WEB NEWS Comments & Business Outlook
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On March 9, 2016, the Board of Directors (the “Board”) of Glorywin Entertainment Group Inc., a Nevada Corporation (the “Company”) approved a Share Exchange Arrangement (the “Arrangement”) to be entered between the Company and Mr. Wen Wei Wu. Mr. Wu is the Company’s Chairman and Acting Chief Executive Officer.
As a result of the actions of the Resigning Officers (as defined in Item 8.01 "Other Events" in this Form 8-K), in order to protect the remaining shareholders’ interest, on March 9, 2016, the Company entered into the Arrangement to acquire the Trading Company. Reference is made to the disclosure under Item 1.01 of this Current Report on Form 8-K. The Trading Company intends to enter into a definitive Sales and Financial Leasing Agreement with an independent third party located in Malaysia on or before April 30, 2016 in connection with the sale and purchase of production facilities for active carbon black and premium quality wood vinegar. Such active carbon black will be used in gas purification, decaffeination, gold purification, metal extraction, water purification, medicine, sewage treatment, air filters in gas masks and respirators, filters in compressed air and many other applications. In addition, such premium quality wood vinegar will be used as: 1) foliar spray, particularly for fungus (grey molds), 2) insecticide when mixed with hot pepper, 3) enhancer for compost-making, 4) soil conditioner to improve the soil when mixed with charcoal, and 5) feed supplement or additives for livestock feeds. As of April 5, 2016, the independent third party has signed the Sales and Financial Leasing Agreement; however, the Company is waiting to to confirm some technical issues with the supplier before it executes the Sales and Financial Leasing Agreement. There can be no assurance or that such agreement will be consummated.
On March 29, the Company acquired a newly formed wholly owned subsidiary of a company incorporated in Seychelles, named Feroce Drago Inc. from an independent third party, and executed all necessary instruments of transfer and bought/sold the Company pursuant to English laws. As of the date of this 8k, Feroce Drago Inc. is a dormant company with no assets and liabilities, however this subsidiary is currently providing due diligence services to two China investors to acquire a public listed company in United States. Any compensation providing that it receives for such due diligence services will belong to the Company. The Company paid $10 in exchange for 100% of Feroce Drago Inc.
On March 9, 2016, the Company agreed to issue an aggregate of 30,000,000 shares of the Company’s Common Stock to Mr. Wu to acquire the Trading Company. The issuance of the shares was exempt from registration under the Securities Act of 1933 pursuant to Section 4(a)(2) thereof on the basis that the transaction did not involve a public offering. The 30,000,000 shares were issued on March 9, 2016. The shares are subject to restrictions on resale pursuant to Commission Rule 144 under the Securities Act.
As a result of the issuance of 30,000,000 shares on March 9, 2016, the total issued and outstanding shares of the Common Stock are 50,900,338 shares. Mr. WenWei Wu now owns an aggregate of 29,000,000 shares, or approximately 56.97% of the issued and outstanding shares of the Common Stock and 56.97% total voting power of all outstanding voting securities, resulting in a change of control of the Company.
On March18, 2016, Mr. WenWei Wu announced his resignation as acting Chief Executive Officer to the Board, effective on April 16, 2016. Mr. Wu did not resign for reasons involving a disagreement with the Company or its management, or because of any matter relating to the Company’s operations, policies, or practices. On the same date, the Board accepted Mr. Wu’s resignation, and appointed Mr. Eng Wah Kung as the Chief Executive Officer, effective on April 1, 2016, to fill the vacancy as of April 16, 2016 created by the resignation of Mr. Wu and as an executive director to the Board.
On March 18, 2016, the Board appointed Mr. Veng Kun Lun as a director and the Board Secretary, effective on April 16, 2016.
