period amounts shown
on the statements of cash flows.
The amendments apply to all organizations that present a classified
balance sheet. For public companies, the amendments are effective for financial statements issued for annual periods beginning
after December 15, 2016, and interim periods within those annual periods. For private companies, not-for-profit organizations,
and employee benefit plans, the amendments are effective for financial statements issued for annual periods beginning after December
15, 2017, and interim periods within annual periods beginning after December 15, 2018.
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 year ended December 31, 2017,
the Company reported a net loss of $746,793 and working capital deficit of $1,309,010. The Company had an accumulated deficit
of $1,215,994 as of December 31, 2017 due to the fact that the Company incurred losses during the year ended December 31,
2017.
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
December 31,
2017
|
|
|
As of
December 31,
2016
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
Quoted shares in Malaysia
|
|
|
93,504
|
|
|
|
12,660
|
|
Quoted shares in U.S. (OTC)
– (Vitaxel Group Limited, stock code VXEL)
|
|
|
2,451,140
|
|
|
|
—
|
|
Total short-term investments
|
|
|
2,544,644
|
|
|
|
12,660
|
|
The assets measured at fair value on a
recurring basis subject to the disclosure requirements of ASC 820 as of December 31, 2017 and December 31, 2016 are $2,544,644
and $12,660 respectively.
Other receivables consist of the following:
|
|
|
As of
December 31,
2017
|
|
|
As of
December 31,
2016
|
|
|
|
|
|
|
|
|
|
Deposits (1)
|
|
|
$
|
196,867
|
|
|
$
|
746,386
|
|
Prepayment (2)
|
|
|
|
8,337
|
|
|
|
1,165
|
|
|
|
|
$
|
205,204
|
|
|
$
|
747,551
|
|
(1)
|
Deposits represented payments for telephone, electricity, water, maintenance fee, rental
& utility and parking.
|
(2)
|
Prepayment represented prepayments for maintenance fee, sinking fund and fire assurance.
|
6.
|
PROPERTY AND EQUIPMENT, NET
|
Property and equipment, net consist of the following:
|
|
As of
December
31, 2017
|
|
|
As of
December
31, 2016
|
|
|
|
|
|
|
|
|
Leasehold building
|
|
$
|
78,227
|
|
|
$
|
70,543
|
|
Computer and software
|
|
|
13,845
|
|
|
|
3,979
|
|
Furniture and fixtures
|
|
|
19,627
|
|
|
|
505
|
|
|
|
|
111,699
|
|
|
|
75,027
|
|
|
|
|
|
|
|
|
|
|
Less: Accumulated depreciation
|
|
|
(19,906
|
)
|
|
|
(14,963
|
)
|
|
|
|
|
|
|
|
|
|
Balance at end of year
|
|
$
|
91,793
|
|
|
$
|
60,064
|
|
Depreciation expenses charged to the statements of operations
with the average exchange rate for the year ended December 31, 2017 and the year ended December 31, 2016 were $2,672 and $2,186,
respectively.
7.
|
OTHER PAYABLES AND ACCRUALS
|
|
|
As of
December
31, 2017
|
|
|
As of
December
31, 2016
|
|
|
|
|
|
|
|
|
Other payables (1)
|
|
$
|
4,692,631
|
|
|
$
|
2,440,117
|
|
Accruals
|
|
|
36,618
|
|
|
|
4,454
|
|
|
|
$
|
4,729,249
|
|
|
$
|
2,444,571
|
|
|
(1)
|
Other payables mainly consist of members redemption balance
|
Income
taxes consisted of Malaysia income tax and U.S. income tax. There was no provision of income taxes made in respect of the two
countries for the years ended December 31, 2017. The provision of income taxes made in Malaysia for the years ended December 31,
2016 is $725.
