PROSPECTUS
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Filed
Pursuant to Rule 424(b)(3)
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Registration
No.: 333-219625
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GREENPRO
CAPITAL CORP.
MINIMUM
OFFERING: 500,000 shares of common stock
MAXIMUM
OFFERING: 2,500,000 shares of common stock
Greenpro
Capital Corp. is offering a minimum of 500,000 shares of common stock, par value $0.0001 per share, and a maximum of 2,500,000
shares of common stock. We currently expect the public offering price to be $6.00 per share. The offering is being made on a “best
efforts” basis without a firm commitment by the placement agent who has no obligation or commitment to purchase any of our
shares. The placement agent must sell the minimum number of shares offered (500,000 shares of common stock), if any are sold,
and are only required to use their best efforts to sell the shares offered. See “Plan of Distribution.”
This
offering will terminate no later than June 30, 2018, (the “Termination Date”), unless extended by our board of directors
for an additional six months until December 31, 2018, although we may close the offering on any date prior to the Termination
Date, if the offering is fully subscribed or upon the vote of the board of directors. Reasons the board may consider in determining
whether to extend or terminate the offering may include, but are not limited to: amount of funds raised, potential to raise additional
capital, and response to the offering as of that date.
We
are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended. Our common stock is currently quoted
on the OTCQB Marketplace (the “OTCQB”) under the symbol “GRNQ.” There is a limited public trading market
for our common stock. Our common stock has been approved for listing, on the NASDAQ Capital Market under the symbol “GRNQ.”
Prior to the commencement of trading of our common stock, we are required to provide to NASDAQ the final number of shares to
be sold and a full list of participants in the offering.
Investing
in our securities involves a high degree of risk. You should carefully consider the risk factors beginning on page 8 of this prospectus
before purchasing shares of our common stock.
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Offering
Price Per Share ($)
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Commission
per
Share(1)(2)
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Net
Proceeds
to Greenpro
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Minimum
Offering (500,000 shares)
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$
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6.00
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$
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0.30
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2,850,000
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Maximum
Offering (2,500,000 shares)
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$
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6.00
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$
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0.30
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14,250,000
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(1)
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Does
not include a non-accountable expense allowance equal to 1.5% of the gross proceeds of this offering, payable to Network 1
Financial Securities, Inc., the placement agent. See “Plan of Distribution” beginning on page 60 of this
prospectus for additional information regarding total placement agent compensation. It also does not include our expected
cash expense for this offering to be approximately $598,300, exclusive of the above commissions.
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(2)
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We
and the placement agent have agreed to pay commissions of 5.0% per share (or $0.30 per share).
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In
addition to the placement agent commissions listed above and the non-accountable expense allowance described in the footnote,
we have agreed to issue share purchase warrants, exercisable commencing 180 days immediately following the effective date of the
registration statement for a period of five years from the effective date of this offering, to purchase shares of common stock
equal to 10% of the total number of shares sold in this offering and may be exercisable at a per share price equal to 120% of
the public offering price (the “Placement Agent Warrants”). The registration statement of which this prospectus is
a part also covers the Placement Agent Warrants and the shares of common stock issuable upon the exercise thereof. For additional
information regarding our arrangement with the placement agent, please see “Plan of Distribution” beginning on page
60
.
Until
we sell at least 500,000 shares of common stock, all investor funds will be held in an escrow account at Continental Stock Transfer
& Trust Company, as agent, for the benefit of the investors. If we do not sell at least 500,000 shares of common stock by
June 30, 2018, unless such date is extended for an additional six months until December 31, 2018 by consent of our board of directors,
all funds will be returned to investors without interest or deduction by noon of the next business day after the Termination Date.
If we complete this offering, net proceeds will be promptly delivered to us on the closing date. Affiliates of the company and
affiliates and associated persons of the placement agent may invest in this offering on the same terms and conditions as the public
investors participating in this offering, and any shares of common stock purchased will make up a portion of the minimum offering
needed to complete this offering.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
placement agent expects to deliver the shares of common stock to purchasers no later than June 30, 2018, unless extended by the
board of directors for an additional six months until December 31, 2018, subject to the condition that at least 500,000 shares
of common stock have been subscribed and paid for.
The
date of this prospectus is May 25, 2018
The
above graphic depicts our logo and motto.
The
above graphic depicts our core concept of “Worldwide Wealth Wisdom”, which encompasses wealth creation, wealth protection
and wealth succession.
The
above graphic depicts two publications by our Company – Greenpro Capital Corp.
The
above graphics depict sharing sessions, seminars and activities the Company conducted or participated in, in the past.
The
above graphics depict sharing sessions, seminars and activities the Company conducted or participated in, in the past.
The
above graphics depict sharing sessions, seminars and activities the Company conducted or participated in, in the past.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
You
should rely only on the information contained in this prospectus or any supplement or amendment hereto. We have not authorized
any person to provide you with different information. We are not offering to sell, or seeking an offer to buy, our common stock
in any jurisdiction where such offer or sale is not permitted. You should assume that the information contained in this prospectus
and any supplement or amendment hereto is accurate only as of the date of this prospectus, regardless of the time of delivery
of this prospectus or of any sale of our common stock. Our business, financial condition, results of operations and prospects
may have changed since that date.
Unless
the context otherwise indicates, all references in this prospectus to:
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The
“Company,” “we,” “us,” or “our,” “Greenpro” are references to
Greenpro Capital Corp., a Nevada corporation.
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“China”
or “PRC” are references to People’s Republic of China;
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“HK”
refers to the Hong Kong Special Administrative Region;
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“U.S.
dollar,” “$” and “US$” refer to the legal currency of the United States;
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Unless
otherwise noted, all currency figures in this filing are in U.S. dollars. References to “yuan” or “RMB”
are to the Chinese yuan (also known as the renminbi). References to “MYR” are to the Malaysian Ringgit. References
to “HK$” are to the Hong Kong Dollar.
SUMMARY
This
summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering,
you should read the entire prospectus carefully, including the information under “Risk Factors” and our financial
statements and the related notes included elsewhere in this prospectus before investing in our common stock.
Overview
We
currently operate and provide a wide range of business solution services to small and medium-size businesses located in Asia and
South-East Asia, with an initial focus on Hong Kong, China and Malaysia. Our comprehensive range of services includes cross-border
business solutions, record management services, and accounting outsourcing services. Our cross border business services include,
among other services, tax planning, trust and wealth management, cross border listing advisory services and transaction services.
As part of the cross border business solutions, we have developed a package solution of services (“Package Solution”)
that can reduce business costs and improve revenues.
We
also operate a venture capital business through Greenpro Venture Capital Limited, an Anguilla corporation. Our venture capital
business is focused on (1) establishing a business incubator for start-up and high growth companies to support such companies
during critical growth periods, which includes education and support services, and (2) searching for investment opportunities
in selected start-up and high growth companies, which we expect can generate significant returns to the Company. We expect to
target companies located in Asia and South-East Asia including Hong Kong, Malaysia, China, Thailand and Singapore. We anticipate
our venture capital business will also engage in the purchase, acquisition and rental of commercial properties in the same Asia
and South-East Asia region.
To
support our venture capital business, we partnered with QSC Asia Sdn. Bhd., an education and training company that arranges seminars
and courses in Malaysia, to provide business, educational and support services. We operate our venture capital related education
and support services through our subsidiary, Greenpro Capital Village Sdn. Bhd. We have started arranging seminars called the
CEO & Business Owners Strategic Session (CBOSS) in Malaysia and Singapore for business owners who are interested in the following:
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Developing
business globally,
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Expanding
business with increased capital funds,
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Creating
a sustainable SME business model,
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Accelerating
the growth of the business, or
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Increasing
company cash flow significantly.
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The
objective of the CBOSS seminars is to educate the chief executive officers or business owners on how to acquire “smart capital”
and the considerations involved. The seminars include an introduction to the basic concepts of “smart capital,” “wealth
and value creation,” recommendation and planning and similar topics. We believe that the seminar will synergistically support
our venture capital business segment.
Our
Growth Strategy
Our
growth strategy is highly dependent on our ability to market our services effectively. We are focused on three primary marketing
strategies, which include offline marketing, online marketing and content marketing.
Offline
Marketing
Due
to the nature of our business where trust is a critical element in client engagement, we are focusing approximately 60% of our
time on our offline marketing activities and approximately 40% of our time on our online marketing activities. For offline marketing,
we believe physical presence in the market is a key to build trust from the public and targeted marketing.
Educational
Events & Seminars
Consistent
with this principal of physical engagement, we organize frequent and targeted events, such as workshops, industry conferences
and other investor education and social events to share our knowledge with prospective clients. We invite potential clients and
prospects through our collaborated partners and existing database to attend our events. At these events, we introduce our services
to see if any potential clients would like to engage in any of our services. These events are often organized in cooperation with
chambers of commerce, distinguished alumni associations and high-profile entrepreneurs.
Roadshow
Platform & Networking Events
For
our venture capital portfolio and our business solution services, our priority objective is to identify potential investments
with solid and sound businesses. Consistent with this objective, we participate in company roadshow events. These roadshow events
allow companies to showcase themselves and their potential for future development. From these events, we are able to promote and
source potential projects or companies that need our business solution services in their corporate development.
Word
of Mouth
Word
of mouth is one of the most effective marketing tools for our business. We intend to engage in nationwide marketing initiatives
to further raise our brand awareness while continuing to improve client satisfaction to strengthen our word of mouth referrals.
We intend to continue to focus on referrals as the major avenue of new client development. We also encourage our employees to
introduce or recommend new clients to us by providing incentive bonuses.
Online
Marketing
We
believe our public brand awareness will further contribute to our brand recognition and improve our performance. We also believe
the most cost effective way to gain awareness is by leveraging the use of the internet and various mobile social network applications.
Social
Network Marketing
Wechat
has been the mainstream mobile online marketing tool for companies in China. According to a 2017 Wechat User Behavior Report,
published by Tencent Penguin Intelligence as of the fourth quarter of 2016, Wechat had 889 million monthly active users worldwide.
The top two reasons for group chats through Wechat are corporate internal communications and professional networking. As a result
of the work-related features of Wechat, we believe that using Wechat can bolster our brand and networking opportunities.
Weibo
is a leading social media platform for people to create, distribute and discover Chinese-language content. Weibo combines the
means of public self-expression in real time with a powerful platform for social interaction, as well as content aggregation and
distribution. Weibo Corporation reported in their official website that in December 2016, Weibo had 313 million monthly active
users, which had increased from 236 million monthly active users in December 2015. Weibo serves a wide range of users including
ordinary citizens, celebrities and other public figures, as well as media outlets, businesses, government agencies, charities
and other organizations, making it a microcosm of Chinese society. For many people in China, Weibo allows them to be heard publicly
and exposed to the rich ideas, cultures and experiences of the broader world.
We
have an official company account in Wechat and Weibo, serving as contact platforms for potential clients to contact us. At the
same time, we continuously introduce basic products and services information, market research and updates to our members, as well
as publish articles and proprietary research reports on major business and finance to our accounts.
Search
Engine Optimization (SEO) & Search Engine Marketing
Search
Engine Optimization and Search Engine Marketing are current strategies we implement to enhance our online appearance in search
engines. We have recruited an internal SEO team to handle technical operations in order to improve our exposure by enhancing higher
rankings in key word searching.
Content
Marketing
Knowledge
sharing & publication
We
have a team of editors who prepare market research and updates to our members. We also publish articles and proprietary research
reports in major business and finance. These contents are the substance and tools to support our existing marketing channel and
activities.
Competitive
Advantages
Cross
Border Advantages
:
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With
our offices setup across the East Asia and South-East Asia regions, we have better information flow within those markets and
a better understanding of the needs in those markets, which allow us to provide services to our clients and fulfill their
needs in a better manner.
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We
have an advantage in sourcing better investment opportunities with our local teams who understand risk-opportunity in the
local industry.
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With
our offices throughout the regions we serve, we have better connectivity as we have more contact points reaching out to potential
local clients, in another way, achieving timely and effective communication.
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Multi-lingual
:
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Our
professional teams are multi nationals who add value to our operations. They are proficient in English, Chinese, Malay, Thai,
Cantonese Dialect, and other local dialects in the East Asia and South-East Asia regions. The multi-national teams allow us
to easily adapt and communicate with clients from all areas in the regions. Such strength is an added value as we are facing
clients from all over the East Asia and South-East Asia regions with different default languages during interaction.
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Such
capabilities enable us to produce efficient and effective communication with our clients.
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Company
Secretarial Services
:
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We
have professional and experienced teams established in Hong Kong, China and Malaysia specializing in corporate advisory services
and company secretarial services that range from advising local and overseas clients for company formation in Hong Kong, U.S.,
China and other overseas jurisdictions, maintaining of statutory records and filing statutory returns of respective clients
with local companies’ registry, applying for business licenses and preparing meeting minutes or resolutions.
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With
our offices and experienced teams in Hong Kong, China and Malaysia, we have better knowledge, skills and resources for servicing
our clients.
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Risk
Related to Our Business
Our
ability to implement our business strategy is subject to numerous risks and uncertainties that you should be aware of before making
an investment decision. As a technology company, we face many risks inherent in our business and our industry generally. You should
carefully consider all of the information set forth in this prospectus and, in particular, the information under the heading “Risk
Factors,” prior to making an investment in our common stock. These risks include, among others, the following:
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We
have business operations in Hong Kong, China and Malaysia and we may be negatively affected by any instability in the economic
and political development of any of the above region.
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We
have incurred operating losses since we began operations and may not be profitable in the future.
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The
Company’s independent registered public accounting firm, in their report on the Company’s December 31, 2017 audited
financial statements, raised substantial doubt about the Company’s ability to continue as a going concern.
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We
may be unable to gain any significant market acceptance for our services and establish a significant market presence to attract
customers under increasing competition.
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If
we fail to cost-effectively acquire new customers or retain our existing customers, our business could be materially adversely
affected.
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If
we fail to manage future growth effectively, our business could be materially adversely affected.
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Our
Corporate Information
We
were incorporated on July 19, 2013 in the State of Nevada. Our principal executive offices are located at Room 1701-1703, 17/F,
The Metropolis Tower, 10 Metropolis Drive, Hung Hom, Kowloon, Hong Kong. Our telephone number is +852 3111 7718. We maintain a
website at
www.greenprocapital.com.
The information contained on our website is not, and should not be interpreted
to be, a part of this prospectus.
THE
OFFERING
The
offering is being made on a “best efforts, minimum/maximum” basis. The offering is being made without a firm commitment
by the placement agent, who has no obligation or commitment to purchase any of our shares. The closing of the offering and delivery
of the shares is expected to occur no later than June 30, 2018. See “Plan of Distribution.” The placement agent must
sell the minimum number of shares offered (500,000 shares of common stock), if any are sold, and are only required to use their
best efforts to sell the shares offered. If the placement agents do not sell the minimum number of shares, the offering will be
terminated on June 30, 2018, unless extended by our board of directors until December 31, 2018.
Common
stock being offered
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Minimum:
500,000 shares
Maximum:
2,500,000 shares
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Shares
of common stock outstanding before this offering
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53,233,960
shares
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Shares
of common stock outstanding after this offering
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Minimum:
53,733,960 shares
Maximum:
55,733,960 shares
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Offering
price per share
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$6.00
per share
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Use
of proceeds
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Our
net proceeds from this offering, assuming the minimum number of shares of common stock offered (500,000 shares) is sold are
expected to be approximately $2,206,700, and assuming the maximum number of shares of common stock offered (2,500,000 shares)
is sold are expected to be approximately $13,426,700, each assuming a public offering price of $6.00. We intend to use the
net proceeds from this offering for the development of Financial Technology, China Service Centre Expansion and Worldwide
Business Expansion.
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Best
efforts
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The
placement agent is selling our common stock on a “best efforts” basis. Accordingly, the placement agent has no
obligation or commitment to purchase any common stock. The placement agent is not required to sell any specific number or
dollar amount of common stock but will use its best efforts to sell the common stock offered. We do not intend
to close this offering unless we sell at least the minimum number of shares of common stock, at the price per share set forth
on the cover page of this prospectus, to result in sufficient proceeds to list our common stock on the NASDAQ Capital Market.
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Offering
period
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The
common stock is being offered until June 30, 2018, unless extended by our board of directors for an additional six months
until December 31, 2018. If the minimum offering amount is not raised within such time period, all subscription funds from
the escrow account will be returned to investors promptly by noon of the next business day after the Termination Date without
interest or deduction of fees. The offering may close or terminate, as the case may be, on the earlier of (i) any time after
the minimum offering amount of our common stock is raised, or (ii) June 30, 2018, unless extended by our board of directors
until December 31, 2018, although we retain the right to terminate the offering prior to the expiration of such extension
period.
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Escrow
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Until
we sell at least 500,000 shares of common stock, all investor funds will be held in a non-interest bearing escrow account
at Continental Stock Transfer & Trust Company as agent, for the benefit of the investors. If we do not sell at least 500,000
shares of common stock by June 30, 2018, unless we determine to extend the offering, all funds will be promptly returned to
investors by noon of the next business day after the termination without interest or deduction. If we complete this offering,
net proceeds will be promptly delivered to us on the closing date. See “Plan of Distribution — Escrow Agent and
Deposit of Offering Proceeds.”
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NASDAQ
trading symbol
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“GRNQ”
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Risk
factors
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The
securities offered by this prospectus are speculative and involve a high degree of risk and investors purchasing securities
should not purchase the securities unless they can afford the loss of their entire investment. See “Risk Factors”
beginning on page 8.
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Lock-up
agreements
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See
“Plan of Distribution” for more information.
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The
number of shares of our common stock to be outstanding after this offering is based on the number of shares outstanding as of
April 27, 2018.
SUMMARY
FINANCIAL AND OTHER DATA
The
following tables set forth our summary historical financial data for the periods presented. The following summary financial data
for the years ended December 31, 2017 and 2016 are derived from our audited financial statements appearing elsewhere in this prospectus.
This
summary financial data should be read together with the historical financial statements and related notes to those statements,
as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are
included elsewhere in this prospectus.
The
pro forma as adjusted balance sheet data reflects the balance sheet data as of December 31, 2017, as adjusted to reflect our receipt
of the estimated net proceeds from our sale of the minimum offering amount (500,000 shares) and maximum offering amount (2,500,000
shares) in this offering at an assumed public offering price of $6.00 per share, which is set forth on the cover page of this
prospectus, after deducting the estimated placement agent commissions and estimated offering expenses payable by us.
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As
of December 31,
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As
of December 31
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2016
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2017
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Pro
Forma, as adjusted
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Actual
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Minimum
Offering
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Maximum
Offering
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(Audited)
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(Audited)
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(Unaudited)
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(Unaudited)
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Balance
Sheet Data:
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Current
Assets
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$
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1,596,156
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$
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1,853,878
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$
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4,060,578
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$
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15,280,578
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Other
Assets
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6,815,080
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9,160,429
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9,160,429
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9,160,429
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Total
Assets
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8,411,236
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11,014,307
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13,221,007
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24,441,007
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Current
Liabilities
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1,997,397
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3,924,079
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4,181,649
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5,211,929
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Total
Liabilities
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2,551,525
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5,766,919
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6,024,489
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7,054,769
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Total
Stockholders’ Equity
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$
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5,859,711
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$
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5,247,388
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$
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7,196,518
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$
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17,386,238
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Year
Ended
December 31,
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2017
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2016
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(Audited)
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(Audited)
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Statements
of Operations Data:
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Revenues
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$
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3,916,372
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$
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3,091,735
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Cost
and Expense
|
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Cost
of Revenues
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|
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(1,487,801
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)
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|
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(1,135,307
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)
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General
and Administrative Expenses
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(3,350,896
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)
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(1,924,293
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)
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Impairment
of goodwill and intangible assets
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(1,898,721
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)
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-
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Income
(Loss) From Operations
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(2,821,046
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)
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32,135
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Loss
before Income Tax
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(3,048,537
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)
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(32,207
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)
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Net
Loss
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(3,116,909
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)
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(39,666
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)
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Net
Loss Attributed to Common Stockholders of Greenpro Capital Corp.
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$
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(2,284,559
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)
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$
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(50,815
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)
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|
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Comprehensive
Income Loss
|
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$
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(2,212,940
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)
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$
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(61,837
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)
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|
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|
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Basic
and diluted loss per common share
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$
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(0.04
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)
|
|
$
|
(0.00
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)
|
Basic
and diluted loss per common share - pro forma – minimum offering 500,000
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|
$
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(0.04
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)
|
|
$
|
(0.00
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)
|
Basic
and diluted loss per common share - pro forma – maximum offering 2,500,000
|
|
$
|
(0.04
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)
|
|
$
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(0.00
|
)
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*
|
The
pro forma number of shares to be outstanding immediately after this offering as shown above is based on shares outstanding
as of December 31, 2017, on an as adjusted basis to give effect to the sale of the minimum and maximum number of shares of
common stock by us in this offering at the assumed public offering price of $6.00 per share, which is the set forth on the
cover page of this prospectus.
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RISK
FACTORS
You
should carefully consider the risks described below and elsewhere in this report, which could materially and adversely affect
our business, results of operations or financial condition. Our business faces significant risks and the risks described below
may not be the only risks we face. Additional risks not presently known to us or that we currently believe are immaterial may
materially affect our business, results of operations, or financial condition. If any of these risks occur, the trading price
of our common stock could decline and you may lose all or part of your investment.
Risks
Related to our Business
We
have a limited operating history that you can use to evaluate us, and the likelihood of our success must be considered in light
of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company.
We
were incorporated in Nevada in July 2013. For the year ended December 31, 2017 and 2016, we have generated $3,916,372 and $3,091,735,
respectively, in revenues and incurred net loss of $3,116,909 and $39,666, respectively. The likelihood of our success must be
considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small company
starting a new business enterprise and the highly competitive environment in which we will operate. We have a limited operating
history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability
and positive cash flow is dependent upon:
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ability to market our product and services;
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ability to generate revenues; and
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ability to raise the capital necessary to continue marketing and developing our product.
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We
are not currently profitable and may not become profitable.
As
of December 31, 2017, we had $1,162,394 cash on hand, our stockholder’s equity was $5,247,388. We have generated $3,916,372
in revenue in 2017 and have incurred operating loss of $2,821,046 and net loss of $3,116,909. We expect to incur losses and negative
operating cash flows for the foreseeable future, and we may not achieve profitability. We also expect to experience negative cash
flow for the foreseeable future as we fund our operating losses and capital expenditures. As a result, we will need to generate
significant revenues in order to achieve and maintain profitability. We may not be able to generate these revenues or achieve
profitability in the future. Our failure to achieve or maintain profitability could negatively impact the value of our business.
We
are dependent upon the proceeds of this offering to fund our business. If we do not sell enough shares in this offering to continue
operations, this could have a negative effect on the value of your common stock.
As
of December 31, 2017, we had $11,014,307 in assets and limited capital resources. In order to continue operating for the next
twelve months, in the event that we do not generate sufficient revenues, we must raise approximately $3,000,000 in gross proceeds
from this offering.
Unless
we begin to generate sufficient revenues to finance operations as a going concern, we may experience liquidity and solvency problems.
Such liquidity and solvency problems may force us to cease operations if additional financing is not available.
Also,
as a public company, we will incur professional and other fees in connection with our quarterly and annual reports and other periodic
filings with the SEC. Such costs can be substantial and we must generate enough revenue or raise money from offerings of securities
or loans in order to meet these costs and our SEC filing requirements. We are offering our securities to the public; however,
there is no guarantee that we will be able to sell the securities. And even if we sell the securities, there is no guarantee that
the proceeds will be sufficient to fund our planned operations. We anticipate a burn rate of approximately $250,000 per month.
At 10% of the minimum offering sold, our burn rate would be 1.2 months, if 25% of the minimum offering is sold, our burn rate
would be 3 months, if 50% of the minimum offering is sold, our burn rate would be 6 months, and if 100% of the minimum offering
is sold, our burn rate would be 12 months. At 10% of the maximum offering sold, our burn rate would be 6 months, if 25% of the
maximum offering is sold, our burn rate would be 15 months, if 50% of the maximum offering is sold, our burn rate would be 30
months, and if 100% of the maximum offering shares is sold, our burn rate would be 60 months.
We
may not be able to continue to operate as a going concern.
For
the year ended December 31, 2017, the Company incurred a net loss of $3,116,909 and used cash in operating activities of $442,711,
and at December 31, 2017, the Company had a working capital deficiency of $2,070,201. In addition, the Company’s independent
registered public accounting firm, in their report on the Company’s December 31, 2017 audited financial statements, raised
substantial doubt about the Company’s ability to continue as a going concern. 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.
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 stock holders, in the case of equity financing.
We
have identified material weaknesses in our internal control over financial reporting that, if not properly remediated, could result
in material misstatements in our financial statements in future periods.
Management
identified material weaknesses in our internal control over financial reporting as of December 31, 2017. See “Item 9A –
Controls and Procedures” of our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the Securities
and Exchange Commission on April 13, 2018. These material weaknesses resulted in the restatement of our consolidated financial
statements for the year ended December 31, 2016.
Although
we are undertaking steps to address these material weaknesses, the existence of a material weakness is an indication that there
is more than a remote likelihood that a material misstatement of our financial statements will not be prevented or detected in
the current or any future period. Remediation efforts are still in process and have not yet been completed. We cannot assure you
that the steps taken will remediate such weakness, nor can we be certain of whether additional actions will be required or the
costs of any such actions.
In
addition, we may in the future identify further material weaknesses in our internal control over financial reporting that we have
not discovered to date. Although we are engaged in remediation efforts with respect to the material weaknesses, the existence
of one or more material weaknesses could result in errors in our financial statements, and substantial costs and resources may
be required to rectify these or other internal control deficiencies. If we cannot produce reliable financial reports, investors
could lose confidence in our reported financial information, the market price of our common stock could decline significantly,
we may be unable to obtain additional financing to operate and expand our business, and our business and financial condition could
be harmed. We cannot assure you that we will be able to remediate these material weaknesses in a timely manner.
Our
operating results may prove unpredictable which could negatively affect our profit.
Our
operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which we have no control.
Factors that may cause our operating results to fluctuate significantly include: our inability to generate enough working capital
from future equity sales; the level of commercial acceptance by clients of our services; fluctuations in the demand for our service
the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations and infrastructure
and general economic conditions. If realized, any of these risks could have a material adverse effect on our business, financial
condition and operating results.
If
we are unable to gain any significant market acceptance for our service or establish a significant market presence, we may be
unable to generate sufficient revenue to continue our business.
Our
growth strategy is substantially dependent upon our ability to successfully market our service to prospective clients. However,
our planned services may not achieve significant acceptance. Such acceptance, if achieved, may not be sustained for any significant
period of time. Failure of our services to achieve or sustain market acceptance could have a material adverse effect on our business,
financial conditions and the results of our operations.
Management’s
ability to implement the business strategy may be slower than expected and we may be unable to generate a profit.
Our
business plans, including offering a cloud auditing system and consulting services, may not occur. Our growth strategy is subject
to significant risks which you should carefully consider before purchasing the shares we are offering.
Our
services may be slow to achieve profitability, or may not become profitable at all, which will result in losses. There can be
no assurance that we will succeed.
We
may be unable to enter into our intended markets successfully. The factors that could affect our growth strategy include our success
in (a) developing our business plan, (b) obtaining our clients, (c) obtaining adequate financing on acceptable terms, and (d)
adapting our internal controls and operating procedures to accommodate our future growth.
Our
systems, procedures and controls may not be adequate to support the expansion of our business operations. Significant growth will
place managerial demands on all aspects of our operations. Our future operating results will depend substantially upon our ability
to manage changing business conditions and to implement and improve our technical, administrative and financial controls and reporting
systems.
Competitors
may enter this sector with superior service which would affect our business adversely.
We
have identified a market opportunity for our business. We believe that barriers to entry are low to medium because of economies
of scale, cost advantage and brand identity. Potential competitors may enter this sector with superior services. This would have
an adverse effect upon our business and our results of operations. In addition, a high level of support is critical for the successful
marketing and recurring sales of our services. Despite having accumulated customers from the past four years, we may still need
to continue to improve our platform and software in order to assist potential customers in using our platform, and we also need
to provide effective support to future clients. If we are unable to increase customer support and improve our platform in the
face of increasing competition, with the increase in competition, our ability to sell our services to potential customers could
adversely affect our brand, which would harm our reputation.