Mr. Veng Kun Lun, aged 55, will be the executive director and the company secretary of the Company. He holds a Diploma in Business Administrative. Prior to joining our company, he was Sales Manager of Jardine Office Solution, Macau and founder and director of All-In-One Officer Solution Co Ltd a company which he has run since 2000. He has more than 25 years’ experience in the marketing and sales industry. He also was the founder and president of Green Environment Protection Association of Macau. In 2015, he was invited to be the Advisor of Overseas Chinese Federation of Fangchengang & Baise City in Guanxi, China.
No family relationship exists between Messrs. Eng Wah Kung and Veng Kun Lun and any directors or executive officers of the Company. In addition, there has been no transaction, nor is there any currently proposed transaction between Messrs. Mr. Kung and Mr. Lun and the Company that would require disclosure under Item 404(a) of Regulation S-K.
On March 18, 2016, the Company entered into an employment agreement with Mr. Veng Kun Lun. The Employment Agreement is effective as of April 16, 2016. Under the terms of the Employment Agreement, the Company agreed to pay Mr. Lun a monthly fee of HKD1,000 as compensation for the services to be provided by him as the Board Secretary. Mr. Lun may also be entitled to discretionary bonus. His employment will be on probation for a period of three months from April 16, 2016. Under the terms of the Employment Agreement, Mr. Lun agreed to keep the Company’s business secrets and information confidential from third parties. The Company is also entitled to the sole ownership an exclusive use of any invention or improvement made or discovered by Mr. Lun and of any copyright, design right, trademark or trade name created or used by Mr. Lun during his employment with the Company.
The foregoing summary of the material terms and conditions of the Employment Agreements does not purport to be complete and is qualified in its entirety by reference to the Employment Agreements attached to this report as
ITEM 5.03. AMENDMENTS TO ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR.
The Amended Articles of Incorporation were approved by the Board and recommended for submittal to the Company’s stockholders on April 5, 2016. On April 5, 2016, Mr. WenWei Wu, being the record holder of 29,000,000 shares of our common stock, constituting 56.97% of our issued and outstanding shares of our common stock, the sole class of our voting securities, adopted and approved the Amended Articles of Incorporation by written consent in lieu of a meeting. On such date, we had 50,900,338 shares of common stock issued and outstanding with the holders thereof being entitled to cast one vote per share.
ITEM 8.01. OTHER EVENTS.
As previously disclosed in Form 8-K, on February 21, 2016, Messrs. Meng Hoa Duang, Lee Boon Siong and Ho Zhen Lung (the “Resigning Officers”) resigned as officers and directors of the Company. Mr. WenWei Wu later contacted Mr. Ming Kong Lee who was a shareholder of the Company that the Company now believes was acting on behalf of the Resigning Officers, who revealed to Mr. Wu that he intended to take away the business operation of GWIN Company Limited, and Wonderful Gate Strategy Company Limited, both of which are wholly owned subsidiaries of the Company in concert with his brother-in-law, Mr. Sing Hong Ting who is a principal shareholder of the Company. The Company is currently seeking legal remedies against the Resigning Officers and Mr. Ting including the cancellation of the shares of common stock of the Company owned by them or entities controlled by them. However, as of the date hereof, the Company currently does not have access to the operation and business records of such subsidiaries. In addition, the Company’s two customers, the two land based casinos in Cambodia, that generated substantially all of our revenues as part of our junket business notified the Company that they were terminating their junket arrangement with the Company. The Company is exploring a new junket relationship with the two land based casinos or other casinos.
