XML 22 R11.htm IDEA: XBRL DOCUMENT

Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2017

9 Months Ended

Sep. 30, 2018

Accounting Changes and Error Corrections [Abstract]

Restatement of Previously Issued Unaudited Condensed Consolidated Financial Statements for the Three and Nine Months Ended September 30, 2017

NOTE 2 – RESTATEMENT OF PREVIOUSLY ISSUED UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017

The financial statements for the nine months ended September 30, 2017 have been restated. On March 15, 2018, our management determined the following:

	●	that the Company’s method of recognizing revenue on service contracts was erroneously accounted for when billed.
	●	that the Company erroneously used an incorrect exchange rate in the translation of fixed assets into the Company’s reporting currency.
	●	that the Company’s accounting for the acquisition of Yabez (Hong Kong) Company Limited in 2015 and for the acquisition of Billion Sino Holdings Limited were erroneously recorded using the partial goodwill method.
	●	that the Company erroneously recorded goodwill on the acquisition of the assets of Greenpro Credit Limited (formerly Gushen Credit Limited), which was an asset acquisition.
	●	that the Company erroneously did not record an allowance for uncollectible accounts receivable and did not write off long-outstanding receivables as bad debts at September 30, 2017 and December 31, 2016.

The effects on the previously issued financial statements are as follows:

(A)	In 2017, the Company corrected its method of recognizing revenue from certain service contracts to use the performance completion method. Previously the Company had recognized revenues upon billings. The Company has restated its consolidated financial statements as of and for the nine months ended September 30, 2017 to reflect the correction of the error. At September 30, 2017 and for the nine months ended September 30, 2017, the restatement resulted in the Company recording a $330,384 decrease in accounts receivable, $92,279 of deferred costs of revenue, $485,000 of deferred revenue, a $180,177 increase in accumulated deficit, $560,000 of decreased service revenue, $17,072 of decreased costs of service revenue, and an increase in net loss of $542,928. For the three months ended September 30, 2017, the restatement resulted in the Company recording $130,000 of decreased service revenue, $40,141 of decreased costs of service revenue, $10,135 of additional general and administrative expenses, and an increase in net loss of $99,995.

(B)	At December 31, 2015, the Company erroneously calculated the cost of real estate held for investment due to an incorrect exchange rate used for translation of amounts from the local currencies of the Company’s operating subsidiaries into the reporting currency of the Company. In preparing its financial statements for the nine months ended September 30, 2017, the Company determined that the incorrect exchange rate was used and corrected it. The Company has restated its consolidated financial statements as of September 30, 2017 to reflect the correction of the error and real estate held for investment was decreased by $158,291 and accumulated other comprehensive income was decreased by $158,291.

	In addition, the Company erroneously calculated the noncontrolling interest of Yabez (Hong Kong) Company Limited for the year ended December 31, 2015. The cumulative effect of the correction of the error was to decrease the accumulated deficit and increase the noncontrolling interest by $3,088 at September 30, 2017. There was no effect on net loss for 2017.

(C)	In September 2015, the Company acquired Yabez (Hong Kong) Company Limited and calculated goodwill using the partial goodwill method. The Company has restated its consolidated financial statements as of and for the nine months ended September 30, 2017 to reflect the full goodwill method as required by US GAAP. The cumulative effect of the correction of the error was to increase goodwill by $174,001 and noncontrolling interest by $174,001 at September 30, 2017. There was no effect on net loss for 2017.

	In April 2017, the Company acquired Billion Sino Holdings Limited and calculated goodwill using the partial goodwill method. The Company has restated its consolidated financial statements as of and for the nine months ended September 30, 2017 to reflect the full goodwill method as required by US GAAP. The cumulative effect of the correction of the error was to increase goodwill by $179,162, decrease additional paid-in capital by $340,645 and increase noncontrolling interest by $519,807 at September 30, 2017. There was no effect on net loss for 2017.

	In April 2017, the Company acquired assets in Greenpro Credit Limited (formerly Gushen Credit Limited). The acquisition was initially treated as a business combination instead of an asset acquisition. The Company restated its consolidated financial statements as of and for the nine months ended September 30, 2017 to reflect the elimination of goodwill. The cumulative effect of the correction of the error was to decrease goodwill by $93,566 and increase general and administrative expenses and net loss the three and nine months ended September 30, 2017 by $93,566.

