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Organization and Summary of Significant Accounting Policies (Policies)
 3 Months Ended
Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Presentation

Basis of presentation

 

The accompanying unaudited condensed consolidated financial statements as of and for the three months ended March 31. 2018 and 2017, have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) that permit reduced disclosure for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the period ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The Condensed Consolidated Balance Sheet information as of December 31, 2017 was derived from the Company’s audited Consolidated Financial Statements as of and for the year ended December 31, 2017 included in the Company’s Annual Report on Form 10-K filed with the SEC on April 13, 2018. These financial statements should be read in conjunction with that report.

 

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries and majority-owned subsidiaries over which the Company exercises control, and entities for which the Company is the primary beneficiary. Intercompany transactions and balances were eliminated in consolidation.

 

At March 31, 2018 and December 31, 2017, the consolidated financial statements include noncontrolling interests related to the Company’s ownership of 60% of Forward Win International Limited, Yabez (Hong Kong) Company Limited, Greenpro Wealthon Sdn Bhd, Billion Sino Holdings Limited, and Parich Wealth Management Limited, and to the Company’s ownership of 51% of Greenpro Capital Village Sdn Bhd and Greenpro Family Office Limited.
Going Concern

Going Concern

 

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. During the three months ended March 31, 2018, the Company incurred a loss from operations of $260,523 and at March 31, 2018, the Company had a working capital deficit of $2,055,882. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date that the financial statements are issued. In addition, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2017 financial statements, has expressed substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

The Company’s ability to continue as a going concern is dependent upon improving its profitability and the continuing financial support from its shareholders. Management believes the existing shareholders or external financing will provide the additional cash to meet the Company’s obligations as they become due. No assurance can be given that any future financing, if needed, will be available or, if available, that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, if needed, it may contain undue restrictions on its operations, in the case of debt financing, or cause substantial dilution for its stockholders, in the case of equity financing.
Use of Estimates

Use of estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates include certain assumptions related to, among others, the allowance for doubtful accounts receivable, impairment analysis of real estate assets and other long term assets including goodwill, valuation allowance on deferred income taxes, and the accrual of potential liabilities. Actual results may differ from these estimates.
Cash, Cash Equivalents, and Restricted Cash

Cash, cash equivalents, and restricted cash

 

Cash, cash equivalents, and restricted cash were denominated in the following currencies at:

 

   

As of

March 31, 2018

    

As of

December 31, 2017

  
      (Unaudited)          
Cash, cash equivalents, and restricted cash                
Denominated in United States Dollars   $ 157,507     $ 283,674  
Denominated in Hong Kong dollars     553,305       568,008  
Denominated in Chinese Renminbi     231,920       239,502  
Denominated in Malaysian Ringgit     59,145       71,210  
Cash, cash equivalents, and restricted cash   $ 1,001,877     $ 1,162,394  

 

At March 31, 2018 and December 31, 2017, cash included funds held by employees of $6,750 and $32,673, respectively, and was held to facilitate payment of expenses in local currencies and to facilitate third-party online payment platforms in which the Company had not set up corporate accounts (WeChat Pay and Alipay).
Revenue Recognition

Revenue recognition

 

In 2014, the FASB issued guidance on revenue recognition (“ASC 606”), with final amendments issued in 2016. The underlying principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected. ASC 606 creates a five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes.

 

The Company’s revenue consists of revenue from providing business consulting and corporate advisory services (“service revenue”), revenue from the sale of real estate properties, and revenue from the rental of real estate properties.

 

Revenue from services

 

For certain of our service contracts providing assistance to clients in capital market listings (“IPO services”), our services provided are considered to be one performance obligation. Revenue and expenses are deferred until the performance obligation is complete and collectability of the consideration is probable. For service contracts where the performance obligation is not completed, deferred costs of revenue are recorded as incurred and deferred revenue is recorded for any payments received on such yet to be completed performance obligations. On an ongoing basis, management monitors these contracts for profitability and when needed may record a liability if a determination is made that costs will exceed revenue.

 

For other services such as company secretarial, accounting financial analysis and related services (“Non-IPO services”), the Company’s performance obligations are satisfied, and the related revenue is recognized, as services are rendered. For contracts in which we act as an agent, the Company reports revenue net of expenses paid.

