The accompanying notes are an integral part
of the consolidated financial statements.
The accompanying notes are an integral part
of the consolidated financial statements
The accompanying notes are an integral part
of the consolidated financial statements.
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.
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 unaudited consolidated
financial statements of the Company have been prepared in accordance with U.S. GAAP for interim financial information and article
10 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 Malaysian HWGG, collectively referred to within as the Company.
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.
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 and OTC Market in the U.S. 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 March 31, 2018 and December 31, 2017, the Company has assets measured at fair value on a recurring basis
subject to the disclosure requirements of ASC 820 of $930,017 and $2,544,644 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. Rental revenue is recognized using the straight-line method in accordance with ASC Topic 970-605, “Real
Estate – General – Revenue Recognition” (“ASC Topic 970-605”).
The Company recognizes revenue pursuant
to Accounting Standards Codification 606 (“ASC 606”)
Revenue from Contracts with Customers
, the standard
applies five step model (i) The standard applies to a company’s contracts with customers (ii) The unit of account for revenue recognition
under the new standard is a performance obligation (a good or service) and the performance obligations will be accounted for separately
if they are distinct (iii) The transaction price is determined based on the amount of consideration that a company expects to be
entitled to from a customer (iv) The transaction price is allocated to all the separate performance obligations in an arrangement,
and (v) Revenue will be recognized when an entity satisfies each performance obligation by transferring control of the promised
goods or services to the customer. Goods or services can transfer at a point in time or over time.
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 three months ended March 31, 2018 and 2017, 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 March 31, 2018, 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 (3) junket operations.
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 months ended March 31, 2018 and 2017.
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.
|
|
(v)
|
entities for which investments in their equity securities
would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825–10–15,
to be accounted for by the equity method by the investing entity
|
|
(vi)
|
trusts for the benefit of employees, such as pension
and profit-sharing trusts that are managed by or under the trusteeship of management
|
A transaction is considered to be a related
party transaction when there is a transfer of resources or obligations between related parties.
Reclassification:
Certain prior period amounts have been reclassified to conform
with the current period presentation.
Recently Issued Accounting Pronouncements:
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 Company adopts new pronouncements relating to generally accepted
accounting principles applicable to the Company as they are issued, which may be in advance of their effective date. Management
does not believe that any pronouncement not yet effective but recently issued would, if adopted, have a material effect on the
accompanying financial.
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 March 31, 2018, the
Company reported a net loss of $1,926,326 and working capital deficit of $3,275,718. The Company had an accumulated deficit of
$3,125,860 as of March 31, 2018 due to the fact that the Company incurred losses during the period ended March 31, 2018.
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.
|
|
Estimated
Fair Value
|
|
|
|
As of
March 31,
2018
(Unaudited)
|
|
|
As of
December 31,
2017
|
|
Short-term investments:
|
|
|
|
|
|
|
|
|
Quoted shares in Malaysia
|
|
|
12,409
|
|
|
|
93,504
|
|
Quoted shares in U.S. (OTC) – (Vitaxel Group Limited, stock code VXEL)
|
|
|
917,608
|
|
|
|
2,451,140
|
|
Total short-term investments
|
|
|
930,017
|
|
|
|
2,544,644
|
|
Other receivables consist of the following:
|
|
As of
March 31,
2018
(Unaudited)
|
|
|
As of
December 31,
2017
|
|
|
|
|
|
|
|
|
Deposits (1)
|
|
$
|
381,345
|
|
|
$
|
196,867
|
|
Prepayment (2)
|
|
|
87,894
|
|
|
|
8,337
|
|
|
|
$
|
469,239
|
|
|
$
|
205,204
|
|
(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
March 31,
2018
(Unaudited)
|
|
|
As of
December
31, 2017
|
|
|
|
|
|
|
|
|
Leasehold building
|
|
$
|
81,914
|
|
|
$
|
78,227
|
|
Computer and software
|
|
|
9,619
|
|
|
|
13,845
|
|
Furniture and fixtures
|
|
|
25,462
|
|
|
|
19,627
|
|
|
|
|
116,995
|
|
|
|
111,699
|
|
|
|
|
|
|
|
|
|
|
Less: Accumulated depreciation
|
|
|
(23,040
|
)
|
|
|
(19,906
|
)
|
|
|
|
|
|
|
|
|
|
Balance at end of period/year
|
|
$
|
93,955
|
|
|
$
|
91,793
|
|
Depreciation expenses charged to the statements of operations
with the average exchange rate for the periods ended March 31, 2018 and 2017 were $2,234 and $2,537, respectively.
7.
|
OTHER PAYABLES AND ACCRUALS
|
|
|
As of
March
31, 2018
(Unaudited)
|
|
|
As of
December
31, 2017
|
|
|
|
|
|
|
|
|
Other payables (1)
|
|
$
|
5,861,089
|
|
|
$
|
4,692,631
|
|
Accruals
|
|
|
23,387
|
|
|
|
36,618
|
|
|
|
$
|
5,884,476
|
|
|
$
|
4,729,249
|
|
|
(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 periods ended March
31, 2018 and 2017.
