Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ |
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 |
For the year ended March 31, 2016.
☐ |
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
Avenida Commercial de Macau 251A-301
Macau
(Address of principal executive offices)
+853 8294-2333
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of
each class |
Trading
Symbol(s) |
Name of
each exchange on which registered |
|
|
|
Securities registered pursuant to Section 12(g) of the Act:
(Title of each class)
_________________
Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405
of the Securities
Act. Yes ☐ No ☐
Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13
or Section 15(d) of the
Act. Yes ☐ No ☐
Indicate by check whether the Registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities and 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 ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant
was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer”,
“smaller reporting company”, and “emerging growth company” in Rule
12b-2 of the Exchange Act.
Large
accelerated filer ☐ |
Accelerated filer ☐ |
Non-accelerated filer
☒ |
Smaller reporting
company ☒ |
|
Emerging Growth Company
☐ |
If an
emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit
report. Yes ☐ No
☒
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of May 22, 2022, the aggregate market value of voting stock held
by non-affiliates of the registrant, based on the closing sales
price of Common Stock on May 22, 2022, was
approximately $4,309,956.
Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest practicable
date: 356,194,747 shares of common stock par value $0.001 as of May
22, 2022.
Table of Contents
PART I
Item 1. Business
Forward Looking Statements
This annual report contains forward-looking statements that involve
risks and uncertainties. These statements relate to future events
or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may",
"should", "expects", "plans", "anticipates", "believes",
"estimates", "predicts", "potential" or "continue" or the negative
of these terms or other comparable terminology. These statements
are only predictions.
While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our
current judgment regarding the direction of our business, actual
results will almost always vary, sometimes materially, from any
estimates, predictions, projections, assumptions or other future
performance suggested in this report. Except as required by
applicable law, we do not intend to update any of the
forward-looking statements to conform these statements to actual
results.
Our audited financial statements are expressed in US dollars and
are prepared in accordance with generally accepted accounting
principles in the United States of America. They reflect all
adjustments (all of which are normal and recurring in nature) that,
in the opinion of management, are necessary for fair presentation
of our interim financial information.
The following discussion should be read in conjunction with our
financial statements and the related notes that appear elsewhere in
this annual report.
As used in this annual report, the terms "we", "us" and "our" mean
Glorywin Entertainment Group Inc., unless otherwise indicate
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 three 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 Banker's 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 illegal
jurisdictions and are fully compliant with all laws
pertaining to their current operation.
Support and Services
Online support is provided to the Company and sub-junkets by
Casino's contracted independent IT company in Vietnam. The IT
Company functions also as an independent third party, to confirm on
month end sales and commission for each individual party.
Competition
The market for the Company's businesses has relatively low
competition in the region of Southeast Asia, being in contract with
licensed and regulated land-based casinos. Internationally, primary
competition would be expected from offshore gaming companies. With
few exceptions, significant listed game companies (many of which
are listed on the stock exchanges) operate using their own
software. We believe that we retain the ability to utilize the
most profitable platform available and are not restricted to a
single platform.
Item 1A. Risk Factors
The following discussion of risk factors contains forward-looking
statements. These risk factors may be important to understanding
any statement in this Form 10-K or elsewhere. The following
information should be read in conjunction with Part II, Item 7,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and the consolidated financial statements
and related notes in Part II, Item 8, "Financial Statements and
Supplementary Data" of this Form 10-K.
The business, financial condition and operating results of the
Company can be affected by a number of factors, whether currently
known or unknown, including but not limited to those described
below. Any one or more of such factors could directly or indirectly
cause the Company's actual results of operations and financial
condition to vary materially from past or anticipated future
results of operations and financial condition. Any of these
factors, in whole or in part, could materially and adversely affect
the Company's business, financial condition, results of operations
and stock price.
Because of the following factors, as well as other factors
affecting the Company's financial condition and operating results,
past financial performance should not be considered to be a
reliable indicator of future performance, and investors should not
use historical trends to anticipate results or trends in future
periods.
Legality of Gambling Globally and Regionally
Regulations relating to online gaming vary significantly in
different jurisdictions. Although the Company can set pre-emptive
measures, it is still currently unable to ensure that sub-junkets
only receive deposits from gamers in jurisdictions in which we are
legally entitled to provide services.
Money Laundering
The Company's online platform provides a borderless access to
people from across the globe. Although the Company tightly
scrutinizes to prevent illegal gambling, it is unenviable that
money laundering may exist among sub-junkets without our knowledge.
The Company is not in a position to predetermine
the source of funds from gamers.
Item 1B. Unresolved Staff
Comments
None.
Item 2. Properties
We lease approximately 100 square feet at Room 8, 20/F, AIA Tower,
Nos 251A-301, Avenida Commercial de Macau, Macau for a monthly rent
of MOP 10,000. Our current lease expired on October, 2015. We
believe that this office is suitable for our current operations and
we do not anticipate requiring any additional property in the
foreseeable future.
We also leased a staff quarters in ZhuHai, China for RMB 6,000
monthly rent. This quarters is relatively cheaper than hotel stays
or house renting in Macau.
Item 3. Legal
Proceedings
We are not aware of any legal proceedings to which we are a party
or of which our property is the subject. None of our directors,
officers, affiliates, any owner of record or beneficially of more
than 5% of our voting securities, or any associate of any such
director, officer, affiliate or security holder are (i) a party
adverse to us in any legal proceedings, or (ii) have a material
interest adverse to us in any legal proceedings. We are not aware
of any other legal proceedings that have been threatened against
us.
Item 4. Mine Safety
Disclosures
Not applicable.
PART II
Item 5. Market for Registrant's
Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
Market Information
Our common stock is quoted under the symbol "GWIN" on the OTCQB
operated by the Financial Industry Regulatory Authority, Inc.
("FINRA"). Only a limited market exists for our
securities. There is no assurance that a regular trading market
will develop, or if developed, that it will be sustained.
Therefore, a shareholder may be unable to resell his securities in
our company.
The following table sets for the high and low bid quotations for
our common stock as reported on the OTCBB/OTCQB for the periods
indicated, as applicable.
Quarter Ended |
|
High |
|
Low |
June 30, 2015 |
|
2.25 |
|
2.25 |
September 30, 2015 |
|
1.41 |
|
1.40 |
December 31, 2015 |
|
5.00 |
|
5.00 |
March 31, 2016 |
|
4.75 |
|
4.75 |
Quarter Ended |
|
High |
|
Low |
June 30, 2014 |
|
0.86 |
|
0.56 |
September 30, 2014 |
|
5.80 |
|
0.56 |
December 31, 2014 |
|
2.95 |
|
1.25 |
March 31, 2015 |
|
2.25 |
|
1.25 |
Holders of Common Stock
As of May 22, 2022, there were approximately 397 shareholders of
356,194,747 shares of our common stock.
Dividends
We have never paid dividends on our Common Stock. We intend to
follow a policy of retaining earnings, if any, to finance the
growth of the business and does not anticipate paying any cash
dividends in the foreseeable future.
Securities Authorized for Issuance under Equity Compensation
Plans
As of March 31, 2016, we did not have any equity compensation
plans.
Recent Sales of Unregistered Securities
None.
Item 6. Selected
Financial Data
Not applicable for a smaller reporting company
Item 7. Management's Discussion
and Analysis of Financial Condition and Results of
Operations
The following discussion should be read in conjunction with our
financial statements, including the notes thereto, appearing
elsewhere in this annual report. The discussions of results, causes
and trends should not be construed to imply any conclusion that
these results or trends will necessarily continue into the
future.
Results of Operations for the Year Ended March 31, 2016 and
2015
Sales
Revenue of $5,464,068 and $3,853,913 was recognized for the year
ended March 31, 2016 and 2015, respectively. Revenues for the
year ended March 31, 2016 were comprised of introduction fee of
junkets and technical support to three casinos.
General and administrative expenses
General and administrative expenses were $3,068,801 for the year
ended March 31, 2016 compared to $2,267,046 for the year ended
March 31, 2015, a decrease of $801,755. The majority of the
increase was due to shares issued for services valued at fair
market value in addition to salaries and rental expenses.
Net Profit / Loss
Net loss for the year ended March 31, 2016 was $(2,912,521).
For the year ended March 31, 2015, the Company recorded
net income of $1,063,476.