Comments & Business Outlook
GLORYWIN ENTERTAINMENT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
For the Three and Six Months Ended September 30, 2015 and 2014
(Unaudited)
For the Three Months Ended September 30,
For the Six Months Ended September 30,
2015
2014
2015
2014
Revenues
$
1,760,946
$
1,048,198
$
3,515,773
$
1,169,462
Gross profit
1,760,946
1,048,198
3,515,773
1,169,462
Operating expenses:
General and administrative expenses
629,420
109,815
908,237
189,234
Professional fees
45,933
33,020
93,314
49,169
Total operating expenses
675,353
142,835
1,001,551
238,403
Income before provision for income taxes
1,085,593
905,363
2,514,222
931,059
Provision for income taxes
(196,189
)
(111,727
)
(395,196
)
(111,727
)
Net income
$
889,404
$
793,636
$
2,119,026
$
819,332
Comprehensive income
Net income
$
889,404
$
793,636
$
2,119,026
$
819,332
Total comprehensive income
$
889,404
$
793,636
$
2,119,026
$
819,332
Net income per share
Basic
$
0.04
$
0.04
$
0.10
$
0.05
Diluted
$
0.04
$
0.04
$
0.10
$
0.05
Weighted average shares outstanding
Basic
20,899,251
20,000,337
20,850,065
15,654,802
Diluted
20,899,251
20,000,337
20,850,065
15,654,802
Management Discussion and Analysis
Sales
Revenue of $3,515,773 and $1,169,462 was recognized during the six months ended September 30, 2015 and 2014. The increase of $2,346,311 or 201% was because the sub-junkets are continuously marketing for new players and clients to play at our platforms. Furthermore, on August 1, 2015 the Company has launched a mobile app for Android's phone users. Users can now choose to bet via computer or Android phones. The flexibility of mobile app has increase the total bets and caused revenue increased in 2015.
For the reasons above, net profit before provision for income taxes for the six months ended September 30, 2015 was $2,119,026 as compared to $819,332 for the six months ended September 30, 2014, an increase of $1,299,694 or 159%.
Comments & Business Outlook
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
Management Discussion and Analysis
Sales
Revenue of $1,754,827 and $121, 264 was recognized during the three months ended June 30, 2015 and 2014. The increase of $1,633,563 or 1,347% was because the Company only acquired the business on June 17, 2014. The revenue recognized during the three months ended June 30, 2014 is less than a month. Revenues were comprised of introduction fee of junkets and technical support to land-based casinos.
For the reasons above, net profit for the three months ended June 30, 2015 was $1,452,222 as compared to $25,696, an increase of $1,426,526 or 5,552%.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
For the Fiscal Years Ended March 31, 2015 and 2014
For the Years Ended March 31,
2015
2014
Revenues
$
3,853,913
$
-
Gross profit
3,853,913
-
Operating expenses:
General and administrative expenses
2,012,146
8,232
Professional fees
175,633
17,354
Total operating expenses
2,187,779
25,586
Income (loss) from operations:
1,666,134
(25,586
)
Other expenses:
Interest expenses
-
(33,725
)
Total other expenses
-
(33,725
)
Income (loss) before provision for income taxes
1,666,134
(59,311
)
Provision for income taxes
(344,002
)
-
Net income (loss)
$
1,322,132
$
(59,311
)
Comprehensive income (loss):
Net income (loss)
$
1,322,132
$
(59,311
)
Other comprehensive loss
Foreign currency translation adjustment
(3,756
)
-
Total comprehensive income (loss)
$
1,318,376
$
(59,311
)
Net income (loss) per share
Basic
$
0.07
$
(0.11
)
Diluted
$
0.07
$
(0.11
)
Weighted average shares outstanding
Basic
18,049,602
536,457
Diluted
18,049,602
536,457
Management Discussion and Analysis
Sales
CFO Trail
Item 4.01 Changes in Registrant's Certifying Accountant.
On June 2, 2015, Glorywin Entertainment Group Inc. (the "Company") was notified by M&K CPAS, PLLC ("M&K") that the firm resigned as the Company's independent registered public accounting firm. Except as noted in the paragraph immediately below, the reports of M&K on the Company's financial statements for the year ended March 31, 2014, did not contain an adverse opinion or disclaimer of opinion, and such reports were not qualified or modified as to uncertainty, audit scope or accounting principle.
The reports of M&K on the Company's financial statements as of and for the year ended March 31, 2014, contained explanatory paragraphs which noted that there was substantial doubt as to the Company's ability to continue as a going concern as the Company has an accumulated deficit.