Provision for income taxes consisted of
the following:
|
|
For the three months ended
|
|
|
|
March
31, 2018
|
|
|
March
31, 2017
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
Provision for Malaysian income tax
|
|
$
|
—
|
|
|
$
|
—
|
|
Provision for U.S. income tax
|
|
|
—
|
|
|
|
—
|
|
Deferred:
|
|
|
|
|
|
|
|
|
Provision for Malaysian income tax
|
|
|
—
|
|
|
|
—
|
|
Provision for U.S. income tax
|
|
|
|
|
|
|
|
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Malaysia
Malaysia HWGG recorded a loss before income tax of $1,926,326
and $173,212 for the periods ended March 31, 2018 and 2017, 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 periods ended March 31, 2018 and 2017, respectively,
to income before income taxes are as follows:
|
|
For the three months ended
|
|
|
|
March
31, 2018
|
|
|
March
31, 2017
|
|
|
|
|
|
|
|
|
Profit (loss) before income tax
|
|
$
|
(1,926,326
|
)
|
|
$
|
(173,212
|
)
|
Permanent difference
|
|
|
1,926,326
|
|
|
|
173,212
|
|
Taxable income
|
|
$
|
—
|
|
|
$
|
—
|
|
Malaysian income tax rate
|
|
|
24
|
%
|
|
|
24
|
%
|
Current tax expenses
|
|
$
|
—
|
|
|
$
|
—
|
|
Less: Valuation allowance
|
|
|
—
|
|
|
|
—
|
|
Income tax expenses
|
|
$
|
—
|
|
|
$
|
—
|
|
United States of America
HWGG is a company incorporated in State of Nevada and recorded
a loss before income tax of $50,880 and $3,906 for the period ended March 31, 2018 and 2017, 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 March 31, 20178 and 2017, respectively, to income before income taxes are as follows:
|
|
For the three months ended
|
|
|
|
March
31, 2018
|
|
|
March
31, 2017
|
|
|
|
|
|
|
|
|
Profit (loss) before income tax
|
|
$
|
(50,880
|
)
|
|
$
|
(3,906
|
)
|
Permanent difference
|
|
|
50,880
|
|
|
|
3,906
|
|
Taxable income
|
|
$
|
—
|
|
|
$
|
—
|
|
U.S. income tax rate
|
|
|
21
|
%
|
|
|
21
|
%
|
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 March 31, 2018 and 2017.
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 March 31, 2018 and December 31, 2017, amounts due from
related parties were as follows:
|
|
As of
March
31, 2018
(Unaudited)
|
|
|
As of
December
31, 2017
|
|
|
|
|
|
|
|
|
Ho Wah Genting Berhad (1)
|
|
$
|
670,330
|
|
|
$
|
247,280
|
|
Vitaxel Online Mall Sdn Bhd (3)
|
|
|
25,893
|
|
|
|
24,728
|
|
Ho Wah Genting Holiday Sdn Bhd (2)
|
|
|
118,846
|
|
|
|
14,837
|
|
Ho Wah Genting ShenZhen Limited (2)
|
|
|
143,519
|
|
|
|
133,974
|
|
Marvel Theme Park City Sdn Bhd (4)
|
|
|
3,763
|
|
|
|
3,594
|
|
Vspark Malaysia Sdn Bhd (3)
|
|
|
5,585
|
|
|
|
—
|
|
|
|
$
|
967,936
|
|
|
$
|
424,413
|
|
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 Beedo Sdn Bhd and Vspark Malaysia Sdn Bhd. He was also director of Vitaxel Online Mall Sdn Bhd, a wholly owned subsidiary of Vitaxel Group Limited, until his resignation from that position on April 2, 2018.
|
|
(4)
|
Marvel Theme Park City Sdn Bhd is a shareholder of our subsidiary company, Ho Wah Genting Property Sdn Bhd.
|
As of March 31, 2018 and 2017, amounts due
to related parties were as follows:
|
|
As of
March
31, 2018
(Unaudited)
|
|
|
As of
December
31, 2017
|
|
|
|
|
|
|
|
|
Beedo SDN BHD
|
|
|
62,144
|
|
|
|
59,347
|
|
Vspark Malaysia Sdn Bhd
|
|
|
474,993
|
|
|
|
7,031
|
|
Vitaxel Sdn Bhd
|
|
|
306,267
|
|
|
|
42,877
|
|
Lim Chun Hoo
|
|
|
846
|
|
|
|
—
|
|
|
|
$
|
844,250
|
|
|
$
|
109,255
|
|
During the periods ended March 31, 2018
and 2017, the Company recognized rental income of $1,604 and $1,350 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 period ended March 31, 2018 and
2017, the Company recognized junket commission revenue of $6,606 and $54,804, respectively, from HWGH.