Professional fees
Professional fees were $175,824 for the year ended March 31, 2016
compared to $175,633 for the year ended March 31, 2015, an increase
of $191 which resulted from the costs of being a public
company.
Interest Expense
Interest expense for the year ended March 31, 2016 is $0
compared to $0 for the year ended March 31, 2015.
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 March 31, 2016 and
March 31, 2015.
|
|
March 31, 2016 |
|
|
March 31, 2015 |
|
Total Assets |
|
$ |
– |
|
|
$ |
681,473 |
|
|
|
|
|
|
|
|
|
|
Accumulated (Deficit) |
|
$ |
(1,974,907 |
) |
|
$ |
944,952 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
Deficit |
|
$ |
(33,011 |
) |
|
$ |
2,655,784 |
|
|
|
|
|
|
|
|
|
|
Net Working
Capital |
|
$ |
(33,011 |
) |
|
$ |
2,655,784 |
|
Net cash provided by operating activities total $2,825,297 for the
year ended March 31, 2016.
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 junket operations and
technical service fees.
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 engaged in provision of junket services to bring VIP
customers to the online operations of 3 land-based casinos in
Cambodia. The Company also provides technical support
services to these 3 casinos regarding their online casino
platforms. In summary, the Company is charging the 3 casinos
0.2% commission regarding our junket services based on the amount
of total bets played by the gamers introduced by the Company.
In addition, the Company is charging the 3 casinos 0.05% technical
support fees regarding our maintenance service to the online gaming
platform of the 3 casinos.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are presented net of an allowance for doubtful
accounts. Management of the Company makes judgments as to its
ability to collect outstanding receivables and provides allowances
for the portion of receivables when collection becomes doubtful.
Provisions are made based upon a specific review of all significant
outstanding invoices. For those invoices not specifically reviewed,
provisions are provided at different rates, based upon the age of
the receivables. In determining these percentages, management
analyzes its historical collection experience and current economic
trends. If the historical data the Company uses to calculate the
allowance for doubtful accounts does not reflect the future ability
to collect outstanding receivables, additional provisions for
doubtful accounts may be needed and the future results of
operations could be materially affected.
Stock-Based Compensation
The Company accounts for stock based compensation issued to
employees in accordance with ASC 718 "Stock Compensation". ASC 718
requires companies to recognize an expense in the statement of
income at the grant date of stock options and other equity based
compensation issued to employees. The Company accounts for
non-employee share-based awards in accordance with ASC 505-50
"Equity-based payments to nonemployees".
Income Taxes
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. A valuation allowance is
provided for significant deferred tax assets when it is more likely
than not, that such asset will not be recovered through future
operations. Current income taxes are provided for in accordance
with the laws and regulations applicable to the Company as enacted
by the relevant tax authorities.
Recently Issued Accounting Pronouncements
In April 2014, the FASB issued ASU 2014-08, "Presentation of
Financial Statements (Topic 205) and Property, Plant, and Equipment
(Topic 360): Reporting Discontinued Operations and Disclosures of
Disposals of Components of an Entity". The amendments in the ASU
change the criteria for reporting discontinued operations while
enhancing disclosures in this area. It also addresses sources of
confusion and inconsistent application related to financial
reporting of discontinued operations guidance in U.S. GAAP. Under
the new guidance, only disposals representing a strategic shift in
operations should be presented as discontinued operations. In
addition, the new guidance requires expanded disclosures about
discontinued operations that will provide financial statement users
with more information about the assets, liabilities, income, and
expenses of discontinued operations. The amendments in the ASU are
effective in the first quarter of 2015 for public organizations
with calendar year ends. Early adoption is permitted. The Company
does not expect the adoption to have a significant impact on its
consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, "Revenue from contracts
with Customers (Topic 606)". This ASU affects any entity that
either enters into contracts with customers to transfer goods or
services or enters into contracts for the transfer of non-financial
assets. This ASU will supersede the revenue recognition
requirements in Topic 605, Revenue Recognition, and most
industry-specific guidance. The ASU also supersedes some cost
guidance included in Subtopic 605-35, Revenue
Recognition-Construction-Type and Production-Type Contracts. The
core principle of the guidance is that an entity should recognize
revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchanged for those goods or
services. The standard is effective for annual reporting periods
beginning after December 15, 2016, including interim periods within
that reporting period. The Company is currently in the process of
evaluating the impact of the adoption on its consolidated financial
statements.
In June 2014, the FASB issued ASU 2014-10, "Development Stage
Entities (Topic 915): Elimination of Certain Financial Reporting
Requirements". The amendments in this Update remove all incremental
financial reporting requirements from U.S. GAAP for development
stage entities, thereby improving financial reporting by
eliminating the cost and complexity associated with providing that
information. The Company has elected to early adopt this ASU by
removing the inception to date information and all references to
development stage.
Item 7A. Quantitative and
Qualitative Disclosures About Market Risk
Not required.
Item 8. Financial Statements
and Supplementary Data
Our financial statements are contained in pages F-1 through F-17,
which appear at the end of this report.
Item 9. Changes In and
Disagreements with Accountants on Accounting and Financial
Disclosure
None.
Item 9A. Controls and
Procedures
The Company's CEO and CFO are responsible for establishing and
maintaining adequate internal control over financial reporting, as
defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.
Our internal control system was designed to provide reasonable
assurance to the company's management and board of directors
regarding the preparation and fair presentation of published
financial statements. All internal control systems, no matter how
well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable
assurance with respect to financial statement preparation and
presentation.
In making its assessment of internal control over financial
reporting management used the criteria issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in
Internal Control-Integrated Framework. Because of the material
weakness described in the following paragraphs, management believes
that, as of March 31, 2016, the Company's internal control over
financial reporting was not effective based on those criteria.
Management's evaluation was retrospective and conducted as of March
31, 2016, the last day of the fiscal year covered by this Form
10-K. Based upon management's evaluation, we have concluded that
our internal controls over financial reporting were not effective
as of March 31, 2016 because we have not completed the remediation
(discussed elsewhere in this document) for the fiscal year ended
March 31, 2016 due to the following material weaknesses:
Company-level controls. We did not maintain effective
company-level controls as defined in the Internal
Control—Integrated Framework published by COSO. These deficiencies
related to each of the five components of internal control as
defined by COSO (control environment, risk assessment, control
activities, information and communication, and monitoring). These
deficiencies resulted in more than a remote likelihood that a
material misstatement of our annual or interim financial statements
would not be prevented or detected. Specifically,
|
· |
Our
control environment did not sufficiently promote effective internal
control over financial reporting throughout our organizational
structure, and this material weakness was a contributing factor to
the other material weaknesses described in this Item
9A; |
|
· |
Our
board of directors had not established adequate financial reporting
monitoring activities to mitigate the risk of management override,
specifically: |
|
– |
no formally documented financial analysis
was presented to our board of directors, specifically fluctuation,
variance, trend analysis or business performance reviews; |
|
– |
an effective whistleblower program had not been
established; |
|
– |
there was insufficient oversight of external audit specifically
related to fees, scope of activities, executive sessions, and
monitoring of results; |
|
– |
there was insufficient oversight of accounting principle
implementation; |
|
– |
there was insufficient review of related party transactions;
and |
|
– |
there was insufficient review of recording of stock
transactions. |
|
· |
We
did not maintained sufficient competent evidence to support the
effective operation of our internal controls over financial
reporting, specifically related to our board of directors'
oversight of quarterly and annual SEC filings; and management's
review of SEC filings, journal entries, account analyses and
reconciliations, and critical spreadsheet controls; |
|
· |
We
had inadequate risk assessment controls, including inadequate
mechanisms for anticipating and identifying financial reporting
risks; and for reacting to changes in the operating environment
that could have a material effect on financial
reporting; |
|
· |
There
was inadequate communication from management to employees regarding
the general importance of controls and employees duties and control
responsibilities; |
|
· |
We
had inadequate monitoring controls, including inadequate staffing
and procedures to ensure periodic evaluations of internal controls,
to ensure that appropriate personnel regularly obtain evidence that
controls were functioning effectively and that identified control
deficiencies were remediated in a timely manner; |
|
· |
We
had an inadequate number of trained finance and accounting
personnel with appropriate expertise in U.S. generally accepted
accounting principles. Accordingly, in certain circumstances, an
effective secondary review of technical accounting matters was not
performed; |
|
· |
We
had inadequate controls over our management information systems
related to program changes, segregation of duties, and access
controls; |
|
· |
We
had inadequate access and change controls over end-user computing
spreadsheets. Specifically, our controls over the completeness,
accuracy, validity and restricted access and review of certain
spreadsheets used in the period-end financial statement preparation
and reporting process were not designed appropriately or did not
operate as designed; and |
|
· |
We
were unable to assess the effectiveness of our internal control
over financial reporting in a timely matter. |
Financial statement preparation and review
procedures. We had inadequate policies, procedures and
personnel to ensure that accurate, reliable interim and annual
consolidated financial statements were prepared and reviewed on a
timely basis. Specifically, we had insufficient: a) levels of
supporting documentation; b) review and supervision within the
accounting and finance departments; c) preparation and review of
footnote disclosures accompanying our financial statements; and d)
technical accounting resources. These deficiencies resulted in
errors in the financial statements and more than a remote
likelihood that a material misstatement of our annual or interim
financial statements would not be prevented or detected.