 

The Company offers no discounts, rebates, rights of return, or other allowances to clients which would result in the establishment of reserves against service revenue. Additionally, to date, the Company has not incurred incremental costs in obtaining a client contract.

 

The Company adopted the guidance of ASC 606 on January 1, 2018, and the implementation of ASC 606 did not have a material impact on the Company’s consolidated financial statements.

 

Revenue from the sale of real estate properties

 

Effective January 1, 2018, the Company adopted the guidance of ASC 610-20, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”), which applies to sales or transfers to noncustomers of nonfinancial assets or in substance nonfinancial assets. Generally, the Company’s sales of its real estate properties would be considered a sale of a nonfinancial asset as defined. Under ASC 610-20, the Company will derecognize the asset and recognize a gain or loss on the sale of the real estate when control of the underlying asset transfers to the buyer. During the three months ended March 31, 2018 and 2017, the Company had no revenue from the sale of real estate properties. As a result of the adoption of ASU 610-20, there was no impact to the Company’s consolidated financial statements.

 

Revenue from the rental of real estate properties

 

Rental revenue represents lease rental income from the Company’s tenants. The tenants pay monthly in accordance with lease agreements and the Company recognizes the income ratably over the lease term as this is the most representative of the pattern in which the benefit is expected to be derived from the underlying asset.

 

Cost of revenues

 

Cost of service revenue primarily consists of employee compensation and related payroll benefits, company formation costs, and other professional fees directly attributable to the services rendered.

 

Cost of real estate properties sold primarily consist of the purchase price of property, legal fees, improvement costs to the building structure, and other acquisition costs. Selling and advertising costs are expensed as incurred.

 

Cost of rental revenue primarily includes costs associated with repairs and maintenance, property insurance, depreciation and other related administrative costs. Property management fees and utility expenses are paid directly by tenants.

 

The following table provides information about disaggregated revenue based on revenue by service lines and revenue by geographic area:

 

    Three Months Ended March 31,  
    2018     2017  
    (Unaudited)     (Unaudited, 
As Restated)		  
Revenue by service lines:                
Corporate advisory – Non-IPO services   $ 499,128     $ 616,167  
Corporate advisory – IPO services     200,000       210,000  
Rental of real estate properties     41,444       29,156  
Total revenue   $ 740,572     $ 855,323  

 

    Three Months Ended March 31,  
    2018     2017  
    (Unaudited)     (Unaudited, 
As Restated)		  
Revenue by geographic area:                
Hong Kong   $ 538,946     $ 604,596  
Malaysia     151,663       224,948  
China     49,963       25,779  
Total revenue   $ 740,572     $ 855,323  

 

Our contract balances include deferred costs of revenue and deferred revenue.

 

Deferred Revenue

 

For service contracts where the performance obligation is not completed, deferred revenue is recorded for any payments received in advance of the performance obligation. Changes in deferred revenue were as follows:

 

Deferred Costs of Revenue

 

For service contracts where the performance obligation is not completed, deferred costs of revenue are recoded for any costs incurred in advance of the performance obligation.

 

Deferred revenue and deferred costs of revenue at March 31, 2018 and December 31, 2017 are classified as current assets or current liabilities and totaled:

 

    As of 
March 31, 2018		     As of 
December 31, 2017		  
    (Unaudited)        
Deferred revenue   $ 350,400     $ 345,000  
Deferred costs of revenue   $ 64,089     $ 74,990  
Accounts Receivable

Accounts Receivable

 

Accounts receivable as presented in the consolidated balance sheets are related to the Company’s contracts and are recorded when the right to consideration becomes unconditional at the amount management expects to collect. Accounts receivable do not bear interest, and payments are generally due within thirty to forty-five days of invoicing. The Company maintains an allowance for doubtful accounts receivable. The allowance reflects the Company’s best estimate of probable losses inherent in the accounts receivable balance. It is based upon historical experience and loss patterns, the number of days that billings are past due, an evaluation of the potential risk of loss associated with delinquent accounts and known delinquent accounts. The carrying value of accounts receivable approximates their fair value.

