GLORYWIN ENTERTAINMENT GROUP, INC. - Quarter Report: 2015 June (Form 10-Q)

Nevada		27-3369810
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

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GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of June 30, 2015 and March 31, 2015
		June 30,				March 31,
		2015				2015
		(Unaudited)
ASSETS
Current assets
Cash and cash equivalents		$	121,771			$	28,873
Accounts receivable			1,518,368				463,205
Other current assets			4,273				4,294
Total current assets			1,644,412				496,372
Total assets		$	1,644,412			$	496,372
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accrued liabilities and other payables		$	58,346			$	74,965
Taxes payable			540,971				343,971
Other payables - related parties			325,900				347,177
Total current liabilities			925,217				766,113
Total liabilities			925,217				766,113
Shareholders' equity (deficit)
Common stock, $0.001 par value, 490,000,000 shares authorized, 20,800,338 shares issued and outstanding as of June 30, 2015 and March 31, 2015			20,800				20,800
Additional paid-in capital			(1,953,679	)			(1,490,393	)
Accumulated other comprehensive loss			(3,756	)			(3,756	)
Retained earnings			2,655,830				1,203,608
Total shareholders' equity (deficit)			719,195				(269,741	)
Total liabilities and shareholders' equity (deficit)		$	1,644,412			$	496,372

 

 

GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the Three Months Ended June 30, 2015 and 2014
(Unaudited)
		For the Three Months Ended June 30,
		2015				2014
Revenues		$	1,754,827			$	121,264
Gross profit			1,754,827				121,264
Operating expenses:
General and administrative expenses			56,217				79,419
Professional fees			47,381				16,149
Total operating expenses			103,598				95,568
Income before provision for income taxes			1,651,229				25,696
Provision for income taxes			(199,007	)			-
Net income		$	1,452,222			$	25,696
Comprehensive income
Net income		$	1,452,222			$	25,696
Total comprehensive income		$	1,452,222			$	25,696
Net income per share
Basic		$	0.07			$	0.00
Diluted		$	0.07			$	0.00
Weighted average shares outstanding
Basic			20,800,338				11,261,514
Diluted			20,800,338				11,261,514

 

 

 

GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended June 30, 2015 and 2014
(Unaudited)
		For the Three Months Ended June 30,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		$	1,452,222			$	25,696
Changes in operating assets and liabilities:
Accounts receivable			(1,057,866	)			-
Other current assets			-				(4,910	)
Taxes payable			199,007				-
Accrued liabilities and other payables			(17,731	)			-
NET CASH PROVIDED BY OPERATING ACTIVITIES			575,632				20,786
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to shareholders			(463,286	)			-
Proceeds from related party advances			120,179				115,460
Repayments to related party advances			(139,627	)			(121,263	)
NET CASH USED IN FINANCING ACTIVITIES			(482,734	)			(5,803	)
NET INCREASE IN CASH AND CASH EQUIVALENTS			92,898				14,983
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			28,873				-
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	121,771			$	14,983
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest		$	-			$	-
Income taxes		$	-			$	-
NON-CASH DISCLOSURE OF CASH FLOW INFORMATION:
Due to shareholder in connection with acquisition of Wonderful Gate		$	-			$	7,692
Debt forgiveness		$	-			$	16,869
Shares issued for acquisition of Top Point		$	-			$	10,195

 

 

 

See notes to unaudited consolidated financial statements

 

Glorywin Entertainment Group, Inc. and Subsidiaries

Notes to Unaudited Consolidated Financial Statements

 

Note 1 – Nature of Business

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

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

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

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

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

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

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

Note 2 – Significant Accounting Policies

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

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

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

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

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

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.

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

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

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

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

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

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.

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

Note 3 – Accounts Receivable

Accounts receivable consists of the following:

		As of June 30, 2015				As of March 31, 2015
Introduction of IT company		$	303,674			$	92,641
Introduction of sub-junkets			1,214,694				370,564
Total		$	1,518,368			$	463,205

 

As of June 30, 2015 and March 31, 2015, there was no allowance for doubtful accounts provided.

Note 4 – Income Taxes

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

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

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

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

 

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

 

Note 5 – Stockholders' Equity

 

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.

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

Note 6 – Related Party Transactions

The Company's officers, directors and related parties, from time to time, provided advances to the Company for working capital purpose. These advances are short-term in nature, unsecured and payable on demand. The due to related parties amounts on June 30, 2015 and March 31, 2015 were as follows:

 

Name of related parties	Relationship with the Company	Interests of borrowings	June 30, 2015	March 31, 2015
Wenwei Wu	Shareholder of 14% of the Company's equity interest	-	$ 325,900	$ 347,177
Total			$ 325,900	$ 347,177

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

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

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

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

Note 7 – Commitments and Contingencies

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

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

Note 8 – Subsequent Events

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

 

 

		June 30, 2015				June 30, 2014
Total Assets		$	1,644,412			$	19,894
Accumulated Profit (Loss)		$	2,652,074			$	(92,828	)
Stockholders' Equity		$	719,195			$	18,004
Net Working Capital		$	719,195			$	18,004

	●	The Company does not have an independent board of directors or audit committee;
	●	We do not have an independent body to oversee our internal controls over financial reporting.

Exhibit		Exhibit Description
31.1		Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
31.2		Certification by the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32.1		Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act
32.2		Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema Document
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		XBRL Taxonomy Extension Label Linkbase Document
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

	GLORYWIN ENTERTAINMENT GROUP INC.
Date: August 13, 2015	By:	/s/EngWah KUNG
		EngWah KUNG
		Chief Executive Officer

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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