Our
use of open source and third-party software could impose limitations on our ability to commercialize our services.
We
intend to incorporate open source software into our platform. Although we monitor our use of open source closely, the terms of
many open source licenses have not been interpreted by U.S. courts or jurisdictions elsewhere, and there is a risk that such licenses
could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our
services. We could also be subject to similar conditions or restrictions should there be any changes in the licensing terms of
the open source software incorporated into our products. In either event, we could be required to seek licenses from third parties
in order to continue our services in the event re-engineering cannot be accomplished on a timely or successful basis, any of which
could adversely affect our business, operating results and financial condition.
We
also intend to incorporate certain third-party technologies, including software programs, into our website and may need to utilize
additional third-party technologies in the future. However, licenses to relevant third-party technology may not continue to be
available to us on commercially reasonable terms, or at all. Therefore, we could face delays in releases of our platform until
equivalent technology can be identified, licensed or developed, and integrated into our current products. These delays, if they
occur, could materially adversely affect our business, operating results and financial condition. Any disruption in our access
to software programs or third-party technologies could result in significant delays in releases of our platform and could require
substantial effort to locate or develop a replacement program. If we decide in the future to incorporate into our products any
other software program licensed from a third party, and the use of such software program is necessary for the proper operation
of our appliances, then our loss of any such license would similarly adversely affect our ability to release our products in a
timely fashion.
The
security of our computer systems may be compromised and harm our business.
A
significant portion of our business operations is conducted through use of our computer network. Although we intend to implement
security systems and procedures to protect the confidential information stored on these computer systems, experienced computer
programmers and hackers may be able to penetrate our network security and misappropriate our confidential information or that
of third parties. As well, they may be able to create system disruptions, shutdowns or effect denial of service attacks. Computer
programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack
our networks or client computers, or otherwise exploit any security vulnerabilities, or that misappropriate and distribute confidential
information stored on these computer systems. Any of the foregoing could result in damage to our reputation and customer confidence
in the security of our products and services, and could require us to incur significant costs to eliminate or alleviate the problem.
Additionally, our ability to transact business may be affected. Such damage, expenditures and business interruption could seriously
impact our business, financial condition and results of operations.
Adverse
developments in our existing areas of operation could adversely impact our results of operations, cash flows and financial condition.
Our
operations are focused on utilizing our sales efforts which are principally located in South-East Asia. As a result, our results
of operations, cash flows and financial condition depend upon the demand for our services in these regions. Due to the lack of
broad diversification in industry type and geographic location, adverse developments in our current segment of the midstream industry,
or our existing areas of operation, could have a significantly greater impact on our results of operations, cash flows and financial
condition than if our operations were more diversified.
We
are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging
growth companies will make our common stock less attractive to investors.
We
are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies that are not “emerging growth companies”
including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not
previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions.
If some investors find our common stock less attractive as a result, there may be a less active trading market for our common
stock and our stock price may be more volatile.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
An “emerging growth company” can therefore delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We are choosing to follow the extended transition period, and as a result, we will
delay adoption of certain new or revised accounting standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies.
Risks
Related to Doing Business in East Asia and South-East Asia
Our
contractual arrangements may not be as effective in providing control over the variable interest entities as direct ownership.
We
rely on contractual arrangements with our variable interest entities to hold part of our assets in Hong Kong. For a description
of these contractual arrangements, see “Acquisition and Reorganization History - VIE Structure and Arrangements.”
These contractual arrangements may not be as effective as direct ownership in providing us with control over our variable interest
entities.
If
we had direct ownership of the variable interest entities, we would be able to exercise our rights as an equity holder directly
to effect changes in the boards of directors of those entities, which could effect changes at the management and operational level.
Under our contractual arrangements, we may not be able to directly change the members of the boards of directors of these entities
and would have to rely on the variable interest entities and the variable interest entity equity holders to perform their obligations
in order to exercise our control over the variable interest entities. The variable interest entity equity holders may have conflicts
of interest with us or our shareholders, and they may not act in the best interests of our company or may not perform their obligations
under these contracts. For example, our variable interest entities and their respective equity holders could breach their contractual
arrangements with us by, among other things, failing to conduct their operations, including maintaining our websites and using
our domain names and trademarks which the relevant variable interest entities have exclusive rights to use, in an acceptable manner
or taking other actions that are detrimental to our interests. Pursuant to the call option, we may replace the equity holders
of the variable interest entities at any time pursuant to the contractual arrangements. Consequently, the contractual arrangements
may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership.
Our
business is subject to the risks of international operations.
Substantially
all of our business operations are conducted in South-East Asia. Accordingly, our results of operations, financial condition and
prospects are subject to a significant degree to economic, political and legal developments in the Asian countries we intend to
develop business. Following the closing of our initial public offering, we will derive a significant portion of our revenue and
earnings from the operation in Hong Kong, our principal business place and also in Malaysia and other South-East Asian countries.
Operating in multiple foreign countries involves substantial risk. For example, our business activities subject us to a number
of laws and regulations, such as anti-corruption laws, tax laws, foreign exchange controls and cash repatriation restrictions,
data privacy and security requirements, labor laws, intellectual property laws, privacy laws, and anti-competition regulations.
As we expand into additional countries, the complexity inherent in complying with these laws and regulations increases, making
compliance more difficult and costly and driving up the costs of doing business in foreign jurisdictions. Any failure to comply
with foreign laws and regulations could subject us to fines and penalties, make it more difficult or impossible to do business
in that country and harm our reputation.
We
may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the foreign corrupt
practices act could have a material adverse effect on our business.
We
are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments
to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the
purpose of obtaining or retaining business. We will have operations, agreements with third parties and make sales in South-East
Asia, which may experience corruption. Our proposed activities in Asia create the risk of unauthorized payments or offers of payments
by one of the employees, consultants, or sales agents of our Company, because these parties are not always subject to our control.
It will be our policy to implement safeguards to discourage these practices by our employees. Also, our existing safeguards and
any future improvements may prove to be less than effective, and the employees, consultants, or sales agents of our Company may
engage in conduct for which we might be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions,
and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies
in which we invest or that we acquire.
You
may have difficulty enforcing judgments against us.
We
are a Nevada corporation and most of our assets are and will be located outside of the United States. Almost all of our operations
will be conducted in Hong Kong. In addition, our officers and directors are nationals and residents of a country other than the
United States. All of their assets are located outside the United States. As a result, it may be difficult for you to effect service
of process within the United States upon them. It may also be difficult for you to enforce in U.S. courts judgments on the civil
liability provisions of the U.S. federal securities laws against us and our officer and director, since he is not a resident in
the United States. In addition, there is uncertainty as to whether the courts of Hong Kong or other Asian countries would recognize
or enforce judgments of U.S. courts.
Payment
of dividends is subject to restrictions under Nevada, Hong Kong, Malaysia and the PRC laws.
Under
Nevada law, we may only pay dividends subject to our ability to service our debts as they become due and provided that our assets
will exceed our liabilities after the dividend. Our ability to pay dividends will therefore depend on our ability to generate
sufficient profits. Under the Hong Kong Companies Ordinance, we are permitted to make payments of dividends from distributable
profits (that is, accumulated realized profits less its accumulated realized losses). Under the Laws of Malaysia, we may only
make a distribution to the shareholders out of our profits available if we are solvent. The Company is regarded as solvent if
the Company is able to pay its debts as and when the debts become due within twelve months immediately after the distribution
is made. In addition, because of the various rules applicable to our operations in China and the regulations on foreign investments
as well as the applicable tax law, we may be subject to further limitations on our ability to declare and pay dividends to our
shareholders.
We
can give no assurance that we will declare dividends of any amounts, at any rate or at all in the future. The declaration of future
dividends, if any, will be at the discretion of our board of directors and will depend upon our future operations and earnings,
capital requirements, general financial conditions, legal and contractual restrictions and other factors that our board of directors
may deem relevant.
We
face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be able
to conduct in the PRC and the profitability of such business.
The
PRC’s economy is in a transition from a planned economy to a market oriented economy subject to five-year and annual plans
adopted by the central government that set national economic development goals. Policies of the PRC government can have significant
effects on the economic conditions of the PRC. The PRC government has confirmed that economic development will follow the model
of a market economy. Under this direction, we believe that the PRC will continue to strengthen its economic and trading relationships
with foreign countries and business development in the PRC will follow market forces. While we believe that this trend will continue,
we cannot assure you that this will be the case. A change in policies by the PRC government could adversely affect our interests
by, among other factors: changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency
conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises. Although the PRC government
has been pursuing economic reform policies for more than two decades, we cannot assure you that the government will continue to
pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership,
social or political disruption, or other circumstances affecting the PRC’s political, economic and social environment.
Introduction
of new laws or changes to existing laws by the PRC government may adversely affect our business.
The
PRC legal system is a codified legal system made up of written laws, regulations, circulars, administrative directives and internal
guidelines. Unlike common law jurisdictions like the U.S., decided cases (which may be taken as reference) do not form part of
the legal structure of the PRC and thus have no binding effect on subsequent cases with similar issues and fact patterns. Furthermore,
in line with its transformation from a centrally-planned economy to a more free market-oriented economy, the PRC government is
still in the process of developing a comprehensive set of laws and regulations. As the legal system in the PRC is still evolving,
laws and regulations or the interpretation of the same may be subject to further changes. For example, the PRC government may
impose restrictions on the amount of service fees that may be payable by municipal governments to wastewater and sludge treatment
service providers. Also, the PRC central and municipal governments may impose more stringent environmental regulations which would
affect our ability to comply with, or our costs to comply with, such regulations. Such changes, if implemented, may adversely
affect our business operations and may reduce our profitability
The
Hong Kong economy may be vulnerable to slowdown in Chinese activity and world trade.
Since
Hong Kong is now closely linked to China with respect to economic and political development, Hong Kong economic and political
development will be more likely to be affected by China’s development. As there are more and more mainland Chinese companies
listed on The Hong Kong Stock Exchange and industries in general are becoming delocalized to mainland China, the Hong Kong stock
market and local economy will become more vulnerable to the economic development in the mainland China. If the economic development
in China becomes unstable, the Hong Kong economy will be negatively affected. Besides, the Hong Kong economy is externally oriented
and highly dependent on trade with the rest of the world. Our business may be subject to the cyclical effect of the economic development
in the world.
We
face the risk that changes in the world economy and political developments in Malaysia may adversely affect our business.
In
recent years, there have been political instabilities in Malaysian government which may reduce investors’ confidence, result
in reduction in foreign direct investment and weigh on consumer and business sentiment, depressing growth. In addition, the Malaysian
economy is reliant on external demand. Any possible worsening global demand is likely to hinder the export development and any
economic weakness may possibly lead to market intervention and the government may impose capital controls. Under these circumstances,
our business operation may be adversely affected.
Risks
Related to this Offering
Prior
to this offering, we had a limited public market for our shares of common stock and you may not be able to resell our shares at
or above the price you paid, or at all.
Prior
to this offering, there was a limited public market for our common stock in the OTC Market. We cannot assure you that an active
public market for our common stock will develop or that the market price of our shares will not decline below the public offering
price. The public offering price of our shares may not be indicative of prices that will prevail in the trading market following
the offering.
Together,
our Chief Executive Officer, Mr. Lee Chong Kuang, and our Chief Financial Officer, Mr. Loke Che Chan Gilbert, own a large percentage
of our outstanding stock and could significantly influence the outcome of our corporate matters.
Mr.
Lee Chong Kuang, our CEO, beneficially owns 37.76% of our outstanding shares of common stock, and Mr. Loke Che Chan Gilbert, our
CFO, beneficially owns 34.64% of our outstanding shares of common stock. As a result, Messrs. Lee and Loke are able to exercise
significant influence over all matters that require us to obtain shareholder approval, including the election of directors to
our board and approval of significant corporate transactions that we may consider, such as a merger or other sale of our company
or its assets. This concentration of ownership in our shares by executive officers will limit the other shareholders’ ability
to influence corporate matters and may have the effect of delaying or preventing a third party from acquiring control over us.
Future
sales of substantial amounts of the shares of common stock by existing shareholders could adversely affect the price of our common
stock.
If
our existing shareholders sell substantial amounts of the shares following this offering, the market price of our common stock
could fall. Such sales by our existing shareholders might make it more difficult for us to issue new equity or equity-related
securities in the future at a time and place we deem appropriate. The shares of common stock offered in this offering will be
eligible for immediate resale in the public market without restrictions. All remaining shares, which are currently held by our
existing shareholders, may be sold in the public market in the future subject to the lock-up agreements and the restrictions contained
in Rule 144 under the Securities Act. If any existing shareholders sell a substantial amount of shares, the prevailing market
price for our shares could be adversely affected.
The
market price of our shares is likely to be highly volatile and subject to wide fluctuations in response to factors such as:
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regarding gains or losses of key personnel by us or our competitors;
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announcements
of competitive developments, acquisitions or strategic alliances in our industry by us or our competitors;
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in earnings estimates or buy/sell recommendations by financial analysts;
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litigation;
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market conditions or other developments affecting us or our industry; and
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operating and stock price performance of other companies, other industries and other events or factors beyond our control.
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addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related
to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market
price of the shares.
In
the event that our shares are traded, they may trade under $5.00 per share and thus will be a penny stock. Trading in penny stocks
has many restrictions and these restrictions could severely affect the price and liquidity of our shares.
In
the event that our shares are traded, and our stock trades below $5.00 per share, our stock would be known as a “penny stock”,
which is subject to various regulations involving disclosures to be given to you prior to the purchase of any penny stock. The
U.S. Securities and Exchange Commission (the “SEC”) has adopted regulations which generally define a “penny
stock” to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Depending
on market fluctuations, our common stock could be considered to be a “penny stock”. A penny stock is subject to rules
that impose additional sales practice requirements on broker/dealers who sell these securities to persons other than established
Members and accredited investors. For transactions covered by these rules, the broker/dealer must make a special suitability determination
for the purchase of these securities. In addition, he must receive the purchaser’s written consent to the transaction prior
to the purchase. He must also provide certain written disclosures to the purchaser. Consequently, the “penny stock”
rules may restrict the ability of broker/dealers to sell our securities, and may negatively affect the ability of holders of shares
of our common stock to resell them. These disclosures require you to acknowledge that you understand the risks associated with
buying penny stocks and that you can absorb the loss of your entire investment. Penny stocks are low priced securities that do
not have a very high trading volume. Consequently, the price of the stock is often volatile and you may not be able to buy or
sell the stock when you want to.
We
do not anticipate paying cash dividends on our common stock in the foreseeable future.
We
do not anticipate paying cash dividends in the foreseeable future. Presently, we intend to retain all of our earnings, if any,
to finance development and expansion of our business. Consequently, your only opportunity to achieve a positive return on your
investment in us will be if the market price of our common stock appreciates.
We
will have discretion in applying a portion of the net proceeds of this offering and may not use these proceeds in ways that will
enhance the market value of our common stock.
Our
management will have considerable discretion in the application of the proceeds received by us from this offering. Such proceeds
may be used to development of Financial Technology, China Service Centre Expansion and Worldwide Business Expansion and for working
capital and general corporate purposes. You will not have the opportunity, as part of your investment decision, to assess whether
the proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net
proceeds of this offering. The net proceeds may be used for corporate purposes that do not improve our profitability or increase
our common stock price. The net proceeds from this offering may also be placed in investments that do not produce income or that
lose value. Future issuances of capital stock may depress the trading price of our common stock. Any issuance of shares of our
common stock after this offering could dilute the interests of our existing stockholders and could substantially decrease the
trading price of our common stock. We may issue additional shares of common stock in the future for a number of reasons, including
to finance our operations and business strategy (including in connection with acquisitions, strategic collaborations or other
transactions).
Sales
of a substantial number of shares of our common stock in the public market could depress the market price of our common stock,
and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future
sales of our common stock or other equity-related securities would have on the market price of our common stock.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements
in this prospectus that are not descriptions of historical facts are forward-looking statements that are based on management’s
current expectations and are subject to risks and uncertainties that could negatively affect our business, operating results,
financial condition and stock price. We have attempted to identify forward-looking statements by terminology including “anticipates,”
“believes,” “can,” “continue,” “could,” “estimates,” “expects,”
“intends,” “may,” “plans,” “potential,” “predicts,” “should,”
or “will” or the negative of these terms or other comparable terminology.
We
may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. We operate in a very
competitive and rapidly changing environment. It is not possible for our management to predict all risks, nor can we assess the
impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to
differ materially from those contained in any forward-looking statements we may make. Accordingly, you should not place undue
reliance on our forward-looking statements. We have included important factors in the cautionary statements included in this prospectus,
particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially
from the forward-looking statements that we make.
You
should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration
statement of which this prospectus is a part completely and with the understanding that our actual future results may be materially
different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements.
We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any
such statement is based, except as required by law.
USE
OF PROCEEDS
After
deducting the estimated placement agent commissions and estimated offering expenses payable by us, we expect to receive net proceeds
of $2,206,700 from this offering, if the minimum offering amount is sold, or $13,426,700, if the maximum offering amount is sold.
We anticipate that the proceeds of a minimum and a maximum offering would be applied approximately as follows:
MINIMUM
OFFERING (500,000 Shares)
USE
OF PROCEEDS
|
|
AMOUNT(US$)
|
|
Development
of Financial Technology
|
|
$
|
400,000
|
|
|
|
|
|
|
China
Service Centre Expansion
|
|
|
1,500,000
|
|
|
|
|
|
|
Worldwide
Wealth Wisdom Development
|
|
|
306,700
|
|
|
|
|
|
|
Greenpro
Synergy Network Expansion
|
|
|
-
|
|
|
|
|
|
|
Development
of Hong Kong Securities and Futures Commission Regulated Activity Type 1 – Dealing in Securities and Type 6 –
Advising on Corporate Finance
|
|
|
-
|
|
|
|
|
|
|
Placement
Agent Commissions
|
|
|
195,000
|
|
|
|
|
|
|
Offering
Expense
|
|
|
598,300
|
|
|
|
|
|
|
Total
|
|
$
|
3,000,000
|
|
MAXIMUM
OFFERING (2,500,000 Shares)
USE
OF PROCEEDS
|
|
AMOUNT(US$)
|
|
Development
of Financial Technology
|
|
$
|
1,500,000
|
|
|
|
|
|
|
China
Service Centre Expansion
|
|
|
3,000,000
|
|
|
|
|
|
|
Worldwide
Wealth Wisdom Development
|
|
|
2,800,000
|
|
|
|
|
|
|
Greenpro
Synergy Network Expansion
|
|
|
626,700
|
|
|
|
|
|
|
Development
of Hong Kong Securities and Futures Commission Regulated Activity Type 1 – Dealing in Securities and Type 6 –
Advising on Corporate Finance
|
|
|
5,500,000
|
|
|
|
|
|
|
Placement
Agent Commissions
|
|
|
975,000
|
|
|
|
|
|
|
Offering
Expense
|
|
|
598,300
|
|
|
|
|
|
|
Total
|
|
$
|
15,000,000
|
|
The
amount and timing of these expenditures will vary depending on a number of factors, including the amount of cash generated by
our operations, competitive and technological developments, and the rate of growth, if any, of our business.
Although
we may use a portion of the proceeds for the acquisition of, or investment in, companies, technologies, products or assets that
complement our business, we have no present understandings, commitments or agreements to enter into any acquisitions or make any
investments. We cannot assure you that we will make any acquisitions or investments in the future.
CAPITALIZATION
The
following table sets forth our capitalization as of December 31, 2017:
|
●
|
On
an actual basis; and
|
|
|
|
|
●
|
On
a pro forma, as adjusted basis to give effect to the sale of the minimum and maximum number of shares of common stock by us
in this offering at the assumed public offering price of $6.00 per share, which is set forth on the cover page of this prospectus,
and after deducting the estimated placement agent commissions and estimated offering expenses payable by us.
|
You
should read this table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results
of Operations” and the financial statements and related notes included elsewhere in this prospectus.
MINIMUM
OFFERING (500,000 Shares)
|
|
December
31, 2017
|
|
|
|
Actual
|
|
|
Pro
forma
|
|
|
|
(audited)
|
|
|
(unaudited)
|
|
Assets:
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
$
|
1,853,878
|
|
|
$
|
4,060,578
|
|
Other
Assets
|
|
|
9,160,429
|
|
|
|
9,160,429
|
|
Total
Assets
|
|
$
|
11,014,307
|
|
|
$
|
13,221,007
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
$
|
3,924,079
|
|
|
$
|
4,181,649
|
|
Other
Liabilities
|
|
|
1,842,840
|
|
|
|
1,842,840
|
|
Total
Liabilities
|
|
|
5,766,919
|
|
|
|
6,024,489
|
|
Stockholder’s
Equity:
|
|
|
|
|
|
|
|
|
Common
stock, $0.0001 par value; 500,000,000 shares authorized; 53,233,960 shares issued and outstanding as of December 31, 2017
actual; 500,000,000 shares authorized, 53,733,960 shares issued and outstanding, pro forma (1)
|
|
|
5,323
|
|
|
|
5,373
|
|
Additional
paid-in capital
|
|
|
8,465,294
|
|
|
|
10,671,944
|
|
Accumulated
other comprehensive(loss) income
|
|
|
(40,199
|
)
|
|
|
(40,199
|
)
|
Accumulated
deficit
|
|
|
(3,266,313
|
)
|
|
|
(3,523,883
|
)
|
Non-controlling
interest
|
|
|
83,283
|
|
|
|
83,283
|
|
Total
stockholders’ equity
|
|
|
5,247,388
|
|
|
|
7,196,518
|
|
Total
Liabilities and Stockholders’ Equity
|
|
$
|
11,014,307
|
|
|
$
|
13,221,007
|
|
(1)
The pro forma number of shares to be outstanding immediately after this offering as shown above is based on shares outstanding
as of December 31, 2017, assumes the minimum offering amount (500,000 shares) has been sold assuming a public offering price $6.00,
which is set forth on the cover page of this prospectus, and after deducting the estimated placement agent commissions and estimated
offering expenses payable by us.
MAXIMUM
OFFERING (2,500,000 Shares)
|
|
December
31, 2017
|
|
|
|
Actual
|
|
|
Pro
forma
|
|
|
|
(audited)
|
|
|
(unaudited)
|
|
Assets:
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
$
|
1,853,878
|
|
|
$
|
15,280,578
|
|
Other
Assets
|
|
|
9,160,429
|
|
|
|
9,160,429
|
|
Total
Assets
|
|
$
|
11,014,307
|
|
|
$
|
24,441,007
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
$
|
3,924,079
|
|
|
$
|
5,211,929
|
|
Other
Liabilities
|
|
|
1,842,840
|
|
|
|
1,842,840
|
|
Total
Liabilities
|
|
|
5,766,919
|
|
|
|
7,054,769
|
|
Stockholder’s
Equity:
|
|
|
|
|
|
|
|
|
Common
stock, $0.0001 par value; 500,000,000 shares authorized; 53,233,960 shares issued and outstanding as of December 31, 2017
actual; 500,000,000 shares authorized, 55,733,960 shares issued and outstanding, pro forma (1)
|
|
|
5,323
|
|
|
|
5,573
|
|
Additional
paid-in capital
|
|
|
8,465,294
|
|
|
|
21,891,744
|
|
Accumulated
other comprehensive(loss) income
|
|
|
(40,199
|
)
|
|
|
(40,199
|
)
|
Accumulated
deficit
|
|
|
(3,266,313
|
)
|
|
|
(4,554,163
|
)
|
Non-controlling
interest
|
|
|
83,283
|
|
|
|
83,283
|
|
Total
stockholders’ equity
|
|
|
5,247,388
|
|
|
|
17,386,238
|
|
Total
Liabilities and Stockholders’ Equity
|
|
$
|
11,014,307
|
|
|
$
|
24,441,007
|
|
(1)
|
The
pro forma number of shares to be outstanding immediately after this offering as shown above is based on shares outstanding
as of December 31, 2017, assumes the maximum offering amount (2,500,000 shares) has been sold assuming a public offering price
of $6.00 which is set forth on the cover page of this prospectus, and after deducting the estimated placement agent commissions
and estimated offering expenses payable by us.
|
DILUTION
If
you invest in our common stock, your interest will be diluted immediately to the extent of the difference between the public offering
price per share you will pay in this offering and the pro forma as adjusted net tangible book value per share of our common stock
after this offering. Our net tangible book value as of December 31, 2017 was $3,783,870, or $0.07 per share of common stock. Our
pro forma net tangible book value per share set forth below represents our total tangible assets less total liabilities, divided
by the number of shares of our common stock outstanding.
If
the minimum offering amount is sold at an assumed public offering price of $6.00 per share, which is set forth on the cover page
of this prospectus, after deducting the estimated placement agent commissions and offering expenses payable by us, the pro forma
as adjusted net tangible book value as of December 31, 2017 would have been $5,733,000, or $0.11 per share. This represents an
immediate increase in net tangible book value to existing shareholders of $0.04 per share. The public offering price per share
will significantly exceed the net tangible book value per share. Accordingly, new investors who purchase shares of common stock
in this offering will suffer an immediate dilution of their investment of $5.89 per share.
The
following table illustrates this per share dilution to the new investors assuming the minimum offering amount is sold:
Assumed
public offering price per share
|
|
|
|
|
|
$
|
6.00
|
|
|
|
|
|
|
|
|
|
|
Net
tangible book value per share as of December 31, 2017
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
in net tangible book value per share attributable to the offering
|
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro
forma net tangible book value per share as of after giving effect to the offering
|
|
|
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
Dilution
per share to new investors
|
|
|
|
|
|
$
|
5.89
|
|
A
$1.00 increase in the assumed public offering price of $6.00 per share, which is set forth on the cover page of this prospectus,
would increase the pro forma net tangible book value by $467,500, the pro forma net tangible book value per share after this offering
by $0.01 per share and the dilution in pro forma net tangible book value per share to investors in this offering by $0.99 per
share, assuming that all of the shares offered by us, as set forth on the cover page of this prospectus, remains the same and
after deducting the estimated offering expenses payable by us.
If
the maximum offering amount is sold at an assumed public offering price of $6.00 per share, which is set forth on the cover page
of this prospectus, after deducting the estimated placement agent commissions and offering expenses payable by us, the pro forma
as adjusted net tangible book value as of December 31, 2017 would have been $15,922,720, or $0.29 per share. This represents an
immediate increase in net tangible book value to existing shareholders of $0.22 per share. The public offering price per share
will significantly exceed the net tangible book value per share. Accordingly, new investors who purchase shares of common stock
in this offering will suffer an immediate dilution of their investment of $5.71 per share.
The
following table illustrates this per share dilution to the new investors assuming the maximum offering amount is sold:
Assumed
public offering price per share
|
|
|
|
|
|
$
|
6.00
|
|
|
|
|
|
|
|
|
|
|
Net
tangible book value per share as of December 31, 2017
|
|
$
|
0.07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase
in net tangible book value per share attributable to the offering
|
|
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro
forma net tangible book value per share as of after giving effect to the offering
|
|
|
|
|
|
$
|
0.29
|
|
|
|
|
|
|
|
|
|
|
Dilution
per share to new investors
|
|
|
|
|
|
$
|
5.71
|
|
A
$1.00 increase in the assumed public offering price of $6.00 per share, which is set forth on the cover page of this prospectus,
would increase the pro forma net tangible book value by $2,337,500, the pro forma net tangible book value per share after this
offering by $0.04 per share and the dilution in pro forma net tangible book value per share to investors in this offering by $0.96
per share, assuming that all of the shares offered by us, as set forth on the cover page of this prospectus, remains the same
and after deducting the estimated offering expenses payable by us.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our
common stock is currently quoted on the OTCQB under the trading symbol “GRNQ.” Our common stock did not trade prior
to July 9, 2015.
Trading
in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that
may have little to do with a company’s operations or business prospects. We cannot assure you that there will be a market
for our common stock in the future.
For
the periods indicated, the following table sets forth the high and low bid prices per share of common stock based on inter-dealer
prices, without retail mark-up, mark-down or commission and may not represent actual transactions.