During the years ended March 31, 2014 and 2015, and through June 2, 2015, the Company has not had any disagreements with M&K on any matter of accounting principles and practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to M&K's satisfaction, would have caused them to make reference thereto in their reports on the Company's financial statements for such periods.
During the years ended March 31, 2014 and 2015 and through June 2, 2015, there were no reportable events, as defined in Item 304(a)(1)(v) of Regulation S-K.
The Company provided M&K with a copy of this disclosure set forth under this Item 4.01 and requested M&K to furnish a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the above statements.
A copy of the letter from M&K is attached hereto as Exhibit 16.1.
On June 2, 2015 (the "Engagement Date"), the Company engaged Malone Bailey, LLP ("Malone Bailey") as its independent registered public accounting firm for the Company's fiscal year ending March 31, 2015.
During the two most recent fiscal years and through the Engagement Date, the Company has not consulted with Malone Bailey regarding either:
2. Any matter that was either the subject of a disagreement (as defined in paragraph (a)(1)(iv) of Item 304 of Regulation S-K and the related instructions thereto) or a reportable event (as described in paragraph (a)(1)(v) of Item 304 of Regulation S-K).
Comments & Business Outlook
Glorywin Entertainment Group Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three
For the Three
For the Nine
For the Nine
Months Ended
Months Ended
Months Ended
Months Ended
December 31,
December 31,
December 31,
December 31,
2014
2013
2014
2013
Revenue
$
1,360,387
$
-
$
2,529,849
$
-
Cost of revenue
-
-
-
-
Gross profit
1,360,387
-
2,529,849
-
Operating expenses:
General and administrative
1,261,007
2,344
1,450,241
6,163
Impairment loss on investment
1,404,479
-
1,404,479
-
Professional Fees
277,918
4,481
327,087
13,854
Total operating expenses
2,943,404
6,825
3,181,807
20,017
Net Operating Income (Loss)
(1,583,017
)
(6,825
)
(651,958
)
(20,017
)
Other income (expense):
Interest expense
(4,773
)
(6,682
)
(4,773
)
(17,967
)
Total other income (expense)
(4,773
)
(6,682
)
(4,773
)
(17,967
)
Income (Loss) before provision for income taxes
(1,587,790
)
(13,507
)
(656,731
)
(37,984
)
Provision for income taxes
146,620
-
258,347
-
Net income (loss)
$
(1,734,410
)
$
(13,507
)
$
(915,078
)
$
(37,984
)
Net income (loss) per share - basic
$
(0.09
)
$
(0.07
)
$
(0.05
)
$
(0.21
)
Net income (loss) per share - diluted
$
(0.09
)
$
(0.07
)
$
(0.05
)
$
(0.21
)
Weighted average shares outstanding – basic and diluted
20,116,701
182,836
25,092,988
182,836
Management Discussion and Analysis
Sales
Revenue of $1,360,388 and $0 was recognized during the three months ended December 31, 2014 and 2013. Revenues for the three months ended December 31, 2014 were comprised of junket commission and technical support fee charged to 3 casinos.
Net Profit / Loss
For the reasons above and investment impairment of $1,404,479, net loss for the three months ended December 31, 2014 was $1,734,410. For the three months ended December 31, 2013 the Company recorded net loss of $13,507.