Provision for income taxes consisted of
the following:
|
|
For the year ended
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Provision for Malaysian income tax
|
|
$
|
—
|
|
|
$
|
725
|
|
Provision for U.S. income tax
|
|
|
—
|
|
|
|
—
|
|
Deferred:
|
|
|
|
|
|
|
|
|
Provision for Malaysian income tax
|
|
|
—
|
|
|
|
—
|
|
Provision for U.S. income tax
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
725
|
|
Malaysia
Malaysia HWGG recorded a loss before income tax of $523,175
and $583,804 for the years ended December 31, 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 years ended December 31, 2017 and 2016,
respectively, to income before income taxes are as follows:
|
|
For the years ended
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
|
|
Profit (loss) before income tax
|
|
$
|
(523,175
|
)
|
|
$
|
(583,804
|
)
|
Permanent difference
|
|
|
523,175
|
|
|
|
586,704
|
|
Taxable income
|
|
$
|
—
|
|
|
$
|
2,900
|
|
Malaysian income tax rate
|
|
|
24
|
%
|
|
|
24
|
%
|
Current tax expenses
|
|
$
|
—
|
|
|
$
|
725
|
|
Less: Valuation allowance
|
|
|
|
|
|
|
|
|
Income tax expenses
|
|
$
|
—
|
|
|
$
|
725
|
|
United States of America
HWGG is a company incorporated in State of Nevada and recorded
a loss before income tax of $159,537 and $208,830 for the year ended December 31, 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
years ended December 31, 2017 and 2016, respectively, to income before income taxes are as follows:
|
|
For the years ended
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
|
|
Profit (loss) before income tax
|
|
$
|
(159,537
|
)
|
|
$
|
(208,830
|
)
|
Permanent difference
|
|
|
159,537
|
|
|
|
208,830
|
|
Taxable income
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. income tax rate
|
|
|
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 years ended December 31, 2017 and 2016.
U.S. Corporate Income Tax
The Company’s management has yet to evaluate the effect
of the U.S. Tax Reform on Ho Wah Genting Group Limited. Management may update its judgment of that effect based on its continuing
evaluation and on future regulations or guidance issued by the U.S Department of the Treasury, and specific actions the Company
may take in the future.
One-Time Transition Tax Related to U.S. Tax Reform
The Company’s management has evaluated the on-time transition
tax and estimated that there will not be such tax due for the Company.
9.
|
RELATED PARTY TRANSACTIONS
|
As of December 31, 2017 and 2016, amounts due from related
parties were as follows:
|
|
As of
December
31, 2017
|
|
|
As of
December
31, 2016
|
|
|
|
|
|
|
|
|
Ho Wah Genting Berhad (1)
|
|
$
|
247,280
|
|
|
$
|
544,096
|
|
Vitaxel Sdn Bhd (2)
|
|
|
—
|
|
|
|
585,619
|
|
Vitaxel Online Mall Sdn Bhd (3)
|
|
|
24,728
|
|
|
|
22,299
|
|
Ho Wah Genting Holiday Sdn Bhd (2)
|
|
|
14,837
|
|
|
|
—
|
|
Ho Wah Genting ShenZhen Limited (2)
|
|
|
133,974
|
|
|
|
—
|
|
Marvel Theme Park City Sdn Bhd (4)
|
|
|
3,594
|
|
|
|
—
|
|
Lim Chun Hoo (2)
|
|
|
—
|
|
|
|
23,503
|
|
|
|
$
|
424,413
|
|
|
$
|
1,175,517
|
|
The amounts due from related parties are
unsecured, interest-free and repayable on demand.
|
(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 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.
|
During the year 2017, Malaysia
HWGG agreed to offset the owing from Silver Rhythm by receiving common stock of Vitaxel Group Limited from Lim Chun Yen. Lim Chun
Yen owes Silver Rhythm US$1,960,912 and Silver Rhythm owes Malaysia HWGG. To settle the debts, the 3 parties decided to enter
into the shares agreement on October 2, 2017 to offset each other’s debt by using the common stock of Vitaxel owned by Lim
Chun Yen. As a result, HWGG Malaysia has acquired 1,960,912 shares of Vitaxel Group Limited, a Nevada corporation in U.S
for the price of USD1 per share from Lim Chun Yen, a nephew of Dato Lim Hui Boon, the President of the Company. The share
closing market price at the end December 31, 2017 was USD1.25.