Inadequate reviews of account reconciliations, analyses and
journal entries. We had inadequate review procedures over
account reconciliations, account and transaction analyses, and
journal entries. Specifically, deficiencies were noted in the
following areas: a) management review of supporting documentation,
calculations and assumptions used to prepare the financial
statements, including spreadsheets and account analyses; and b)
management review of journal entries recorded during the financial
statement preparation process. These deficiencies resulted in a
more than a remote likelihood that a material misstatement of our
annual or interim financial statements would not be prevented or
detected.
Inadequate controls over purchases and disbursements.
We had inadequate controls over the segregation of duties and
authorization of purchases, and the disbursement of funds. These
weaknesses increase the likelihood that misappropriation of assets
and/or unauthorized purchases and disbursements could occur and not
be detected in a timely manner. These deficiencies resulted in
errors in the financial statements and in more than a remote
likelihood that a material misstatement of our annual or interim
financial statements would not be prevented or detected.
Specifically,
|
· |
We
had inadequate procedures and controls to ensure proper segregation
of duties within our purchasing and disbursements processes and
accounting systems; |
|
· |
We
had inadequate procedures and controls to ensure proper
authorization of purchase orders; and |
|
· |
We
had inadequate approvals for payment of invoices and wire
transfers. |
This annual report does not include an attestation report of our
registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to
attestation by our registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only
management's report in this annual report.
As of March 31, 2016, we had not completed the remediation of any
of these material weaknesses.
Attached as exhibits to this report are certifications of our CEO
and CFO, which are required in accordance with Rule 13a-14 of
Securities Exchange Act of 1934, as amended. The discussion above
in this Item 9A includes information concerning the controls and
controls evaluation referred to in the certifications and those
certifications should be read in conjunction with this Item 9A for
a more complete understanding of the topics presented.
We are committed to improving our internal control processes and
will continue to diligently review our internal control over
financial reporting and our disclosure controls and procedures. The
failure to implement adequate controls may result in deficient and
inaccurate reports under the Exchange Act.
Item 9B. Other
Information
None.
PART III
Item 10. Directors, Executive
Officers and Corporate Governance
Name |
|
Age |
|
Position |
Wen Wei Wu |
|
49 |
|
Non-Executive
Chairman |
Eng Wah Kung |
|
51 |
|
Chief Executive Officer and
Director
|
Carmen Lum |
|
27 |
|
Chief Financial Officer and
Director |
Zhen Long Ho |
|
38 |
|
Chief Operating Officer and
Director |
Boon Siong Lee |
|
34 |
|
Director |
Mr. Wen Wei WU, aged 49, is the non-executive Chairman of the
Company. He is a citizen of Macau, China. Mr. Wu is a
merchant. From 1984 to 1989, he worked in Longhua Food Factory Co.,
Ltd. and Mali Plastics Co., Ltd. of Jinjiang City, Fujian Province,
China respectively. In 1993, he went to Yiwu City of Zhejiang
Province, China to engage in commerce and trade and successively
established Yiwu Xiaomuma Ornament Trading Company, Yiwu Weilainina
Ornament Co., Ltd., Guangzhou Tiffany Ornament Co., Ltd.,
etc. During his engaging in the trade business, he studied
law in the School of Politics of National University of Defense
Technology of PLA and obtained a bachelor's degree. He
also participated in many public bodies. In 2005, he established
Jinhua Quanzhou Chamber of Commerce and held the post of president
of the chamber. Later, he took the posts of permanent
honorary chairman of Hong Kong Guying Village Natives Association,
Hong Kong Yangxi Social Club, Hong Kong Wu's Clan Association and
Hong Kong Overseas Chinese General Chamber of Commerce.
Mr. Eng Wah KUNG, aged 51, is the CEO and executive director of the
Company. He holds a First Class Diploma in Hotel Management with
Les Roches, Switzerland. He was the General Manager with Hic Inn,
Cambodia prior to joining the Company. Mr. Kung has been a
general manager for several Southeast Asian hotel operations
companies since year 2003, including Nha trang Lodge, Vietnam and
NCL Cambodia Pte Ltd. He has over 33 years in the senior general
management position in the
Meetings/Incentives/Convention/Exhibition industry. He is
responsible for over-seeing the future MICE operations of the
Company using his extensive skills, knowledge and experience.
In fact, Mr. Kung has established good working relationships with
the central governments and local authorities of Cambodia, Vietnam
and Malaysia.
Miss Carmen LUM, aged 28, is the CFO and executive director of the
Company. She is a Practicing Certified Financial Planner with the
qualification obtained from the Financial Planning Association of
Malaysia. Miss Lum also holds a Bachelor's Degree (Hons) in
Financial Economics from the University Tunku Abdul Rahman,
Malaysia. Prior to joining the Company, she had been a personal
banker with United Overseas Bank, Kuala Lumpur office and a
business development manager with the Kuala Lumpur office of
Allianz Insurance, a German listed company. Miss Lum has over 6
years' experience of private banking, financial modeling, forecast,
assets management and investment advisory services. She is
also the Vice President of Step Well Equity Inc. a Nevada company
which is principally engaged in provision of corporate finance
advisory services to various listed and unlisted companies in Hong
Kong, China and Malaysia.
Mr. Zhen Long HO, aged 38, is the Chief Operating Officer and
executive director of the Company. He holds a Diploma of Computer
Science/ Information Technology from the Institute Technologi
Pertama, Malaysia. Prior to joining the company, he is a programmer
with Onyx Enterprise Sdn Bhd Malaysia from July 97 till May 2004.
From June 2004 till August 2011, he was a software development
manager with Profdoc Sdn Bhd Malaysia. From September 2011 onwards,
he has been acting as the Chief Technology Officer of Neklstech Sdn
Bhd, an Information Technology company providing software and
healthcare consultancy. Mr. Ho has over 16 years in the IT
industry.
Mr. Boon Siong LEE, aged 34, is an Executive director of the
Company. He holds a Bachelor's Degree in Computer Science /
Informative Technology from Campbell University. Prior to joining
the Company, he was a System Engineer and System Architect with
Game Flier (M) Sdn Bhd Malaysia and F-Secure Corporation Sdn
Bhd. Mr. Lee has over 11 years of experience in the IT
industry.
Significant Employees
Other than as described above, we do not expect any other
individuals to make a significant contribution to our business.
Family Relationships
There are no family relationships among our directors, executive
officers or persons nominated or chosen by us to become directors
or executive officers except that Alexander Kunz is the son of
Daniel Kunz.
Legal Proceedings
None of our directors, executive officers, promoters or control
persons has been involved in any of the following events during the
past 10 years:
|
· |
any
bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that
time; |
|
|
|
|
· |
any
conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses); |
|
|
|
|
· |
being
subject to any order, judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of
business, securities or banking activities; |
|
|
|
|
· |
being
found by a court of competent jurisdiction (in a civil action), the
SEC or the Commodity Futures Trading Commission to have violated
any federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated; |
|
|
|
|
· |
any
judicial or administrative proceedings resulting from involvement
in mail or wire fraud or fraud in connection with any business
activity; |
|
|
|
|
· |
and
judicial or administrative proceedings based on violations of
federal or state securities, commodities, banking or insurance laws
and regulations, or any settlement to such actions; or |
|
|
|
|
· |
any
disciplinary sanctions or orders imposed by a stock, commodities or
derivatives exchange or other self-regulatory
organization. |
Section 16(a) Beneficial Ownership Compliance Reporting
Section 16(a) of the Exchange Act requires our directors, executive
officers and persons who own more than 10% of our common stock to
file reports regarding ownership of, and transactions in, our
securities with the SEC and to provide us with copies of those
filings. Based solely on our review of the copies of such forms
received by us, or written representations from certain reporting
persons, we believe that during fiscal year ended March 31, 2016
our directors, executive officers and 10% stockholders complied
with all applicable filing requirements except that each of Eng Wah
Kung and Taipan Pearl Sdn Bhd was late in filing a Form 4 for
acquisition of shares of the Company's common stock.