Fiscal
Year 2018
|
|
High
Bid
|
|
|
Low
Bid
|
|
First
Quarter
|
|
$
|
6.00
|
|
|
$
|
6.00
|
|
Second
Quarter (through April 27, 2018)
|
|
$
|
10.00
|
|
|
$
|
6.00
|
|
Third
Quarter
|
|
$
|
-
|
|
|
$
|
-
|
|
Fourth
Quarter
|
|
$
|
-
|
|
|
$
|
-
|
|
Fiscal
Year 2017
|
|
High
Bid
|
|
|
Low
Bid
|
|
First
Quarter
|
|
$
|
5.70
|
|
|
$
|
5.70
|
|
Second
Quarter
|
|
$
|
5.70
|
|
|
$
|
5.70
|
|
Third
Quarter
|
|
$
|
6.50
|
|
|
$
|
5.70
|
|
Fourth
Quarter
|
|
$
|
7.00
|
|
|
$
|
5.10
|
|
Fiscal
Year 2016
|
|
High
Bid
|
|
|
Low
Bid
|
|
First
Quarter
|
|
$
|
5.25
|
|
|
$
|
5.20
|
|
Second
Quarter
|
|
$
|
5.25
|
|
|
$
|
5.20
|
|
Third
Quarter
|
|
$
|
5.70
|
|
|
$
|
5.20
|
|
Fourth
Quarter
|
|
$
|
5.70
|
|
|
$
|
5.70
|
|
Holders
As
of April 27, 2018, we had 53,233,960 shares of our common stock issued and outstanding. There were approximately 320 record holders
of our common stock. Such number does not include any shareholders holding shares in nominee or “street name.”
Dividend
Policy
We
have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the
foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our board of directors
and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed
relevant by the board of directors. There are no contractual restrictions on our ability to declare or pay dividends.
Equity
Compensation Plan Information
We
have not adopted an equity compensation plan. There are no securities that have been issued outside of such a plan.
EXCHANGE
RATE INFORMATION
Substantially
all of our business operations are conducted in Asia and South-East Asia. We will derive a significant portion of our revenue
and earnings from the operation in Hong Kong, our principal business place and also in Malaysia and other South-East Asian countries.
Our reporting currency is the United States Dollars (“US$”) and the audited financial statements have been expressed
in US$. Our operating subsidiaries maintain their books and records in a local currency, Malaysian Ringgit (“MYR”),
Renminbi (“RMB”), and Hong Kong Dollars (“HK$”), which is also the respective functional currencies for
each subsidiary as they are the primary currency of the economic environment in which each subsidiary operates.
In
general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ 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 foreign subsidiary are recorded
as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. No representation
is made that the MYR, RMB and HKD amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
Assets
and liabilities are translated at the exchange rates as of the balance sheet date.
Balance
sheet items, except for equity accounts
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
MYR:USD
|
|
|
4.05
|
|
|
|
4.48
|
|
RMB:USD
|
|
|
6.51
|
|
|
|
6.95
|
|
HKD:USD
|
|
|
7.75
|
|
|
|
7.75
|
|
Items
in the statements of operations and comprehensive loss, and statements of cash flows are translated at the average exchange rate
of the period.
|
|
Year
ended
|
|
|
|
December
31,
|
|
|
|
2017
|
|
|
2016
|
|
MYR:USD
|
|
|
4.28
|
|
|
|
4.14
|
|
RMB:USD
|
|
|
6.74
|
|
|
|
6.66
|
|
HKD:USD
|
|
|
7.75
|
|
|
|
7.75
|
|
SELECTED
HISTORICAL FINANCIAL AND OPERATING DATA
The
following table presents our selected historical financial data for the periods presented and should be read in conjunction with
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statement
and notes thereto included elsewhere in this prospectus.
The
following selected consolidated financial and operating data for the fiscal years ended December 31, 2017 and 2016, and the consolidated
balance sheet data as of December 31, 2017 and 2016, have been derived from our consolidated financial statements included elsewhere
in this prospectus.
|
|
As
of December 31,
|
|
|
As
of December, 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(Audited)
|
|
|
(As
Restated)
|
|
Balance
Sheet Data:
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
$
|
1,853,878
|
|
|
$
|
1,596,156
|
|
Other
Assets
|
|
|
9,160,429
|
|
|
|
6,815,080
|
|
Total
Assets
|
|
|
11,014,307
|
|
|
|
8,411,236
|
|
Current
Liabilities
|
|
|
3,924,079
|
|
|
|
1,997,397
|
|
Total
Liabilities
|
|
|
5,766,919
|
|
|
|
2,551,525
|
|
Total
Stockholders’ Equity
|
|
$
|
5,247,388
|
|
|
$
|
5,859,711
|
|
|
|
Year
Ended
December
31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(Audited)
|
|
|
(As
Restated)
|
|
Statements
of Operations Data:
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
3,916,372
|
|
|
$
|
3,091,735
|
|
|
|
|
|
|
|
|
|
|
Cost
and Expense
|
|
|
|
|
|
|
|
|
Cost
of Revenues
|
|
|
(1,487,801
|
)
|
|
|
(1,135,307
|
)
|
General
and Administrative Expenses
|
|
|
(3,350,896
|
)
|
|
|
(1,924,293
|
)
|
Impairment
of goodwill and intangible assets
|
|
|
(1,898,721
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Income
(Loss) From Operations
|
|
|
(2,821,046
|
)
|
|
|
32,135
|
|
|
|
|
|
|
|
|
|
|
Loss
before Income Tax
|
|
$
|
(3,048,537
|
)
|
|
$
|
(32,207
|
)
|
|
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(3,116,909
|
)
|
|
$
|
(39,666
|
)
|
|
|
|
|
|
|
|
|
|
Net
Loss Attributed to Common Stockholders of Greenpro Capital Corp.
|
|
$
|
(2,284,559
|
)
|
|
$
|
(50,815
|
)
|
|
|
|
|
|
|
|
|
|
Comprehensive
Loss
|
|
$
|
(2,212,940
|
)
|
|
$
|
(61,837
|
)
|
|
|
|
|
|
|
|
|
|
Basic
and diluted loss per common share
|
|
$
|
(0.04
|
)
|
|
$
|
(0.00
|
)
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The
following discussion of our financial condition and results of operations should be read in conjunction with our audited financial
statements and the related notes thereto and other financial information appearing elsewhere in this prospectus. Some of the information
contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our
plans and strategy for our business and related financing, includes forward looking statements that involve risks, uncertainties
and assumptions. As a result of many factors, including those factors set forth in the “Risk Factors” section of this
prospectus, our actual results could differ materially from the results described in or implied by the forward-looking statements
contained in this prospectus.
Company
Overview
Greenpro
Capital Corp. (the “Company” or “Greenpro”), was incorporated in the State of Nevada on July 19, 2013.
We provide cross-border business solutions and accounting outsourcing services to small and medium-size businesses located in
Asia and South-East Asia, with an initial focus on Hong Kong, Malaysia and China. Greenpro provides a range of services as a package
solution (the “Package Solution”) to our clients and we believe that our clients can reduce their business costs and
improve their revenues.
In
addition to our business solution services, we also operate a venture capital business through Greenpro Venture Capital Limited,
an Anguilla corporation. One of our venture capital business segments is focused on (1) establishing a business incubator for
start-up and high growth companies to support such companies during critical growth periods, which will include education and
support services, and (2) searching the investment opportunities in selected start-up and high growth companies, which may generate
significant returns to the Company. Our venture capital business is focused on companies located in Asia and South-East Asia including
Hong Kong, Malaysia, China, Thailand and Singapore. Another one of our venture capital business segments is focused on rental
activities of commercial properties and the sale of investment properties.
Results
of Operations
During
the years ended December 31, 2017 and 2016, we operated in three regions: Hong Kong, Malaysia and China. We derived revenue from
rental activities of our commercial properties, sale of properties, and the provision of services. A table further describing
our revenue and cost of revenues is set forth below:
|
|
Year
ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
(As
Restated)
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
Service
revenue (including $281,962 and $399,792 of service revenue from related parties, respectively)
|
|
$
|
3,313,819
|
|
|
$
|
2,991,592
|
|
Sale
of properties
|
|
|
423,871
|
|
|
|
-
|
|
Rental
revenue (including $47,683 and $6,839 of rental revenue from related parties, respectively)
|
|
|
178,682
|
|
|
|
100,143
|
|
Total
revenues
|
|
|
3,916,372
|
|
|
|
3,091,735
|
|
|
|
|
|
|
|
|
|
|
OPERATING
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
Cost
of service revenue
|
|
|
(1,071,910
|
)
|
|
|
(1,086,393
|
)
|
Cost
of properties sold
|
|
|
(347,479
|
)
|
|
|
-
|
|
Cost
of rental revenue
|
|
|
(68,412
|
)
|
|
|
(48,914
|
)
|
General
and administrative
|
|
|
(3,350,896
|
)
|
|
|
(1,924,293
|
)
|
Impairment
of goodwill and intangible assets
|
|
|
(1,898,721
|
)
|
|
|
-
|
|
Total
operating costs and expenses
|
|
|
(6,737,418
|
)
|
|
|
(3,059,600
|
)
|
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) FROM OPERATIONS
|
|
$
|
(2,821,046
|
)
|
|
$
|
32,135
|
|
Comparison
of the years ended December 31, 2017 and 2016
Total
Revenues
Total
revenue was $3,916,372 and $3,091,735 for the years ended December 31, 2017 and 2016, respectively. The increased amount of $824,637
was due to the broadening of the range of business services offered and the increase in our client base. We expect revenue from
our business services segment to increase as we continue to grow our business and expand into new territories.
Rental
Revenue
Revenue
from rentals was $178,682 and $100,143 for the years ended December 31, 2017 and 2016, respectively. It was derived principally
from leasing properties in Malaysia and Hong Kong. We believe our rental income will be stable in the near future.
Sale
of properties
Revenue
from the sale of properties was $423,871 for the year ended December 31, 2017, which was derived from the sale of certain commercial
properties located in Hong Kong. There was no revenue generated from the sale of properties for the year ended December 31, 2016.
As
opportunities permit, management expects to continue to purchase and sell commercial real estate in the near future. Accordingly,
we expect revenue and costs attributable to the sale of properties to fluctuate on a going forward basis.
Service
Revenue
Revenue
from the provision of business services was $3,313,819 and $2,991,592 for the years ended December 31, 2017 and 2016, respectively.
It was derived principally from the provision of business consulting and advisory services as well as company secretarial, accounting
and financial review services. We experienced an increase in service income as a result of our integration of clients in connection
with our acquisitions and increased focus on high-end services.
Total
Operating Costs and Expenses
Total
operating costs and expenses was $6,737,418 and $3,059,600 for the years ended December 31, 2017 and 2016, respectively. They
consist of cost of service revenue, cost of properties sold, cost of rental income, general and administrative and impairment
of goodwill and intangible assets.
The
overall income (loss) from operations for the Company for the years ended December 31, 2017 and 2016 were $(2,821,046) and $32,135,
respectively. The increase in loss from operations was mainly due to an increase in general and administrative expenses and impairment
of goodwill and intangible assets.
Cost
of rental revenue
Cost
of rental revenue was $68,412 and $48,914 for the years ended December 31, 2017 and 2016, respectively. It includes the costs
associated with government rent and rates, repairs and maintenance, property insurance, depreciation and other related administrative
costs. Property management fee and utility expenses are paid directly by tenants.
Cost
of service revenue
Costs
of revenue on provision of services were $1,071,910 and $1,086,393 for the years ended December 31, 2017 and 2016, respectively.
It primarily consists of employee compensation and related payroll benefits, company formation cost and other professional fees
directly attributable to cost in related to the services rendered.
Cost
of properties sold
Costs
of revenue on properties sold were $347,479 and $0 for the years ended December 31, 2017 and 2016, respectively. It primarily
consists 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.
General
and administrative expenses
General
and administrative expenses were $3,350,896 and $1,924,293 for the years ended December 31, 2017 and 2016, respectively. The general
and administrative expenses consist primarily of salary and wages of $1,014,700, rent and rates of $474,741, directors’
remuneration of $330,000, and audit, legal, and other professional fees of $482,343. We expect our G&A to continue to increase
as we integrate our business acquisitions, expand our offices into new jurisdictions, and deepen our existing businesses.
Impairment
of Goodwill and Intangible Assets
The
impairment losses of goodwill were $1,734,384 and $0 for the years ended December 31, 2017 and 2016, respectively. The impairment
losses of Intangible Assets were $164,337 and $0 for the years ended December 31, 2017 and 2016, respectively. The Company performed
an impairment test on the goodwill as of December 31, 2017 based on ASC 350 “Goodwill and Other”. We performed a free
cash flow to equity forecast of our acquired subsidiaries and we expect that from 2018 to 2022, two of these subsidiaries will
contribute a negative free cash flow to equity, while probably constituting a negative fair value of those entities. As a result,
we decided to write off all of the goodwill and intangible assets of these two subsidiaries at December 31, 2017.
Attributable
to noncontrolling interest
The
Company records income attributable to noncontrolling interest in the consolidated statements of operations for any noncontrolling
interest of consolidated subsidiaries.
At
December 31, 2017, the Company holds 60% of the shareholdings of Forward Win International Limited, Yabez (Hong Kong) Company
Limited, Greenpro Wealthon Sdn Bhd, Billion Sino Holdings Limited, and Parich Wealth Management Limited (Hong Kong). At December
31, 2017, the Company holds 51% of the shareholdings of each of Greenpro Capital Village Sdn Bhd and Greenpro Family Office Limited.
For
the year ended December 31, 2017, the Company recorded net loss attributable to noncontrolling interest of $832,350. For the year
ended December 31, 2016, the Company recorded net income attributable to non-controlling interest of $11,149. The increase in
loss attributable to noncontrolling interest was due to impairment of goodwill and intangible assets of $795,168 allocated to
noncontrolling interests in Billion Sino Holdings Limited and Yabez (Hong Kong) Company Limited.
Net
Loss
Net
losses were $3,116,909 and $39,666 for the year ended December 31, 2017 and 2016, respectively. The increase in net loss was mainly
due to an increase in operating costs and expenses, and impairment of goodwill and intangible assets.
There
were no seasonal aspects that had a material effect on the financial condition or results of operations of the Company.
Other
than as disclosed elsewhere in this prospectus, we are not aware of any trends, uncertainties, demands, commitments or events
for the year ended December 31, 2017 that are reasonably likely to have a material adverse effect on our financial condition,
changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources,
or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial
conditions.
Off
Balance Sheet Arrangements
We
have no significant off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our
financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures
or capital resources that are material to our stockholders as of December 31, 2017.
Contractual
Obligations
As
of December 31, 2017, the Company’s subsidiaries lease an office in Hong Kong under a non-cancellable operating lease that
expires in April 2018. In January 2018, the tenancy agreement was renewed for three years commencing from May 1, 2018 and expiring
on April 30, 2021.
Related
Party Transactions
Related
party transactions amounted to $329,645 and $406,631 for the years ended December 31, 2017 and 2016, respectively, in service
revenue and rental revenue.
The
amount due from related parties was $1,761 and $30,215 as of December 31, 2017 and 2016, respectively. The amounts due to related
parties were $1,813,930 and $1,509,492 as of December 31, 2017 and 2016, respectively.
Our
related parties are those companies where Greenpro Venture Capital Limited owns a certain percentage of the shares of such companies,
and companies that we have determined that we can significantly influence based on our common business relationships. One related
party is under common control of Mr. Loke Che Chan, Gilbert, a director of the Company.
Critical
Accounting Policies and 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.
Property
and equipment, net
Property
and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated on the straight-line
basis over the following expected useful lives from the date on which they become fully operational and after taking into account
their estimated residual values:
Categories
|
|
Expected
useful life
|
|
Residual
value
|
|
Office
leasehold
|
|
27
years
|
|
|
|
|
Furniture
and fixtures
|
|
3
- 10 years
|
|
|
5
|
%
|
Office
equipment
|
|
3
- 10 years
|
|
|
5%
- 10
|
%
|
Leasehold
improvement
|
|
Over
the shorter of estimated useful life or term of lease
|
|
|
-
|
|
Management
assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value
may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to
result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset,
an impairment loss is recognized to write down the asset to its estimated fair value.
Investment
in real estate
Real
estate held for sale is reported at the lower of its carrying amount or fair value, less estimated costs to sell. The cost of
real estate held for sale includes the purchase price of property, legal fees, improvement costs to the building structure, and
other acquisition costs. Project wide costs such as land and building acquisition and certain development costs are allocated
to the specific units based upon their relative fair value before construction. We continue to actively market all properties
that are designated as held for sale. Real estate held for sale is not depreciated.
Real
estate held for investment is stated at cost less accumulated depreciation. Depreciation is calculated on the straight-line basis
over the following expected useful lives from the date on which they become fully operational and after taking into account their
estimated residual values:
Categories
|
|
Expected
useful life
|
|
Residual
value
|
|
Leasehold
land and buildings
|
|
50
years
|
|
|
-
|
|
Furniture
and fixtures
|
|
3
– 10 years
|
|
|
5
|
%
|
Office
equipment
|
|
3
– 10 years
|
|
|
5%
- 10
|
%
|
Leasehold
improvement
|
|
Shorter
of the estimated useful life or term of lease
|
|
|
-
|
|
Intangible
assets, net
Intangible
assets are stated at cost less accumulated amortization. Intangible assets represented customer lists and order backlogs acquired
in business combinations and certain trademarks registered in Hong Kong, the PRC, and Malaysia. Intangible assets are amortized
on a straight-line basis over their estimated useful life’s ranging from five to ten years.
The
Company follows ASC 360 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of
impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’
carrying amounts. The Company’s policy is to perform its annual impairment testing for its intangible assets on December
31, of each fiscal year.
Goodwill
Goodwill
is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed
in a business combination. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually,
and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying
amount may be impaired. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s
net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill
over the derived fair value of goodwill. The Company’s policy is to perform its annual impairment testing for its reporting
units on December 31, of each fiscal year.
Impairment
of long-lived assets
Long-lived
assets primarily include real estate held for investment, real estate held for use, and equipment and intangible assets. In accordance
with the provision of ASC 360, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually
in the fourth quarter of each year, or more frequently if indicators of impairment exist, such as a significant sustained change
in the business climate. The recoverability of long-lived assets is measured at the reporting unit level. If the total of the
expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference
between the fair value and carrying amount of the asset.
Revenue
recognition
The
Company follows the guidance of ASC 606 which 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’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, 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, 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.
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.
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
Recent
accounting pronouncements
Refer
to Note 1 in the accompanying financial statements.
Liquidity
and Capital Resources
As
of December 31, 2017, we had a working capital deficiency of $2,070,201 as compared to a working capital deficiency of $401,241
as of December 31, 2016. The increase was mainly due to an increase of amounts due to related parties, an increase of accounts
payable and accrued liabilities, and an increase of loan borrowings. We had total current assets of $1,853,878 consisting of cash
and cash equivalents of $1,162,394, accounts receivable of $345,734, prepaids and other current assets of $270,760, and deferred
costs of revenue of $74,990, compared to total current assets of $1,596,156 as of December 31, 2016. The increase in current assets
was mainly due to the increase in prepaids and other current assets. We had current liabilities of $3,924,079 mainly consisting
of amounts due to related parties of $1,813,930, and accounts payable and accrued liabilities of $768,994. The Company’s
net losses were $3,116,909 and $39,666 for the years ended December 31, 2017 and 2016, respectively. The Company’s comprehensive
losses were $2,212,940 and $61,837 for the years ended December 31, 2017 and 2016, respectively. The increase in net loss was
due to a significant increase in general and administrative expenses and impairment of goodwill and intangible assets.
For
the year ended December 31, 2017, the Company incurred a net loss of $3,116,909 and used cash in operating activities of $442,711,
and at December 31, 2017, the Company had a working capital deficiency of $2,070,201. 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 our December 31, 2017 financial
statements, has raised 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.
As
of December 31, 2017, $1,441,548 was due to a related party for advances to the Company to purchase real estate held for sale
in 2014 and another related party advanced $175,693 to the Company for business operations of one of the subsidiaries of the Company.
These advances are non-interest bearing and are due upon demand.
As
of December 31, 2017, our long-term liabilities consist of loans secured by real estate from:
(a)
|
Standard
Chartered Saadiq Berhad, with 300 monthly installments of MYR9,287 (approximately $2,840) each and will mature in May 2038;
|
(b)
|
United
Overseas Bank (Malaysia) Berhad, with 360 monthly installments of MYR5,382 (approximately $1,645) each and will mature in
August 2043;
|
(c)
|
Bank
of China Limited, with 120 monthly installments of an amount determined by the sum of (i) 25% premium above the 5-year-or-above
RMB base lending rate per annum on 20th day of each month for the interest payment and (ii) RMB75,000 (approximately $11,528)
for the fixed repayment of principal. The current interest rate of the loan is 6.125% per annum, assuming the 5-year-or-above
RMB base lending rate to be maintained at 4.90% for the whole period of the loan agreement.
|
(d)
|
Laboratory
JaneClare Limited, a non-banking lender located in Hong Kong. The loan is secured by the Company’s real estate held
for sale, bears interest at 8.4% per annum, and is due September 12, 2018.
|
The
maturity dates of the long-term bank loans for each of the five years and thereafter following December 31, 2017 are as follows:
Year
ending December 31:
|
|
|
|
2018
|
|
$
|
928,147
|
|
2019
|
|
|
154,703
|
|
2020
|
|
|
155,413
|
|
2021
|
|
|
156,311
|
|
2022
|
|
|
157,175
|
|
Thereafter
|
|
|
1,219,238
|
|
|
|
|
|
|
Total
|
|
$
|
2,770,987
|
|
Operating
activities
Net
cash used in operating activities was $442,711 for the year ended December 31, 2017 as compared to net cash used in operating
activities of $500,228 for the year ended December 31, 2016. The cash used in operating activities in 2017 was mainly from net
losses for the year, while the cash used in operating activities in 2016 consisted primarily of a decrease in deferred revenue,
accounts payable and accrued liabilities, and an increase in accounts receivable. Non-cash expenses totaled $2,426,577 and $231,010
for the years ended December 31, 2017 and 2016, respectively, which were primarily composed of depreciation and amortization of
$188,487, and an impairment of goodwill and intangible assets of $1,898,721 for the year ended December 31, 2017.
The
Company has incurred operating losses and used cash in its operating activities for the past two years. In fiscal 2017, the Company
suffered an increase in net loss and prepaids and other current assets, which resulted in negative operating cash flow. The increase
in net loss was due to an increase in general and administrative expenses and impairment of goodwill and intangible assets. The
Company’s management believes it will have an improvement in accounts receivable turnover and accounts payable turnover
ratios in fiscal 2018. However, there can be no assurance that the anticipated sales level will be achieved.
Investing
activities
Net
cash used in investing activities was $2,813,869 and $16,726 for the years ended December 31, 2017 and 2016, respectively.
The
cash used in investing activities was mainly for the long-term investment and purchase of property and equipment, offset by the
cash proceeds from real estate held for sale and from acquisition of subsidiaries in 2017. Net cash used in investing activities
consisted primarily of purchases of property and equipment in 2016.
Financing
activities
Net
cash provided by financing activities for the year ended December 31, 2017 was $3,367,258 while net cash used in financing activities
for the year ended December 31, 2016 was $46,162.
The
cash provided by financing activities mainly resulted from the proceeds from share issuances of $984,864 and proceeds from loans
secured by real estate of $2,368,085 in 2017.
Below
is a tabular summary of the financing activities of the Company during 2017 and 2016:
Date
|
|
Shares
of common stock issued
|
|
|
Cash
proceeds from
share issuance
|
|
|
Recipients
of shares
|
May
20, 2016 (1)
|
|
|
257,500
|
|
|
$
|
412,000
|
|
|
Three
shareholders
|
December
7, 2016 (2)
|
|
|
27,700
|
|
|
$
|
49,860
|
|
|
Dato
Seri Dr. How Kok Choong
|
December
27, 2016 (3)
|
|
|
138,804
|
|
|
$
|
249,847
|
|
|
Two
shareholders
|
January
13, 2017 (4)
|
|
|
199,922
|
|
|
$
|
359,860
|
|
|
Two
shareholders
|
March
8, 2017 (5)
|
|
|
278,162
|
|
|
$
|
556,324
|
|
|
Two
shareholders
|
April
18, 2017 (6)
|
|
|
27,472
|
|
|
$
|
68,680
|
|
|
One
Shareholder
|
April
25, 2017 (7)
|
|
|
340,645
|
|
|
$
|
-
|
|
|
Two
shareholders
|
1.
|
The
Company completed the sale of 257,500 shares of restricted common stock at a price of $1.60 per share for aggregate gross
proceeds of $412,000 in a private placement to Fortune Wealth (Asia) Limited, Bosy Consultancy Sdn. Bhd. and Dongjia Holdings
Limited.
|
|
|
2.
|
The
Company completed the sale of 27,700 shares of restricted common stock at a price of $1.80 per share for aggregate gross proceeds
of $49,860 in a private placement to Dato Seri Dr. How Kok Choong.
|
|
|
3.
|
The
Company completed the sale of 138,804 shares of restricted common stock at a price of $1.80 per share for aggregate gross
proceeds of $249,847 in a private placement to Dongjia Holdings Limited and Fortune Wealth (Asia) Limited.
|
|
|
4.
|
The
Company completed the sale of 199,922 shares of restricted common stock at a price of $1.80 per share for aggregate gross
proceeds of approximately $359,860 in a private placement to Dato Seri Dr. How Kok Choong and Fortune Wealth (Asia) Limited.
|
|
|
5.
|
The
Company completed the sale of 278,162 shares of restricted common stock at a price of $2.00 per share for aggregate gross
proceeds of $556,324 in a private placement to CPN Investment Ltd and Fortune Wealth (Asia) Limited.
|
|
|
6.
|
The
Company completed the sale of 27,472 shares of restricted common stock at a price of $2.50 per share for aggregate gross proceeds
of $68,680 in a private placement to Fortune Wealth (Asia) Limited.
|
|
|
7.
|
The
Company issued 340,645 restricted shares of common stock for the acquisition of 60% of the issued and outstanding securities
of Billion Sino Holdings Limited.
|
As
of December 31, 2017, there were 53,233,960 shares of common stock issued and outstanding.
BUSINESS
Overview
We
currently operate and provide a wide range of business solution services to small and medium-size businesses located in Asia and
South-East Asia, with an initial focus on Hong Kong, China and Malaysia. Our comprehensive range of services includes cross-border
business solutions, record management services, and accounting outsourcing services. Our cross border business services include,
among other services, tax planning, trust and wealth management, cross border listing advisory services and transaction services.
As part of the cross border business solutions, we have developed a package solution of services (“Package Solution”)
that can reduce their business costs and improve their revenues.
We
also operate a venture capital business through Greenpro Venture Capital Limited, an Anguilla corporation. Our venture capital
business is focused on (1) establishing a business incubator for start-up and high growth companies to support such companies
during critical growth periods, which includes education and support services that operates through our subsidiary, Greenpro Capital
Village Sdn. Bhd., and (2) searching for investment opportunities in selected start-up and high growth companies, which we expect
can generate significant returns to the Company. We expect to target companies located in Asia and South-East Asia including Hong
Kong, Malaysia, China, Thailand and Singapore. We anticipate our venture capital business will also engage in the purchase, acquisition
and rental of commercial properties in the same Asia and South-East Asia region.
Our
Services
We
provide a range of services to our clients as part of the Package Solution that we have developed. We believe that our clients
can reduce their business costs and improve their revenues by utilizing our Package Solution.
