UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549    
 
 
 
FORM 10-Q 
 
 
 
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 2015
 
or
 
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
Commission File Number: 333-173680
 
GLORYWIN ENTERTAINMENT GROUP INC.
(Exact name of registrant as specified in its charter)
 
Nevada
27-3369810
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
Room 8, 20/F, AIA Tower,Nos 251A-301, Avenida Commercial de Macau, Macau
(Address of principal executive offices)
 
+853 8294-2333
(Registrant's telephone number)
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x    No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes     No o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer  o
Accelerated filer                 
Non-accelerated filer    o
Smaller reporting company x
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o    No x

APPLICABLE ONLY TO CORPORATE ISSUERS:
 
Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 20,900,338 shares of $0.001 par value common stock outstanding as of August 7, 2015. 
 

 
GLORYWIN ENTERTAINMENT GROUP INC.
FORM 10-Q
Quarterly Period Ended June 30, 2015
  
TABLE OF CONTENTS
 
 
Page
 
 
3
 
 
4
Item 1.
4
 
4
 
5
 
6
 
7
Item 2.
12
Item 3.
14
Item 4.
14
 
 
 
15
Item 1.
15
Item 1A.
15
Item 2.
15
Item 3.
15
Item 4. 
15
Item 5.
15
Item 6.
15
 
 
 
16
 
 
 
 
 
 
Unless otherwise noted, references in this registration statement to "Glorywin Entertainment Group Inc." the "Company," "we," "our" or "us" means Glorywin Entertainment Group Inc. and its subsidiaries.

FORWARD-LOOKING STATEMENTS

This document contains "forward-looking statements".  All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words "may, "could," "estimate," "intend," "continue," "believe," "expect" or "anticipate" or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. Except for our ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement.  Additionally, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 most likely do not apply to our forward-looking statements as a result of being a penny stock issuer.  You should, however, consult further disclosures we make in future filings of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.  Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties.

AVAILABLE INFORMATION

We file annual, quarterly and special reports and other information with the SEC that can be inspected and copied at the public reference facility maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405. Information regarding the public reference facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. The Company's filings are also available through the SEC's Electronic Data Gathering Analysis and Retrieval System which is publicly available through the SEC's website (www.sec.gov). Copies of such materials may also be obtained by mail from the public reference section of the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549-0405 at prescribed rates.
 
GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
 
As of June 30, 2015 and March 31, 2015
 
 
       
 
 
June 30,
   
March 31,
 
 
 
2015
   
2015
 
 
 
(Unaudited)
     
ASSETS
 
Current assets
       
Cash and cash equivalents
 
$
121,771
   
$
28,873
 
Accounts receivable
   
1,518,368
     
463,205
 
Other current assets
   
4,273
     
4,294
 
   Total current assets
   
1,644,412
     
496,372
 
       Total assets
 
$
1,644,412
   
$
496,372
 
 
               
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
 
Current liabilities
               
Accrued liabilities and other payables
 
$
58,346
   
$
74,965
 
Taxes payable
   
540,971
     
343,971
 
Other payables - related parties
   
325,900
     
347,177
 
       Total current liabilities
   
925,217
     
766,113
 
       Total liabilities
   
925,217
     
766,113
 
 
               
Shareholders' equity (deficit)
               
Common stock, $0.001 par value, 490,000,000 shares authorized, 20,800,338 shares issued and outstanding as of June 30, 2015 and March 31, 2015
   
20,800
     
20,800
 
Additional paid-in capital
   
(1,953,679
)
   
(1,490,393
)
Accumulated other comprehensive loss
   
(3,756
)
   
(3,756
)
Retained earnings
   
2,655,830
     
1,203,608
 
       Total shareholders' equity (deficit)
   
719,195
     
(269,741
)
       Total liabilities and shareholders' equity (deficit)
 
$
1,644,412
   
$
496,372
 
 
 
See notes to unaudited consolidated financial statements
 
GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
 
For the Three Months Ended June 30, 2015 and 2014
 
(Unaudited)
 
         
   