Code of Ethics
We have not yet adopted a code of ethics that applies to our
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions. We expect to adopt a code as we develop our
business.
Audit Committee
We do not have an audit committee. Our entire Board of Directors
carries out the functions of the audit committee.
Our Board has determined that we do not have an audit committee
financial expert on our Board carrying out the duties of the audit
committee. The Board has determined that the cost of hiring a
financial expert to act as a director and to be a member of the
audit committee or otherwise perform audit committee functions
outweighs the benefits of having an audit committee financial
expert on the Board.
Nomination Procedures for Directors
We do not have a nominating committee. Our Board of Directors
selects individuals to stand for election as members of the Board,
and does not have a policy with regards to the consideration of any
director candidates recommended by our security holders. Our Board
has determined that it is in the best position to evaluate our
company's requirements as well as the qualifications of each
candidate when it considers a nominee for a position on our Board.
If security holders wish to recommend candidates directly to our
Board, they may do so by communicating directly with our President
at the address specified on the cover of this annual report. There
has not been any change to the procedures that our shareholder may
recommend nominees to our Board of Directors.
Item 11. Executive
Compensation
The following summary compensation table sets forth information
concerning compensation for services rendered in all capacities
during the years ended March 31, 2016 and 2015 awarded to, earned
by or paid to our executive officers. The value attributable to any
Option Awards and Stock Awards reflects the grant date fair values
of stock awards calculated in accordance with FASB Accounting
Standards Codification Topic 718. As described further in Note 6 –
Stockholders' Equity - Common Stock Options to our consolidated
year-end financial statements, the assumptions made in the
valuation of these option awards and stock awards is set forth.
Name and Principal Position |
|
Year |
|
Salary |
|
|
Bonus Awards |
|
|
Stock Awards |
|
|
Option Awards |
|
|
Non-Equity Plan Compensation |
|
|
All Other Compensation |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($) |
|
|
|
($) |
|
|
|
($) |
|
|
|
($) |
|
|
|
($) |
|
|
|
($) |
|
|
|
($) |
|
Wen Wei Wu |
|
2015 |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Chairman |
|
2016 |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Eng Wah Kung |
|
2015 |
|
|
27,000 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
225,000 |
|
|
|
– |
|
|
|
252,000 |
|
CEO and Director |
|
2016 |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Carmen Lum |
|
2015 |
|
|
27,000 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
27,000 |
|
CFO and Director |
|
2016 |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Zhen Long Ho |
|
2015 |
|
|
36,000 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
36,000 |
|
COO and Director |
|
2016 |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Boon Siong Lee |
|
2015 |
|
|
40,500 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
40,500 |
|
Director |
|
2016 |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Janet Somsen (1) |
|
2016 |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
Former CEO and CFO |
|
2015 |
|
|
266 |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
266 |
|
|
(1) |
Janet
Somsen resigned from all positions with the Company in June,
2014. |
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension,
retirement or similar benefits to our directors or executive
officers. We have no material bonus or profit sharing plans
pursuant to which cash or non-cash compensation is or may be paid
to our directors or executive officers, except that stock options
may be granted at the discretion of the Board of Directors or a
committee thereof.
Compensation Committee
We currently do not have a compensation committee of the Board of
Directors or a committee performing similar functions. It is the
view of the Board that it is appropriate for us not to have such a
committee because of our size and because the Board as a whole
participates in the consideration of executive compensation. None
of our executive officers served as a director or member of the
compensation committee of any entity that has one or more executive
officers serving on our Board.
Item 12. Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock as of June
24, 2015 by (i) each person who is known by us to beneficially own
more than 5% of the Company's Common Stock; (ii) each of the
Company's officers and directors; and (iii) all of the Company's
officers and directors as a group.
Beneficial ownership has been determined in accordance with the
rules and regulations of the Securities and Exchange Commission
(the "Commission") and includes voting or investment power with
respect to the shares. Unless otherwise indicated, the persons
named in the table below have sole voting and investment power with
respect to the number of shares indicated as beneficially owned by
them. Capital stock beneficially owned and percentage ownership is
based on 20,800,338 shares of Common Stock outstanding on June 24_,
2015 and assuming the exercise of any options or warrants or
conversion of any convertible securities held by such person, which
are presently exercisable or will become exercisable within
60 days of June 24, 2015.
Name of Beneficial Owner (1) |
|
Common Stock Beneficially Owned |
|
|
Percentage of Common Stock (2) |
|
|
|
|
|
|
|
|
Taipan Pearl Sdn Bhd
(3) |
|
|
11,648,235 |
(3) |
|
|
56.00% |
|
Wen Wei Wu (Chairman) |
|
|
2,912,059 |
|
|
|
14.00% |
|
Boon Siong Lee (Director) |
|
|
400,000 |
|
|
|
1.92% |
|
Eng Wah Kung (CEO and
Director) |
|
|
100.000 |
|
|
|
0.48% |
|
Carmen Lum (CFO and Director) |
|
|
0 |
|
|
|
– |
|
Zhen Lung Ho (COO and
Director) |
|
|
200,000 |
|
|
|
0.96% |
|
* Less than 1%
(1) |
Except
as otherwise indicated, the corresponding address of each
beneficial owner is Glorywin Entertainment Group Inc. , Room 8,
20/F, AIA Tower, No's 251A-301 Avenida Commercial De Macau,
Macau. |
(2) |
Applicable
percentage ownership is based on 20,800,338 shares of common
stock outstanding as of March 31, 2015. |
(3) |
Sing
Hong Ting is the beneficial owner of the shares owned by Taipan
Pearl Sdn Bhd. |
Change of Control
As of the date of this report, we had no pension plans or
compensatory plans or other arrangements that provide compensation
in the event of a termination of employment or a change in our
control.
Item 13. Certain Relationships
and Related Transactions, and Director Independence
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 amount on March 31, 2015 and
2014 was as follows:
Name
of related parties |
|
Relationship with the Company |
|
Interests of borrowing |
|
|
March 31, 2015 |
|
|
March 31, 2014 |
|
Wenwei W u |
|
Shareholder of 14% of the
Company's interest |
|
|
0% |
|
|
$ |
347,177 |
|
|
$ |
– |
|
BK
Consulting |
|
former majority
shareholder |
|
|
8% |
|
|
|
– |
|
|
|
3,500 |
|
Total |
|
|
|
|
|
|
|
$ |
347,177 |
|
|
$ |
3,500 |
|
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 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, who was later appointed as Chief Financial
Officer of the Company. See Note 1 – NATURE OF BUSINESS for
details.
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.
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% 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 March 31, 2015, the Company paid a total
of $3,180,425 and additional 463,286 as of the filing date. Since
both the Conditional Sale Agreement and Supplementary Agreement are
signed between entities under common control, the transaction was
recorded as a distribution to shareholder with the payment is
reflected as a reduction of shareholders' equity (additional
paid-in capital).
Related Person Transaction Policy
Our Board of Directors is responsible to approve all related party
transactions. We have not adopted written policies and procedures
specifically for related person transactions.
Director Independence
The OTCQB on which our common stock is quoted does not have any
director independence requirements. We currently use NASDAQ's
general definition for determining director independence, which
states that "independent director" means a person other than an
officer or employee of the company or its subsidiaries or any other
individual having a relationship, that, in the opinion of the
company's board of directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of the
director. Glorywin Entertainment Group Inc. meet this definition of
independence.