 

    As of
March 31, 2018
(Unaudited)		     As of 
December 31, 2017		  
Accounts receivable, gross   $ 385,400     $ 421,913  
Less: Allowance for doubtful accounts     (58,483 )     (76,179 )
Accounts receivable, net   $ 326,917     $ 345,734  
Income (Loss) Per Share

Income (loss) per Share

 

Basic income (loss) per share is computed by dividing the net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per share is calculated by dividing the net loss by the weighted average number of common shares outstanding during the period plus any potentially dilutive shares related to the issuance of stock options, shares from the issuance of stock warrants, shares issued from the conversion of redeemable convertible preferred stock and shares issued for the conversion of convertible debt. At March 31, 2018 and December 31, 2017, there were no potentially dilutive shares outstanding.
Foreign Currencies Translation

Foreign currency translation

 

The reporting currency of the Company is the United States Dollars (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company’s operating subsidiaries maintain their books and records in their respective local currency, which consists of the Malaysian Ringgit (“MYR”), Chinese Renminbi (“RMB”), and Hong Kong Dollars (“HK$”), which is also the respective functional currency of subsidiaries.

 

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$ using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of a foreign subsidiary are recorded as a separate component of accumulated other comprehensive loss within equity.

 

Translation of amounts from the local currencies of the Company into US$ has been made at the following exchange rates for the respective periods:

 

    As of and for the three months ended March 31,  
    2018     2017  
Period-end MYR : US$1 exchange rate     3.86       4.43  
Period-average MYR : US$1 exchange rate     3.90       4.43  
Period-end RMB : US$1 exchange rate     6.28       6.89  
Period-average RMB : US$1 exchange rate     6.30       6.88  
Period-end / average HK$ : US$1 exchange rate     7.75       7.75  
Fair Value of Financial Instruments

Fair value of financial instruments

 

The Company follows the guidance of the ASC 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

 

● Level 1 : Observable inputs such as quoted prices in active markets;
   
● Level 2 : Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
   
● Level 3 : Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions

 

There were no assets or liabilities measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of March 31, 2018 or December 31, 2017. The Company believes the carrying amount reported in the balance sheet for cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, deferred costs of revenue, deferred revenue, and due to related parties, approximate their fair values because of the short-term nature of these financial instruments.
Concentrations of Risks

Concentrations of risks

 

For the three months ended March 31, 2018, no customer accounted for 10% or more of the service revenue or accounts receivable at year-end.

 

For the three months ended March 31, 2017, one customer that accounted for 10% or more of the service income is presented as follows:

 

    For the three months ended March 31, 2017     As of
March 31, 2017		  
    Revenues     Percentage 
of revenues		     Trade accounts 
receivable		  
                   
Customer A (Related Party C)     91,032       11 %     -  
Total:   $ 91,032       11 %   $ -  

 

For the three months ended March 31, 2018 and 2017, no vendor accounted for 10% or more of the Company’s cost of revenues, or accounts payable at quarter-end.
Exchange Rate Risk

Exchange rate risk

 

The reporting currency of the Company is US$. To date the majority of the revenues and costs are denominated in MYR and RMB and a significant portion of the assets and liabilities are denominated in MYR and RMB. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$, MYR and RMB. If MYR and RMB depreciates against US$, the value of MYR and RMB revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose it to substantial market risk.
Economic and Political Risks

Economic and political risks

 

Substantially all of the Company’s services are conducted in Malaysia, the PRC and Asian region. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in Malaysia. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations in Malaysia.

 

The Company’s operations in the People’s Republic of China (“PRC”) are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s results may be adversely affected by changes in the political conditions in the PRC, and by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation.
Recent Accounting Pronouncements

Recent accounting pronouncements

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This update will require the recognition of a right-of-use asset and a corresponding lease liability, initially measured at the present value of the lease payments, for all leases with terms longer than 12 months. For operating leases, the asset and liability will be expensed over the lease term on a straight-line basis, with all cash flows included in the operating section of the statement of cash flows. For finance leases, interest on the lease liability will be recognized separately from the amortization of the right-of-use asset in the statement of comprehensive income and the repayment of the principal portion of the lease liability will be classified as a financing activity while the interest component will be included in the operating section of the statement of cash flows. ASU 2016-02 is effective for annual and interim reporting periods beginning after December 15, 2018 for public business entities. Early adoption is permitted. Upon adoption, leases will be recognized and measured at the beginning of the earliest period presented using a modified retrospective approach. The Company is currently evaluating the impact of the adoption of ASU 2016-02 on its financial statements and related disclosures.

 

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statements of cash flows. The Company adopted the guidance of ASU No. 2016-18 on January 1, 2018 and there was no effect to the Company’s consolidated financial statements.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.