For the Three Months Ended June 30,
 
 
2015
   
2014
 
         
Revenues
 
$
1,754,827
   
$
121,264
 
Gross profit
   
1,754,827
     
121,264
 
Operating expenses:
               
General and administrative expenses
   
56,217
     
79,419
 
Professional fees
   
47,381
     
16,149
 
Total operating expenses
   
103,598
     
95,568
 
Income before provision for income taxes
   
1,651,229
     
25,696
 
Provision for income taxes
   
(199,007
)
   
-
 
Net income
 
$
1,452,222
   
$
25,696
 
                 
Comprehensive income
               
Net income
 
$
1,452,222
   
$
25,696
 
Total comprehensive income
 
$
1,452,222
   
$
25,696
 
                 
Net income per share
               
  Basic
 
$
0.07
   
$
0.00
 
  Diluted
 
$
0.07
   
$
0.00
 
Weighted average shares outstanding
               
  Basic
   
20,800,338
     
11,261,514
 
  Diluted
   
20,800,338
     
11,261,514
 
 
 
 
See notes to unaudited consolidated financial statements
GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
For the Three Months Ended June 30, 2015 and 2014
 
 (Unaudited)
       
 
 
For the Three Months Ended June 30,
 
 
 
2015
   
2014
 
CASH FLOWS FROM OPERATING ACTIVITIES:
       
Net income
 
$
1,452,222
   
$
25,696
 
Changes in operating assets and liabilities:
               
Accounts receivable
   
(1,057,866
)
   
-
 
Other current assets
   
-
     
(4,910
)
Taxes payable
   
199,007
     
-
 
Accrued liabilities and other payables
   
(17,731
)
   
-
 
 
               
NET CASH PROVIDED BY OPERATING ACTIVITIES
   
575,632
     
20,786
 
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Distributions to shareholders
   
(463,286
)
   
-
 
Proceeds from related party advances
   
120,179
     
115,460
 
Repayments to related party advances
   
(139,627
)
   
(121,263
)
 
               
NET CASH USED IN FINANCING ACTIVITIES
   
(482,734
)
   
(5,803
)
 
               
NET INCREASE IN CASH AND CASH EQUIVALENTS
   
92,898
     
14,983
 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
   
28,873
     
-
 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
 
$
121,771
   
$
14,983
 
 
               
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
               
Cash paid for:
               
Interest
 
$
-
   
$
-
 
Income taxes
 
$
-
   
$
-
 
 
               
NON-CASH DISCLOSURE OF CASH FLOW INFORMATION:
               
Due to shareholder in connection with acquisition of Wonderful Gate
 
$
-
   
$
7,692
 
Debt forgiveness
 
$
-
   
$
16,869
 
Shares issued for acquisition of Top Point
 
$
-
   
$
10,195
 
 
 
 
See notes to unaudited consolidated financial statements
 
Glorywin Entertainment Group, Inc. and Subsidiaries
Notes to Unaudited Consolidated Financial Statements

 
Note 1 – Nature of Business

Glorywin Entertainment Group Inc. ("Glorywin"), formerly known as Zippy Bags, Inc., was incorporated in the state of Nevada on August 26, 2010 ("Inception"). It was initially formed to market a snowboard carrying bag locally, in the Salt Lake City, Utah area to snowboard shops and outdoor retailers.

On June 17, 2014, Janet Somsen, the original owner of Glorywin, entered into a security purchase agreement to sell 44.5% of Glorywin's outstanding shares, or 4,365,000 shares, of common stock, to Taipan Pearl Sdn Bhd and Wenwei Wu in exchange for an aggregate purchase price of $189,004 in cash. At the closing of the transaction, Janet Somsen agreed that the previous officers would resign, and all the debts, consisting of $11,719 of taxes payable, $1,650 of accounts payable, and $3,500 of notes payable due to BK Consulting and Associates, P.C. ("BK Consulting"), would be repaid by Ms. Somsen. Glorywin is a shell company and has no operations.