Item 14. Principal Accountant
Fees and Services
Audit and Non-Audit Fees
The following table sets forth the fees for professional audit
services and the fees billed for other services rendered by our
auditors, M&K CPAS, PLLC and Malone Bailey, LLP, in connection
with the audit of our financial statements for the years ended
March 31, 2015 and 2014, and any other fees billed for services
rendered by our auditors during these periods.
|
|
Year Ended
March 31, 2016
($)
|
|
|
Year Ended
March 31, 2015
($)
|
|
Audit fees |
|
|
0 |
|
|
|
60,000 |
|
Audit-related fees |
|
|
|
|
|
|
|
|
Tax fees |
|
|
|
|
|
|
|
|
All other
fees |
|
|
|
|
|
|
|
|
Total |
|
|
0 |
|
|
|
60,000 |
|
Since our inception, our Board of Directors, performing the duties
of the audit committee, has reviewed all audit and non-audit
related fees at least annually. The Board, acting as the audit
committee, pre-approved all audit related services for the year
ended March 31, 2016.
PART IV
Item 15. Exhibits, Financial
Statement Schedules
|
(1) |
Incorporated
herein by reference to exhibits to our registration statement on
Form S-1 filed with the SEC on April 22, 2011. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange
Act, the registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date:
June 13, 2022 |
GLORYWIN
ENTERTAINMENT GROUP INC. |
|
|
|
|
By: |
/s/Sorphea
Rath |
|
|
Sorphea
Rath |
|
|
Chief
Executive Officer |
|
|
|
|
By: |
/s/
Solin Hoem |
|
|
Solin
Hoem |
|
|
Chief
Financial Officer |
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the date
indicated.
Signature |
|
Capacity |
|
Date |
|
|
|
|
|
/s/
Sorphea Rath |
|
Chief
Executive Officer and Director |
|
June
13, 2022 |
Sorphea
Rath |
|
(Principal
Executive Officer) |
|
|
|
|
|
|
|
/s/
Solin Hoem |
|
Chief
Financial Officer and Director |
|
June
13, 2022 |
Solin
Hoem |
|
(Principal
Financial and Accounting Officer) |
|
|
|
|
|
|
|
GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED MARCH 31, 2016 AND 2015
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Glorywin Entertainment Group, Inc. and Subsidiaries,
We have audited the accompanying consolidated balance sheet of
Glorywin Entertainment Group, Inc. and its subsidiaries
(collectively, the "Company") as of March 31, 2015, and the related
consolidated statements of operations and comprehensive income
(loss), changes in stockholders' equity, and cash flows for the
year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements
are free of material misstatement. The Company is not required
to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration
of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit
included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of the Company as of March 31, 2015, and the results of
their operations and their cash flows for the year then ended in
conformity with accounting principles generally accepted in the
United States of America.
/s/ MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
July 15, 2015
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Zippy Bags, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Zippy Bags, Inc.
(A Development Stage Company) as of March 31, 2014 and 2013, and
the related statements of operations, changes in stockholders'
equity (deficit) and cash flows for the years then ended, and the
period from inception on August 26, 2010 through March 31, 2014.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of
material misstatement. The Company was not required to have, nor
were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly,
we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Zippy
Bags, Inc. (A Development Stage Company) as of March 31, 2014 and
2013, and the results of its operations and cash flows for the
periods described above in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company has an accumulated
deficit of $118,524 which raises substantial doubt about its
ability to continue as a going concern. Management's plans
concerning these matters are also described in Note 2. The
financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
June 4, 2014
GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
(FORMERLY ZIPPY BAGS, INC.)
CONSOLIDATED BALANCE
SHEETS
As of March 31, 2016 and 2015
|
|
As of March 31, |
|
|
|
2016 |
|
|
2015 |
|
|
ASSETS |
Current assets |
|
|
|
|
|
|
|
|
Cash
and cash equivalents |
|
$ |
252 |
|
|
$ |
213,974 |
|
Accounts
receivable |
|
|
– |
|
|
|
463,205 |
|
Other
current assets |
|
|
– |
|
|
|
2,744,718 |
|
Total
current assets |
|
|
252 |
|
|
|
3,421,897 |
|
Total assets |
|
$ |
252 |
|
|
$ |
3,421,897 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
– |
|
|
$ |
– |
|
Accrued
liabilities and other payables |
|
|
33,263 |
|
|
|
74,965 |
|
Taxes
payable |
|
|
– |
|
|
|
343,971 |
|
Other payables –
related parties |
|
|
– |
|
|
|
347,177 |
|
Convertible notes payable, related party, net |
|
|
– |
|
|
|
– |
|
Total
current liabilities |
|
|
33,263 |
|
|
|
766,113 |
|
Total
liabilities |
|
|
33,262 |
|
|
|
766,113 |
|
|
|
|
|
|
|
|
|
|
Shareholders' equity (deficit) |
|
|
|
|
|
|
|
|
Common stock,
$0.001 par value, 490,000,000 shares authorized, 50,900,338
shares and 20,800,338 shares issued and outstanding as of
March 31, 2016 and 2015, respectively |
|
|
50,900 |
|
|
|
20,800 |
|
Additional
paid-in capital |
|
|
1,890,996 |
|
|
|
1,690,032 |
|
Accumulated other
comprehensive loss |
|
|
(11,094 |
) |
|
|
(3,756 |
) |
Retained earnings (deficit) |
|
|
(1,963,813 |
) |
|
|
948,708 |
|
Total
shareholders' deficit |
|
|
(33,011 |
) |
|
|
2,655,784 |
|
Total liabilities and shareholders' deficit |
|
$ |
252 |
|
|
$ |
3,421,897 |
|
The accompanying notes are an integral part of the consolidated
financial statements.
GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
(FORMERLY ZIPPY BAGS, INC.)
CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Fiscal Years Ended March 31, 2016 and 2015
|
|
For the Years Ended March 31, |
|
|
|
2016 |
|
|
2015 |
|
Revenues |
|
$ |
5,464,068 |
|
|
$ |
3,853,913 |
|
Gross profit |
|
|
5,464,068 |
|
|
|
3,853,913 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
General and administrative
expenses |
|
|
3,068,801 |
|
|
|
2,267,046 |
|
Professional
fees |
|
|
175,824 |
|
|
|
175,633 |
|
Total
operating expenses |
|
|
3,244,625 |
|
|
|
2,442,679 |
|
Income (loss)
from operations: |
|
|
2,219,443 |
|
|
|
1,411,234 |
|
Other expenses: |
|
|
|
|
|
|
|
|
Loss on
Discontinue Operations |
|
|
(5,131,974 |
) |
|
|
– |
|
Interest
Income |
|
|
11 |
|
|
|
– |
|
Total other
expenses |
|
|
(5,131,963 |
) |
|
|
– |
|
Income (loss) before provision for
income taxes |
|
|
(2,912,521 |
) |
|
|
1,411,234 |
|
Provision for
income taxes |
|
|
– |
|
|
|
(344,002 |
) |
Net income
(loss) |
|
$ |
(2,912,521 |
) |
|
$ |
1,067,232 |
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss): |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(2,912,521 |
) |
|
$ |
1,067,232 |
|
Other comprehensive loss |
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
– |
|
|
|
(3,756 |
) |
Total comprehensive income (loss) |
|
$ |
(2,912,521 |
) |
|
$ |
1,063,476 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share |
|
|
|
|
|
|
|
|
Basic |
|
$ |
(0.13 |
) |
|
$ |
0.06 |
|
Diluted |
|
$ |
(0.13 |
) |
|
$ |
0.06 |
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
22,678,479 |
|
|
|
18,049,602 |
|
Diluted |
|
|
22,648,479 |
|
|
|
18,049,602 |
|
The accompanying notes are an integral part of the consolidated
financial statements.
GlORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
(FORMERLY ZIPPY BAGS, INC.)