Cross-Border
Business Solutions/Cross-Border Listing Solutions
We
provide a full range of cross-border services to small to medium-sized businesses to assist them in conducting their business
effectively. Our “Cross-Border Business Solution” includes the following services:
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Advising
clients on company formation in Hong Kong, the United States, the British Virgin Islands and other overseas jurisdictions;
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Providing
assistance to set up bank accounts with banks in Hong Kong to facilitate clients’ banking operations;
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Providing
bank loan referral services;
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Providing
company secretarial services;
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Assisting
companies in applying for business registration certificates with the Inland Revenue Department of Hong Kong;
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Providing
corporate finance consulting services;
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Providing
due diligence investigations and valuations of companies;
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Advising
clients regarding debt and company restructurings;
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Providing
liquidation, insolvency, bankruptcy and individual voluntary arrangement advice and assistance;
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Designing
a marketing strategy and promoting the company’s business, products and services;
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Providing
financial and liquidity analysis;
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Assisting
in setting up cloud invoicing systems for clients;
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Assisting
in liaising with investors for purposes of raising capital;
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Assisting
in setting up cloud inventory system to assist clients to record, maintain and control their inventories and track their inventory
levels;
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Assisting
in setting up cloud accounting system to enable clients to keep track of their financial performance;
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Assisting
clients in payroll matters operated in our cloud payroll system;
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Assisting
clients in tax planning, preparing the tax computation and making tax filings with the Inland Revenue Department of Hong Kong;
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Cross-border
listing advisory services, including but not limited to, United States, United Kingdom, Hong Kong, Australia;
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International
tax planning in China;
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Trust
and wealth management; and
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Transaction
services.
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There
is a growing market in East Asia and South-East Asia, and to an extent this trend continues worldwide, of companies who are seeking
to go public and become listed on a recognized exchange in a foreign jurisdiction. With respect to cross border listing advisory
services, we are assisting private companies in their desire to list and trade on public exchanges, including the U.S. OTC markets.
The Jumpstart Our Business Startups Act, or JOBS Act, signed in 2012, eases the initial public offering (“IPO”) process
for “emerging growth companies” and reduces their regulatory burden, (2) improves the ability of these companies to
access capital through private offerings and small public offerings without SEC registration, and (3) allows private companies
with a substantial shareholder base to delay becoming a public reporting company.
Through
our cross border listing advisory services, we seek to form the bridge between these companies seeking to conduct their IPO (or
in some cases self-directed public offerings), and their goal of becoming a listed company on a recognized U.S. national exchange,
such as NASDAQ and the NYSE.
While
there are several alternatives for companies seeking to go public and trade on the U.S. OTC markets, we primarily focus on three
methods:
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Registration
Statement on Form S-1.
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Regulation
A+ offering.
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The
Form 10 shell company.
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The
manner in which the OTC markets are structured provides companies the ability to “move up” in the marketplace as they
provide better transparency. These markets include:
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OTCQX
Best Marketplace: offers transparent and efficient trading of established, investor-focused U.S. and global companies.
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OTCQB
Venture Marketplace: for early-stage and developing U.S. and international companies that are not yet able to qualify for
OTCQX.
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OTC
Pink Open Marketplace: offers trading in a wide spectrum of securities through any broker. With no minimum financial standards,
this market includes foreign companies that limit their disclosure, penny stocks and shells, as well as distressed, delinquent,
and dark companies not willing or able to provide adequate information to investors.
|
We
act as a case reference for our clients, in which we first list on OTC market and subsequently uplift to a U.S. national exchange.
With
growing competition and increasing economic sophistication, we believe more companies need strategies for cross-border restructuring
and other corporate matters. Our plan is to bundle our Cross-Border Business Solution services with our Cloud Accounting Solution
and Accounting Outsourcing Services described below.
Accounting
Outsourcing Services
We
intend to develop relationships with professional firms from Hong Kong, Malaysia and China that can provide company secretarial,
business centers and virtual offices, book-keeping, tax compliance and planning, payroll management, business valuation, and wealth
management services to our clients. We intend to include local accounting firms within this network to provide general accounting,
financial evaluation and advisory services to our clients. Our expectation is that firms within our professional network will
refer their international clients to us that may need our book-keeping, payroll, company secretarial and tax compliance services.
We believe that this accounting outsourcing service arrangement will be beneficial to our clients by providing a convenient, one-stop
firm for their local and international business and financial compliance and governance needs.
Our
Service Rates
We
intend to have a two-tiered rate system based upon the type of services being offering. We may impose project-based fees, where
we charge 10%-25% of the revenues generated by the client on projects that are completed using our services, such as transaction
projects, contract compliance projects, and business planning projects. We may also charge a flat rate fee or fixed fee based
on the estimated complexity and timing of a project when our professionals provide specified expertise to our clients on a project.
For example, for the Cross-Border Business Solutions, we plan to charge our client a monthly fixed fee.
Our
Venture Capital Business Segment
Venture
Capital Investment
As
a result of our acquisition of Greenpro Venture Capital Limited (“GPVC”) in 2015, we entered the venture capital business
in Hong Kong with a focus on companies located in Asia and South-East Asia, including Hong Kong, Malaysia, China, Thailand and
Singapore. Our venture capital business is focused on (1) establishing a business incubator for start-up and high growth companies
to support such companies during critical growth periods and (2) investment opportunities in select start-up and high growth companies.
We
believe that a company’s life cycle can be divided into five stages, including the seed stage, start-up stage, expansion
stage, mature stage and decline stage.
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●
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Seed
stage: Financing is needed for assets, and research and development of an initial business concept. The company usually has
relatively low costs in developing the business idea. The ownership model is considered and implemented.
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●
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Start-up
stage: Financing is needed for product development and initial marketing. Firms in this phase may be in the process of setting
up a business or they might have been in operating the business for a short period of time, but may not have sold their products
commercially. In this phase, costs are increasing due to. product development, market research and the need to recruit personnel.
Low levels of revenues are starting to generate.
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●
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Expansion
stage: Financing is needed for growth and expansion. Capital may be used to finance increased production capacity, product
or marketing development or to hire additional personnel. In the early expansion phase, sales and production increases but
there is not yet any profit. In the later expansion stage, the business typically needs extra capital in addition to organically
generated profit, for further development, marketing or product development.
|
We
anticipate that most of a company’s funding needs will occur during these first three stages.
We
intend for our business incubators to provide valuable support to young, emerging growth and potential high growth companies at
critical junctures of their development. For example, our incubators will offer office space at a below market rental rate. We
will also provide our expertise, business contacts, introductions and other resources to assist their development and growth.
Depending on each individual circumstance, we may also take an active advisory role in our venture capital companies including
board representation, strategic marketing, corporate governance, and capital structuring. We believe that there will be potential
investment opportunities for us in these start-up companies.
Our
business processes for our investment strategy in select start-up and high growth companies is as follows:
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●
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Step
1. Generating Deal Flow: We expect to actively search for entrepreneurial firms and to generate deal flow through our business
incubator and the personal contacts of our executive team. We also anticipate that entrepreneurs will approach us for financing.
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●
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Step
2. Investment Decision: We will evaluate, examine and engage in due diligence of a prospective portfolio company, including
but not limited to product/services viability, market potential and integrity as well as capability of the management. After
that both parties arrive at an agreed value for the deal. Following that is a process of negotiation, which if successful,
ends with capital transformation and restructuring.
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●
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Step
3. Business Development and Value Adding: In addition to capital contribution, we expect to provide expertise, knowledge and
relevant business contacts to the company.
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Step
4. Exit: There are several ways to exit an investment in a company. Common exits are:
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IPO
(Initial Public Offering): The company’s shares are offered in a public sale on an established securities market.
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Trade
sale (Acquisition): The entire company is sold to another company.
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Secondary
sale: The company’s firm sells only part of its shares.
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Buyback
or MBO: Either the entrepreneur or the management of the company buys back the company’s shares of the firm.
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Reconstruction,
liquidation or bankruptcy: If the project fails the company will restructure or close down the operations.
|
Our
objective is to achieve a superior rate of return through the eventual and timely disposal of investments. We intend to invest
in businesses that meet the following criteria:
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high
growth prospects;
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ambitious
teams;
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viability
of product or service;
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experienced
management;
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●
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ability
to convert plans into reality; and
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●
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justification
of venture capital investment and investment criteria.
|
Our
Venture Capital Related Education and Support Services.
In
addition to providing venture capital services through GPVC, we also provide educational and support services that we believe
will be synergistic with our venture capital business. We have arranged few seminars called the CEO & Business Owners Strategic
Session (“CBOSS”) in Malaysia and Singapore for business owners who are interested in the following:
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Developing
their business globally;
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●
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Expanding
business with increased capital funding;
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|
●
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Creating
a sustainable SME business model;
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|
●
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Accelerating
the growth of the business; or
|
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|
●
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Significantly
increasing company cash flows.
|
The
objective the CBOSS seminar is to educate the chief executive officers or business owners on how to acquire “smart capital”
and the considerations involved. The seminar includes an introduction to the basic concepts of “smart capital,” “wealth
and value creation,” recommendation and planning and similar topics. We believe that this seminar will synergistically support
our venture capital business segment.
China
Service Centres Expansion
With
a population of 1.3 billion, China is the second largest economy and has been the largest contributor to world growth since the
global financial crisis of 2008.
Figures
released by a Hurun Report in 2016 shows that as of May 2016, there were almost 1.34 million High Net Worth Individuals (HNWIs)
with a net worth exceeding RMB 10 million (USD 1.47 million) in the Chinese mainland, up 10.7% from prior year.
(Reference
from: http://www.ebeijing.gov.cn/BeijingInformation/BeijingNewsUpdate/t1458502.htm)
Among
those HNWIs, there are approximately 89,000 billionaires, reaching a 14.1% growth rate, which means the number of Chinese HNWIs
accounts for 0.1%, according to the data from National Bureau of Statistics of the PRC. In 2016, the largest number of HNWIs resided
in Guangdong Province, Beijing, Shanghai, Zhejiang Province and Jiangsu Province.
Tier
1 City in China
(Reference
from: http://multimedia.scmp.com/2016/cities/)
Our
expansion strategy is to establish service centres in the Tier 1 cities of Guangzhou, Beijing and Shanghai, where a majority of
the HNWIs reside. The centres will cater to customer’ needs by providing and delivering professional, high quality service
and assistance before, during, and after the customer’s requirements are met. Approximately 2 million of the proceeds from
this offering will be used for renting office space ranging from f 180 to 250 square meters (approximate 2,150 to 2,690 square
feet) and recruiting a team of 10 people (estimated) in the first year of present in the city. The plan in each city would be
based on various factors, such as property availability and job market conditions.
Sales
and Marketing
We
plan to deploy three strategies to market the Greenpro brand: leadership, market segmentation and sales management process development.
|
●
|
Building
Brand Image:
Greenpro’s marketing efforts will focus on building the image of our extensive expertise and knowledge
of our professionals. We intend to conduct a marketing campaign through media visibility, seminars, webinars, and the creation
of a wide variety of white papers, newsletters, books, and other information.
|
|
|
|
|
●
|
Market
segmentation:
We plan to devote marketing resources to the highly measurable and high return on investment tactics that
specifically target those industries and areas where Greenpro has particularly deep experience and capabilities. These efforts
typically involve local, regional or national trade show and event sponsorships, targeted direct mail, email, and telemarketing
campaigns, and practice and industry specific micro-sites and newsletters in the Asia region.
|
|
|
|
|
●
|
Social
Media:
We plan to begin a social media campaign utilizing blogs, Twitter, Facebook and LinkedIn after we secure sufficient
financing. A targeted campaign will be made to the following groups of clients: law firms, auditing firms, consulting firms
and small to medium-size enterprises in different industries, including biotechnology, intellectual property, information
technologies and real estate.
|
Worldwide
Wealth Wisdom Development
Worldwide
Wealth Wisdom Development (“WWW”) is our marketing and promotional campaign, which is focused on building long-term
awareness of our brand. WWW targets the following markets (i) business owners and senior management; (ii) high and medium net
worth individuals in China and (iii) financial services providers, such as Certified Financial Planners in China. The campaign
involves sharing content, knowledge and information about wealth management, including wealth creation, wealth protection and
wealth succession.
The
objectives of WWW are:
1.
|
To
arouse public awareness resulting in the recognition of Greenpro as a well-known advocate of the wealth principles described
above;
|
|
|
2.
|
For
our philosophy to gain recognition so that our clients are confident and comfortable with our services and trust us;
|
|
|
3.
|
To
educate existing clients and potential prospects; and
|
|
|
4.
|
To
act as a channel of communication to gather market data and feedback.
|
Approximately
3.5 million of the proceeds from this offering will be used to develop the following marketing strategies.
Awareness
& Optimization
1.
|
Email
Blasts and E-Newsletter
|
Email
blasts are one of the commonly used tactics to disseminate information. Our email database will be collected through leads generated
by online marketing (social media) and promotional events. Future event invitations and monthly/quarterly newsletters will be
sent to the email database in order to boost event participation and provide updates on Company development.
2.
|
Media
PR and News Releases
|
Our
post event information will be sent to news and media platforms as part of our publicity effort to increase public awareness about
our events and developments, and to encourage more participants to join our upcoming events. We will also share our analysis on
various industries and industry trends to the media network providers for free. We believe that this strategy will strengthen
the relationship between Greenpro and the media network providers.
To
generate more leads and subscribers, two to four articles related to wealth management will be shared in our official Wechat account.
These articles are tools we use to share content online, through social media platforms such as Wechat, Toutiao and Facebook,
which increases our online presence.
4.
|
Online
Search Engine Optimization
|
Online
Search Engine Optimization (SEO) will be used as a supporting strategy to enhance our online presence campaign. We will seek a
SEO expert team in China and Malaysia to assist in the promotion of the campaign by using an advertising and keyword tagging strategy
to drive traffic to our social media accounts and our company website. The major search engines are Baidu and Google as these
are the common search engine worldwide.
Interaction
& Conversion
1.
|
Seminars
and Conferences
|
Seminars
and conferences will be held once a month to deliver and educate the attendees on wealth management. We target between 80 and
100 attendees each time. We intend to invite professionals and strategic partners to share their ideas, resources and knowhow
in the seminars and conferences. The seminars and conferences will focus on our three core wealth management principles, namely
“Wealth Creation, Wealth Protection and Wealth Succession”.
2.
|
Private
Events By Invitation
|
Private
and exclusive events are planned to be held quarterly with a target between 30 and 40 attendees. These events are exclusive and
by-invitation only, at which we will share insights into our services and explain to attendees how they can proceed with wealth
management planning.
3.
|
Small
Group Meet Ups and Networking
|
Small
Group Meet Ups will be held twice a month targeting the public with an estimated five to ten attendees per session. The objective
of these sessions is to encourage idea exchanges, to provide a platform for networking and potentially future collaboration opportunities,
and foster better understanding between the participants and us, as well as among themselves.
Front
Door View of the Company Office in Shenzhen, China, with two banners of the Company
Market
Opportunities
We
believe the main drivers for the growth of our business are the products and services together with the resources such as an office
network, professional staff members and operational tools to make the advisory and consulting business more competitive.
We
intend to assist our clients in the cost-effective preparation of their financial statements and provide security based on such
financial information since the data will be stored in the cloud system. We anticipate a market with growing needs in East Asia
and South-East Asia. We believe that there is currently an increasing need for enterprises in different industries to maximize
their performance with cost-effective methods. We believe our services will create numerous competitive advantages for our clients.
We believe that with us handling the administrative and logistic support, our clients can focus on developing their businesses
and expanding their own client portfolio.
Customers
Our
revenues are generated from clients located globally, including those from Hong Kong, China, Malaysia, Singapore, Indonesia, Thailand,
Australia, Japan, Taiwan, Russia and the United States. Our venture capital business segment will initially focus on Hong Kong
and South-East Asia start-ups and high growth companies. We hope to generate deal flow through personal contacts of our management
team as well as through our business incubator.
We
generated net revenues of $3,916,372 during the fiscal year ended December 31, 2017 and $3,091,735 during the fiscal year ended
December 31, 2016. Our venture capital business accounted for approximately thirteen percent and two percent of our net revenue
in 2017 and 2016, respectively. We are not a party to any long-term agreements with our customers.
Competition
We
operate in a mature, competitive industry. We consider our focus to be on a niche market of small and medium-sized businesses.
Competition in the general field of business advisory services is quite intense, particularly in Hong Kong. We face competition
principally from established law firms and consulting service providers in the corporate finance industry, such as Marbury, King
& Wood Mallesons, QMIS Financial Group, First Asia Finance Group Limited and their respective affiliates, as well as from
certain accounting firms, including those that specialize in a tax planning and corporate restructuring. The competition in China
and Malaysia is not as fierce as in Hong Kong. Our major competitors in China are JP Investment Group and QMIS Financial Group
while our major competitors in Malaysia are Global Bridge Management Sdn. Bhd. and QMIS Financial Group. These competitors generate
significant traffic and have established brand recognition and financial resources. New or existing competition that uses a business
model that is different from our business model may apply pressure on us to change so that we can remain competitive.
We
believe that the principal competitive factors in our market include quality of analysis; applicability and efficacy of recommendations;
strength and depth of relationships with clients; ability to meet the changing needs of current and prospective clients; and service
scope. By utilizing our competitive strengths, we believe that we have a competitive edge over other competitors due to the breadth
of our service offerings, one stop convenience, pricing, marketing expertise, coverage network, service levels, track record,
brand and reputation. We are confident we can retain and enlarge our market share.
Intellectual
Property
We
intend to protect our investment in the research and development of our products and technologies. We intend to seek the widest
possible protection for significant product and process developments in our major markets through a combination of trade secrets,
trademarks, copyrights and patents, if applicable. We anticipate that the form of protection will vary depending upon the level
of protection afforded by a particular jurisdiction. Currently, our revenue is derived principally from our operations in Hong
Kong, China and Malaysia, where intellectual property protection may be limited and difficult to enforce. In such instances, we
may seek protection of our intellectual property through measures taken to increase the confidentiality of intellectual property.
We
have registered trademarks as a means of protecting the brand names of our companies and products. We intend to protect our trademarks
against infringement and also seek to register design protection where appropriate. Currently, there are six trademarks registered
under the name of Greenpro Resources (HK) Limited.
Trademark
Owner
|
Country/
Territory
|
Registration
Date
|
Brief
Description
|
|
Hong
Kong
|
August
11, 2010, June 25, 2013 and December 3, 2014
|
Advertising,
business management, business administration, office functions, research services, education, training
|
Greenpro
Resources (HK)
Limited
|
The
U.S.
|
February
2, 2016
|
Business
administration services, Business assistance, management and information services, Business knowledge management and consulting
services
|
|
China
|
December
28, 2014
|
Advertising,
business management, business administration, office functions and research services
|
|
Singapore
|
July
22, 2013
|
Advisory
services related to business management and administration, computer software and security
|
We
rely on trade secrets and un-patentable know-how that we seek to protect, in part, by confidentiality agreements. Our policy is
to require all employees to execute confidentiality agreements upon the commencement of employment with us. These agreements provide
that all confidential information developed or made known to the individual during the course of the individual’s relationship
with us is to be kept confidential and not disclosed to third parties except in specific limited circumstances. The agreements
also provide that all inventions conceived by the individual while rendering services to us shall be assigned to us as the exclusive
property of our company. There can be no assurance, however, that all persons who we desire to sign such agreements will sign,
or if they do, that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade
secrets or unpatentable know-how will not otherwise become known or be independently developed by competitors.
Government
Regulation
We
provide our Package Solution initially in Hong Kong, China and Malaysia, which we believe are locations that would need outsourcing
support services. Further, we believe these markets are the central and regional markets for many customers doing cross border
business in Asia. We target those customers from East Asia and South-East Asia doing international business and plan to provide
our Package Solution to meet their needs. Our planned Packaged Solution will be structured in Hong Kong but services may be outsourced
to lower cost jurisdictions such as Malaysia and China, which encourage and welcome outsourcing services.
The
following regulations are the laws and regulations that may be applicable to us:
Hong
Kong
Our
businesses located in Hong Kong are subject to the general laws in Hong Kong governing businesses, including labor, occupational
safety and health, general corporations, intellectual property and other similar laws. Because our website is maintained through
the server in Hong Kong, we expect that we will be required to comply with the rules of regulations of Hong Kong governing the
data usage and regular terms of service applicable to our potential customers. As the information of our potential customers is
preserved in Hong Kong, we will need to comply with the Hong Kong Personal Data (Privacy) Ordinance (Cap 486).
The
Employment Ordinance is the main piece of legislation governing conditions of employment in Hong Kong. It covers a comprehensive
range of employment protection and benefits for employees, including Wage Protection, Rest Days, Holidays with Pay, Paid Annual
Leave, Sickness Allowance, Maternity Protection, Statutory Paternity Leave, Severance Payment, Long Service Payment, Employment
Protection, Termination of Employment Contract, Protection Against Anti-Union Discrimination.
An
employer must also comply with all legal obligations under the Mandatory Provident Fund Schemes Ordinance, (Cap 485). These include
enrolling all qualifying employees in Mandatory Provident Fund (“MPF”) schemes and making MPF contributions for them.
Except for exempt persons, employer should enroll both full-time and part-time employees who are at least 18 but under 65 years
of age in an MPF scheme within the first 60 days of employment. The 60-day employment rule does not apply to casual employees
in the construction and catering industries.
We
are required to make MPF contributions for our Hong Kong employees once every contribution period (generally the wage period).
Employers and employees are each required to make regular mandatory contributions of 5% of the employee’s relevant income
to an MPF scheme, subject to the minimum and maximum relevant income levels. For a monthly-paid employee, the minimum and maximum
relevant income levels are $7,100 and $30,000 respectively.
We
are in compliance with the above applicable ordinances and regulations in Hong Kong and have not involved any lawsuit or prosecuted
by the local authority resulting from any breach of the ordinances and regulations.
Malaysia
Our
businesses located in Malaysia are subject to the general laws in Malaysia governing businesses including labor, occupational
safety and health, general corporations, intellectual property and other similar laws including the Computer Crime Act 1997 and
The Copyright (Amendment) Act 1997. We believe that the focus of these laws is censorship in Malaysia, however we believe this
does not impact our businesses because the censorship focus is on media controls and does not relate to cloud based technology
we plan to use.
Our
real estate investments are subject to extensive local, city, county and state rules and regulations regarding permitting, zoning,
subdivision, utilities and water quality as well as federal rules and regulations regarding air and water quality and protection
of endangered species and their habitats. Such regulation may result in higher than anticipated administrative and operational
costs.
We
are in compliance with the above applicable ordinances and regulations in Malaysia and have not involved any lawsuit or prosecuted
by the local authority resulting from any breach of the ordinances and regulations.
China
A
portion of our acquired businesses is located in China and subject to the general laws in China governing businesses including
labor, occupational safety and health, general corporations, intellectual property and other similar laws.
Employment
Contracts
The
Employment Contract Law was promulgated by the National People’s Congress’ Standing Committee on June 29, 2007 and
took effect on January 1, 2008. The Employment Contract Law governs labor relations and employment contracts (including the entry
into, performance, amendment, termination and determination of employment contracts) between domestic enterprises (including foreign-invested
companies), individual economic organizations and private non-enterprise units (collectively referred to as the “employers”)
and their employees.
a.
Execution of employment contracts
Under
the Employment Contract Law, an employer is required to execute written employment contracts with its employees within one month
from the commencement of employment. In the event of contravention, an employee is entitled to receive double salary for the period
during which the employer fails to execute an employment contract. If an employer fails to execute an employment contract for
more than 12 months from the commencement of the employee’s employment, an employment contract would be deemed to have been
entered into between the employer and employee for a non-fixed term.
b.
Right to non-fixed term contracts
Under
the Employment Contract Law, an employee may request for a non-fixed term contract without an employer’s consent to renew.
In addition, an employee is also entitled to a non-fixed term contract with an employer if he has completed two fixed term employment
contracts with such employer; however, such employee must not have committed any breach or have been subject to any disciplinary
actions during his employment. Unless the employee requests to enter into a fixed term contract, an employer who fails to enter
into a non-fixed term contract pursuant to the Employment Contract Law is liable to pay the employee double salary from the date
the employment contract is renewed.
c.
Compensation for termination or expiry of employment contracts
Under
the Employment Contract Law, employees are entitled to compensation upon the termination or expiry of an employment contract.
Employees are entitled to compensation even in the event the employer (i) has been declared bankrupt; (ii) has its business license
revoked; (iii) has been ordered to cease or withdraw its business; or (iv) has been voluntarily liquidated. Where an employee
has been employed for more than one year, the employee will be entitled to such compensation equivalent to one month’s salary
for every completed year of service. Where an employee has employed for less than one year, such employee will be deemed to have
completed one full year of service.
d.
Trade union and collective employment contracts
Under
the Employment Contract Law, a trade union may seek arbitration and litigation to resolve any dispute arising from a collective
employment contract; provided that such dispute failed to be settled through negotiations. The Employment Contract Law also permits
a trade union to enter into a collective employee contract with an employer on behalf of all the employees.
Where
a trade union has not been formed, a representative appointed under the recommendation of a high-level trade union may execute
the collective employment contract. Within districts below county level, collective employment contracts for industries such as
those engaged in construction, mining, food and beverage and those from the service sector, etc., may be executed on behalf of
employees by the representatives from the trade union of each respective industry. Alternatively, a district-based collective
employment contract may be entered into.
As
a result of the Employment Contract Law, all of our employees have executed standard written employment agreements with us. We
have not experienced any significant labor disputes or any difficulties in recruiting staff for our operations.
On
October 28, 2010, the National People’s Congress of China promulgated the PRC Social Insurance Law, which became effective
on July 1, 2011. In accordance with the PRC Social Insurance Law, the Interim Regulations on the Collection and Payment of Social
Security Fund and other relevant laws and regulations, China establishes a social insurance system including basic pension insurance,
basic medical insurance, work-related injury insurance, unemployment insurance and maternity insurance. An employer shall pay
the social insurance for its employees in accordance with the rates provided under relevant regulations and shall withhold the
social insurance that should be assumed by the employees. The authorities in charge of social insurance may request an employer’s
compliance and impose sanctions if such employer fails to pay and withhold social insurance in a timely manner. Under the Regulations
on the Administration of Housing Fund effective in 1999, as amended in 2002, PRC companies must register with applicable housing
fund management centers and establish a special housing fund account in an entrusted bank. Both PRC companies and their employees
are required to contribute to the housing funds.
The
Ministry of Human Resources and Social Security promulgated the Interim Provisions on Labor Dispatch on January 24, 2014. The
Interim Provisions on Labor Dispatch, which became effective on March 1, 2014, sets forth that labor dispatch should only be applicable
to temporary, auxiliary or substitute positions. Temporary positions shall mean positions subsisting for no more than six months,
auxiliary positions shall mean positions of non-major business that serve positions of major businesses, and substitute positions
shall mean positions that can be held by substitute employees for a certain period of time during which the employees who originally
hold such positions are unable to work as a result of full-time study, being on leave or other reasons. The Interim Provisions
further provides that, the number of the dispatched workers of an employer shall not exceed 10% of its total workforce, and the
total workforce of an employer shall refer to the sum of the number of the workers who have executed labor contracts with the
employer and the number of workers who are dispatched to the employer.
Foreign
Exchange Control and Administration
Foreign
exchange in China is primarily regulated by:
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The
Foreign Currency Administration Rules (1996), as amended; and
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The
Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules.
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Under
the Foreign Currency Administration Rules, if documents certifying the purposes of the conversion of RMB into foreign currency
are submitted to the relevant foreign exchange conversion bank, the RMB will be convertible for current account items, including
the distribution of dividends, interest and royalties payments, and trade and service-related foreign exchange transactions. Conversion
of RMB for capital account items, such as direct investment, loans, securities investment and repatriation of investment, however,
is subject to the approval of SAFE or its local counterpart.
Under
the Administration Rules for the Settlement, Sale and Payment of Foreign Exchange, foreign-invested enterprises may only buy,
sell and/or remit foreign currencies at banks authorized to conduct foreign exchange business after providing valid commercial
documents and, in the case of capital account item transactions, obtaining approval from SAFE or its local counterpart.
As
an offshore holding company with a PRC subsidiary, we may (i) make additional capital contributions to our PRC subsidiaries, (ii)
establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, (iii) make loans to our PRC subsidiaries
or consolidated affiliated entities, or (iv) acquire offshore entities with business operations in China in offshore transactions.