On the same day, Glorywin entered into a share transfer agreement with Top Point Limited ("Top Point"), a company incorporated in Samoa on April 9, 2014. Pursuant to the agreement, Glorywin issued 10,195,294 shares of common stock to Wenwei Wu, Taipan Pearl Sdn Bhd, Boom Siong Lee and Zhen Long Ho to acquire 1,000 common shares (100%) of Top Point. Top Point is a shell company and has no operations.

Simultaneously, Glorywin paid Macanese Pataca ("MOP") 60,000 (approximately $7,692) to acquire Wonderful Gate Strategy Company Limited ("Wonderful Gate"), a company incorporated on March 11, 2009 in Macau, China and had no operation prior to the acquisition, from Carmen Lum. Since then, Wonderful Gate has been engaged in service of introducing sub-junkets and information technology infrastructure to land-based casinos and receiving an agreed percentage of total bets as revenue. During the three months ended June 30, 2015, 25 sub-junkets introduced by Wonderful Gate provided service to two land-based casinos in Cambodia. Glorywin and its subsidiaries (collectively, the "Company", "us") do not hold licence to operate casinos/junket or to conduct gaming promotion business in any country.

The acquisitions were accounted for as acquisitions by entities under common control due to the fact that each company was and continued to be held by the Company. As such, the transaction was recorded on the purchase method of accounting at historical amounts.

After the above transactions, Taipan Pearl Sdn Bhd owns 56.00% interest of the Company and became the biggest shareholder of the Company.

On October 30, 2014, the Company changed its name to Glorywin Entertainment Group, Inc.

Note 2 – Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its majority owned subsidiaries. All intercompany balances and transactions have been eliminated in the consolidation. Certain information and footnote disclosures normally included in financial statements prepared in conjunction with U.S. generally accepted accounting principles ("U.S. GAAP") have been condensed or omitted as permitted by the rules and regulations of the United States Securities and Exchange Commission ("SEC"), although the Company believes that the disclosures contained in this report are adequate to make the information presented not misleading. The consolidated balance sheet information as of March 31, 2015 was derived from the consolidated audited financial statements included in the Company's Annual Report on Form 10-K for the year ended March 31, 2015. These consolidated financial statements should be read in conjunction with the annual consolidated audited financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended March 31, 2015, and other reports filed with the SEC.

The accompanying unaudited interim consolidated financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole.

We have defined various periods that are covered in this report as follows:

- "fiscal year 2013"—April 1, 2013 through March 31, 2014
- "fiscal year 2014"—April 1, 2014 through March 31, 2015

Use of Estimates

The preparation of consolidated financial statements that conform with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company continually evaluates its estimates, including those related to bad debts, income taxes, and the valuation of equity transactions. The Company bases its estimates on historical experience and on various other assumptions that it believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Any future changes to these estimates and assumptions could cause a material change to our reported amounts of revenues, expenses, assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Fair value of Financial Instruments

The Company's financial instruments consist principally of cash and cash equivalents, accounts receivable, accrued liability and other payables. The carrying amounts of such financial instruments in the accompanying balance sheets approximate their fair values due to their relatively short-term nature.     

Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated. It is not, however, practical to determine the fair value of other payables to related parties due to their related party nature.

Foreign Currency Translation

The accompanying consolidated financial statements are presented in United States dollars ("USD"). The functional currency of Wonderful Gate located in Macau is Hong Kong Dollars ("HKD"), and the functional currency of Glorywin and Top Point is the USD. The financial statements are translated into US dollars from HK$ at year-end exchange rates for assets and liabilities, and weighted average exchange rates for revenues and expenses. Capital accounts are translated at their historical exchange rates when the capital transactions occurred.

The Hong Kong Monetary Authority ("HKMA"), Hong Kong's central bank, maintains a Linked Exchange Rate System since 1983. The HKMA operates Convertibility Undertakings on both the strong side and the weak side of the Linked Rate of US$1: HK$7.8. Thus, the consistent exchange rate used has been 7.80 HKD per each USD.

Foreign currency transactions are those that required settlement in a currency other than HKD. Gain or loss from foreign currency transactions, or exchange loss, are recognized in income in the period they occur.