|
(3)
|
Liew Jenn Lim, one of
our directors since March 1, 2017, is also a director of Vitaxel Online Mall Sdn Bhd,
Beedo Sdn Bhd and Vspark Malaysia Sdn Bhd.
|
|
(4)
|
Marvel Theme Park City
Sdn Bhd is a shareholder of our subsidiary company, Ho Wah Genting Property Sdn Bhd.
|
As of December 31, 2017 and 2016, amounts
due to related parties were as follows:
|
|
As of
December
31, 2017
|
|
|
As of
December
31, 2016
|
|
|
|
|
|
|
|
|
Dato’ Lim Boon Hui
|
|
$
|
—
|
|
|
$
|
208,830
|
|
Beedo SDN BHD
|
|
|
59,347
|
|
|
|
57,977
|
|
Vspark Malaysia Sdn Bhd
|
|
|
7,031
|
|
|
|
—
|
|
Vitaxel Sdn Bhd
|
|
|
42,877
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
109,255
|
|
|
$
|
266,807
|
|
During the years ended December 31, 2017
and 2016, the Company recognized rental income of $5,584 and $5,801 respectively from Ho Wah Genting Berhad (“HWGB”).
Our president, Dato’ Lim Hui Boon, is also the Group President and shareholder of HWGB. In addition, two sons of Dato’
Lim Hui Boon are directors of HWGB.
On April 1, 2016, we entered into the Travel
and Junket Service Contract with our partner, Ho Wah Genting Holiday SDN BHD (“HWGH”), pursuant to which HWGH shall
render HWGG tour agency services, including but not limited to providing HWGG with tour packages, hotel bookings, and transportation
arrangements to offer HWGG’s members and to share in junket operation profits. Lim Chun Hoo, our Chief Executive Officer,
Chief Financial Officer, Chief Operating Officer and director, is the Executive Director of HWGH. In addition, two sons of Dato
Lim Hui Boon, our president, are the directors of HWGB, the parent company of HWGH. During the years ended December 31, 2017 and
2016, the Company recognized junket commission revenue of $7,932 and $16,730, respectively, from HWGH.
As of December 31, 2017 and 2016, HWGB owed the Company $247,280 and $544,096, respectively. Such debt is
unsecured, interest-free and repayable on demand.
During the years ending December 31, 2017 and 2016, the Company loaned $0 and $585,619, respectively,
to Vitaxel Sdn Bhd, a Malaysian corporation (“Vitaxel”). During the years ending December 31, 2017 and 2016, the Company
loaned $24,728 and $22,299, respectively,
to Vitaxel
Online Mall Sdn Bhd, a Malaysian corporation (“Vionmall”). Such debt is unsecured, interest-free and repayable on
demand. Vitaxel and Vionmall are wholly owned subsidiaries of Vitaxel Group Limited, a Nevada corporation. Lim Chun Hoo, our Chief
Executive Officer, Chief Financial Officer, Chief Operating Officer and director, was a director of Vitaxel Group Limited, Vionmall
and Vitaxel’s parent company, until his resignation on March 31, 2017. In addition, Leong Yee Ming, our former Chief Financial
Officer, Chief Operating Officer and director, is a director and Chief Executive Officer of Vitaxel Group Limited.
From January 1, 2016 to August 12, 2016,
the Company, through its subsidiary Beedo recognized revenue from the provision of information technology services of $9,668 from
HWGH and $55,545 from Vitaxel. Beedo was disposed of by the Company after August 12, 2016 and stopped earning revenue from the
provision of information technology services.
During the years ended December 31, 2017
and 2016, the recognized junket commission revenue of the Company from HWGH was $7,932 and $16,730, respectively.
During the years ended December 31, 2017
and 2016, the Company recognized revenue of $240,802 and $0, respectively, from the 10% management charges to ETM member from
HWGB.
10.
|
Commitments and Contingencies
|
Capital Commitments
As of December 31, 2017 and 2016, Company
has no capital commitments.
Operation Commitments
As of December 31, 2017 and 2016, Company
has no operation commitments and lease commitments.