However, most of these uses are subject to PRC regulations and approvals. For example:
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Capital
contributions to our PRC subsidiaries, whether existing or newly established ones, must be approved by the Ministry of Commerce
or its local counterparts;
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Loans
by us to our PRC subsidiaries, each of which is a foreign-invested enterprise, to finance their activities cannot exceed statutory
limits and must be registered with SAFE or its local branches; and
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Loans
by us to our consolidated affiliated entities, which are domestic PRC entities, must be approved by the National Development
and Reform Commission and must also be registered with SAFE or its local branches.
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On
August 29, 2008, SAFE promulgated the Circular on the Relevant Operating Issues concerning the Improvement of the Administration
of Payment and Settlement of Foreign Currency Capital of Foreign-invested Enterprises, or “Circular 142”. On March
30, 2015, SAFE issued the Circular of the State Administration of Foreign Exchange Concerning Reform of the Administrative Approaches
to Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or “Circular 19”, which became effective
on June 1, 2015, to regulate the conversion by foreign invested enterprises, or FIEs, of foreign currency into RMB by restricting
how the converted RMB may be used. Circular 19 requires that RMB converted from the foreign currency-dominated capital of a FIE
shall be managed under the Accounts for FX settlement and pending payment. The expenditure scope of such Account includes: expenditure
within the business scope, payment of funds for domestic equity investment and RMB deposits, repayment of the RMB loans after
completed utilization and so forth. A FIE shall truthfully use its capital by itself within the business scope and shall not,
directly or indirectly, use its capital or RMB converted from the foreign currency-dominated capital for (i) expenditure beyond
its business scope or expenditure prohibited by laws or regulations, (ii) disbursing RMB entrusted loans (unless permitted under
its business scope), repaying inter-corporate borrowings (including third-party advance) and repaying RMB bank loans already refinanced
to any third party. Where a FIE, other than a foreign-invested investment company, foreign-invested venture capital enterprise
or foreign-invested equity investment enterprise, makes domestic equity investment by transferring its capital in the original
currency, it shall obey the current provisions on domestic re-investment. Where such a FIE makes domestic equity investment by
its RMB conversion, the invested enterprise shall first go through domestic re-investment registration and open a corresponding
Accounts for FX settlement and pending payment, and the FIE shall thereafter transfer the conversion to the aforesaid Account
according to the actual amount of investment. In addition, according to the Regulations of the People’s Republic of China
on Foreign Exchange Administration, which became effective on August 5, 2008, the use of foreign exchange or RMB conversion may
not be changed without authorization.
Violations
of the applicable circulars and rules may result in severe penalties, including substantial fines as set forth in the Foreign
Exchange Administration Regulations.
In
light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding
companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary
government approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiary or future capital contributions
by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds
we expect to receive from this offering and the concurrent private placement and to capitalize or otherwise fund our PRC operations
may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.
We
are in compliance with the above applicable ordinances and regulations in China and have not involved any lawsuit or prosecuted
by the local authority resulting from any breach of the ordinances and regulations.
Insurance
We
do not current maintain property, business interruption and casualty insurance. As our business matures, we expect to obtain such
insurance in accordance with customary industry practices in Malaysia, Hong Kong and China, as applicable.
Employees
As
of April 27, 2018, we have 59 employees, located in the following territories:
Country/Territory
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Number
of Employees
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Malaysia
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13
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China
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24
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Hong
Kong
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22
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As
a result of the PRC Employment Contract Law, all of our employees in China have executed standard written employment agreements
with us.
We
are required to contribute to the Employees Provident Fund under a defined contribution pension plan for all eligible employees
in Malaysia between the ages of eighteen and fifty-five. We are required to contribute a specified percentage of the participant’s
income based on their ages and wage level. The participants are entitled to all of our contributions together with accrued returns
regardless of their length of service with the Company. For the years ended December 31, 2017 and 2016, the contributions were
$38,074 and $19,151, respectively.
We
are required to contribute to the MPF for all eligible employees in Hong Kong between the ages of eighteen and sixty-five. We
are required to contribute a specified percentage of the participant’s income based on their ages and wage level. For the
years ended December 31, 2017 and 2016, the MPF contributions by the Company were $31,717 and $14,529, respectively. We have not
experienced any significant labor disputes or any difficulties in recruiting staff for our operations.
We
are required to contribute to the Social Insurance Schemes and Housing Fund Schemes for all eligible employees in the PRC. For
the years ended December 31, 2017 and 2016, the contributions were $16,306 and $9,262, respectively.
Executive
Office
Our
principal executive office is located at Room 1701-1703, 17/F, The Metropolis Tower, 10 Metropolis Drive, Hung Hom, Kowloon, Hong
Kong. Our principal telephone number is +852 3111 7718. Our website is at:
http://www.greenprocapital.com
. The information
contained on our website is not, and should not be interpreted to be, a part of this prospectus.
Properties
Our
principal executive office is located at Room 1701-1703, 17/F, The Metropolis Tower, 10 Metropolis Drive, Hung Hom, Kowloon, Hong
Kong. We are subject to a two-year operating lease expiring on April 30, 2018. In January 2018, the tenancy agreement was renewed
for three years commencing from May 1, 2018 and expiring on April 30, 2021.
The
Company owns the following properties which are currently used for investment purposes:
Location
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Owner
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Use
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B-7-5,
North Point Office, Mid Valley City, No. 1, Medan Syed Putra Utara~59200 Kuala Lumpur, Malaysia
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Greenpro
Resources Sdn. Bhd.
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Office
Building
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D-07-06
and D-07-07~Skypark @ One City Jalan USJ 25.1~47650 Subang Jaya, Selangor, Malaysia
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Greenpro
Resources Sdn. Bhd.
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Investment
for rental and capital gains
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Factory
Units A3, A7, A8, A8, B1, B2, B3, B5, B6, B7, B8, B9, C1, C2, C3, C5, C6, C7, C8, C9, D1, D3, D8, D9, D10 on 14/F, Wang Cheung
Industrial Building, 6 Tsing Yeung Circuit- Tuen Mun, N.T., Hong Kong
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Forward
Win International Limited
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Investment
for rental and capital gains
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In
May 2013, the Company obtained a loan in the principal amount of MYR1,629,744 (approximately $495,170) from Standard Chartered
Saadiq Berhad, a financial institution in Malaysia to finance the acquisition of leasehold office units at Skypark One City, Selangor
in Kuala Lumpur, Malaysia. The loan bears interest at the base lending rate less 2.1% per annum with 300 monthly installments
of MYR9,287 (approximately $2,840) each and will mature in May 2038. The mortgage loan is secured by (i) the first legal charge
over the property, (ii) personally guaranteed by Mr. Lee Chong Kuang and Mr. Loke Che Chan Gilbert, the directors of the Company,
and (iii) corporate guaranteed by a related company which is controlled by the directors of the Company.
In
August 2013, the Company, through Mr. Lee Chong Kuang, the chief executive officer of the Company, obtained a loan in the principal
amount of MYR1,074,696 (approximately $326,530) from United Overseas Bank (Malaysia) Berhad, a financial institution in Malaysia
to finance the acquisition of a leasehold office unit at Northpoint, Mid Valley City in Kuala Lumpur, Malaysia. The loan bears
interest at the base lending rate less 2.2% per annum with 360 monthly installments of MYR5,382 (approximately $1,645) each and
will mature in August 2043. The mortgage loan is secured by the first legal charge over the property.
In
September, 2017, the Company borrowed HKD 8,000,000 (approximately $1,032,258) from Laboratory JaneClare Limited, a non-banking
lender located in Hong Kong. The loan is secured by the Company’s real estate held for sale, bears interest at 8.4% per
annum, and is due September 12, 2018.
In
December 2017, the Company obtained a loan in the principal amount of RMB9,000,000 (approximately $1,383,360) from Bank of China
Limited, a financial institution in China, to finance the acquisition of leasehold office units of approximately 5,000 square
feet at the Di Wang Building (Shun Hing Square), Shenzhen, China. The loan bears interest at a 25% premium above the 5-year-or-above
RMB base lending rate per annum with 120 monthly installments and will mature in December 2027. The current interest rate of the
loan is 6.125% per annum. The monthly installments will be determined by the sum of (i) a 25% premium above the 5-year-or-above
RMB base lending rate per annum on the 20
th
day of each month for the interest payment and (ii) RMB75,000 (approximately
$11,528) for the fixed repayment of principal. The mortgage loan is secured by (i) the first legal charge over the property, (ii)
a Restricted-Cash Fixed Deposit of RMB1,000,000 (approximately $153,707) of Greenpro Management Consultancy (Shenzhen) Limited,
(iii) the accounts receivable of Greenpro Management Consultancy (Shenzhen) Limited, (iv) corporate guaranteed by Greenpro Financial
Consulting Limited, (v) corporate guaranteed by a related company which is controlled by Loke Che Chan Gilbert, and (vi) personally
guaranteed by Ms. Chen Yanhong, the legal representative of Greenpro Management Consultancy (Shenzhen) Limited and a shareholder
of the Company.
We
believe that the current facilities are adequate for our current needs. We intend to secure new facilities or expand existing
facilities as necessary to support future growth. We believe that suitable additional space will be available on commercially
reasonable terms as needed to accommodate our operations.
Legal
Proceedings
As
of the date hereof, we know of no material pending legal proceedings against to which we or any of our subsidiaries is a party
or of which any of our property is the subject. There are no proceedings in which any of our directors, executive officers or
affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.
From time to time, we may be subject to various claims, legal actions and regulatory proceedings arising in the ordinary course
of business.
OUR
CORPORATE STRUCTURE AND ACQUISITION HISTORY
We
were incorporated on July 19, 2013 in the state of Nevada under the name Greenpro, Inc. On May 6, 2015, we changed our name to
Greenpro Capital Corp. Our corporate structure is set forth below:
A
list of our subsidiaries, affiliates and VIE entities together with a brief description of their business is set forth below:
Name
(Domicile)
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Business
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Greenpro
Capital Corp. (Nevada, USA)
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Provides
financial consulting services and corporate services
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Greenpro
Resources Limited (British Virgin Islands)
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Holding
company
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Greenpro
Holding Limited (Hong Kong)
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Holds
life insurance products
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Greenpro
Resources (HK) Limited (Hong Kong)
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Holds
Greenpro intellectual property and currently holds six trademarks and applications thereof
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Greenpro
Resources Sdn. Bhd. (Malaysia)
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Holds
real property usable as offices in Malaysia
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Greenpro
Management Consultancy (Shenzhen) Limited (China)
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Provides
corporate advisory services such as tax planning, cross-border listing solution and advisory, transaction services in China
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Shenzhen
Falcon Financial Consulting Limited (China)
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Provides
Hong Kong company formation advisory services & company secretarial services and financial services. It focuses on China
clients.
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Greenpro
Capital Village Sdn. Bhd. (Formerly known as Greenpro Global Advisory Sdn. Bhd.) (Malaysia)
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Provides
educational and support services through seminars and courses to new start-up companies or SMEs.
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Greenpro
Wealthon Sdn. Bhd. (Malaysia)
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Provides
corporate advisory services such as company review, bank loan advisory and bank products analysis services.
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Greenpro
Financial Consulting Limited (Belize)
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Provides
corporate advisory services such as tax planning, cross-border listing solution and advisory, transaction services
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Asia
UBS Global Limited (Belize)
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Provides
business advisory services with main focus on offshore company formation advisory and company secretarial service, such as
tax planning, bookkeeping and financial review. It focuses on South-East Asia and China clients.
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Asia
UBS Global Limited (Hong Kong)
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Provides
business advisory services with main focus on Hong Kong company formation advisory and company secretarial service, such as
tax planning, bookkeeping and financial review. It focuses on Hong Kong clients.
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Falcon
Corporate Services Limited (Formerly known as Ace Corporate Services Limited) (Hong Kong)
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Provides
offshore company formation advisory services & company secretarial services. Clients based in Hong Kong & China
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Falcon
Secretaries Limited (Hong Kong)
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Provides
Hong Kong company formation advisory services & company secretarial services. Clients based in Hong Kong & China
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Yabez
(Hong Kong) Company Limited (Hong Kong)
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Provides
Hong Kong company formation advisory services, corporate secretarial services and IT related services to Hong Kong based clients.
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Yabez
Business Service (SZ) Company Limited (China)
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Provides
Shenzhen company formation advisory services, corporate secretarial services and IT related services to China based clients.
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Billion
Sino Holdings Limited (Seychelles)
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Holding
company
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Parich
Wealth Management Limited (Hong Kong)
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Provides
insurance intermediary business in Hong Kong. Services include long term and general insurance. A qualified member of Professional
Insurance Brokers Association (“PIBA”)
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Greenpro
Credit Limited (Hong Kong) (Formerly known as Gushen Credit Limited)
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Provides
loan and credit services in Hong Kong. Holder of Money Lenders License.
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Greenpro
Family Office Limited (Hong Kong)
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Provides
professional multi-family office offers services such as wealth planning, administration, asset protection & management,
asset consolidation, asset performance monitoring, charity services, tax and legal services, trusteeship and risk management,
investment planning & management, and business support services.
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Greenpro
Venture Capital Limited (Anguilla)
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Holding
company
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Forward
Win International Limited (Hong Kong)
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Holds
investment in commercial Hong Kong real estate
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Chief
Billion Limited (Hong Kong)
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Holds
investment in commercial Hong Kong real estate
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Greenpro
Venture Cap (Qianhai) Limited (Formerly known as Greenpro Venture Cap (CGN) Limited) (Anguilla)
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Holding
company
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Greenpro
Synergy Network Limited (Hong Kong)
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Holds
universal life insurance policies and provides a borderless platform through networking events and programs in Hong Kong.
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Greenpro
Synergy Network (Shenzhen) Limited (China)
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Provides
a borderless platform through networking events and programs in China for our members to seek professional services, business
opportunities, and to exchange sources of information and research
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Acquisition
and Reorganization History
Acquisition
of entities under common control
Acquisition
of Greenpro Resources Limited, a British Virgin Islands company
On
July 31, 2015, we acquired 100% of the issued and outstanding securities of Greenpro Resources Limited, a British Virgin Islands
corporation that was our affiliate at the time of the acquisition (“GRBV”). As consideration thereof, we issued to
the shareholders of GRBV 9,070,000 restricted shares of our common stock (valued at $3,174,500 based on the average closing price
of the six trading days preceding July 28, 2015, which was $0.35 per share) and paid US$25,500 in cash, representing an aggregate
purchase price of US$3,200,000. The purchase price was determined based on the existing business value of GRBV, carrying value
of GRBV properties, brand names of GRBV and settlement of GRBV founder initial investment.
GRBV
provides corporate advisory services such as tax planning, cross-border listing solutions and advisory and transaction services
to start-up and high –growth companies. It also owns real estate in Selangor Darul Ehsan, Malaysia and Kuala Lumpur, Malaysia
that are investment properties, which are currently generating rental income. Through our acquisition of GRBV, we hope to expand
our customer and revenue base as well as broaden the range of services we offer.
Lee
Chong Kuang, our Chief Executive Officer, President and director, was also the Chief Executive Officer, President and director
of GRBV at the time of the acquisition. Mr. Lee holds 44.6% of our issued and outstanding securities and held 50% of the issued
and outstanding securities of GRBV at the time of the acquisition. Loke Che Chan Gilbert, our Chief Financial Officer, Secretary,
Treasurer and director, is also the Chief Financial Officer and director of GRBV. Mr. Loke holds 44.6% of our issued and outstanding
securities and held 50% of the issued and outstanding securities of GRBV at the time of the acquisition. Upon the consummation
of the acquisition, Messrs. Lee and Loke received, in the aggregate, US$25,500 in cash and 9,070,000 shares of our restricted
common stock.
Acquisition
of A&G International Limited, a Belize company
On
September 30, 2015, we acquired 100% of the issued and outstanding securities of A&G International Limited, a Belize corporation
(“A&G”). In connection therewith, we issued to Yap Pei Ling, the shareholder of A&G, 1,842,000 restricted
shares of our common stock, representing an aggregate purchase price of $957,840 based on the average closing price of the ten
trading days preceding July 31, 2015, the date of the acquisition agreement, of $0.52 per share. The purchase price was determined
based on the existing business value generated from A&G.
Ms.
Yap Pei Ling, the director and sole shareholder of A&G, is the spouse of Lee Chong Kuang, our Chief Executive Officer, President
and director.
A&G
provides corporate and business advisory services through its wholly-owned subsidiaries, Asia UBS Global Limited (Hong Kong) and
Asia UBS Global Limited (Belize).
On
December 30, 2015, A&G International Limited transferred all of the issued and outstanding securities of Asia UBS Global Limited,
a Belize Corporation, and Asia UBS Global Limited, a Hong Kong limited company, to Greenpro Resources Limited to simplify our
corporate structure. A&G International Limited, now a corporation with no assets, was subsequently transferred back to Ms.
Yap Pei Ling.
Acquisition
of Greenpro Venture Capital Limited, an Anguilla corporation
On
September 30, 2015, we acquired all of the issued and outstanding securities of Greenpro Venture Capital Limited, an Anguilla
corporation, (“GPVC”) from its shareholders, Lee Chong Kuang and Loke Che Chan Gilbert. As consideration thereof,
we issued to the shareholders of GPVC an aggregate of 13,260,000 restricted shares of our common stock (valued at $7,956,000 based
on the signed Memorandum of Understanding on July 25, 2015 of $0.60 per share) and paid $6,000 in cash, representing an aggregate
purchase price of $7,962,000. The purchase price was determined based on the existing business value of GPVC, including all customers,
fixed assets, investments, cash and cash equivalents and assuming certain liabilities of GPVC. Mr. Lee Chong Kuang, our Chief
Executive Officer, President and director, was also the Chief Executive Officer, President and director of GPVC at the time of
the acquisition. Mr. Lee holds 43.02% of our issued and outstanding shares and held 50% of the issued and outstanding shares of
GPVC at the time of the acquisition. Mr. Loke Che Chan Gilbert, our Chief Financial Officer, Secretary, Treasurer and director,
was also the Chief Financial Officer and director of GPVC. Mr. Loke holds 43.02% of our issued and outstanding shares and held
50% of the issued and outstanding shares of GPVC at the time of the acquisition.
Incorporation
of Greenpro Capital Pty Ltd, an Australian company
Greenpro
Capital Pty Ltd. was formed on May 11, 2016 with 50% held by Greenpro Holding Limited, one of our subsidiaries, and 50% was held
by Mohammad Reza Masoumi Al Agha.
Acquisition
of Greenpro Wealthon Sdn. Bhd., a Malaysia company
On
May 23, 2016, our subsidiary. Greenpro Holding Limited (“GPHL”) acquired 400 shares of Greenpro Wealthon Sdn. Bhd.
from Mr. Lee Chong Kuang with MYR 1 (approximately $0.25). On June 7, 2016, GPHL acquired an additional 200 shares of Greenpro
Wealthon Sdn. Bhd. for MYR120,000 (approximately $30,000), resulting in GPHL owing 60% of Greenpro Wealthon Sdn. Bhd. The remaining
40% of Greenpro Wealthon Sdn. Bhd. is held by Mr. Yiap Soon Keong.
Acquisition
of Greenpro Family Office Limited, a Hong Kong company
On
July 21, 2017, Greenpro Resources Limited, the wholly owned subsidiary of GRNQ, acquired 51% of the shareholdings of Greenpro
Family Office Limited (“GFOL”). GFOL allotted 231,895 shares of GFOL to Greenpro Resources Limited, representing 51%
of the shareholdings of GFOL. The remaining 49% of the shareholdings of GFOL is held by Icon Capital Management Company Limited.
VIE
Structure and Arrangements
Greenpro
Synergy Network Ltd (“GSN”) was incorporated in Hong Kong on March 2, 2016, as a variable interest entity (“VIE”)
that is subject to consolidation with the Company. GSN’s principal activities are to hold certain of our universal life
insurance policies. Loke Che Chan Gilbert,
our
Chief Financial Officer, Secretary, Treasurer and director
and Lee Chong Kuang,
our
Chief Executive Officer, President and director
are the sole shareholders of GSN. We control
GSN through a series of contractual arrangements (the “VIE Agreements”) between GPHL and GSN. The VIE agreements include
(i) an Exclusive Business Cooperation Agreement, (ii) a Loan Agreement, (iii) a Share Pledge Agreement, (iv) a Power of Attorney
and (v) an Exclusive Option Agreement with the shareholder of GSN.
Set
forth below is a more detailed description of each of the VIE agreements.
Exclusive
Business Cooperation Agreement: Pursuant to the Exclusive Business Cooperation Agreement, GPHL serves as the exclusive provider
of technical support, consulting services and management services to GSN. In consideration of such services, GSN has agreed to
pay a service fee to GPHL, which is based on the time of services rendered multiplied by the corresponding rate, plus amount of
the services fees or ratio decided by the board of directors of GPHL. The Agreement has a term of 10 years but may be extended
GPHL in its discretion.
Loan
Agreement: Pursuant to the Loan Agreement, GPHL granted interest-free loans to the shareholders of the GSN for the sole purpose
of increasing the registered capital of the GSN. These loans are eliminated with the capital of GSN during consolidation.
Share
Pledge Agreement: Pursuant to the Share Pledge Agreement, the shareholders of GSN pledged to GPHL a first security interest in
all of their equity interests in GSN to secure GSN’s timely and complete payment and performance of its obligations under
the Exclusive Business Cooperation Agreement. During the term of the Share Pledge Agreement, the pledgors agreed, among other
things, not to transfer, place or permit the existence of any security interest or other encumbrance on their interest in GSN
without the prior written consent of GPHL. The pledge shall remain in effect until 10 years after the obligations under the principal
agreement will have been fulfilled. However, upon the full payment of the consulting and service fees under the Exclusive Business
Cooperation Agreement and upon the termination of GSN’s obligations under the Exclusive Business Cooperation Agreement,
the Share Pledge Agreement shall be terminated and GPHL shall terminate this agreement as soon as reasonably practicable.
Power
of Attorney: Pursuant to the Power of Attorney, Messrs. Lee and Loke, as the sole shareholders of GSN, granted to the GPHL the
right to (i) attend shareholders meetings of GSN (ii) exercise all shareholder rights (including voting rights) with respect to
such equity interests in GSN and (iii) designate and appoint on behalf of such shareholders the legal representative, directors,
supervisors, and other senior management members of GSN. The Power of Attorney is irrevocable and is continuously valid from the
date of execution of such Power of Attorney, so long as such persons remain shareholders of GSN.
Exclusive
Option Agreement: Pursuant to the Exclusive Option Agreement, the shareholders of GSN granted to the GPHL an irrevocable and exclusive
right and option to purchase all of their equity interests in GSN. The purchase price shall be equal to the capital paid in by
the shareholders, adjusted pro rata for the purchase of less than all of the equity interests. The Agreement is effective for
a term of 10 years, and may be renewed at GPHL’s election
.
On
July 28, 2017, GSN incorporated a new subsidiary in Shenzhen, China, Greenpro Synergy Network (Shenzhen) Limited, with 100% ownership.
Greenpro Synergy Network (Shenzhen) Limited was incorporated for cross-border cooperation among independent professional services
firms, global institutions, high net worth individuals, and entrepreneurs. We intend to provide a borderless platform through
networking events and programs in China for our members to seek professional services, business opportunities, and to exchange
sources of information and research.
Acquisitions
Acquisition
of Yabez (Hong Kong) Company Limited, a Hong Kong company
On
September 30, 2015, we acquired 60% of the issued and outstanding securities of Yabez (Hong Kong) Company Limited, a Hong Kong
corporation (“Yabez”). As consideration thereto, we issued to the shareholders of Yabez 486,171 restricted shares
of our common stock, representing an aggregate purchase price of $252,808 based on the average closing price of the ten trading
days preceding July 31, 2015, the date of the acquisition agreement, of $0.52 per share. The purchase price was determined based
on the existing business value generated from Yabez. Yabez provides Hong Kong company formation advisory services, corporate secretarial
services and IT related services to Hong Kong based clients.
Acquisition
of Falcon Secretaries Limited and Ace Corporate Services Limited, each Hong Kong companies, and Shenzhen Falcon Financial Consulting
Limited, a Shenzhen, China company
On
September 30, 2015, we acquired all of the issued and outstanding securities of Falcon Secretaries Limited, Ace Corporate Services
Limited and Shenzhen Falcon Financial Consulting Limited (these companies collectively known as “F&A”). As consideration
thereto, we issued to Ms. Chen Yanhong, the sole shareholder of F&A, 2,080,200 restricted shares of our common stock, representing
an aggregate purchase price of $1,081,704 based on the average closing price of the ten trading days preceding July 31, 2015,
the date of the acquisition agreement, of $0.52 per share. The purchase price was determined based on the existing business value
generated from F&A.
Ms.
Chen Yanhong, the director and sole shareholder of F&A, is also the director and legal representative of Greenpro Management
Consultancy (Shenzhen) Limited, one of our subsidiaries.
Acquisition
of Billion Sino Holdings Limited, a Seychelles company
On
April 25, 2017, GRNQ and Mr. Yiu Yau Wing and Mr. Chui Sang Derek, representing the 91% & 9% shareholders of Billion Sino
Holdings Limited respectively, a Seychelles corporation (“BSHL”), entered into a Sale and Purchase Agreement, pursuant
to which GRNQ acquired 60% of the issued and outstanding shares of BSHL. As consideration thereto, GRNQ agreed to issue to the
shareholders of BSHL in the aggregate 340,645 restricted shares of GRNQ’s common stock.
Acquisition
of Gushen Credit Limited, a Hong Kong company
On
April 27, 2017, Greenpro Resources Limited, the wholly owned subsidiary of GRNQ and Gushen Credit Limited, a Hong Kong corporation
(“GCL”), entered into an Asset Purchase Agreement, pursuant to which GRNQ purchased the assets in GCL. As consideration
thereto, GRNQ agreed to pay the purchase price of $105,000.
GCL
operates a money lending business in Hong Kong, located at 1701-03, 17/F, Metropolis Tower, 10 Metropolis Drive, Hung Hom, Kowloon,
Hong Kong. On April 28, 2017, GSHL sold two (2) ordinary shares of GCL to GRNQ, representing 100% ownership, for a total consideration
of $0.26 in cash. The purchase price is determined based on the mutual agreement between GSHL and GRNQ. GCL was renamed to Greenpro
Credit Limited on May 16, 2017.
Potential
acquisitions
We
are searching for potential acquisitions targets in financial technology and/or financial services industries. Currently we have
not entered into any material definitive agreements with any potential targets as of the filing date of the prospectus.
DIRECTORS
AND EXECUTIVE OFFICERS
The
following table sets forth certain information about our executive officers and directors as of the date of this prospectus.
Name
|
|
Age
|
|
Positions
and Offices
|
|
|
|
|
|
Lee,
Chong Kuang
|
|
44
|
|
President,
Chief Executive Officer, Chairman of the Board
|
Loke,
Che Chan Gilbert
|
|
63
|
|
Chief
Financial Officer, Secretary, Treasurer, Director
|
Chuchottaworn,
Srirat
|
|
49
|
|
Director
|
Hee,
Chee Keong (1)
|
|
46
|
|
Director
|
Shum,
Albert (1)(2)(3)
|
|
58
|
|
Director
|
Chin,
Kiew Kwong (1)(2)(3)
|
|
46
|
|
Director
|
How,
Kok Choong
|
|
54
|
|
Director
|
(1)
|
Member
of the Audit Committee.
|
(2)
|
Member
of the Compensation Committee.
|
(3)
|
Member
of the Nominating and Corporate Governance Committee.
|
Lee,
Chong Kuang
, age 44, has served as our Chief Executive Officer, President and Chairman of the Board since July 19, 2013.
From 2003 until January 2015, Mr. Lee served as a director of Asia UBS Global Ltd, a Hong Kong company, which he founded in 2003.