Comments & Business Outlook
(UNAUDITED)
For the Three
For the Three
For the Six
For the Six
Months Ended
Months Ended
Months Ended
Months Ended
September 30,
September 30,
September 30,
September 30,
2014
2013
2014
2013
Revenue
$
1,048,198
$
-
$
1,169,462
$
-
Cost of revenue
-
-
-
-
Gross profit
1,048,198
-
1,169,462
-
Operating expenses:
General and administrative
109,815
1,838
189,234
3,819
Professional Fees
33,020
9,373
49,169
9,373
Total operating expenses
142,835
11,211
238,403
13,192
Net Operating Income (Loss)
905,363
(11,211
)
931,059
(13,192
)
Other income (expense):
Interest expense
-
(10,603
)
-
(11,285
)
Total other income (expense)
-
(10,603
)
-
(11,285
)
Income (Loss) before provision for income taxes
905,363
(21,814
)
931,059
(24,477
)
Provision for income taxes
111,727
-
111,727
-
Net income (loss)
$
793,636
$
(21,814
)
$
819,332
$
(24,477
)
Net income (loss) per share - basic
$
0.04
$
(0.00
)
0.05
$
(0.00
)
Net income (loss) per share - diluted
$
0.04
$
(0.00
)
0.05
$
(0.00
)
Weighted average shares outstanding - basic
20,000,337
182,500
15,654,802
182,500
Weighted average shares outstanding - diluted
20,000,337
182,500
15,654,802
182,500
Management Discussion and Analysis
Sales
Revenue of $1,048,198 and $0 was recognized during the three months ended September 30, 2014 and 2013. Revenues were comprised of junket commission and a technical support fee charged to 3 casinos.
For the reasons above, net profit for the three months ended September 30, 2014 was $793,636. For the three months ended September 30, 2013 the Company recorded net loss of $21,814.
Comments & Business Outlook
(UNAUDITED)
For the Three
For the Three
Months Ended
Months Ended
June 30,
June 30,
2014
2013
Revenue
$
121,264
$
-
Operating expenses:
General and administrative
79,419
1,981
Professional fees
16,149
-
Total operating expenses
95,568
1,981
Net Operating Income (Loss)
25,696
(1,981)
Other income (expense):
Interest expense
-
(682)
Total other income (expense)
-
(682)
Income (Loss) before provision for income taxes
25,696
(2,663)
Net income (loss)
$
25,696
$
(2,663)
Net income (loss) per share – basic
$
0.00
$
(0.00)
Net income (loss) per share – diluted
$
0.00
$
(0.00)
Weighted average shares outstanding – basic
11,261,514
182,500
Weighted average shares outstanding – diluted
11,261514
182,500
Management Discussion and Analysis
Sales
Revenue of $121, 264 and $0 was recognized during the three months ended June 30, 2014 and 2013. Revenues were comprised of junket commission and technical support fee charged to 2 casinos for the 8 days from June 23, 2014 to June 30, 2014.
Net Profit / Loss
For the reasons above, net profit for the three months ended June 30, 2014 was $25,696. Excluding the non-cash and once-off merger costs, the Company recorded an operating income of $25,696 based on 8 days revenues from its new business operations. For the three months ended June 30, 2013 the Company recorded net loss of $2,663 with no revenues.
Reverse Merger Activity
The Company agreed to issue an aggregate of 10,195,294 unregistered shares of the Company's common stock to the following parties in the amounts set forth next to their respective names:
Taipan Pearl Sdn Bhd:
7,556,235
Wen Wei Wu:
2,039,059
Boon Siong Lee:
400,000
Zhen Long Ho:
200,000
These shares were issued in connection with their contribution of their efforts in establishing a business (Top Point, Ltd, a Samoa Company) as a junket operation to the online casino operated by Lucky 89 Hotel & Casino, Cambodia and Grand Golden Hotel & Casino, Cambodia. Top Point simultaneously acquired 100% of the capital stock of Wonderful Gate Strategy Company Limited ("Wonderful Gate"), a Macau company from Carmen Lum who will be the Company's Chief Financial Officer and a Director of the Company. It is intended that Lucky 89 Hotel & Casino-Prey Vor, Au Village, Thmei Commune, Kampong Ro District, Cambodia and Grand Golden Hotel & Casino, Kampong Cham Province, Cambodia will enter into a junket operator agreement with Wonderful Gate shortly. Under this agreement, Wonderful Gate will be responsible to introduce VIP Asian gamers to the casino's online operations and to maintain its back office online platform in return for a 0.25% commission on the total bets played by those gamers. All of the junket's operations will be consolidated with the Company. Following the issuance, the Company has 20,000,338 shares of Common Stock outstanding.