Related Party Transactions

A related party is generally defined as (i) any person that holds 10% or more of 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.
Reclassifications

Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications had no impact on net earnings and financial position.

Note 3 – Accounts Receivable

Accounts receivable consists of the following:

 
 
As of June 30, 2015
   
As of March 31, 2015
 
Introduction of IT company
 
$
303,674
   
$
92,641
 
Introduction of sub-junkets
   
1,214,694
     
370,564
 
Total
 
$
1,518,368
   
$
463,205
 
 
As of June 30, 2015 and March 31, 2015, there was no allowance for doubtful accounts provided.

Note 4 – Income Taxes

Wonderful Gate, the operating entity of the Company, is located in Macau, China. Income received in Macau is taxable under Macau's Complementary Tax provisions, irrespective of the beneficiary being an individual or a corporation, its particular line of business, its nationality or domiciliation, without prejudice to the particular deductions and allowances each taxpayer enjoys. Companies are required to declare their annual profit and such profit is subject to Complementary Tax. If dividend is declared, taxable profit is based on taxable profit (after dividends have been paid). Law No.5/2015 (the 2015 Budget Law) extends the exempted portion of income to MOP600, 000 and determines that the excess of taxable income be taxed at the relevant brackets (0% from MOP0 to MOP600, 000 and 12% on the excess). These measures implemented through the 2015 Budget Law are extraordinary and there can be no assurances that the exemption limit will increase, decrease or stay at its present level. These rates apply to the declared taxable profit (gross income less allowable deductions) from all income generating sources, except professional tax and property income, taxed separately under different regulations. The provision for income taxes for the three months ended June 30, 2015 and 2014 was $199,007 and $nil, respectively.

The Company's subsidiary, Top Point, is incorporated in Samoa, and is subject to company tax at a tax rate of 27%. No provision for income taxes in Samoa has been made as the Company had no Samoa taxable income as of June 30, 2015.

Glorywin is incorporated in the State of Nevada and is subject to the United States federal income tax at an effective tax rate of 34%.

Income taxes are calculated on a separate entity basis. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The provisions for income taxes for the three months ended June 30, 2015 and 2014, respectively, are summarized as follows:
 
   
Three Months Ended June 30,
 
   
2015
   
2014
 
Current taxes
 
$
199,007
     $
-
 
Deferred taxes
   
-
     
-
 
Total
   $
199,007
     $
-
 

The table below summarizes the difference between the U.S. statutory federal tax rate and the Company's effective tax rate for the three months ended June 30, 2015 and 2014:

   
Three Months Ended June 30,
 
   
2015
   
2014
 
U.S. federal income tax rate
   
34%
 
   
34%
 
Foreign income note recognized in the U.S.
   
(34%)
 
   
(34%)
 
Macau Complementary tax
   
12%
 
   
-
 
Total effective income tax rate
   
12%
 
   
-
 
 

Note 5 – Stockholders' Equity
 
Shares issued

On June 17, 2014, the Company issued 10,195,294 restricted shares to Taipan Pearl Sdn Bhd, Wenwei Wu, Boom Siong Lee and Zhen Long Ho as consideration for 1,000 shares of Top Point. The shares were booked at par value issuance cost with a decrease to additional paid-in capital of $10,195 due to treatment requirements for stock granted for an acquisition of an entity under common control. The transaction was accounted for as an acquisition of entity under common control which requires booking the transaction at historical cost.

On November 18, 2014, the Company issued 600,000 restricted shares to Taipan Pearl Sdn Bhd, its major shareholder, 100,000 shares to Eng Wah Kung, its Chief Executive Officer, and 100,000 shares to its public relationship company as consideration for their services provided. The total fair value of the common stock was $1,600,000 based on the closing price of the Company's common stock on the date of grant and the expense was included in general and administrative expenses for the year ended March 31, 2015. The restriction period is one year from the grant date.