He served as director, Chief Financial Officer and Treasurer of Odenza Corp. from February 4, 2013 to April 29, 2016. He also
served as the Chief Financial Officer and director of Moxian Corporation from October 2012 until December 2014. Mr. Lee served
as director of Greenpro Talents Ltd. from November 16, 2015 to June 6, 2017. Mr. Lee served as director of GC Investment Management
Limited, which is the investment manager of Greenpro Asia Strategic SPC, since April 6, 2016. From 1997 to 2000, Mr. Lee worked
at K. Y. Ho & Co, Chartered Accountants. He began his professional career with Siva Tan & Co., a Chartered Accountant
firm in Malaysia in 1995 where he remained until 1997. As a qualified member of the ACCA and Malaysia Institute of Accountants,
Mr. Lee earned his professional qualification from the Hong Kong Institute of Certified Public Accountants and extended his professional
services covering accounting, tax, corporate structuring planning with special focus in cross-border client nature, in addition
to his accounting software businesses. Mr. Lee established the Cross Border Business Association (CBBA) – a NGO (Non-Government
Organization) established under Hong Kong Society Act - to provide information and professional advice in Cross Border Business
for its investment members. For the Cross Border Investment especially in the mining resources companies which are growing fast
since 2011, Mr. Lee continues to support its clients by using cloud platform to strengthen its clientele through the use of technology
advancement and models such as SaaS, PaaS, etc., for accounting and management solution purposes. Mr. Lee brings to the board
of directors business leadership, corporate strategy and accounting and financial expertise.
Loke,
Che Chan Gilbert
,
age 63, has served as our Chief Financial Officer, Treasurer and Director since inception on July 19,
2013. Mr. Loke has extensive knowledge in accounting and has been an accountant for more than 30 years. He was trained and qualified
with UHY (formerly known as Hacker Young), Chartered Accountants, one of the large accounting firms based in London, England between
1980 and 1988. His extensive experience in auditing, accounting, taxation, SOX compliance and corporate listing has prompted him
to specialize in corporate advisory, risk management and internal controls serving those small medium-sized enterprises. From
September 1999 until June 2013, Mr. Loke served as an adjunct lecturer in ACCA P3 Business Analysis at HKU SPACE (HKU School of
Professional and Continuing Education), which is an extension of the University of Hong Kong and provides professional and continuing
education. Mr. Loke worked as an independent, non-executive director of ZMay Holdings Limited, a public company listed on the
Hong Kong Stock Exchange from January 2008 to July 2008 and as Chief Financial Officer for Asia Properties Inc. from May 31, 2011
to March 28, 2012 and Sino Bioenergy Inc., with both companies listed on the OTC Markets in the US, from 2011 to 2012. Mr. Loke
has served as the Chief Executive Officer and a director of Greenpro Resources Corporation since October 16, 2012. He has also
served the Chief Executive Officer and a director of Moxian Corporation from October 2012 until December 2014. Mr. Loke served
as an independent director of Odenza Corp. from February 2013 to May 2015. He has also served as the Chief Financial Officer,
Secretary, Treasurer, and a director of CGN Nanotech, Inc. from September 4, 2014 to September 28, 2016.
Mr.
Loke served as director of Greenpro Talents Ltd. from November 16, 2015 to June 6, 2017. Mr. Loke served as director of GC Investment
Management Limited, which is the investment manager of Greenpro Asia Strategic SPC, since April 6, 2016. Mr. Loke earned his degree
of MBA from Bulacan State University, Philippines, and earned his professional accountancy qualifications from the ACCA, AIA and
HKICPA. He also earned other professional qualifications from the HKICS, ICSA as Chartered Secretary, FPAM - Malaysia as Certified
Financial Planner, ATIHK as tax adviser in Hong Kong and CWM Institute as Chartered Wealth Manager in Hong Kong. Mr. Loke brings
to the board of directors accounting and financial expertise and business leadership.
Chuchottaworn,
Srirat,
age 49, joined us as an Independent Director on October 18, 2015. Ms. Chuchottaworn has more than 20 years in
the IT and consulting business. In 1997, she became an SAP consultant for finance and controlling (FI/CO) and held a certificate
of FI/CO. In 2004, she found I AM Group and has been the group director since then. She is an experienced project manager and
holds multiple SAP certifications. She obtained a Bachelor Degree in Engineer from the King Monkut’s Institute of Technology
Ladkrabang and Master of Science in Information Technology from the Chulalongkorn University. Ms. Chuchottaworn brings to the
board of directors business leadership and experience and familiarity with conducting business in Thailand.
Hee,
Chee Keong,
age 46, joined us as an Independent Director of the Company on March 14, 2016. From June 2014 to October 2015,
Mr. Hee served as the Chief Financial Officer of Galasys Plc. From June 2013 to September 2014, he served as the Chief Financial
Officer of Apple Green Holding, Inc. (formerly called Blue Sun Media, Inc). Mr. Hee was the Finance Director and Non-Independent
& Non-Executive Director at NetX Holdings Berhad (known as Global Soft Berhad) from November 2004 to January 2009 and January
2009 to June 2013, respectively. Mr. Hee is a Chartered Accountant of the Malaysian Institute of Accountants (MIA) and a fellow
member of Association of Chartered Certified Accountants (FCCA). He has more than 18 years of working experience in both private
and public companies. Mr. Hee has also worked as the Group Accountant and Principal Accounting Officer in his career. During the
course of his career, Mr. Hee was involved in various industries, including accounting, information technology, manufacturing,
trading, property, construction, leisure and entertainment. He has hands-on experience with the due diligence process, IPOs, issuance
of warrants, corporate and debt restructuring in different fields and industries especially in accounting and finance. He brings
to the board of directors deep finance, audit and business experience.
Shum,
Albert
,
age 58, joined us as an Independent Director of the Company on March 14, 2016. Mr. Shum is a certified Project
Management Practitioner with over 30 years of experience in leading projects and people, implementing and overseeing technology
programs, and administering all facets of technology initiatives. Mr. Shum has served as the Global Head of IT (ADM) in the Intertrust
Group since May 2010, where he was responsible for leading the delivery of core information technology services through a global
team to business units across more than twenty jurisdictions. Mr. Shum was fully accountable for the implementation of professional
and effective solutions to ensure that the underlying functions, coupled with effective internal controls and worked together
with the business to achieve its overall strategy across all locations. Prior to that time, Mr. Shum served as the Chief Information
Officer in the South China Morning Post Group from January 2007 to March 2010 and the Regional CIO for Schindler Group from October
2000 to December 2006. Mr. Shum holds a Bachelor Degree of Business Administration from Pacific States University, USA, a Diploma
in Computer Science from the Computer Learning Institute, USA and had attended program for Executive Development at IMD business
school in Lausanne, Switzerland. Mr. Shum brings to the board of directors his wide experience in internal controls and information
technology.
Chin,
Kiew Kwong
, age 46, joined us as an Independent Director of the Company on March 14, 2016. Mr. Chin has served as a Group
Agency Manager at Public Mutual Berhad since 2005, a company listed on the Bursa, Stock Exchange of Malaysia which is a provider
of private unit trust company and private retirement scheme (PRS) in Malaysia. He is a project leader and marketing expert in
leading more than 100 unit trust consultants for the past 10 years. He was frequently awarded by the Great Eastern Assurance from
1997 to 2004 and Public Mutual Berhad Achievement since 2005. Mr. Chin was a Post graduate in computer studies from Informatics
College, Kuala Lumpur in 1993. He is also a Certified NLP Practitioner and has vast experience in the fields of IT services, finance
and unit trust since 1991. Mr. Chin brings to the board of directors his broad business and management experience.
How,
Kok Choong,
age 54, joined us as an Independent Director of the Company on December 7, 2016. Mr. How earned a Master and
Doctorate in Business Administrative from Newport University, USA. He is also a Fellow Member of Chartered Institute of Management
in UK and a Fellow Member of Canadian Chartered Institute of Business Administration in Canada. Mr. How has extensive knowledge
in business management for more than 20 years. Since 1993, Mr. How has served as CEO of San Hin Group which is a strong group
of companies ranging from property development, civil & building construction, machinery & transportation, ready mixed
concrete and shopping complex management in Malaysia. Since 1994, he has also served as managing director of Wawasan Saga, Kota
Kinabalu which is a shopping complex with hotel at the heart of Kota Kinabalu, Malaysia. Since 1997, he has served as a group
CEO of Tang Dynasty Hotel Group which is the largest chain hotel in Sabah, Malaysia. In 2004, Mr. How started to work as Global
president of AGAPE Superior Living International Group which is a leading health and wellness company in nine countries. Since
2010, he has worked as president of TH3 Holdings Sdn. Bhd. which specializes in IT, academy, online education, mobile App, e-Commerce
and digital marketing. Since June, 2016, Mr. How has served as CEO and a director of Agape ATP Corporation, a company which provides
health solution advisory services. In Malaysia, he received Outstanding Asian Community Contribution Award in 2011, Malaysia Top
Team 50 Enterprise Award in 2011, The Contributor Award (Medical and Health Research) in 2012, “Man of The Year” in
Worldwide Excellence Award in 2015 and “Man of The Year” in McMillan Global Award in 2016. Mr. How brings to the board
of directors his business leadership and experience in a wide range of industries.
Family
Relationships
There
are no family relationships between any of our directors or executive officers.
Board
of Directors
All
directors hold office until the next annual meeting of shareholders and until their successors have been duly elected and qualified.
Directors are elected at the annual meetings to serve for one-year terms. Officers are elected by, and serve at the discretion
of, the board of directors. Our board of directors shall hold meetings on at least a quarterly basis.
The
board of directors has determined to comply with the NASDAQ Listing Rules with respect to certain corporate governance matters.
As a smaller reporting company, under the NASDAQ rules we are only required to maintain a board of directors comprised of at least
50% independent directors, and an audit committee of at least two members, comprised solely of independent directors who also
meet the requirements of Rule 10A-3 under the Securities Exchange Act of 1934.
Director
Independence
The
board of directors has reviewed the independence of our directors, applying the NASDAQ independence standards. Based on this review,
the board of directors determined that each of Chuchottaworn Srirat, Hee Chee Keong, Shum Albert, Chin Kiew Kwong and How Kok
Choong are independent within the meaning of the NASDAQ rules. In making this determination, our board of directors considered
the relationships that each of these non-employee directors has with us and all other facts and circumstances our board of directors
deemed relevant in determining their independence. As required under applicable NASDAQ rules, we anticipate that our independent
directors will meet on a regular basis as often as necessary to fulfill their responsibilities, including at least annually in
executive session without the presence of non-independent directors and management.
Board
Committees
Our
board of directors has established standing committees in connection with the discharge of its responsibilities. These committees
include an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Our board of directors
has adopted written charters for each of these committees. Copies of the charters are available on our website. Our board of directors
may establish other committees as it deems necessary or appropriate from time to time.
Audit
Committee
Our
Audit Committee was established on March 23, 2016 and is comprised of three of our independent directors: Hee Chee Keong (Chairman),
Shum Albert and Chin Kiew Kwong. Hee Chee Keong qualifies as the Audit Committee financial expert as defined in Item 407(d)(5)
of Regulation S-K promulgated under the Securities Act.
According
to its charter, the Audit Committee consists of at least three members, each of whom shall be a non-employee director who has
been determined by the Board to meet the independence requirements of NASDAQ, and also Rule 10A-3(b)(1) of the SEC, subject to
the exemptions provided in Rule 10A-3(c). We do not have a website containing a copy of the Audit Committee Charter. The Audit
Committee Charter describes the primary functions of the Audit Committee, including the following:
|
●
|
Oversee
the Company’s accounting and financial reporting processes;
|
|
|
|
|
●
|
Oversee
audits of the Company’s financial statements;
|
|
|
|
|
●
|
Discuss
policies with respect to risk assessment and risk management, and discuss the Company’s major financial risk exposures
and the steps management has taken to monitor and control such exposures;
|
|
|
|
|
●
|
Review
and discuss with management the Company’s audited financial statements and review with management and the Company’s
independent registered public accounting firm the Company’s financial statements prior to the filing with the SEC of
any report containing such financial statements.
|
|
|
|
|
●
|
Recommend
to the board that the Company’s audited financial statements be included in its annual report on Form 10-K for the last
fiscal year;
|
|
|
|
|
●
|
Meet
separately, periodically, with management, with the Company’s internal auditors (or other personnel responsible for
the internal audit function) and with the Company’s independent registered public accounting firm;
|
|
|
|
|
●
|
Be
directly responsible for the appointment, compensation, retention and oversight of the work of any independent registered
public accounting firm engaged to prepare or issue an audit report for the Company;
|
|
|
|
|
●
|
Take,
or recommend that the board take, appropriate action to oversee and ensure the independence of the Company’s independent
registered public accounting firm; and
|
|
|
|
|
●
|
Review
major changes to the Company’s auditing and accounting principles and practices as suggested by the Company’s
independent registered public accounting firm, internal auditors or management.
|
Compensation
Committee
The
Compensation Committee will be responsible for, among other matters:
|
●
|
reviewing
and approving, or recommending to the board of directors to approve the compensation of our CEO and other executive officers
and directors reviewing key employee compensation goals, policies, plans and programs;
|
|
|
|
|
●
|
administering
incentive and equity-based compensation;
|
|
|
|
|
●
|
reviewing
and approving employment agreements and other similar arrangements between us and our executive officers; and
|
|
|
|
|
●
|
appointing
and overseeing any compensation consultants or advisors.
|
Our
Compensation Committee was established on March 17, 2017 and currently consists of Mr. Chin Kiew Kwong and Mr. Shum Albert. Mr.
Chin Kiew Kwong serves as chair of the Compensation Committee.
Corporate
Governance and Nominating Committee
The
Corporate Governance and Nominating Committee will be responsible for, among other matters:
|
●
|
selecting
or recommending for selection candidates for directorships;
|
|
|
|
|
●
|
evaluating
the independence of directors and director nominees;
|
|
|
|
|
●
|
reviewing
and making recommendations regarding the structure and composition of our board and the board committees;
|
|
|
|
|
●
|
developing
and recommending to the board corporate governance principles and practices;
|
|
|
|
|
●
|
reviewing
and monitoring the Company’s Code of Business Conduct and Ethics; and
|
|
|
|
|
●
|
overseeing
the evaluation of the Company’s management.
|
Our
Corporate Governance and Nominating Committee was established on March 17, 2017 and currently consists of Mr. Shum Albert and
Mr. Chin Kiew Kwong. Mr. Shum Albert serves as chair of the Corporate Governance and Nominating Committee.
Board
Leadership Structure and Role in Risk Oversight
Mr.
Lee Chong Kuang holds the positions of chief executive officer and chairman of the board of the Company. The board believes that
Mr. Lee’s services as both chief executive officer and chairman of the board is in the best interest of the Company and
its shareholders. Mr. Lee possesses detailed and in-depth knowledge of the issues, opportunities and challenges facing the Company
in its business and is thus best positioned to develop agendas that ensure that the Board’s time and attention are focused
on the most critical matters relating to the business of the Company. His combined role enables decisive leadership, ensures clear
accountability, and enhances the Company’s ability to communicate its message and strategy clearly and consistently to the
Company’s shareholders, employees and customers.
The
board has not designated a lead director. Given the limited number of directors comprising the Board, the independent directors
call and plan their executive sessions collaboratively and, between meetings of the Board, communicate with management and one
another directly. Under these circumstances, the directors believe designating a lead director to take on responsibility for functions
in which they all currently participate might detract from rather than enhance performance of their responsibilities as directors.
Management
is responsible for assessing and managing risk, subject to oversight by the board of directors. The board oversees our risk management
policies and risk appetite, including operational risks and risks relating to our business strategy and transactions. Various
committees of the board assist the board in this oversight responsibility in their respective areas of expertise.
|
●
|
The
Audit Committee assists the board with the oversight of our financial reporting, independent auditors and internal controls.
It is charged with identifying any flaws in business management and recommending remedies, detecting fraud risks and implementing
anti-fraud measures. The audit committee further discusses Greenpro policies with respect to risk assessment and management
with respect to financial reporting.
|
|
|
|
|
●
|
The
Compensation Committee oversees compensation, retention, succession and other human resources-related issues and risks.
|
|
|
|
|
●
|
The
Corporate Governance and Nominating Committee overviews risks relating to our governance policies and initiatives.
|
Code
of Business Conduct and Ethics
Our
board of directors has adopted a code of ethics that applies to all of our directors, officers and employees, including our principal
executive officer, principal financial officer and principal accounting officer. The code addresses, among other things, honesty
and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements
under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code. The
code of ethics is available on the Company’s website at www.greenprocapital.com.
EXECUTIVE
COMPENSATION
Set
forth below is information regarding the compensation paid during the years ended December 31, 2017 and 2016 to our principal
executive officer and principal financial officer, who are collectively sometimes referred to as “named executive officers”
elsewhere in this prospectus.
Name
and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
Lee
Chong Kuang
|
|
|
2017
|
|
|
|
180,000
|
|
|
|
180,000
|
|
Chief
Executive Officer and President
|
|
|
2016
|
|
|
|
180,000
|
|
|
|
180,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loke
Che Chan Gilbert
|
|
|
2017
|
|
|
|
180,000
|
|
|
|
180,000
|
|
Chief
Financial Officer, Treasurer and Secretary
|
|
|
2016
|
|
|
|
180,000
|
|
|
|
180,000
|
|
Employment
Agreements
Each
of Loke Che Chan Gilbert, our Chief Financial Officer, Secretary, and director, and Mr. Lee Chong Kuang, our Chief Executive Officer,
signed new employment agreements on July 28, 2017. The new employment agreements came into effect on September 1, 2017 and will
expire on August 31, 2020. The terms of the agreements are the same as that of the existing employment agreements.
Under
the terms of the agreements, each of Messrs. Loke and Lee will receive a monthly salary equal to $13,000, and a monthly housing
allowance of $2,000, both which may also be payable in Hong Kong Dollars.
Messrs.
Loke and Lee are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with
their services on our behalf. The employment agreements also contain normal and customary terms relating to confidentiality, indemnification,
non-solicitation and ownership of intellectual property.
Outstanding
Equity Awards At Fiscal Year-End
None.
Director
Compensation
During
our fiscal years ended December 31, 2017 and 2016, we provided $500 per month as compensation to our independent directors, including
Hee Chee Keong, Shum Albert and Chin Kiew Kwong, who serve on the audit committee.
We
currently have no plan for compensating our executive directors for their services in their capacity as directors, although we
may elect to issue stock options or provide cash compensation to such persons from time to time in the future. However, we are
compensating the independent directors who are serving in the audit committee. These independent directors in the audit committee
are entitled to the reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance
at meetings of our board of directors. Our board of directors may award special remuneration to any director undertaking any special
services on our behalf other than services ordinarily required of a director.
Compensation
Committee Interlocks and Insider Participation
We
are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide
the information under this item.
CERTAIN
RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS
Except
as set forth below, we have not been a party to any transaction since January 1, 2016, in which the amount involved in the transaction
exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets as at the year-end for the last
two completed fiscal years, and to which any of our directors, executive officers or beneficial holders of more than 5% of our
capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will
have a direct or indirect material interest.
Our
policy is that a contract or transaction either between the Company and a director, or between a director and another company
in which he is financially interested is not necessarily void or void-able if the relationship or interest is disclosed or known
to the board of directors and the board of directors is entitled to vote on the issue.
Transactions
with certain companies which Greenpro Venture Capital Limited owns a certain percentage of such company shares and companies that
we have determined that we can significantly influence based on our common business relationships.
Related
party transactions amounted to $329,645 and $406,631 for the years ended December 31, 2017 and 2016, respectively, in service
revenue and rental revenue.
Our
related parties are those companies where Greenpro Venture Capital Limited owns a certain percentage of the shares of such companies,
and companies that we have determined that we can significantly influence based on our common business relationships. One related
party is under common control of Mr. Loke Che Chan, Gilbert, the chief financial officer of the Company. All of these related
party transactions are transacted at an arms-length basis at the current market value in the normal course of business.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of April 27, 2018, certain information concerning the beneficial ownership of our common stock
by (i) each stockholder known by us to own beneficially five percent or more of our outstanding common stock or series a common
stock; (ii) each director; (iii) each named executive officer; and (iv) all of our executive officers and directors as a group,
and their percentage ownership and voting power.
The
information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the
rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these
rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote
or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to
own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within
sixty (60) days through the conversion or exercise of any convertible security, warrant, option, or other right. More than one
(1) person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person
as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number
of shares as to which such person has the right to acquire voting or investment power within sixty (60) days, by the sum of the
number of shares outstanding as of such date. Consequently, the denominator used for calculating such percentage may be different
for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the
beneficial owners of our common stock listed below have sole voting and investment power with respect to the shares shown.
The
column entitled “Percentage of Shares Beneficially Owned — Before Offering” is based on a total of 53,233,960
shares of our common stock outstanding on April 27, 2018. The columns entitled “Percentage of Shares Beneficially Owned
— After Offering” also include shares of common stock outstanding after completion of this offering assuming the sale
of all of the shares of common stock being offered hereby.
|
|
|
|
|
Percentage
of Shares Beneficially Owned
(2)
|
|
Name
of Beneficial Owner
(1)
|
|
Number
of Shares Beneficially Owned
(2)
|
|
|
Before
Offering
|
|
|
After
Offering (Minimum Offering)
|
|
|
After
Offering (Maximum Offering)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Officers
and Directors
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lee
Chong Kuang
(3)
President,
Chief Executive Officer and Director
|
|
|
20,099,600
|
|
|
|
37.76
|
%
|
|
|
37.41
|
%
|
|
|
36.06
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loke
Che Chan Gilbert
Chief Financial
Officer and Director
|
|
|
18,438,450
|
|
|
|
34.64
|
%
|
|
|
34.31
|
%
|
|
|
33.08
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chuchottaworn
Srirat Independent Director
|
|
|
1,221,500
|
|
|
|
2.29
|
%
|
|
|
2.27
|
%
|
|
|
2.19
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hee
Chee Keong Independent Director
|
|
|
0
|
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shum
Albert Independent Director
|
|
|
0
|
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chin
Kiew Kwong Independent Director
|
|
|
0
|
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
How
Kok Choong Independent Director
|
|
|
55,400
|
|
|
|
0.10
|
%
|
|
|
0.10
|
%
|
|
|
0.10
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
officers and directors as a group (7 persons named above)
|
|
|
39,814,950
|
|
|
|
74.79
|
%
|
|
|
74.10
|
%
|
|
|
71.44
|
%
|
(1)
|
Except
as otherwise set forth below, the address of each beneficial owner is Room 1701-1703, 17/F, The Metropolis Tower, 10 Metropolis
Drive, Hung Hom, Kowloon, Hong Kong.
|
|
|
(2)
|
Based
on 53,233,960 shares of common stock outstanding as of April 27, 2018, together with securities exercisable or convertible
into shares of common stock within 60 days of April 27, 2018. Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares
of common stock that a person has the right to acquire beneficial ownership of upon the exercise or conversion of options,
convertible stock, warrants or other securities that are currently exercisable or convertible or that will become exercisable
or convertible within 60 days of April 27, 2018 are deemed to be beneficially owned by the person holding such securities
for the purpose of computing the number of shares beneficially owned and percentage of ownership of such person, but are not
treated as outstanding for the purpose of computing the percentage ownership of any other person.
|
|
|
(3)
|
Represents
18,438,450 shares held directly by Mr. Lee Chong Kuang and 1,661,150 shares held by his spouse Yap Pei Ling.
|
DESCRIPTION
OF SECURITIES
The
following description of our capital stock is only a summary, and is qualified in its entirety by reference to the actual terms
and provisions of the capital stock contained in our articles of incorporation and our bylaws.
As
of April 27, 2018, we had 53,233,960 shares of our common stock issued and outstanding. There were approximately 301 record holders
of our common stock. Such number does not include any shareholders holding shares in nominee or “street name”.
Our
authorized capital consists, of 600,000,000 shares, of which 500,000,000 shares are designated as shares of common stock, par
value $0.0001 per share, and 100,000,000 shares are designated as shares of preferred stock, par value $0.0001 per share. No shares
of preferred stock are currently outstanding. Shares of preferred stock may be issued in one or more series, each series to be
appropriately designated by a distinguishing letter or title, prior to the issuance of any shares thereof. The voting powers,
designations, preferences, limitations, restrictions, relative, participating, options and other rights, and the qualifications,
limitations, or restrictions thereof, of the preferred stock shall hereinafter be prescribed by resolution of the board of directors
before the issuance of any shares of preferred stock in such series.
Common
Stock
Each
share of our common stock entitles its holder to one vote per share on all matters to be voted or consented upon by the stockholders.
The holders of our common stock are entitled to receive dividends, in equal amounts per share, when and as declared by our board
of directors from legally available sources, subject to any restrictions in our certificate of incorporation or prior rights of
the holders of our preferred stock. In the event of our liquidation or dissolution, the holders of our common stock are entitled
to share ratably in the assets available for distribution after the payment of all of our debts and other liabilities, subject
to the prior rights of the holders of our preferred stock. The holders of our common stock have no subscription, redemption or
conversion privileges. Our common stock does not entitle its holders to preemptive rights. All of the outstanding shares of our
common stock are fully paid and non-assessable. The rights, preferences and privileges of the holders of our common stock are
subject to the rights of the holders of shares of any series of preferred stock which we may issue in the future.
Transfer
Agent
The
transfer agent for our capital stock is VStock Transfer, LLC, with an address at 18 Lafayette Place, Woodmere, NY 11598, telephone
number is 212-828-8436.
Listing
Our
common stock has been approved for listing on the NASDAQ Capital Market under the symbol “GRNQ.” Prior to the commencement
of trading of our common stock, we are required to provide to NASDAQ the final number of shares to be sold and a full list of
participants in the offering.
Control
Share Acquisitions
The
“control share” provisions of Sections 78.378 to 78.3793, inclusive, of the NRS, apply to “issuing corporations”
that are Nevada corporations with at least 200 stockholders of record, including at least 100 stockholders of record who are Nevada
residents, and that conduct business directly or indirectly in Nevada, unless the corporation has elected to not be subject to
these provisions. The control share statute prohibits an acquirer of shares of an issuing corporation, under certain circumstances,
from voting its shares of a corporation’s stock after crossing certain ownership threshold percentages, unless the acquirer
obtains approval of the target corporation’s disinterested stockholders. The statute specifies three thresholds: (a) one-fifth
or more but less than one-third, (b) one-third but less than a majority, and (c) a majority or more, of the outstanding voting
power. Generally, once a person acquires shares in excess of any of the thresholds, those shares and any additional shares acquired
within 90 days thereof become “control shares” and such control shares are deprived of the right to vote until disinterested
stockholders restore the right. These provisions also provide that if control shares are accorded full voting rights and the acquiring
person has acquired a majority or more of all voting power, all other stockholders who do not vote in favor of authorizing voting
rights to the control shares are entitled to demand payment for the fair value of their shares in accordance with statutory procedures
established for dissenters’ rights. A corporation may elect to not be governed by, or “opt out” of, the control
share provisions by making an election in its articles of incorporation or bylaws, provided that the opt-out election must be
in place on the 10th day following the date an acquiring person has acquired a controlling interest, that is, crossing any of
the three thresholds described above. We have not opted out of these provisions and will be subject to the control share provisions
of the NRS if we meet the definition of an issuing corporation upon an acquiring person acquiring a controlling interest unless
we later opt out of these provisions and the opt out is in effect on the 10th day following such occurrence.
The
effect of the Nevada control share statute is that the acquiring person, and those acting in association with the acquiring person,
will obtain only such voting rights in the control shares as are conferred by a resolution of the stockholders at an annual or
special meeting. The Nevada control share law, if applicable, could have the effect of discouraging takeovers of our company.
SHARES
ELIGIBLE FOR FUTURE SALE
Prior
to this offering, only a limited public market for our common stock existed on the OTCQB. Future sales of substantial amounts
of our common stock in the public market, including shares issued upon exercise of outstanding warrants, or the anticipation of
such sales, could adversely affect prevailing market prices of our common stock from time to time and could impair our ability
to raise equity capital in the future.
Upon
the closing of this offering, assuming a public offering price of $6.00 per share, which is set forth on the cover page of this
prospectus, we will have 53,733,960 shares of our common stock issued and outstanding assuming the minimum offering amount is
sold and 55,733,960 shares of our common stock issued and outstanding assuming the maximum offering amount is sold. In addition,
we will have outstanding 53,983,960 shares of common stock issuable upon the exercise of the Placement Agent’s Warrants
assuming the minimum offering amount is sold and 55,983,960 shares of our common stock issued and outstanding assuming the maximum
offering amount is sold.
All
of the shares sold in this offering will be freely tradable unless purchased by our “affiliates,” as that term is
defined in Rule 144 under the Securities Act of 1933, as amended, or the Securities Act.