CONSOLIDATED STATEMENTS OF
CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
For the Years Ended March 31, 2016 and 2015
|
|
Number of Common Shares |
|
|
Par Value of Common Stock |
|
|
Additional Paid in Capital |
|
|
Accumulated Deficit |
|
|
Total Shareholder’s Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE AT MARCH 31, 2013 |
|
|
182,500 |
|
|
|
183 |
|
|
|
41,817 |
|
|
|
(59,213 |
) |
|
|
(17,213 |
) |
Net Loss – 3.31.14 |
|
|
– |
|
|
|
– |
|
|
|
50,033 |
|
|
|
(59,311 |
) |
|
|
(9,278 |
) |
Shares Issued |
|
|
9,622,544 |
|
|
|
9,622 |
|
|
|
– |
|
|
|
– |
|
|
|
9,622 |
|
BALANCE AT MARCH 31, 2014 |
|
|
9,805,044 |
|
|
|
9,805 |
|
|
|
91,850 |
|
|
|
(118,524 |
) |
|
|
(16,869 |
) |
Net Loss – 3.31.15 |
|
|
– |
|
|
|
– |
|
|
|
1,598,193 |
|
|
|
1,063,476 |
|
|
|
2,661,669 |
|
Shares Issued |
|
|
10,995,294 |
|
|
|
10,995 |
|
|
|
– |
|
|
|
– |
|
|
|
10,995 |
|
BALANCE AT MARCH 31, 2015 |
|
|
20,800,338 |
|
|
|
20,800 |
|
|
|
1,690,043 |
|
|
|
944,952 |
|
|
|
2,655,795 |
|
Net Loss – 3.31.16 |
|
|
– |
|
|
|
– |
|
|
|
200,953 |
|
|
|
(2,919,859 |
) |
|
|
(2,718,906 |
) |
Shares Issued |
|
|
30,100,000 |
|
|
|
30,100 |
|
|
|
– |
|
|
|
– |
|
|
|
30,100 |
|
BALANCE AT MARCH 31, 2016 |
|
|
50,900,338 |
|
|
|
50,900 |
|
|
|
1,890,996 |
|
|
|
(1,974,907 |
) |
|
|
(33,011 |
) |
The accompanying notes are an integral part of the consolidated
financial statements.
GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
(FORMERLY ZIPPY BAGS, INC.)
CONSOLIDATED STATEMENTS OF
CASH FLOWS
For the Fiscal Years Ended March 31, 2016 and 2015
|
|
For
the Years Ended |
|
|
|
March 31, 2016 |
|
|
March 31, 2015 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(2,912,521 |
) |
|
$ |
1,067,232 |
|
Adjustments to
reconcile net income/loss to net cash provided by operating
activities: |
|
|
|
|
|
|
|
|
Share based
compensation - employees |
|
|
– |
|
|
|
200,000 |
|
Share issued to
third parties for services provided |
|
|
225,000 |
|
|
|
200,000 |
|
Share issued to
related parties for services provided |
|
|
|
|
|
|
1,200,000 |
|
Loss on
Discontinued Operations |
|
|
5,131,974 |
|
|
|
– |
|
Depreciation |
|
|
4,018 |
|
|
|
– |
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts
receivable |
|
|
463,205 |
|
|
|
(463,247 |
) |
Other current
assets |
|
|
4,294 |
|
|
|
(4,295 |
) |
Deposits for
long-term leases |
|
|
295,000 |
|
|
|
(295,000 |
) |
Taxes payable |
|
|
(343,971 |
) |
|
|
344,002 |
|
Accrued
liabilities and other payables |
|
|
(41,702 |
) |
|
|
74,972 |
|
Other
payables - related parties |
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
NET CASH PROVIDED
BY OPERATING ACTIVITIES |
|
|
2,825,297 |
|
|
|
2,323,664 |
|
CASH FLOW FROM INVESTING
ACTIVITIES |
|
|
|
|
|
|
|
|
Purchase of
property, plant and equipment |
|
|
(32,150 |
) |
|
|
– |
|
Cash
paid for Construction in Process |
|
|
(2,965,593 |
) |
|
|
(2,445,424 |
) |
NET CASH USED IN
INVESTING ACTIVITIES |
|
|
(2,997,743 |
) |
|
|
(2,445,424 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
|
|
|
|
Distribution to
shareholders |
|
|
– |
|
|
|
(440,001 |
) |
Repayments of bank
overdrafts |
|
|
– |
|
|
|
– |
|
Proceeds from
related party notes payable |
|
|
– |
|
|
|
– |
|
Proceeds from
related party advances |
|
|
381,765 |
|
|
|
937,824 |
|
Repayments of
related party notes payable |
|
|
– |
|
|
|
– |
|
Repayments to related party advances |
|
|
(413,873 |
) |
|
|
(158,309 |
) |
|
|
|
|
|
|
|
|
|
NET CASH USED IN
FINANCING ACTIVITIES |
|
|
(32,108 |
) |
|
|
339,514 |
|
|
|
|
|
|
|
|
|
|
EFFECT OF
EXCHANGE RATE ON CASH |
|
|
(9,168 |
) |
|
|
(3,780 |
) |
NET INCREASE IN CASH AND CASH
EQUIVALENTS |
|
|
(213,722 |
) |
|
|
213,974 |
|
CASH AND CASH
EQUIVALENTS AT BEGINNING OF YEAR |
|
|
213,974 |
|
|
|
– |
|
CASH AND CASH
EQUIVALENTS AT END OF YEAR |
|
$ |
252 |
|
|
$ |
213,974 |
|
|
|
|
|
|
|
|
|
|
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 |
|
Debt
discount on convertible notes payable |
|
$ |
– |
|
|
$ |
– |
|
Conversion of convertible notes payable to common stock |
|
$ |
– |
|
|
$ |
– |
|
Note
payable and accrued interest reclassified to convertible note |
|
$ |
– |
|
|
$ |
– |
|
Debt
and interest reclassified from non-related party to related
party |
|
$ |
– |
|
|
$ |
– |
|
The accompanying notes are an integral part of these consolidated
financial statements.
GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
(FORMERLY ZIPPY BAGS, INC.)
NOTES TO 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. Ms. Lum was later appointed as Chief Financial
Officer of Glorywin and its subsidiaries, (collectively, the
"Company", "us"). 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. The Company has introduced 25
sub-junkets to three land-based casinos in Cambodia to date, and
the Company itself does 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 and its affiliates. 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
We prepared the consolidated financial statements in accordance
with accounting principles generally accepted in the United States
of America ("U.S. GAAP") and pursuant to the U.S. Securities and
Exchange Commission ("SEC") rules. We included all adjustments that
are necessary for the fair presentation of our financial position,
results of operations, and cash flows for the periods
presented.
We have defined various periods that are covered in this report as
follows:
|
- |
"fiscal
year 2015"—April 1, 2014 through March 31, 2015 |
|
- |
"fiscal
year 2016"—April 1, 2015 through March 31, 2016 |
Principles of Consolidation
The consolidated financial statements include the financial
statements of Glorywin, and its wholly-owned subsidiaries. All
significant intercompany balances and transactions have been
eliminated on consolidation.
The following table depicts the identity of our subsidiaries as of
March 31, 2016:
None
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.
Cash and Cash Equivalents
We maintain cash balances in non-interest-bearing accounts, which
do not currently exceed federally insured limits. For the purpose
of the statements of cash flows, all highly liquid investments with
an original maturity of three months or less are considered to be
cash equivalents.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are presented net of an allowance for doubtful
accounts. Management of the Company makes judgments as to its
ability to collect outstanding receivables and provides allowances
for the portion of receivables when collection becomes doubtful.
Provisions are made based upon a specific review of all significant
outstanding invoices. For those invoices not specifically reviewed,
provisions are provided at different rates, based upon the age of
the receivables. In determining these percentages, management
analyzes its historical collection experience and current economic
trends. If the historical data the Company uses to calculate the
allowance for doubtful accounts does not reflect the future ability
to collect outstanding receivables, additional provisions for
doubtful accounts may be needed and the future results of
operations could be materially affected. As of March 31, 2016 and
2015, the Company did not establish, based on a review of
outstanding balances, an allowance for doubtful accounts.
Income Taxes
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. A valuation allowance is
provided for significant deferred tax assets when it is more likely
than not, that such asset will not be recovered through future
operations. Current income taxes are provided for in accordance
with the laws and regulations applicable to the Company as enacted
by the relevant tax authorities.
Fair value of Financial Instruments
Fair value is the price that would be received from selling an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. When
determining the fair value measurements for assets and liabilities
required or permitted to be recorded at fair value, the Company
considers the principal or most advantageous market in which it
would transact and it considers assumptions that market
participants would use when pricing the asset or liability.
Authoritative literature provides a fair value hierarchy that
requires an entity to maximize the use of observable inputs and
minimize the use of unobservable inputs when measuring fair value.