Debt forgiveness by related party

On June 17, 2014, Janet Somsen paid and released the Company of $16,869 of outstanding liabilities. As Ms. Somsen was a shareholder of the Company, the transaction was accounted for as contributed capital.

Note 6 – Related Party Transactions

The Company's officers, directors and related parties, from time to time, provided advances to the Company for working capital purpose. These advances are short-term in nature, unsecured and payable on demand. The due to related parties amounts on June 30, 2015 and March 31, 2015 were as follows:
 
Name of related parties
Relationship with the Company
Interests of borrowings
June 30, 2015
March 31, 2015
Wenwei Wu
Shareholder of 14% of the Company's equity interest
-
$ 325,900
$ 347,177
Total
 
 
$ 325,900
$ 347,177

The balance of $325,900 on June 30, 2015 included $7,692 that was paid by Wenwei Wu for acquisition of Wonderful Gate.

On June 17, 2014, Janet Somsen, the Glorywin's original owner, sold 4,365,000 shares to Taipan Pearl Sdn Bhd and Wenwei Wu. As part of the security purchase agreement, all the debts of the Glorywin as of the transaction date, including $11,719 of taxes payable, $1,650 of accounts payable, and $3,500 of notes payable due to BK Consulting, would be repaid by Ms. Somsen. On the same day, Glorywin issued 10,195,294 restricted shares to Wenwei Wu, Taipan Pearl Sdn Bhd, Boom Siong Lee and Zhen Long Ho for their interest in the 1,000 shares of Top Point. Simultaneously, Glorywin paid MOP60,000 (approximately $7,692) to acquire Wonderful Gate from Carmen Lum. Also see Note 1.

On October 22, 2014, the Company orally entered into a conditional sale agreement ("Conditional Sale Agreement"), which was later put into a written form on January 19, 2015, with Taipan Pearl Sdn Bhd, shareholder of 56.00% of the Company's interest. Pursuant to the Conditional Sale Agreement, the Company shall pay a total price of $2,000,000 to acquire Gwin Company Limited ("Target Company", or "Gwin"), which is solely owned by Mr Sing Hong Ting, the 100% beneficial owner of Taipan Pearl Sdn Bhd. The sale would be completed under conditions that the Target Company becomes profitable within 12 months from the date of the Conditional Sale Agreement and that the Target Company maintains all necessary licenses to be operational. If the two conditions are not satisfied, the amount paid will be fully refunded. On February 18, 2015, the Company signed a supplementary agreement to the Conditional Sale Agreement ("Supplementary Agreement") with Taipan Pearl Sdn Bhd, pursuant to which, another $2,000,000 would be paid by the Company for acquisition of the Target Company. The incremental $2,000,000 would be used in renovating and operating of the Target Company. As of June 30, 2015 and March 31, 2015, the Company paid a total of $3,643,711 and $3,180,425, respectively. Since both the Conditional Sale Agreement and Supplementary Agreement are signed between entities under common control, the transaction was recorded as a distribution to shareholder with the payment reflected as a deduction on shareholder's equity (additional paid-in capital).

On November 18, 2014, the Company issued 600,000 restricted shares of common stock to Taipan Pearl Sdn Bhd and 100,000 restricted shares of common stock to Eng Wah Kung, the Company's Chief Executive Officer, as consideration for their services provided. The total fair value of the common stock was $1,400,000 based on the closing price of the Company's common stock on the date of grant.

Note 7 – Commitments and Contingencies

On May 19, 2014, the Company entered into an agreement for the lease of an office in Macau for monthly rental of MOP10,000 (approximately $1,290). The original lease term began on May 19, 2014 and expired on April 18, 2015. On April 19, 2015, the Company renewed the agreement for another six months. The monthly rental for the renewed lease is MOP11,000, or $1,410. The renewed lease will expire on November 18, 2015.

The total rent expenses for the three months ended June 30, 2015 and 2014 were $3,734 and $0, respectively.

Note 8 – Subsequent Events

On July 1, 2015, the Company issued 100,000 restricted shares of the Company's common stock valued at $2.25 per share to Mr. Muhammad Shahrezza Chong as compensation for his service to the Company as Director of Public Relationships.
 