(D)	In preparing its financial statements for the nine months ended September 30, 2017, the Company erroneously did not record an allowance for uncollectible accounts and did not write off long-outstanding receivables as bad debts. The Company has restated its consolidated financial statements as of and for the nine months ended September 30, 2017 to increase the allowance for uncollectible accounts by $97,211, increase accumulated deficit by $14,414, and increase bad debt expense and provision by $82,796.

(E)	In preparing its financial statements for the nine months ended September 30, 2017, the Company erroneously recorded the exchange difference, which arose from a capital injection into one of the subsidiaries as additional paid-in capital instead of other comprehensive income. The Company has restated its consolidated financial statements as of and for the nine months ended September 30, 2017 to decrease the additional paid-in capital by $2,029 and increase the other comprehensive income by $2,029.

The following table presents the effect of the restatements on the Company’s previously issued consolidated balance sheet:

	As of September 30, 2017 (Unaudited)
	As Previously Reported			Adjustments			Notes	As Restated

Accounts receivable, net	$	751,326		$	(427,594	)	A, D	$	323,732
Deferred costs related to revenue		-			92,279		A		92,279
Real estate held for investment, net		998,741			(158,291	)	B		840,450
Goodwill		2,686,650			259,596		C		2,946,246
Deferred revenue		-			485,000		A		485,000
Additional paid in capital		8,807,968			(342,674	)	C, E		8,465,294
Accumulated other comprehensive income (loss)		80,173			(156,265	)	B, E		(76,092	)
Accumulated deficit		(751,056	)		(910,791	)	A, B, C, D		(1,661,847	)
Noncontrolling interests in consolidated subsidiaries		190,458			690,719		B, C		881,177

The following table presents the effect of the restatements on the Company’s previously issued consolidated statements of operations and comprehensive loss:

	For the three months ended September 30, 2017 (Unaudited)
	As Previously Reported			Adjustments			Notes	As Restated

Service revenue	$	956,290		$	(130,000	)	A	$	826,290
Cost of service revenue		(251,063	)		40,141		A		(210,922	)
General and administrative		(778,599	)		(10,136	)	C, D		(788,735	)
Net loss		(103,395	)		(99,995	)	A, C, D		(203,390	)
Net loss attribute to common shareholders		(86,707	)		(99,995	)			(186,702	)
Foreign currency translation income (loss)		(7,685	)		19,568		B		11,883
Comprehensive income (loss)		(94,392	)		(80,427	)			(174,819	)

	For the nine months ended September 30, 2017 (Unaudited)
	As Previously Reported			Adjustments			Notes	As Restated

Service revenue	$	2,699,939		$	(560,000	)	A	$	2,139,939
Cost of service revenue		(518,538	)		17,072		A		(501,466	)
General and administrative		(2,172,815	)		(176,363	)	C, D		(2,349,178	)
Net income (loss)		4,741			(719,291	)	A, C, D		(714,550	)
Net income (loss) attribute to common shareholders		39,197			(719,291	)			(680,094	)
Foreign currency translation income (loss)		(22,725	)		58,451		B		35,726
Comprehensive income (loss)		16,472			(660,840	)			(644,368	)

Net loss per share, basic and diluted	$	(0.00	)	$	(0.01	)		$	(0.01	)

The following table presents the effect of the restatements on the Company’s previously issued consolidated statement of cash flows:

	For the nine months ended September 30, 2017 (Unaudited)
	As Previously Reported			Adjustments			Notes	As Restated

Cash flows from operating activities:
Net income (loss)	$	4,741		$	(719,291	)	A, C, D	$	(714,550	)
Provision for bad debt		-			46,054		D		46,054
Changes in operating assets and liabilities:
Accounts receivable, net		(355,964	)		326,743		A		(29,221	)
Deferred costs of revenue		-			(17,072	)	A		(17,072	)
Accounts payable and accrued liabilities		(268,416	)		93,566		C		(174,850	)
Deferred revenue		-			270,000		A		270,000

The information herein amends and supersedes the information contained in our Quarterly Report on Form 10-Q for the nine months ended September 30, 2017. The affected financial statements and related financial information contained in our previously filed reports for those periods should no longer be relied upon and should be read only in conjunction with the Unaudited financial information set forth herein.