For the periods ended March 31, 2018 and 2017, HWGB lent the
Company $670,330 and $247,280, respectively. Such debt is unsecured, interest-free and repayable on demand.
During the periods ended March 31, 2018 and 2017, the Company
lent $306,267 and $42,877, respectively, to Vitaxel Sdn Bhd, a Malaysian corporation (“Vitaxel”). During the periods
ended March 31, 2018 and 2017, the Company loaned $25,893 and $24,728, 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.
During the periods ended March 31, 2018
and 2017, the recognized junket commission revenue of the Company from HWGH was $6,606 and $54,804, respectively.
During the periods ended March 31, 2018
and 2017, the Company recognized revenue of $117,276 and nil, respectively, from the 10% management charges to ETM member from
HWGB.
10.
|
Commitments and Contingencies
|
Capital Commitments
As of March 31, 2018 and December 31, 2017,
Company has no capital commitments.
Operation Commitments
As of March 31, 2018 and December 31, 2017,
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 three months ended
|
|
|
|
March
31, 2018
|
|
|
March
31, 2017
|
|
|
|
|
|
|
|
|
Net loss applicable to common shares
|
|
$
|
(1,909,867
|
)
|
|
$
|
(173,212
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding (Basic/Diluted)
|
|
|
500,027,774
|
|
|
|
500,027,774
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(0.004
|
)
|
|
$
|
(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 May 7, 2018 and December 31, 2017, the Company has 750,000,000
shares authorized and 500,027,774 shares issued respectively.
Our reported segments for the periods ended
March 31, 2018 and 2017 are described as follows:
Investment property holding
The Company generates rental income from
the leasing out of its leasehold building.
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 periods
ended March 31, 2018 and 2017.
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 three months ended March 31, 2018 and 2017 was as follows:
|
|
For the three months ended
|
|
|
|
March
31, 2018
|
|
|
March
31, 2017
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
1,604
|
|
|
$
|
1,350
|
|
Junket operations
|
|
|
6,606
|
|
|
|
54,804
|
|
Management fee
|
|
|
117,276
|
|
|
|
—
|
|
Others
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
125,486
|
|
|
$
|
56,154
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues:
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
—
|
|
|
$
|
—
|
|
Junket operations
|
|
|
—
|
|
|
|
31,585
|
|
Management fee
|
|
|
93,892
|
|
|
|
—
|
|
Others
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
93,892
|
|
|
$
|
31,585
|
|
|
|
|
|
|
|
|
|
|
Depreciation:
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
2,234
|
|
|
$
|
4,034
|
|
Junket operations
|
|
|
—
|
|
|
|
—
|
|
Management fee
|
|
|
—
|
|
|
|
—
|
|
Others
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
2,234
|
|
|
$
|
4,034
|
|
|
|
|
|
|
|
|
|
|
Net income (loss):
|
|
|
|
|
|
|
|
|
Investment property holding
|
|
$
|
(630
|
)
|
|
$
|
(2,684
|
)
|
Junket operations
|
|
|
6,606
|
|
|
|
23,219
|
|
Management fee
|
|
|
23,384
|
|
|
|
—
|
|
Others
|
|
|
(1,955,686
|
)
|
|
|
(193,747
|
)
|
|
|
$
|
(1,926,326
|
)
|
|
$
|
(173,212
|
)
|
|
|
March 31, 2018
|
|
|
|
Investment
property
holding
|
|
|
Junket
operation
|
|
|
Others
|
|
|
Total
|
|
Identifiable long-lived assets, net
|
|
$
|
63,346
|
|
|
$
|
—
|
|
|
$
|
30,609
|
|
|
$
|
93,955
|
|
|
|
December 31, 2017
|
|
|
|
Investment
property
holding
|
|
|
Junket
operation
|
|
|
Others
|
|
|
Total
|
|
Identifiable long-lived assets, net
|
|
$
|
60,887
|
|
|
$
|
—
|
|
|
$
|
30,906
|
|
|
$
|
91,793
|
|
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:
|
|
Balance at March 31, 2018 (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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investment
|
|
$
|
930,017
|
|
|
$
|
930,017
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total short-term investments
|
|
|
930,017
|
|
|
|
930,017
|
|
|
|
—
|
|
|
|
—
|
|
Total financial assets measured at fair value
|
|
$
|
930,017
|
|
|
$
|
930,017
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
Balance at December 31, 2017
|
|
|
Quoted Prices in Active Markets for Identical Assets (Level 1)
|
|
|
Significant Other Observable Inputs (Level 2)
|
|
|
Significant Unobserved Inputs (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
|
|
|
$
|
—
|
|
|
$
|
—
|
|
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.