 
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW AND OUTLOOK

The Company was formed in the state of Nevada on August 26, 2010 under the name "Zippy Bags, Inc." to provide retail sales of snowboard carrying bags to the general public.

After the takeover by new management on June 17, 2014, the Company, through its 100% indirectly owned subsidiary, Wonderful Gate Strategy Company Limited, became principally engaged in the service of introducing sub-junkets and information technology infrastructure to land-based casinos. For sub-junkets introduction service and IT infrastructure introduction service performed, we charge 0.2% and 0.05%, respectively, of total bets played by players introduced by sub-junkets from the casinos located in Cambodia.

On October 30, 2014, the Company filed a certificate of amendment (the "Amendment") to its Certificate of Incorporation with the Secretary of State of the State of Nevada in order to change its name to "Glorywin Entertainment Group, Inc." in order to better reflect the direction and business of the Company. The Company has adopted a fiscal year end of March 31.
 
We have established a website (www.glorywinentertainment.com) which set forth general information for the Company.

Based on our current operating plan, we expect that we will be able to generate revenue that is sufficient to cover our expenses for the next twelve months. Our ability to maintain sufficient liquidity is dependent on our ability to raise additional capital. 

Recent Developments
 
The Company is in the process of developing mobile applications to provide gaming to customers where such activity is legal. The software is provided by a third party vendor who is providing the on-line casino platform in selected markets. Development of the mobile application of gaming requires the Company to customize the appearance and branding of the third party software, and establish merchant services to accept payments and facilitate distribution of winnings.
 
Player acquisition is a key factor for organic growth in the online gaming industry. Players are primarily acquired from affiliates for a fixed fee or percentage of earnings based on negotiated predetermined criteria. Affiliates are websites or individuals that attract players through various means such as player news/interest websites, email campaigns or other relationships. The key is that payment to affiliates takes place only when negotiated criteria are met. The criteria may be player minimum deposit, level of play, or revenue earned. The critical element is that unlike most marketing campaigns, the revenues returned by marketing are generally predictable.

The key elements of player retention are the creation of exciting opportunities to maintain player interest and increase play frequency. Similar to land-based casino's compensation programs, the tools used for this purpose include prizes, "free money," opportunities to play against famous (or infamous) players, and tournament qualifications.

On January 19, 2015, the Company entered into a conditional agreement with the Company's major shareholder, Taipan Pearl Sdn Bhd to acquire 100% interest in GWIN Company Limited ("GWIN"), operating Chetaeu De Bavet Club Co ("Chetaeu") a land based casino in Kingdom of Cambodia. Under the terms of the conditional purchase agreement, the Company is entitle to 100% interest of the company. In consideration for the purchase, GWIN made a Refundable Deposit of USD2,000,000 ("Deposit") and will take full operation of the land-based casino for a total of 12 months. Upon the operations achieving at least positive revenue within that 12 months period, the transaction is considered completed with Deposit being the Consideration Purchase Price.

On February 18, 2015, the Company entered into a binding sub agreement worth $2 million with GWIN. Pursuant to the binding sub agreement, the Company would finance the construction amount and working capital for operations of GWIN. GWIN has extensive experience in promoting gaming business in Asia, as well as implementing fraud and risk control, payment processing and compliance with particular respect to gaming. It is envisaged that the parties will work together in a joint venture to raise capital and contribute expertise with the intention of generating revenues, profits and returning value to shareholders.

The Company is currently finalizing due diligence on this transaction and incorporated as part of the due diligence will be an assurance that GWIN does not facilitate gaming in any jurisdictions when such activities are illegal and are fully compliant with all laws pertaining to their current operation.
 
 
Results of Operations for the Three Months Ended June 30, 2015 and 2014

Sales

Revenue of $1,754,827 and $121, 264 was recognized during the three months ended June 30, 2015 and 2014.  The increase of $1,633,563 or 1,347% was because the Company only acquired the business on June 17, 2014. The revenue recognized during the three months ended June 30, 2014 is less than a month. Revenues were comprised of introduction fee of junkets and technical support to land-based casinos.