Lock-Up
For
further details on the lock-up agreements, see the section entitled “Plan of Distribution — Lock Up Agreements.”
Rule
144
In
general, under Rule 144 of the Securities Act, as in effect on the date of this prospectus, any person who is not our affiliate
and has not been our affiliate at any time during the preceding three months, and who has beneficially owned their shares for
at least six months, including the holding period of any prior owner other than one of our affiliates, would be entitled to sell
an unlimited number of shares of our common stock provided current public information about us is available, and, after owning
such shares for at least one year, including the holding period of any prior owner other than one of our affiliates, would be
entitled to sell an unlimited number of shares of our common stock without restriction.
A
person who is our affiliate or who was our affiliate at any time during the preceding three months, and who has beneficially owned
restricted securities for at least six months, including the holding period of any prior owner other than one of our affiliates,
is entitled to sell within any three-month period a number of shares that does not exceed the greater of:
|
●
|
one
percent (1%) of the number of shares of our common stock then outstanding, which will equal approximately 557,340 shares assuming
all of the shares of common stock offered hereby are sold, or
|
|
|
|
|
●
|
the
average weekly trading volume of our common stock during the four calendar weeks preceding the filing of a Notice of Proposed
Sale of Securities pursuant to Rule 144 with respect to the sale.
|
Sales
under Rule 144 by our affiliates are also subject to manner of sale provisions and notice requirements and to the availability
of current public information about us.
PLAN
OF DISTRIBUTION
In
connection with this offering, we will enter into a placement agency agreement with Network 1 Financial Securities, Inc., which
we sometimes refer to herein as the Placement Agent. The Placement Agent is not purchasing or selling any securities offered by
this prospectus but will assist us in this offering on a “best efforts” basis. The Placement Agent is no obligation
to buy any of the common stock from us nor are they required to arrange the purchase or sale of any specific number or dollar
amount of the common stock, but have agreed to use their “best efforts” to arrange for the sale of a minimum of 500,000
shares of common stock and a maximum of 2,500,000 shares of common stock. The Placement Agent may retain other brokers or dealers
to act as sub-agents on its behalf in connection with this offering and may pay any sub-agent a solicitation fee with respect
to any securities placed by it. Affiliates of the company and affiliates and associated persons of the Placement Agent may invest
in this offering on the same terms and conditions as the public investors participating in this offering, and any common stock
purchased will make up a portion of the minimum offering needed to complete this offering.
The
shares of common stock are being offered on a “best efforts” basis, meaning that the Placement Agent is not obligated
to purchase any common stock. No common stock will be sold unless at least a minimum of 500,000 shares of common stock have been
sold no later than June 30, 2018, unless extended for an additional six months until December 31, 2018 with the consent of our
board of directors. All monies collected for subscriptions will be held in a separate escrowed bank account at JP Morgan Chase.
Continental Stock Transfer & Trust Company shall serve as escrow agent. The monies shall remain in the bank account until
the total amount of 500,000 shares of common stock have been sold. Any checks for the purchase of shares should be made payable
to “CST&T Greenpro Capital Corp Escrow Account” The Placement Agent will instruct their customers to transfer
funds from their respective accounts directly to the escrow agent by wire transfer and will instruct other purchasers of the shares
to make checks payable to “CST&T Greenpro Capital Corp Escrow Account”. Upon receipt, the Escrow Agent shall promptly
deposit funds in the escrowed bank account. Upon receipt of funds sufficient for the sale of 500,000 shares and satisfaction of
all other closing conditions, the funds may be transferred to our business account. In the event the minimum total of 500,000
shares is not sold prior to June 30, 2018, unless extended for an additional one hundred-eighty days until December 31, 2018 with
the consent of our board of directors, all monies will be returned to investors, without interest or deduction, within one business
day.
Fees
and Expenses
The
following table shows the public offering price, placement agent commissions and proceeds, before expenses, to us.
|
|
Price
per Share
|
|
|
Commission
per Share
|
|
|
Proceeds
to
Greenpro
|
|
Minimum
Offering (500,000 shares)
|
|
$
|
6.00
|
|
|
$
|
0.30
|
|
|
$
|
2,850,000
|
|
Maximum
Offering (2,500,000 shares)
|
|
$
|
6.00
|
|
|
$
|
0.30
|
|
|
$
|
14,250,000
|
|
We
and the placement agent have agreed to pay commissions of 5.0% per share (or $0.30 per share) on the offering proceeds. We have
agreed to pay to the placement agent upon the consummation of the offering, a non-accountable expense allowance equal to 1.5%
of the gross proceeds of the offering. We have also agreed to pay the placement agent reasonable out-of-pocket expenses including
but not limited to, (i) reasonable travel and out-of-pocket expenses, including clearing charges; (ii) reasonable fees of legal
counsel incurred by the placement agent in connection with the offering; (iii) the cost of due diligence meetings not exceeding
$10,000 in the aggregate; and (iv) preparation of printed documents for closing and deal mementos with costs not exceeding US$3,000.
The total accountable expenses shall not exceed $100,000. We have paid an advance of $70,000 to the placement agents to be applied
to the placement agent’ anticipated out-of-pocket expenses. The advance will be returned to us to the extent such out-of-pocket
accountable expenses are not actually incurred in accordance with FINRA Rule 5110(f)(2)(C).
Placement
Agent Warrants
We
have also agreed to grant to the placement agent a warrant covering a number of shares equal to 10% of the aggregate number of
the Shares sold in the offering. The placement agent warrants will be exercisable, in whole or in part, during a period commencing
on the effective date of the registration statement and will expire on the five-year anniversary of the effective date of the
offering. The placement agent warrants will be exercisable at a price equal to 120% of the offering price and shall not be redeemable.
We have registered the shares underlying the placement agent warrants in the registration statement. The placement agent warrants
may not be sold, transferred, assigned, pledged or hypothecated, or be the subject of any hedging, short sale, derivative, put,
or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180
days immediately following the effective date of the registration statement, of which this prospectus forms a part (in accordance
with FINRA Rule 5110), except that they may be assigned, in whole or in part, to any successor, officer, manager, member, or partner
of the underwriter, and to members of the syndicate or selling group and their respective officers, managers, members or partners.
The placement agent warrants may be exercised as to all or a lesser number of shares, and will provide for cashless exercise.
The placement agent warrants shall further provide for adjustment in the number and price of such warrants (and the share of the
common stock underlying such warrants) in the event of recapitalization, merger or other structural transaction to prevent dilution.
Terms
of the Offering
We
are offering, on a best efforts basis, a minimum of US$3,000,000 and a maximum of US$15,000,000. The offering is being made without
a firm commitment by the placement agent, which has no obligation or commitment to purchase any securities. The placement agent
is not required to sell any specific number of dollar amount of the common stock but will use its best efforts to sell of the
common stock offered. The common stock is being offered for a period through and including June 30, 2018, unless extended for
an additional six months until December 31, 2018 with the consent of our board of directors. If the minimum offering amount is
not raised prior to June 30, 2018, or December 31, 2018 if the offering is extended, all subscription funds from the escrow account
will be returned to investors promptly without interest (since the funds are being held in a non-interest bearing account) or
deduction of fees. The offering may terminate on the earlier of (i) any time after the minimum offering amount of our common stock
is raised, or (ii) June 30, 2018, unless extended by our board of directors for an additional six months until December 31, 2018.
Reasons the board may consider in determining whether to extend or terminate the offering may include, but are not limited to:
amount of funds raised, potential to raise additional capital, and response to the offering as of that date. If we can successfully
raise the minimum offering amount within the offering period, the proceeds from the offering will be released to us.
Escrow
Agent and Deposit of Offering Proceeds
The
placement agent and the Company have agreed in accordance with the provisions of SEC Rule 15c2-4 to cause all funds received by
the placement agent for the sale of the common stock to be promptly deposited in a non-interest bearing escrow account (“Escrow
Account”) maintained by Continental Stock Transfer & Trust Company (the “Escrow Agent”) as escrow agent
for the investors in the offering, who will deposit the funds received in the Escrow Account into a special bank account established
by JP Morgan Chase. The purpose of the Escrow Account is for (i) the deposit of all subscription monies (checks or wire transfers)
which are received by the underwriter from prospective purchasers of our offered common stock and are delivered by the underwriter
to the Escrow Agent, (ii) the holding of amounts of subscription monies which are collected through the banking system, and (iii)
the disbursement of collected funds. The Escrow Agent will exercise signature control on the escrow account and will act based
on joint instructions from our Company and the placement agent. On the closing date for the offering, and presuming that all conditions
to closing have been satisfied (such as NASDAQ approval and other conditions described herein), proceeds in the bank account maintained
will be delivered to our company.
The
placement agent shall promptly deliver to the Escrow Agent all funds in the form of checks or wire transfers which it receives
from prospective purchasers of our common stock by noon of the next business day following receipt where internal supervisory
review is conducted at the same location at which subscription documents and funds are received. Simultaneously with each deposit
to the Escrow Account, the placement agent shall inform the Escrow Agent about the subscription information for each prospective
purchaser. Upon the Escrow Agent’s receipt of such monies, they shall be credited to the Escrow Account and then deposited
to the bank account at JP Morgan Chase. All checks delivered to the Escrow Agent shall be made payable to “CST&T Greenpro
Capital Corp Escrow Account”. The Escrow Agent shall not be required to accept for credit to the Escrow Account or for deposit
into the Escrow Account checks which are not accompanied by the appropriate subscription information. Wire transfers representing
payments by prospective purchasers shall not be deemed deposited in the Escrow Account until the Escrow Agent has received in
writing the subscription information required with respect to such payments.
No
interest will be available for payment to either us or the investors (since the funds are being held in a non-interest bearing
account). All subscription funds will be held in trust pending the raising of the minimum offering amount and no funds will be
released to us until the completion of the offering. Release of the funds to us is based upon the Escrow Agent reviewing the records
of the depository institution holding the escrow to verify that the funds received have cleared the banking system prior to releasing
the funds to us. All subscription information and subscription funds through checks or wire transfers should be delivered to the
Escrow Agent. Failure to do so will result in subscription funds being returned to the investor. In event that the offering is
terminated, all subscription funds from the escrow account will be returned to investors.
If
we terminate this offering, all amounts will be promptly returned to the investors as described below. In the event of any dispute
between us and the placement agent, including whether and how funds are to be reimbursed, the Escrow Agent is entitled to petition
a court of competent jurisdiction to resolve any such dispute.
Investors
must pay in full for the common stock at the time of investment. Payment for the shares may be made (i) by check, bank draft or
money order made payable to “CST&T Greenpro Capital Corp Escrow Account” and delivered to the placement agent
no less than four business days before the date of closing, or (ii) by wire made payable to “CST&T Greenpro Capital
Corp Escrow Account”. The checks, bank drafts and money orders will be forwarded/returned by the placement agent and their
dealers to the Escrow Agent by noon of the following business day. The placement agent will inform prospective purchasers of the
anticipated date of closing.
Proceeds
deposited in escrow with the Escrow Agent may not be withdrawn by investors prior to the earlier of the closing of the offering
or the date the offering is terminated. If the offering is withdrawn or canceled or terminated and proceeds therefrom are not
received by us on or prior to the date the offering is terminated, all proceeds will be promptly returned by the Escrow Agent
without interest or deduction to the persons from which they are received (within one business day) in accordance with applicable
securities laws. All such proceeds will be placed in a non-interest bearing account pending such time.
Electronic
Offer, Sale and Distribution of Ordinary Shares
A
prospectus in electronic format may be made available on the websites maintained by the placement agent. In addition, the common
stock may be sold by the placement agent to securities dealers who resell the common stock to online brokerage account holders.
Other than the prospectus in electronic format, the information on the placement agent’s website and any information contained
in any other website maintained by the placement agent is not part of the prospectus or the registration statement of which this
prospectus forms a part, has not been approved and/or endorsed by us or the placement agent in its capacity as placement agent
and should not be relied upon by investors.
Lock-up
Agreements
We,
each of our directors and officers and holders of ten percent or more of our common stock on a fully diluted basis immediately
prior to the consummation of this offering have agreed or are otherwise contractually restricted for a period of 180 days after
the date of this prospectus, without the prior written consent of the placement agent not to directly or indirectly:
|
●
|
issue
(in the case of us), offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of any shares of our
common stock or other capital stock or any securities convertible into or exercisable or exchangeable for our common stock
or other capital stock;
|
|
|
|
|
●
|
in
the case of us, file or cause the filing of any registration statement under the Securities Act with respect to any shares
of our common stock or other capital stock or any securities convertible into or exercisable or exchangeable for our common
stock or other capital stock, other than registration statements on Form S-8 filed with the SEC after the closing date of
this offering; or
|
|
|
|
|
●
|
enter
into any swap or other agreement, arrangement, hedge or transaction that transfers to another, in whole or in part, directly
or indirectly, any of the economic consequences of ownership of our common stock or other capital stock or any securities
convertible into or exercisable or exchangeable for our common stock or other capital stock,
|
whether
any transaction described in any of the foregoing bullet points is to be settled by delivery of our common stock or other capital
stock, other securities, in cash or otherwise, or publicly announce an intention to do any of the foregoing.
There
are no existing agreements between the placement agent and any person who will execute a lock-up agreement in connection with
this offering providing consent to the sale of shares prior to the expiration of the lock-up period. The lock up does not apply
to the issuance of shares upon the exercise of rights to acquire shares of common stock pursuant to any existing stock option
or the conversion of any of our preferred convertible stock.
Procedures
and Requirements for Subscription
If
you decide to subscribe for any shares in this offering, you must:
|
●
|
execute
and deliver a subscription agreement; and
|
|
|
|
|
●
|
deliver
the subscription price to the Company by cashier’s check or wire transfer of immediately available funds.
|
The
subscription agreement requires you to disclose your name, address, social security number, telephone number, email address, number
of shares you are purchasing, and the price you are paying for your shares.
Upon
the Company’s acceptance of a subscription and receipt of full payment, and subject to the timing qualification set forth
above, the Company shall countersign the subscription agreement and issue a stock certificate along with a copy of the subscription
agreement.
We
have the right to accept or reject subscriptions in whole or in part, for any reason or for no reason. All monies from rejected
subscriptions will be returned immediately by us to the subscriber, without interest or deductions. Subscriptions for securities
will be accepted or rejected within three (3) business days after we receive them.
Offer
Restrictions outside the United States
Other
than in the United States, no action has been taken by us or the placement agent that would permit a public offering of the securities
offered by this prospectus in any jurisdiction where action for that purpose is required. The securities offered by this prospectus
may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in
connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances
that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this
prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution
of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered
by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
China
THIS
DOCUMENT HAS NOT BEEN AND WILL NOT BE CIRCULATED OR DISTRIBUTED IN THE PRC AND THE ORDINARY SHARES MAY NOT BE OFFERED OR SOLD
TO ANY PERSON FOR RE-OFFERING OR RESALE, DIRECTLY OR INDIRECTLY, TO ANY RESIDENT OF THE PRC EXCEPT PURSUANT TO APPLICABLE LAWS
AND REGULATIONS OF THE PRC. FOR THE PURPOSE OF THIS SECTION ONLY, THE PRC DOES NOT INCLUDE TAIWAN AND THE SPECIAL ADMINISTRATIVE
REGIONS OF HONG KONG AND MACAU. THIS DOCUMENT HAS NOT BEEN NOR WILL IT BE APPROVED BY OR REGISTERED WITH THE RELEVANT CHINESE
GOVERNMENTAL AUTHORITIES, AND IT DOES NOT CONSTITUTE NOR IS IT INTENDED TO CONSTITUTE AN OFFER OF SECURITIES WITHIN THE MEANING
PRESCRIBED UNDER THE PRC SECURITIES LAW OR OTHER LAWS AND REGULATIONS OF THE PRC. ACCORDINGLY, THIS DOCUMENT SHALL NOT BE OFFERED
OR MADE AVAILABLE, NOR MAY THE COMMON STOCK BE MARKETED OR OFFERED FOR SALE TO THE GENERAL PUBLIC, DIRECTLY OR INDIRECTLY, IN
THE PRC. THE COMMON STOCK SHALL ONLY BE OFFERED OR SOLD TO PRC INVESTORS THAT ARE AUTHORIZED OR QUALIFIED TO BE ENGAGED IN THE
PURCHASE OF THE COMMON STOCK BEING OFFERED. POTENTIAL INVESTORS IN THE PRC ARE RESPONSIBLE FOR OBTAINING ALL THE RELEVANT REGULATORY
APPROVALS/LICENSES FROM THE CHINESE GOVERNMENT BY THEMSELVES, INCLUDING, WITHOUT LIMITATION, THOSE THAT MAY BE REQUIRED FROM THE
STATE ADMINISTRATION OF FOREIGN EXCHANGE, THE CHINA BANKING REGULATORY COMMISSION, THE MINISTRY OF COMMERCE AND THE NATIONAL DEVELOPMENT
AND REFORM COMMISSION, WHERE APPROPRIATE, AND FOR COMPLYING WITH ALL THE RELEVANT PRC LAWS AND REGULATIONS IN SUBSCRIBING FOR
COMMON STOCK.
Hong
Kong
THESE
SECURITIES HAVE NOT BEEN DELIVERED FOR REGISTRATION TO THE REGISTRAR OF COMPANIES IN HONG KONG AND, ACCORDINGLY, MUST NOT BE ISSUED,
CIRCULATED OR DISTRIBUTED IN HONG KONG OTHER THAN TO PERSONS WHOSE ORDINARY BUSINESS IT IS TO BUY OR SELL SHARES OR DEBENTURES,
WHETHER AS PRINCIPAL OR AGENT, WITHIN THE MEANING OF THE HONG KONG COMPANIES ORDINANCE (THE “ORDINANCE”) OR IN CIRCUMSTANCES
WHICH DO NOT CONSTITUTE AN OFFER TO THE PUBLIC FOR THE PURPOSES OF THE ORDINANCE. UNLESS PERMITTED BY THE SECURITIES LAWS OF HONG
KONG, NO PERSON MAY ISSUE OR CAUSE TO BE ISSUED IN HONG KONG THIS SECURITIES OR ANY OR OTHER INVITATION, ADVERTISEMENT OR DOCUMENT
RELATING TO THE SECURITIES TO ANYONE OTHER THAN A PERSON WHOSE BUSINESS INVOLVES THE ACQUISITION, DISPOSAL OR HOLDING OF SECURITIES,
WHETHER AS PRINCIPAL OR AGENT.
Singapore
THE
SECURITIES REPRESENTED MAY NOT BE OFFERED OR SOLD, NOR MAY ANY DOCUMENT OR OTHER MATERIAL IN CONNECT WITH SUCH SECURITIES BE DISTRIBUTED,
EITHER DIRECTLY OR INDIRECTLY, (I) TO PERSONS IN SINGAPORE OTHER THAN UNDER CIRCUMSTANCES IN WHICH SUCH OFFER OR SALE DOES NOT
CONSTITUTE AN OFFER OR SALE OF SUCH SECURITIES TO THE PUBLIC IN SINGAPORE OR (II) TO THE PUBLIC OR ANY MEMBER OF THE PUBLIC IN
SINGAPORE OTHER THAN PURSUANT TO, AND IN ACCORDANCE WITH THE CONDITIONS OF, AN EXEMPTION INVOKED UNDER DIVISION 5A OR PART IV
OF THE COMPANIES ACT, CHAPTER 50 OF SINGAPORE AND TO PERSONS TO WHOM THE SECURITIES MAY BE OFFERED OR SOLD UNDER SUCH EXEMPTION.
Malaysia
THESE
SECURITIES HAVE NOT BEEN AND MAY NOT BE APPROVED BY THE SECURITIES COMMISSION MALAYSIA, OR SC, AND THIS DOCUMENT HAS NOT BEEN
AND WILL NOT BE REGISTERED AS A PROSPECTUS WITH THE SC UNDER THE MALAYSIAN CAPITAL MARKETS AND SERVICES ACT OF 2007, OR CMSA.
ACCORDINGLY, NO SECURITIES OR OFFER FOR SUBSCRIPTION OR PURCHASE OF SECURITIES OR INVITATION TO SUBSCRIBE FOR OR PURCHASE SECURITIES
ARE BEING MADE TO ANY PERSON IN OR FROM WITHIN MALAYSIA UNDER THIS DOCUMENT EXCEPT TO PERSONS FALLING WITHIN ANY OF PARAGRAPHS
2(G)(I) TO (XI) OF SCHEDULE 5 OF THE CMSA AND DISTRIBUTED ONLY BY A HOLDER OF A CAPITAL MARKETS SERVICES LICENCE WHO CARRIES ON
THE BUSINESS OF DEALING IN SECURITIES AND SUBJECT TO THE ISSUER HAVING LODGED THIS PROSPECTUS WITH THE SC WITHIN SEVEN DAYS FROM
THE DATE OF THE DISTRIBUTION OF THIS PROSPECTUS IN MALAYSIA. THE DISTRIBUTION IN MALAYSIA OF THIS DOCUMENT IS SUBJECT TO MALAYSIAN
LAWS. SAVE AS AFOREMENTIONED, NO ACTION HAS BEEN TAKEN IN MALAYSIA UNDER ITS SECURITIES LAWS IN RESPECT OF THIS DOCUMENT. THIS
DOCUMENT DOES NOT CONSTITUTE AND MAY NOT BE USED FOR THE PURPOSE OF A PUBLIC OFFERING OR AN ISSUE, OFFER FOR SUBSCRIPTION OR PURCHASE,
INVITATION TO SUBSCRIBE FOR OR PURCHASE ANY SECURITIES REQUIRING THE APPROVAL OF THE SC OR THE REGISTRATION OF A PROSPECTUS WITH
THE SC UNDER THE CMSA.
LEGAL
MATTERS
The
validity of the shares of our common stock offered hereby has been passed upon for us by Loeb & Loeb LLP, New York, New York.
Mei & Mark LLP, Washington, D.C., is acting as counsel to the placement agent.
EXPERTS
Our
consolidated financial statements as of December 31, 2017 and 2016 (restated), and for the years ended December 31, 2017 and 2016
(restated), incorporated by reference into this prospectus have been so incorporated in reliance on the report of Weinberg &
Company, P.A., independent registered public accounting firm, upon the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the SEC a registration statement on Form S-1 under the Securities Act, with respect to the shares of common stock
being offered by this prospectus. This prospectus does not contain all of the information in the registration statement and its
exhibits. For further information with respect to us and the common stock offered by this prospectus, we refer you to the registration
statement and its exhibits. Statements contained in this prospectus as to the contents of any contract or any other document referred
to are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an
exhibit to the registration statement. Each of these statements is qualified in all respects by this reference.
You
can read our SEC filings, including the registration statement, over the Internet at the SEC’s website at
www.sec.gov.
You may also read and copy any document we file with the SEC at its public reference facilities at 100 F Street NE, Washington,
D.C. 20549. You may also obtain copies of these documents at prescribed rates by writing to the Public Reference Section of the
SEC at 100 F Street NE, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation
of the public reference facilities. You may also request a copy of these filings, at no cost, by writing us at Room 1701-1703,
17/F, The Metropolis Tower, 10 Metropolis Drive, Hung Hom, Kowloon, Hong Kong or telephoning us at +852 3111 7718.
We
are subject to the information reporting requirements of the Exchange Act, and file reports, proxy statements and other information
with the SEC. These reports, proxy statements and other information are available for inspection and copying at the public reference
room and web site of the SEC referred to above. We also maintain a website at
www.greenprocapital.com
, at which, following
the closing of this offering, you may access these materials free of charge as soon as reasonably practicable after they are electronically
filed with, or furnished to, the SEC. The information contained in, or that can be accessed through, our website incorporated
by reference in, and is not part of, this prospectus.
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
Report
of Independent Registered Public Accounting Firm
To
the Stockholders and Board of Directors of
Greenpro
Capital Corporation
Opinion
on the Financial Statements
We
have audited the accompanying consolidated balance sheets of Greenpro Capital Corporation (the “Company”) as of December
31, 2017 and 2016 (restated), the related consolidated statements of operations and comprehensive loss, changes in stockholders’
equity, and cash flows for the year ended December 31, 2017, the related consolidated statements of operations and comprehensive
loss, change in stockholders’ equity, and cash flows for the year ended December 31, 2016 (restated) and the related notes
(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial
statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2017
and 2016, and the consolidated results of its operations and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
The
2016 consolidated financial statements were previously audited by another auditor. As discussed in Note 2 to the financial statements,
the 2016 consolidated financial statements have been restated to correct errors.
Going
Concern
The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.
As discussed in Note 1 to the consolidated financial statements, during the year ended December 31, 2017 the Company incurred
a net loss and utilized cash flows in operations, and at December 31, 2017 had a working capital deficiency. These conditions
raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to
these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Basis
for Opinion
These
consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether
due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over
financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting
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. Our audits included performing procedures to assess the risks of material misstatement,
whether due to error fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
Our
audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our
opinion.
WEINBERG
& COMPANY, P.A.
We
have served as the Company’s auditor since 2017.
Los
Angeles, California
April
13, 2018
GREENPRO
CAPITAL CORP.