A financial instrument's categorization within the fair value
hierarchy is based upon the lowest level of input that is
significant to the fair value measurement as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for
identical assets or liabilities that the Company has the ability to
access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and
liabilities in active markets, quoted prices for identical or
similar assets or liabilities in markets that are not active,
inputs other than quoted prices that are observable for the asset
or liability (e.g., interest rates, yield curves, etc.), and inputs
that are derived principally from or corroborated by observable
market data by correlation or other means (market corroborated
inputs).
Level 3 - Unobservable inputs that reflect our assumptions about
the assumptions that market participants would use in pricing the
asset or liability.
The Company's financial instruments consist principally of cash,
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. For the
entities whose functional currencies are the HKD, results of
operations and cash flows are translated at average exchange rates
during the period, assets and liabilities are translated at the
unified exchange rate at the end of the period, and equity is
translated at historical exchange rates. As a result, amounts
relating to assets and liabilities reported on the statements of
cash flows may not necessarily agree with the changes in the
corresponding balances on the balance sheets. Translation
adjustments resulting from the process of translating the local
currency financial statements into USD are included in determining
comprehensive income. A summary of the conversion rates for the
periods presented is as follows:
|
|
March 31, 2016 |
|
March 31, 2015 |
Period end (HKD: USD
exchange rate) |
|
7.7645 |
|
7.7545 |
|
|
|
|
|
Average fiscal year (HKD: USD
exchange rate) |
|
7.7638 |
|
7.7538 |
Revenue Recognition
Since Wonderful Gate was acquired, the Company has been 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 charge s 0.2% and 0.05%, respectively, of total bets played
by players introduced by sub-junkets from the three casinos located
in Cambodia.
At the end of each month, the IT company introduced by the Company
generates a bet statement of the three casinos where all the
playing information is presented, and that lays the ground for
revenue calculation. After both the Company and the casinos agree
with the information of the bet statement, settlement is prepared
by the casinos and the Company usually gets paid on the 7th of the
following month.
As all of the Company's revenues were derived from three casinos
located in Cambodia, its revenues and accounts receivable are
subject to concentrations of credit risk. If any of the casinos has
operating difficulties and fails to make payment in time, the
Company's cash flow would be suffered. Besides, the paying ability
of the casinos is also dependent on the political, economic and
legal environment in Cambodia. The Company has not experienced
any losses in such accounts, however, no guarantee of future
in-time payment can be made.
Basic and Diluted Earnings (Deficit) per Share
ASC 260 "Earnings per Share," requires dual presentation of basic
and diluted earnings (deficit) per share ("EPS") with a
reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS
computation. Basic EPS excludes dilution. Diluted EPS reflects the
potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock that then
shared in the earnings (deficit) of the entity. Basic net income
(loss) per share is computed by dividing net income (loss)
available to common shareholders by the weighted average number of
shares of common stock outstanding during the period. Diluted
income (loss) per share is computed by dividing net income by the
weighted average number of shares of common stock, common stock
equivalents and potentially dilutive securities outstanding during
each period. Potentially dilutive common shares consist of common
shares issuable upon the confirmation of subscriptions for shares
and common stock options (using the treasury stock method). For the
periods presented, there were no outstanding potential common stock
equivalents and therefore basic and diluted earnings per share
result in the same figure.
Stock-Based Compensation
The Company accounts for stock based compensation issued to
employees in accordance with ASC 718 "Stock Compensation". ASC 718
requires companies to recognize an expense in the statement of
income at the grant date of stock options and other equity based
compensation issued to employees. The Company accounts for
non-employee share-based awards in accordance with ASC 505-50
"Equity-based payments to nonemployees".
Reverse Stock Split
All preferred and common share amounts (except par value and par
value per share amounts) have been retroactively restated to
reflect the Company's one thousand-for-one reverse capital stock
split effective August 19, 2013, as described in Note 6.
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.
Note 3 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In April 2014, the FASB issued ASU 2014-08, "Presentation of
Financial Statements (Topic 205) and Property, Plant, and Equipment
(Topic 360): Reporting Discontinued Operations and Disclosures of
Disposals of Components of an Entity". The amendments in the ASU
change the criteria for reporting discontinued operations while
enhancing disclosures in this area. It also addresses sources of
confusion and inconsistent application related to financial
reporting of discontinued operations guidance in U.S. GAAP. Under
the new guidance, only disposals representing a strategic shift in
operations should be presented as discontinued operations. In
addition, the new guidance requires expanded disclosures about
discontinued operations that will provide financial statement users
with more information about the assets, liabilities, income, and
expenses of discontinued operations. The amendments in the ASU are
effective in the first quarter of 2015 for public organizations
with calendar year ends. Early adoption is permitted. The Company
does not expect the adoption to have a significant impact on its
consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, "Revenue from contracts
with Customers (Topic 606)". This ASU affects any entity that
either enters into contracts with customers to transfer goods or
services or enters into contracts for the transfer of non-financial
assets. This ASU will supersede the revenue recognition
requirements in Topic 605, Revenue Recognition, and most
industry-specific guidance. The ASU also supersedes some cost
guidance included in Subtopic 605-35, Revenue
Recognition-Construction-Type and Production-Type Contracts. The
core principle of the guidance is that an entity should recognize
revenue to depict the transfer of promised goods or services to
customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchanged for those goods or
services. The standard is effective for annual reporting periods
beginning after December 15, 2016, including interim periods within
that reporting period. The Company is currently in the process of
evaluating the impact of the adoption on its consolidated financial
statements.
In June 2014, the FASB issued ASU 2014-10, "Development Stage
Entities (Topic 915): Elimination of Certain Financial Reporting
Requirements". The amendments in this Update remove all incremental
financial reporting requirements from U.S. GAAP for development
stage entities, thereby improving financial reporting by
eliminating the cost and complexity associated with providing that
information. The Company has elected to early adopt this ASU by
removing the inception to date information and all references to
development stage.
Note 4 – ACCOUNTS RECEIVABLE
Management of the Company makes judgments as to its ability to
collect outstanding receivables and provides allowances for the
portion of receivables when collection becomes doubtful, in our
case, when the payment of the current month is not settled by the
7th of the following month. As of March 31, 2016, no
postponement on payment of revenue incurred.
Accounts receivable consists of the following:
|
|
As of March 31, 2016 |
|
|
As of March 31, 2015 |
|
Introduction of IT
company |
|
$ |
– |
|
|
$ |
92,641 |
|
Introduction
of sub - junkets |
|
|
– |
|
|
|
370,564 |
|
Total |
|
$ |
– |
|
|
$ |
463,205 |
|
As of March 31, 2016 and 2015, there was no allowance for doubtful
accounts provided.
Note 5 – 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 as of March 31, 2015 and 2014 was
$344,002 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 March 31, 2016.
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 years ended March
31, 2016 and 2015, respectively, are summarized as follows:
|
|
Years ended March
31, |
|
|
|
2016 |
|
|
2015 |
|
Current taxes |
|
|
– |
|
|
|
344,002 |
|
Deferred
taxes |
|
|
– |
|
|
|
– |
|
Total |
|
|
– |
|
|
|
344,002 |
|
The table below summarizes the difference between the U.S.
statutory federal tax rate and the Company's effective tax rate for
the years ended March 31, 2015 and 2014:
|
|
Years ended March
31, |
|
|
|
2016 |
|
|
2015 |
|
U.S. federal income tax
rate |
|
|
34% |
|
|
|
34% |
|
Foreign income not recognized in
the U.S. |
|
|
(34% |
) |
|
|
(34% |
) |
Macau Complementary tax |
|
|
12% |
|
|
|
12 |
|
Effect of
income tax difference under different tax jurisdictions |
|
|
3% |
|
|
|
3 |
|
Total
effective income tax rate |
|
|
15% |
|
|
|
15 |
|
The principal components of the deferred income tax assets as of
March 31, 2015 and 2014 are as follows:
|
|
|
March
31, 2016 |
|
|
|
March 31, 2015 |
|
Current deferred income
tax assets |
|
|
– |
|
|
|
– |
|
Less:
valuation allowance, current portion |
|
|
– |
|
|
|
– |
|
Total |
|
|
– |
|
|
|
– |
|
For the years ended March 31, 2016 and 2015, respectively, the
Company produced net operating income (loss) before provision for
income taxes of $1,666,134 and $(59,311), respectively. Based on
the available objective evidence, including the Company's history
of its loss, management believed it is more likely than not that
future net deferred tax asset would not be fully realizable.