General and administrative expenses

General and administrative expenses were $56, 217 for the three months ended June 30, 2015 compared to $79,419 for the three months ended June 30, 2014, a decrease of $23,202.

Net Profit / Loss

For the reasons above, net profit for the three months ended June 30, 2015 was $1,452,222 as compared to $25,696, an increase of $1,426,526 or 5,552%.
LIQUIDITY AND CAPITAL RESOURCES

We believe that our existing sources of liquidity will be sufficient to fund our operations, anticipated capital expenditures, working capital and other financing requirements for at least the next twelve months.

The following table summarizes total assets, accumulated deficit, stockholder's equity and working capital at June 30, 2015.
 
 
 
June 30, 2015
   
June 30, 2014
 
Total Assets
 
$
1,644,412
   
$
19,894
 
 
               
Accumulated Profit (Loss)
 
$
2,652,074
   
$
(92,828
)
 
               
Stockholders' Equity
 
$
719,195
   
$
18,004
 
 
               
Net Working Capital
 
$
719,195
   
$
18,004
 
 
Net cash provided by operating activities totaled $575,632 during the three months ended June 30, 2015.
 
Satisfaction of Our Cash Obligations for the Next Twelve Months

Our plan for satisfying our cash requirements for the next twelve months is through generating revenue from introduction of junket operations and technical service.

Inflation

The rate of inflation has had little impact on the Company's results of operations and is not expected to have a significant impact on the continuing operations.
  
Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies

We have identified the policies outlined below as critical to our business operations and an understanding of our results of operations. The list is not intended to be a comprehensive list of all of our accounting policies. In many cases, the accounting treatment of a particular transaction is specifically dictated by accounting principles generally accepted in the United States, with no need for management's judgment in their application. The impact and any associated risks related to these policies on our business operations is discussed throughout management's Discussion and Analysis or Plan of Operation where such policies affect our reported and expected financial results. Note that our preparation of the financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period. There can be no assurance that actual results will not differ from those estimates.
 
Revenue Recognition

Revenues from service contracts are recognized as services are performed if collectability is reasonably assured.

The Company is engaged in service of introducing of sub-junkets and information technology (IT) company to land-based casinos and receiving an agreed percentage of total bets as revenue. For sub-junkets introduction service and IT infrastructure introduction service performed, the Company charges 0.2% and 0.05%, respectively, of total bets played by players introduced by sub-junkets from the casinos located in Cambodia.

Recently Issued Accounting Pronouncements

For information about new accounting pronouncements and the potential impact on our Consolidated Financial Statements, see Note 3 of the Notes to Consolidated Financial Statements in our Form 10-K for the year ended March 31, 2015.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

This item is not applicable as we are currently considered a smaller reporting company.
Item 4. Controls and Procedures.
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission (“SEC”) rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as appropriate, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Disclosure Controls

In designing and evaluating the Company's disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, Company management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions
 
Evaluation of Disclosure Controls and Procedures

Our CEO and CFO, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on the evaluation, they concluded that our disclosure controls and procedures are not effective in timely alerting them to material information relating to us that is required to be included in our periodic SEC filings and ensuring that information required to be disclosed by us in the reports we file or submit under the Act is accumulated and communicated to our management, including our chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure, for the following reasons:
  
 
The Company does not have an independent board of directors or audit committee;
 
 
 
 
We do not have an independent body to oversee our internal controls over financial reporting.
  
We plan to rectify these weaknesses by implementing an independent board of directors.

Changes in Internal Control Over Financial Reporting

None.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.
 
We know of no material pending legal proceedings to which our company or subsidiary is a party or of which any of their property is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.

We know of no material proceedings in which any director, officer or affiliate of our company, or any registered or beneficial stockholder of our company, or any associate of any such director, officer, affiliate, or stockholder is a party adverse to our company or subsidiary or has a material interest adverse to our company or subsidiary.