11.
|
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 years ended
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
|
|
Net loss applicable to common shares
|
|
$
|
(682,712
|
)
|
|
$
|
(798,637
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding (Basic/Diluted)
|
|
|
500,027,774
|
|
|
|
415,443,013
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
The Company has no potentially dilutive
securities, such as options or warrants, currently issued and outstanding.
FORWARD STOCK
SPLIT
On November 8, 2016, the Board of Directors of Ho Wah Genting
Group Limited (formerly Computron, Inc.) (the “Company”) authorized and declared a 1,428-for-1 forward stock split
of the Company’s issued and outstanding common stock, par value $0.0001 per share (the “Common Stock”) in the
form of a dividend (the “Stock Split”) with a record date of November 17, 2016 (the “Record Date”). On
the Record Date, each holder of the Company’s Common Stock will receive 1,428 additional shares of the Company’s Common
Stock for each one share owned, rounded up to the nearest whole share
On November 28, 2016, Financial Industry Regulatory Authority,
Inc. (“FINRA”) notified us of its announcement of the payment date of the Stock Split as November 29, 2016 (the “Payment
Date”) and ex-dividend date as November 30, 2016 (the “Ex-Dividend Date”). On the Payment Date, as a result
of the Stock Split, each holder of the Company’s Common Stock as of the Record Date received 1427 additional shares of the
Company’s Common Stock for each one share owned, rounded up to the nearest whole share. As of the Ex-Dividend Date, our
Common Stock began trading on a post-split adjusted basis.
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.
As of December 31, 2017 and December 31, 2016, the Company has 750,000,000 shares authorized and 500,027,774
shares issued respectively.
Our reported segments for the years ended
December 31, 2017 and 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 operations
The Company generates revenue from junket
operations with commissions receivable from Ho Wah Genting Holiday SDN BHD. This line of business commenced in the year 2016.
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
years ended December 31, 2017 and 2016.
The Company’s reportable segments
are managed separately based on the fundamental differences in their operations.
Information with respect to these reportable
business segments for the years ended December 31, 2017 and 2016 was as follows:
|
|
For the years ended
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
5,584
|
|
|
$
|
5,801
|
|
Information technology services
|
|
|
—
|
|
|
|
74,291
|
|
Junket operations
|
|
|
7,932
|
|
|
|
16,730
|
|
Management fee
|
|
|
240,802
|
|
|
|
—
|
|
Others
|
|
|
6,431
|
|
|
|
—
|
|
|
|
$
|
260,749
|
|
|
$
|
96,822
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
—
|
|
|
$
|
—
|
|
Information technology services
|
|
|
—
|
|
|
|
14,586
|
|
Junket operations
|
|
|
683
|
|
|
|
5,474
|
|
Management fee
|
|
|
212,706
|
|
|
|
—
|
|
Others
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
213,389
|
|
|
$
|
20,060
|
|
|
|
|
|
|
|
|
|
|
Depreciation:
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
1,472
|
|
|
$
|
1,411
|
|
Information technology services
|
|
|
—
|
|
|
|
—
|
|
Junket operations
|
|
|
—
|
|
|
|
—
|
|
Others
|
|
|
632
|
|
|
|
3,909
|
|
|
|
$
|
2,104
|
|
|
$
|
5,320
|
|
|
|
|
|
|
|
|
|
|
Net income (loss):
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
4,112
|
|
|
$
|
4,390
|
|
Information technology services
|
|
|
—
|
|
|
|
59,705
|
|
Junket operations
|
|
|
7,249
|
|
|
|
11,256
|
|
Management fee
|
|
|
28,096
|
|
|
|
—
|
|
Others
|
|
|
(786,250
|
)
|
|
|
(885,940
|
)
|
|
|
$
|
(746,793
|
)
|
|
$
|
(810,589
|
)
|
|
|
December 31, 2017
|
|
|
|
Investment
property
holding
|
|
|
Junket
operation
|
|
|
Others
|
|
|
Total
|
|
Identifiable long-lived assets, net
|
|
$
|
60,887
|
|
|
$
|
—
|
|
|
$
|
30,906
|
|
|
$
|
91,793
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016
|
|
|
|
Investment
property
holding
|
|
|
Junket
operation
|
|
|
Others
|
|
|
Total
|
|
Identifiable long-lived assets, net
|
|
$
|
56,317
|
|
|
$
|
—
|
|
|
$
|
3,747
|
|
|
$
|
60,064
|
|
The Company does not allocate any administrative
expenses and 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.