Accordingly, the Company provided for a full valuation allowance
against its net deferred tax asset at March 31, 2015. No deferred
tax assets or liabilities existed as of March 31, 2016.
The Company applied the provisions of ASC 740-10-50, "Accounting
for Uncertainty in Income Taxes", which provides clarification
related to the process associated with accounting for uncertain tax
positions recognized in our financial statements. Audit periods
remain open for review until the statute of limitations has passed.
The completion of review or the expiration of the statute of
limitations for a given audit period could result in an adjustment
to the Company's liability for income taxes. Any such adjustment
could be material to the Company's results of operations for any
given quarterly or annual period based, in part, upon the results
of operations for the given period. As of March 31, 2015, the
Company had no uncertain tax positions, and will continue to
evaluate for uncertain positions in the future.
Note 6 - STOCKHOLDERS' EQUITY
Stock-splits
On August 19, 2013, the Company's board of directors and
shareholders approved a one thousand-for-one reverse stock split of
the Company's common stock. On November 7, 2013, the Company issued
336 shares of common stock as fractional shares from the August 19,
2013 reverse stock split. All reference to share and per share
amounts in the consolidated financial statement and accompanying
notes to the consolidated financial statements have been
retroactively restated to reflect the one thousand-for-one reverse
stock split, unless otherwise noted.
Shares Issued
On November 7, 2013, the Company issued 336 shares of common stock
as fractional shares from the August 19, 2013 reverse stock
split.
On March 7, 2014, Janet Somsen, elected to convert convertible
notes in the amount of $8,530 into 4,265,000 shares of common
stock.
On March 26, 2014, third party note holders elected to convert
convertible notes in the amount of $9,759 into 4,879,500 shares of
common stock.
On March 26, 2014, BK Consulting elected to convert convertible
notes in the amount of $8,415 at a conversion price of $2 per share
into 4,208 shares of common stock and convertible notes in the
amount of $947 at a conversion price of $0.002 into 473,500 shares
of common stock.
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. Due to related party
relationship, the transaction was accounted for as contributed
capital.
Note 7 – 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 amount on March 31, 2015 and
2014 was as follows:
Name
of related parties |
|
Relationship with the Company |
|
Interests of borrowing |
|
|
March 31, 2016 |
|
|
March 31, 2015 |
|
Wenwei W u |
|
Shareholder of 14% of the
Company's interest |
|
|
0% |
|
|
$ |
– |
|
|
$ |
347,177 |
|
BK
Consulting |
|
Former majority
shareholder |
|
|
8% |
|
|
|
– |
|
|
|
– |
|
Total |
|
|
|
|
|
|
|
$ |
– |
|
|
$ |
347,177 |
|
The balance of $347,177 on March 31, 2015 included $7,692 that was
paid by Weiwei Wu for acquisition of Wonderful Gate.
On February 17, 2014, the Company exchanged a note payable to Janet
Somsen in the amount of $6,876 and accrued interest of $1,654 for a
convertible promissory note in the amount of $8,530. On March 7,
2014, Janet Somsen, elected to convert convertible notes in the
amount of $8,530 into 4,265,000 shares of common stock. The
convertible note conversion was done within the conversion term. No
gain (loss) was recorded for this conversion. Also see Note 8.
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, who was later appointed as Chief Financial Officer
of the Company. Also see Note 1.
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.
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 March 31, 2015, the Company paid a total
of $3,180,425 and additional 463,286 as of the filing date. 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 is
reflected as a reduction of shareholders' equity (additional
paid-in capital).
Also see debts with related parties in Note 8.
Note 8 - DEBT
Officer Note
From time to time, the Company's the original owner, Janet Somsen,
advanced loans to the Company for operations at an 8% per annum
interest date, due on demand. On February 17, 2014, the Company
exchanged the outstanding principal of $6,876 and accrued interest
of $1,654 for a convertible promissory note in the amount of
$8,530. The convertible promissory note bears no interest and is
convertible at the holders' discretion into common stock at a rate
of $0.002. On March 7, 2014, Janet Somsen, elected to convert
convertible notes in the amount of $8,530 into 4,265,000 shares of
common stock.
The Company recorded interest expense in the amount of $487 for the
year ended March 31, 2014 related to the officer notes payable and
included in interest expense $32 of imputed interest on the
convertible notes payable.
BK Consulting Notes Payable
From time to time the Company has received loans from BK Consulting
to fund operations at an 8% per annum interest rate, due on demand.
During the year ended March 31, 2014, the Company received proceeds
in the amount of $1,419 and repaid $28,297 principal and $2,330
interest on notes payable to BK Consulting.
There was no principal balance due or accrued interest existed at
March 31, 2014. The Company recorded interest expense in the amount
of $1,234 for the year ended March 31, 2014 related to loans from
BK Consulting.
Convertible Notes
During the year ended March 31, 2014, the Company issued
convertible promissory notes for aggregate proceeds in the amount
of $22,621, from BK Consulting. These loans are noninterest bearing
and convertible at the holder discretion into common stock. Of the
$22,621, $8,415 is convertible at a price of $2 per share, which
was adjusted for the reverse stock split on August 19, 2013 and
$14,206 is convertible at a price of $0.002 per share. The Company
recorded $821 of imputed interest at a rate of 8% on these
convertible notes during the year ended March 31, 2014. On March
26, 2014, BK Consulting, elected to convert $9,362 of convertible
notes into 477,708 share of common stock. The convertible note
conversions were done within the conversion term. No gain (loss)
was recorded for these conversions.
On February 17, 2014, the Company exchanged a note payable to Janet
Somsen in the amount of $6,876 and accrued interest of $1,654 for a
convertible promissory note in the amount of $8,530. The
convertible promissory note bears no interest and is convertible at
the holders' discretion into common stock at a rate of $0.002. On
March 7, 2014, Janet Somsen, elected to convert convertible notes
in the amount of $8,530 into 4,265,000 shares of common stock. The
Company recorded $32 of imputed interest at a rate of 8% on this
convertible note during the year ended March 31, 2014. The
convertible note conversion was done within the conversion term. No
gain (loss) was recorded for this conversion.
On March 25, 2014, BK Consulting sold an aggregate of $9,759 in
convertible notes to third party investors. On March 26, 2014,
those note holders notified the Company and elected to convert
convertible notes in the amount of $9,759 into 4,879,500 shares of
common stock. The Company did not record any imputed interest on
these third party convertible notes. The convertible note
conversions were done within the conversion term. No gain (loss)
was recorded for these conversions.
As of March 31, 2014, the balance due on convertible notes was
$3,500. This balance was paid by Janet Somsen as part of the
agreement to sell Glorywin's shares to Taipan Pearl Sdn Bhd and
Wenwei Wu on June 17, 2014, also see Note 1.
Discounts on Convertible Notes Payable
The Company calculates any beneficial conversion feature embedded
in its convertible notes via the intrinsic value method. The
conversion feature was considered a discount to the notes, to the
extent the aggregate value of the conversion feature did not exceed
the face value of the notes. These discounts are amortized to
interest expense through earlier of the term or conversion of the
notes. During the year ended March 31, 2014, the Company recorded
debt discounts in the amount of $31,151. During the year ended
March 31, 2014, the Company amortized debt discounts to interest
expense in the aggregate amount of $31,151.
Note 9 - COMMITMENTS AND CONTINGENCIES
On May 19, 2014, the Company entered into an agreement for the
lease of an office place 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 $1,419. The renewed lease
will expire on November 18, 2015.
On May 1, 2014, the Company entered into an agreement for the lease
of a staff dormitory in Macau for monthly rental of HKD8, 000
(approximately $1,032). The lease term began on May 1, 2014. The
Company terminated the lease on January 31, 2015.
The total rent expenses for years ended March 31, 2016 and 2015
were $0 and $26,273, respectively.
On March 31, 2015, future annual lease payments due pursuant to
operation leases amounts to the following:
Fiscal Years Ended March 31,
2016 |
|
$ |
10,550 |
|
2017 |
|
|
– |
|
2018 |
|
|
– |
|
2019 |
|
|
– |
|
2020 and
thereafter |
|
|
– |
|
Total |
|
$ |
10,550 |
|
Note 10 - SUBSEQUENT EVENTS
None.
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