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

Appointment of Officer

On August 11, 2015, Carmen Lum resigned as the Company's Chief Financial Officer and the Board of Directors appointed Mr. Gim Hooi Ooi as the Company's Chief Financial Officer, who will serves as the principal financial officer of the Company.

There is no family relationship between Mr. Ooi and any of our other officers and directors.  There are no understandings or arrangements between Mr. Ooi and any other person pursuant to which Mr. Ooi was appointed the Deputy Chief Financial Officer.

Gim Hooi Ooi, Age 34, has a background in banking and financial services. He has been serving as a Senior Relationship Manager of Alliance Bank Malaysia Berhad since 2013. From 2012 to 2013, he served as an Account Relationship Manager at Hong Leong Bank Berhad. From 2009 to 2012, he served as a Team Leader at UOB (M) Berhad.
    
Item 6. Exhibits.

Exhibit
Exhibit Description
31.1
31.2
32.1
32.2
101.INS
XBRL Instance Document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
 

 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
GLORYWIN ENTERTAINMENT GROUP INC.
 
 
 
 
 
Date: August 13, 2015
By:
/s/EngWah KUNG
 
 
 
EngWah KUNG
 
 
 
Chief Executive Officer
 
 

Date: August 13, 2015
By:
/s/Gim Hooi OOI
 
 
 
Gim Hooi OOI
 
 
 
Chief Financial Officer
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
16


 
EXHIBIT 31.1
 
CERTIFICATION BY THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, EngWah Kung, certify that:
 
1. I have reviewed this quarterly report on Form 10-Q of Glorywin Entertainment Group Inc.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
 
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control for financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
 
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the issuer's most recent fiscal quarter (the issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and
 
5. The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the business issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):
 
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and
 
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.
 
Date: August 13, 2015
 
/s/ EngWah Kung
 
 
 
EngWah Kung
 
 
 
Chief Executive Officer
 


 
EXHIBIT 31.2
 
CERTIFICATION BY THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Gim Hooi OOI, certify that:
 
1. I have reviewed this quarterly report on Form 10-Q of Glorywin Entertainment Group Inc.;
 
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
 
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
 
4. The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control for financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
 
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer is made known to us by others within those entities, particularly during the period in which this report is being prepared;
 
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
 
(c) Evaluated the effectiveness of the issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
 
(d) Disclosed in this report any change in the issuer's internal control over financial reporting that occurred during the issuer's most recent fiscal quarter (the issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer's internal control over financial reporting; and
 
5. The issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer's auditors and the audit committee of the issuer's board of directors (or persons performing the equivalent functions):
 
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer's ability to record, process, summarize and report financial information; and
 
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer's internal control over financial reporting.
 
Date: August 13, 2015
 
/s/ Gim Hooi OOI
 
 
 
Gim Hooi OOI
 
 
 
Chief Financial Officer
 


 
EXHIBIT 32.1
 
Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
Pursuant to 18 U. S. C. Section 1350, I, EngWah Kung, hereby certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of Glorywin Entertainment Group Inc. for the fiscal quarter ended June 30, 2015 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Glorywin Entertainment Group Inc.
 
Date: August 13, 2015
 
/s/ EngWah Kung
 
 
 
EngWah Kung
 
 
 
Chief Executive Officer
 
 
This certification accompanies the Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by Glorywin Entertainment Group Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that Glorywin Entertainment Group Inc. specifically incorporates it by reference.


 
EXHIBIT 32.2
 
Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
Pursuant to 18 U. S. C. Section 1350, I, Gim Hooi OOI , hereby certify that, to the best of my knowledge, the Quarterly Report on Form 10-Q of Glorywin Entertainment Group Inc. for the fiscal quarter ended June 30, 2015 (the "Report") fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Glorywin Entertainment Group Inc.
 
Date: August 13, 2015
 
/s/ Gim Hooi OOI
 
 
 
Gim Hooi OOI
 
 
 
Chief Financial Officer
 
 
This certification accompanies the Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by Glorywin Entertainment Group Inc. for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that Glorywin Entertainment Group Inc. specifically incorporates it by reference.
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