13.
|
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 December 31, 2017 and 2016 were as follows:
|
|
|
|
|
Quoted Prices
|
|
|
|
|
|
|
|
|
|
|
|
|
in Active
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Markets for
|
|
|
Other
|
|
|
Significant
|
|
|
|
Balance at
|
|
|
Identical
|
|
|
Observable
|
|
|
Unobserved
|
|
|
|
December 31,
|
|
|
Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
2017
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investment
|
|
$
|
2,544,644
|
|
|
$
|
2,544,644
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total short-term investments
|
|
|
2,544,644
|
|
|
|
2,544,644
|
|
|
|
—
|
|
|
|
—
|
|
Total financial assets measured
at fair value
|
|
$
|
2,544,644
|
|
|
$
|
2,544,644
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investment
|
|
$
|
12,660
|
|
|
$
|
12,660
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total short-term investments
|
|
|
12,660
|
|
|
|
12,660
|
|
|
|
—
|
|
|
|
—
|
|
Total financial assets measured
at fair value
|
|
$
|
12,660
|
|
|
$
|
12,660
|
|
|
$
|
—
|
|
|
$
|
—
|
|
14.
|
DISPOSAL OF SUBSIDIARY AND LOSS FROM DISCONTINUED OPERATIONS
|
On June 25, 2015 the Company acquired
65% of the equity interests of Beedo, a Malaysian company founded by Lim Chun Hoo, our Chief Executive Officer, Chief Financial
Officer, Chief Operating Officer and director, who served as its director since May 2014. On July 7, 2015, Beedo increased its
number of authorized shares from 2,500 the Company acquired an additional 508,375 shares in Beedo for MYR 508,375 ($133,403) and
its equity interest in Beedo became 51%.
On August 12, 2016, the Company 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).
Summarized financial information for discontinued
operations is shown in the tables below.
|
|
For the years ended
December
31,
|
|
|
|
2017
|
|
|
2016
|
|
Total revenue
|
|
$
|
—
|
|
|
$
|
74,291
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
|
$
|
—
|
|
|
$
|
(24,392
|
)
|
|
|
|
|
|
|
|
|
|
Gain on disposal
|
|
$
|
—
|
|
|
$
|
7,397
|
|
|
|
|
|
|
|
|
|
|
Total gain (loss) from discontinued operations,
before income taxes
|
|
$
|
—
|
|
|
$
|
(16,995
|
)
|
|
|
|
|
|
|
|
|
|
Provision for income taxes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) from discontinued operations, net
of tax
|
|
$
|
—
|
|
|
$
|
(16,995
|
)
|
As of the date of disposal, Beedo had
net assets of $194,726, and non-controlling interests of $83,242. The Company recognized a gain on disposal of $7,397 accordingly.
|
|
As of
|
|
|
As of
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
—
|
|
Other receivables, deposits and prepayment
|
|
|
—
|
|
|
|
—
|
|
Other current assets
|
|
|
—
|
|
|
|
—
|
|
Total Current Assets
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
PROPERTY
AND EQUIPMENT, NET
|
|
|
—
|
|
|
|
—
|
|
TOTAL ASSETS
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Other payables and accrued expenses
|
|
$
|
—
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$
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—
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Amount due to directors
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—
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—
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Total Liabilities
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—
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—
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On April 13, 2018 Ho Wah Genting Group
Sdn Bhd disposed Ho Wah Genting Property Sdn Bhd to Lim Chun Hoo at cost for MYR67.00. Ho Wah Genting Property Sdn Bhd has not
generate any revenue since acquisition and continue to incur losses to the group. Due to this, the Board of Directors decided
to dispose the subsidiary.