CONSOLIDATED
BALANCE SHEETS
AS
OF DECEMBER 31, 2017, AND 2016
(Expressed
in U.S. Dollars)
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
(As
Restated)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents (including $166,610 of restricted cash at December 31, 2017)
|
|
$
|
1,162,394
|
|
|
$
|
1,021,351
|
|
Accounts
receivable, net
|
|
|
345,734
|
|
|
|
384,418
|
|
Prepaids
and other current assets (includes due from related parties of $1,761 and $30,215 as of December 31, 2017 and 2016, respectively)
|
|
|
270,760
|
|
|
|
115,180
|
|
Deferred
costs of revenue
|
|
|
74,990
|
|
|
|
75,207
|
|
Total
current assets
|
|
|
1,853,878
|
|
|
|
1,596,156
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
3,266,829
|
|
|
|
38,531
|
|
Real
Estate investments:
|
|
|
|
|
|
|
|
|
Real
estate held for sale
|
|
|
3,430,641
|
|
|
|
3,747,732
|
|
Real
estate held for investment, net
|
|
|
868,984
|
|
|
|
801,514
|
|
Intangible
assets, net
|
|
|
251,655
|
|
|
|
472,320
|
|
Goodwill
|
|
|
1,211,863
|
|
|
|
1,646,730
|
|
Other
investments (includes investments in related party of $51,613)
|
|
|
130,457
|
|
|
|
108,253
|
|
TOTAL
ASSETS
|
|
$
|
11,014,307
|
|
|
$
|
8,411,236
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
|
$
|
768,994
|
|
|
$
|
241,786
|
|
Current
portion of loans secured by real estate
|
|
|
928,147
|
|
|
|
13,042
|
|
Due
to related parties
|
|
|
1,813,930
|
|
|
|
1,509,492
|
|
Income
tax payable
|
|
|
68,008
|
|
|
|
18,077
|
|
Deferred
revenue
|
|
|
345,000
|
|
|
|
215,000
|
|
Total
current liabilities
|
|
|
3,924,079
|
|
|
|
1,997,397
|
|
|
|
|
|
|
|
|
|
|
Long
term portion of loans secured by real estate
|
|
|
1,842,840
|
|
|
|
554,128
|
|
Total
liabilities
|
|
|
5,766,919
|
|
|
|
2,551,525
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity:
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.0001 par value; 100,000,000 shares authorized; no shares issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common
stock, $0.0001 par value; 500,000,000 shares authorized; 53,233,960 and 52,387,759 shares issued and outstanding, respectively
|
|
|
5,323
|
|
|
|
5,239
|
|
Additional
paid in capital
|
|
|
8,465,294
|
|
|
|
6,628,901
|
|
Accumulated
other comprehensive loss
|
|
|
(40,199
|
)
|
|
|
(111,818
|
)
|
Accumulated
deficit
|
|
|
(3,266,313
|
)
|
|
|
(981,754
|
)
|
Total
Greenpro Capital Corp. common stockholders’ equity
|
|
|
5,164,105
|
|
|
|
5,540,568
|
|
Noncontrolling
interests in consolidated subsidiaries
|
|
|
83,283
|
|
|
|
319,143
|
|
|
|
|
|
|
|
|
|
|
Total
Stockholders’ equity
|
|
|
5,247,388
|
|
|
|
5,859,711
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$
|
11,014,307
|
|
|
$
|
8,411,236
|
|
See
accompanying notes
GREENPRO
CAPITAL CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR
THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(Expressed
in U.S. Dollars)
|
|
Year
ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
(As
Restated)
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
Service
revenue (including $281,962 and $399,792 of service revenue from related parties, respectively)
|
|
$
|
3,313,819
|
|
|
$
|
2,991,592
|
|
Sale
of properties
|
|
|
423,871
|
|
|
|
-
|
|
Rental
revenue (including $47,683 and $6,839 of rental revenue from related parties, respectively)
|
|
|
178,682
|
|
|
|
100,143
|
|
Total
revenues
|
|
|
3,916,372
|
|
|
|
3,091,735
|
|
|
|
|
|
|
|
|
|
|
OPERATING
COSTS AND EXPENSES:
|
|
|
|
|
|
|
|
|
Cost
of service revenue
|
|
|
(1,071,910
|
)
|
|
|
(1,086,393
|
)
|
Cost
of properties sold
|
|
|
(347,479
|
)
|
|
|
-
|
|
Cost
of rental revenue
|
|
|
(68,412
|
)
|
|
|
(48,914
|
)
|
General
and administrative
|
|
|
(3,350,896
|
)
|
|
|
(1,924,293
|
)
|
Impairment
of goodwill and intangible assets
|
|
|
(1,898,721
|
)
|
|
|
-
|
|
Total
operating costs and expenses
|
|
|
(6,737,418
|
)
|
|
|
(3,059,600
|
)
|
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) FROM OPERATIONS
|
|
|
(2,821,046
|
)
|
|
|
32,135
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
22,901
|
|
|
|
12,063
|
|
Loss
on other investments
|
|
|
(196,082
|
)
|
|
|
(9,007
|
)
|
Interest
expense
|
|
|
(54,310
|
)
|
|
|
(67,398
|
)
|
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) BEFORE INCOME TAX
|
|
|
(3,048,537
|
)
|
|
|
(32,207
|
)
|
Income
tax expense
|
|
|
(68,372
|
)
|
|
|
(7,459
|
)
|
NET
INCOME (LOSS)
|
|
|
(3,116,909
|
)
|
|
|
(39,666
|
)
|
Net
(income) loss attributable to noncontrolling interest
|
|
|
832,350
|
|
|
|
(11,149
|
)
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS) ATTRIBUTED TO COMMON STOCKHOLDERS
|
|
|
(2,284,559
|
)
|
|
|
(50,815
|
)
|
Other
comprehensive loss:
|
|
|
|
|
|
|
|
|
-
Foreign currency translation income (loss)
|
|
|
71,619
|
|
|
|
(11,022
|
)
|
COMPREHENSIVE
LOSS
|
|
$
|
(2,212,940
|
)
|
|
$
|
(61,837
|
)
|
|
|
|
|
|
|
|
|
|
NET
LOSS PER SHARE, BASIC AND DILUTED
|
|
$
|
(0.04
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
WEIGHTED
AVERAGE NUMBER OF COMMON STOCK OUTSTANDING, BASIC AND DILUTED
|
|
|
53,060,323
|
|
|
|
52,125,008
|
|
See
accompanying notes
GREENPRO
CAPITAL CORP.
CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR
THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(Expressed
in U.S. Dollars)
|
|
Common
Stock
|
|
|
Additional
|
|
|
Accumulated
Other
|
|
|
|
|
|
Non-
|
|
|
|
|
|
|
Number
of shares
|
|
|
Amount
|
|
|
Paid-in
Capital
|
|
|
Comprehensive
Income (Loss)
|
|
|
Accumulated
Deficit
|
|
|
Controlling
Interest
|
|
|
Total
Equity
|
|
Balance
as of December 31, 2015, as restated
|
|
|
51,963,755
|
|
|
$
|
5,196
|
|
|
$
|
5,917,237
|
|
|
$
|
(100,795
|
)
|
|
$
|
(930,939
|
)
|
|
$
|
307,896
|
|
|
$
|
5,198,595
|
|
Shares
issued for cash
|
|
|
424,004
|
|
|
|
43
|
|
|
|
711,664
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
711,707
|
|
Sale
of interest in subsidiary
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
98
|
|
|
|
98
|
|
Foreign
currency translation, as restated
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,023
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(11,023
|
)
|
Net
Income (loss) for the period, as restated
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(50,815
|
)
|
|
|
11,149
|
|
|
|
(39,666
|
)
|
Balance
as of December 31, 2016, as restated
|
|
|
52,387,759
|
|
|
|
5,239
|
|
|
|
6,628,901
|
|
|
|
(111,818
|
)
|
|
|
(981,754
|
)
|
|
|
319,143
|
|
|
|
5,859,711
|
|
Shares
issued for cash
|
|
|
505,556
|
|
|
|
50
|
|
|
|
984,814
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
984,864
|
|
Shares
issued for acquisition
|
|
|
340,645
|
|
|
|
34
|
|
|
|
851,579
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
851,613
|
|
Noncontrolling
interest related to acquisition
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
567,742
|
|
|
|
567,742
|
|
Acquisition
of common controlled company
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
28,748
|
|
|
|
28,748
|
|
Foreign
currency translation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
71,619
|
|
|
|
-
|
|
|
|
-
|
|
|
|
71,619
|
|
Net
loss for the period
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(2,284,559
|
)
|
|
|
(832,350
|
)
|
|
|
(3,116,909
|
)
|
Balance
as of December 31, 2017
|
|
|
53,233,960
|
|
|
$
|
5,323
|
|
|
$
|
8,465,294
|
|
|
$
|
(40,199
|
)
|
|
$
|
(3,266,313
|
)
|
|
$
|
83,283
|
|
|
$
|
5,247,388
|
|
See
accompanying notes.
GREENPRO
CAPITAL CORP.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
FOR
THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(Expressed
in U.S. Dollars)
|
|
Year
ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
(As
Restated)
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(3,116,909
|
)
|
|
$
|
(39,666
|
)
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
188,487
|
|
|
|
167,204
|
|
Impairment
of goodwill and intangible assets
|
|
|
1,898,721
|
|
|
|
-
|
|
Gain
on sale of real estate held for sale
|
|
|
(76,392
|
)
|
|
|
-
|
|
Provision
for bad debts
|
|
|
21,381
|
|
|
|
54,799
|
|
Write
off of other receivables (includes write off of related party receivable of $28,340)
|
|
|
121,906
|
|
|
|
-
|
|
Increase
in cash surrender value on life insurance
|
|
|
(19,285
|
)
|
|
|
(19,226
|
)
|
Loss
on other investments
|
|
|
196,082
|
|
|
|
9,007
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Accounts
receivable, net
|
|
|
(180,281
|
)
|
|
|
(288,962
|
)
|
Prepaids
and other current assets
|
|
|
(76,146
|
)
|
|
|
151,036
|
|
Deferred
costs of revenue
|
|
|
217
|
|
|
|
88,994
|
|
Accounts
payable and accrued liabilities
|
|
|
419,676
|
|
|
|
(178,295
|
)
|
Income
tax payable
|
|
|
49,832
|
|
|
|
10,228
|
|
Deferred
revenue
|
|
|
130,000
|
|
|
|
(455,347
|
)
|
Net
cash used in operating activities
|
|
|
(442,711
|
)
|
|
|
(500,228
|
)
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Purchase
of property and equipment
|
|
|
(3,152,539
|
)
|
|
|
(16,126
|
)
|
Purchase
of intangible assets
|
|
|
(1,058
|
)
|
|
|
(600
|
)
|
Proceeds
from real estate held for sale
|
|
|
393,483
|
|
|
|
-
|
|
Purchase
of investments
|
|
|
(199,109
|
)
|
|
|
-
|
|
Cash
acquired on acquisition of business
|
|
|
145,354
|
|
|
|
-
|
|
Net
cash used in investing activities
|
|
|
(2,813,869
|
)
|
|
|
(16,726
|
)
|
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds
from shares issued for cash
|
|
|
984,864
|
|
|
|
711,707
|
|
Proceeds
from loans secured by real estate
|
|
|
2,368,085
|
|
|
|
-
|
|
Principal
payments of loans secured by real estate
|
|
|
(272,034
|
)
|
|
|
(13,860
|
)
|
Advances
from related parties
|
|
|
286,343
|
|
|
|
42,901
|
|
Repayment
of advances from related parties
|
|
|
-
|
|
|
|
(787,008
|
)
|
Proceeds
from sale of interest in subsidiary
|
|
|
-
|
|
|
|
98
|
|
Net
cash provided by (used in) financing activities
|
|
|
3,367,258
|
|
|
|
(46,162
|
)
|
|
|
|
|
|
|
|
|
|
Effect
of exchange rate changes in cash and cash equivalents
|
|
|
30,365
|
|
|
|
(3,394
|
)
|
NET
CHANGE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
|
|
141,043
|
|
|
|
(566,510
|
)
|
CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR
|
|
|
1,021,351
|
|
|
|
1,587,861
|
|
|
|
|
|
|
|
|
|
|
CASH,
CASH EQUIVALENTS, AND RESTRICTED CASH, END OF YEAR
|
|
$
|
1,162,394
|
|
|
$
|
1,021,351
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
Cash
paid for income tax
|
|
$
|
7,417
|
|
|
$
|
-
|
|
Cash
paid for interest
|
|
$
|
69,337
|
|
|
$
|
27,162
|
|
|
|
|
|
|
|
|
|
|
NON-CASH
INVESTING AND FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Acquisition
of lease deposit in settlement of accounts receivable
|
|
$
|
105,000
|
|
|
|
-
|
|
Shares
issued for acquisition of business
|
|
$
|
851,613
|
|
|
$
|
-
|
|
See
accompanying notes
GREENPRO
CAPITAL CORP.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE YEARS ENDED DECEMBER 31, 2017 AND 2016
(Expressed
in U.S. Dollars)
NOTE
1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Greenpro
Capital Corp. (the “Company” or “GRNQ”) was incorporated on July 19, 2013 in the state of Nevada. On May
6, 2015, the Company changed its name to Greenpro Capital Corp. The Company currently provides a wide range of business consulting
and corporate advisory services including cross-border listing advisory services, tax planning, advisory and transaction services,
record management services, and accounting outsourcing services. As part of our business consulting and corporate advisory business
segment, Greenpro Venture Capital Limited provides a business incubator for start-up and high growth companies during their critical
growth period, and focuses on investments in select start-up and high growth potential companies. In addition to our business
consulting and corporate advisory business segment, we operate another business segment that focuses on the acquisition and rental
of real estate properties held for investment and the acquisition and sale of real estate properties held for sale. Our focus
is on companies located in Asia and Southeast Asia including Hong Kong, Malaysia, China, Thailand, and Singapore.
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. As reflected in the accompanying financial statements,
for the year ended December 31, 2017, the Company incurred a net loss of $3,116,909 and used cash in operating activities of $442,711,
and at December 31, 2017, the Company had a working capital deficiency of $2,070,201. 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.
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 stock holders, in the case of equity financing.
Basis
of presentation
The
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. The accompanying consolidated
financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America.
The Company’s consolidated financial statements are expressed in U.S. Dollars. All inter-company accounts and transactions
have been eliminated in consolidation.
At
December 31, 2017, the Company’s holds 60% of the shareholdings of Forward Win International Limited, Yabez (Hong Kong)
Company Limited, Greenpro Wealthon Sdn Bhd, Billion Sino Holdings Limited, and Parich Wealth Management Limited (Hong Kong). At
December 31, 2017, the Company holds 51% of the shareholdings of Greenpro Capital Village Sdn Bhd and Greenpro Family Office Limited.
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
consists of funds on hand and held in bank accounts. Cash equivalents includes demand deposits placed with banks or other financial
institutions and all highly liquid investments with original maturities of three months or less, including money market funds.
Restricted cash represents cash restricted for the loan collateral requirements as defined in a loan agreement, and also the minimum
paid-up share capital requirement for insurance brokers specified under the Insurance Ordinance of Hong Kong.
At
December 31, 2017 and 2016, cash included funds held by employees of $32,673 and $51,283, respectively and was held to facilitate
payment of expenses in local currencies and to facilitate third-party online payment platforms which the Company had not set up
corporate accounts for (Wechat Pay and Alipay).
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
Cash,
cash equivalents, and restricted cash
|
|
|
|
|
|
|
|
|
Denominated
in United States Dollars
|
|
$
|
283,674
|
|
|
$
|
529,563
|
|
Denominated
in Hong Kong dollars
|
|
|
568,008
|
|
|
|
211,776
|
|
Denominated
in Renminbi
|
|
|
239,502
|
|
|
|
131,081
|
|
Denominated
in Malaysian Ringgit
|
|
|
71,210
|
|
|
|
148,931
|
|
Cash,
cash equivalents, and restricted cash
|
|
$
|
1,162,394
|
|
|
$
|
1,021,351
|
|
Accounts
receivable
Accounts
receivable are recorded at the invoiced amount less an allowance for any uncollectible accounts. Management reviews the adequacy
of the allowance for doubtful accounts on an ongoing basis, using historical collection trends and aging of receivables. Management
also periodically evaluates individual customer’s financial condition, credit history, and the current economic conditions
to make adjustments in the allowance when it is considered necessary. Account balances are charged off against the allowance after
all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for uncollectible
accounts at December 31, 2017 and 2016 was $76,180 and $54,799 respectively.
Property
and equipment, net
Property
and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is calculated on the straight-line
basis over the following expected useful lives from the date on which they become fully operational and after taking into account
their estimated residual values:
Categories
|
|
Expected
useful life
|
|
Residual
value
|
|
Office
leasehold
|
|
27
years
|
|
|
|
|
Furniture
and fixtures
|
|
3
- 10 years
|
|
|
5
|
%
|
Office
equipment
|
|
3
- 10 years
|
|
|
5%
- 10
|
%
|
Leasehold
improvement
|
|
Over
the shorter of estimated useful life or term of lease
|
|
|
-
|
|
Office
leasehold represents three adjoining office units used by the Company located in a commercial building in Shenzhen, China. The
office leasehold is subject to a 50 years land lease with a remaining term of 27 years, and is being amortized over the remaining
lease term. Expenditures for maintenance and repairs are expensed as incurred.
Management
assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value
may not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to
result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset,
an impairment loss is recognized to write down the asset to its estimated fair value. For the year ended December 31, 2017, the
Company determined there were no indicators of impairment of its property and equipment.
Depreciation
and amortization expense, classified as operating expenses, was $21,992 and $15,292 for the years ended December 31, 2017 and
2016, respectively.
Real
estate held for sale
Real
estate held for sale is reported at the lower of its carrying amount or fair value, less estimated costs to sell. The cost of
real estate held for sale includes the purchase price of property, legal fees, improvement costs to the building structure, and
other acquisition costs. Project wide costs such as land and building acquisition and certain development costs are allocated
to the specific units based upon their relative fair value before construction. We continue to actively market all properties
that are designated as held for sale. Real estate held for sale is not depreciated.
In
conducting its reviews for indicators of impairment, the Company evaluates, among other things, the margins on units already sold
within the project, margins on units under contract but not closed (none as of December 31, 2017), and projected margin on future
unit sales. The Company pays particular attention to discern if the real estate held for sale is moving at a slower than expected
pace or where margins are trending downward. As at December 31, 2017, the Company determined there were no indicators of impairment
of its real estate held for sale.
Real
estate held for investment, net
Real
estate held for investment is stated at cost less accumulated depreciation. Depreciation is calculated on the straight-line basis
over the following expected useful lives from the date on which they become fully operational and after taking into account their
estimated residual values:
Categories
|
|
Expected
useful life
|
|
Residual
value
|
|
Office
leasehold
|
|
50
years
|
|
|
-
|
|
Furniture
and fixtures
|
|
3
– 10 years
|
|
|
5
|
%
|
Office
equipment
|
|
3
– 10 years
|
|
|
5%
- 10
|
%
|
Leasehold
improvement
|
|
Shorter
of the estimated useful life or term of lease
|
|
|
-
|
|
The
cost of office leasehold includes the purchase price of property, legal fees, and other acquisition costs.
Depreciation
and amortization expense, classified as cost of rental, was $30,570 and $30,050 for the years ended December 31, 2017 and 2016,
respectively. As at December 31, 2017, the Company determined there were no indicators of impairment of its real estate held for
investment.
Intangible
assets, net
Intangible
assets are stated at cost less accumulated amortization. Intangible assets represented customer lists and order backlogs acquired
in business combinations and certain trademarks registered in Hong Kong, the PRC, and Malaysia. Intangible assets are amortized
on a straight-line basis over their estimated useful life’s ranging from five to ten years. Amortization expense for the
years ended December 31, 2017 and 2016 were $135,925 and $121,862, respectively.
The
Company follows ASC 360 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of
impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’
carrying amounts. At December 31, 2017, the Company recorded an impairment of intangible assets of $164,337. There were no impairments
recorded at December 31, 2016
Goodwill
Goodwill
is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed
in a business combination. Under the guidance of ASC 350, goodwill is not amortized, rather it is tested for impairment annually,
and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying
amount may be impaired. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s
net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill
over the derived fair value of goodwill. The Company’s policy is to perform its annual impairment testing for its reporting
units on December 31, of each fiscal year. At December 31, 2017, based on its annual impairment testing, the Company recorded
impairment of goodwill of $1,734,384. There were no impairments recorded at December 31, 2016
Impairment
of long-lived assets
Long-lived
assets primarily include real estate held for investment, property and equipment and intangible assets. In accordance with the
provision of ASC 360, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually in the
fourth quarter of each year, or more frequently if indicators of impairment exist, such as a significant sustained change in the
business climate. The recoverability of long-lived assets is measured at the reporting unit level. If the total of the expected
undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between
the fair value and carrying amount of the asset. As at December 31, 2017, the Company determined there were no indicators of impairment
of its real estate held for investment and its property and equipment.
Comprehensive
income
Comprehensive
income is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances
from non-owner sources. The Company’s accumulated other comprehensive income consists of cumulative foreign currency translation
adjustments.
Revenue
recognition
The
Company recognizes its revenue in accordance with ASC 605, “
Revenue Recognition
”, upon the delivery of its
products when: (1) delivery has occurred or services rendered; (2) persuasive evidence of an arrangement exists; (3) there are
no continuing obligations to the customer; and (4) the collection of related accounts receivable is probable.
(a)
Service revenue
Revenue
from the provision of (i) business consulting and advisory services and (ii) company secretarial, accounting and financial review
services are recognized when there is (i) an existence of contract or an arrangement (ii) services are rendered, (iii) the service
price is fixed or determinable, and (iv) collectability is reasonable assured.
For
certain service contracts, the completed performance method is applied. Revenue, expenses and gross profit are deferred until
the performance obligation is complete and collectability is reasonably assured. For contracts where performance is not completed,
deferred costs related to revenue are recorded as incurred and deferred revenue is recorded for any payments received on such
yet to be completed performance obligations. When all contractual performance obligations have been met, revenue and expenses
will be recorded. Deferred revenue related to contracts where performance was not completed was $345,000 and $215,000 as of December
31, 2017 and 2016, respectively. Deferred costs related to such contracts was $74,990 and $75,207 as of December 31, 2017 and
2016, respectively. 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 service contracts such as company secretarial, accounting
and financial review services, revenue is recognized as services are rendered.
(b)
Rental revenue
Revenue
from rental of leasehold land and buildings is recognized as earned based upon amounts that are currently due from tenants, collectability
is reasonably assured, and the tenant has taken possession or controls the physical use of the leased assets.
The
Company leases its commercial office premises in Malaysia and Hong Kong under various non-cancelable operating leases with terms
of two to three years and contains renewal options. For the year ended December 31, 2017, the Company recorded $178,682 in rental
revenue.
(c)
Sale of properties
Revenue
from the sale of properties is recognized at the time each unit is delivered and title and possession are transferred to the buyer.
Specifically, the Company utilizes the full accrual method where recognition occurs when (i) the collectability of the sales price
is reasonably assured, (ii) the seller is not obligated to perform significant activities after the sale, (iii) the initial investment
from the buyer is sufficient, and (iv) the Company recognizes revenue when it satisfies a performance obligation by transferring
control of a promised property to a customer.
Cost
of revenues
Costs
of service revenue primarily consists of employee compensation and related payroll benefits, company formation cost and other
professional fees directly attributable to the services rendered.
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.
Cost
of properties sold primary 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.
Income
taxes
The
Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred
tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred
taxes are provided for 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. A valuation allowance is provided for deferred tax
assets if it is more likely than not these items will either expire before the Company is able to realize their benefits, or that
future deductibility is uncertain.
The
Company conducts major businesses in Hong Kong, Malaysia and China and is subject to tax in these jurisdictions. As a result of
its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities.
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 December 31, 2017 and 2016, there were no potentially dilutive
shares outstanding.
Foreign
currencies translation
The
reporting currency of the Company is the United States Dollars (“US$”) and the accompanying consolidated financial
statements have been expressed in US$. In addition, the Company’s operating subsidiaries maintain their books and records
in their respective local currency, which consists of the Malaysian Ringgit (“MYR”), Renminbi (“RMB”),
and Hong Kong Dollars (“HK$”), 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 years ended
December
31,
|
|
|
|
2017
|
|
|
2016
|
|
Period-end
MYR : US$1 exchange rate
|
|
|
4.05
|
|
|
|
4.48
|
|
Period-average
MYR : US$1 exchange rate
|
|
|
4.28
|
|
|
|
4.14
|
|
Period-end
RMB : US$1 exchange rate
|
|
|
6.51
|
|
|
|
6.95
|
|
Period-average
RMB : US$1 exchange rate
|
|
|
6.74
|
|
|
|
6.66
|
|
Period-end
/ average HK$ : US$1 exchange rate
|
|
|
7.75
|
|
|
|
7.75
|
|
Related
parties
Parties
are considered to be related to the Company if the parties that, directly or indirectly, through one or more intermediaries, control,
are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company,
its management, members of the immediate families of principal owners of the Company and its management and other parties with
which the Company may deal if one party controls or can significantly influence the management or operating policies of the other
to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. Transactions
with related parties are disclosed in the financial statements.
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 December 31, 2017 or 2016. The Company believes the carrying amount reported in the balance sheet for cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities, deferred revenue, and due to related parties, approximate at their
fair values because of the short-term nature of these financial instruments.
Concentrations
of risks
For
the year ended December 31, 2017, no customer accounted for 10% or more of the service revenue or accounts receivable at year-end.
For
the year ended December 31, 2016, the two customers that accounted for 10% or more of the service income and one customer that
accounted for 24% of trade accounts receivable are presented as follows:
|
|
For
the year ended
December 31,
2016
|
|
|
As
of
December 31, 2016
|
|
|
|
Revenues
|
|
|
Percentage
of revenues
|
|
|
Trade
accounts
receivable
|
|
|
|
|
|
|
|
|
|
|
|
Customer
A
|
|
$
|
361,200
|
|
|
|
12
|
%
|
|
$
|
106,800
|
|
Customer
B
|
|
|
503,500
|
|
|
|
16
|
%
|
|
|
-
|
|
Total:
|
|
$
|
864,700
|
|
|
|
27
|
%
|
|
$
|
106,800
|
|
For
the years ended December 31, 2017 and 2016, no vendor accounted for 10% or more of the Company’s cost of revenues, or accounts
payable at year-end.
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
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 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
and social 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
In
May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts
with Customers (Topic 606). ASU 2014-09 is a comprehensive revenue recognition standard that will supersede nearly all existing
revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition.
Under ASU 2014-09, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an
amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. In addition,
the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts
with customers. The FASB has recently issued ASU 2016-08, ASU 2016-10, ASU 2016-11, ASU 2016-12, ASU 2016-20, and ASU 2017-05,
all of which clarify certain implementation guidance within ASU 2014-09. ASU 2014-09 is effective for interim and annual periods
beginning after December 15, 2017. The standard can be adopted either retrospectively to each prior reporting period presented
(full retrospective method), or retrospectively with the cumulative effect of initially applying the guidance recognized at the
date of initial application (the cumulative catch-up transition method). The Company will adopt the provisions of this statement
in the first quarter of fiscal 2018, using the modified retrospective approach. We have assessed the impact adoption of this standard
will have on our consolidated financial statements and related disclosures. Based on our assessment, the adoption of this standard
will not have a material impact on our revenue recognition policies for our service revenues.
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
January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying
the Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04,
an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair
value up to the amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual and interim reporting
periods beginning after December 15, 2019 for public business entities. Early adoption is permitted. The Company early adopted
ASU 2017-04 during the fourth quarter of 2017.
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.
NOTE
2 – RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS
The
financial statements for the year ended December 31, 2016 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) in 2015 was erroneously recorded using the partial
goodwill method.
|
|
●
|
that
the Company erroneously did not record an allowance for uncollectible accounts receivable at 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 of the performance completion
method. Previously the Company had recognized revenues upon billings. The cumulative effect of the correction of the error
was to increase accumulated deficit by $366,099 at December 31, 2015. The Company restated its consolidated financial statements
as of and for the year ended December 31, 2016 to reflect the correction of the error. The restatement resulted in the Company
recording $315,300 of additional service revenue, $88,992 of additional costs, and additional net income of $226,307 for 2016.
|
|
|
(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 year ended December 31,
2017, the Company determined that the incorrect exchange rate was used and corrected
it. The cumulative effect of the correction of the error was to decrease real estate
held for investment by $173,352 and decrease accumulated other comprehensive income by
$175,298 at December 31, 2015. The Company restated its consolidated financial statements
as of and for the year ended December 31, 2016 to reflect the correction of the error
and real estate held for investment was decreased by $212,775 and accumulated other comprehensive
income was decreased $214,716.
In
addition, the Company erroneously calculated the noncontrolling interest of Yabez (Hong Kong) for the year ended December
31, 2015. The cumulative effect of the correction of the error was to increase the accumulated deficit and decrease the
noncontrolling interest by $3,088. The Company restated its consolidated financial statements as of and for the year ended
December 31, 2016 to reflect the correction of the error, and accumulated deficit was increased by $3,088 while the noncontrolling
interest was decreased by $3,088. There was no effect on net income for 2016.
|
|
|
(C)
|
In
September 2015, the Company acquired Yabez (Hong Kong) and calculated goodwill using the partial goodwill method. In preparing
its financial statements for the year ended December 31, 2017, the Company determined that the full goodwill method is 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 December 31, 2015. The Company restated its consolidated financial statements as of and for the year ended
December 31, 2016 to reflect the correction of the error, and goodwill and noncontrolling interest were increased by $174,001.
There was no effect on net loss for 2016.
|
|
|
(D)
|
In
preparing its financial statements for the year ended December 31, 2016, the Company erroneously did not record an allowance
for uncollectible accounts and bad debts. The Company restated its consolidated financial statements as of and for the year
ended December 31, 2016 to reflect an allowance for uncollectible accounts and bad debts, and accounts receivable was decreased
by $54,799 and accumulated deficit was increased by $54,799.
|
The
following table presents the effect of the restatements on the Company’s previously issued consolidated balance sheet:
|
|
As
of December 31, 2016
|
|
|
|
As
Previously Reported
|
|
|
Adjustments
|
|
|
Notes
|
|
|
As
Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
$
|
439,217
|
|
|
$
|
(54,799
|
)
|
|
|
D
|
|
|
$
|
384,418
|
|
Deferred
costs related to revenue
|
|
|
-
|
|
|
|
75,207
|
|
|
|
A
|
|
|
|
75,207
|
|
Real
estate held for investment, net
|
|
|
1,014,289
|
|
|
|
(212,775
|
)
|
|
|
B
|
|
|
|
801,514
|
|
Goodwill
|
|
|
1,472,729
|
|
|
|
174,001
|
|
|
|
C
|
|
|
|
1,646,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
revenue
|
|
|
-
|
|
|
|
215,000
|
|
|
|
A
|
|
|
|
215,000
|
|
Additional
paid in capital
|
|
|
6,626,958
|
|
|
|
1,943
|
|
|
|
B
|
|
|
|
6,628,901
|
|
Accumulated
other comprehensive income
|
|
|
102,898
|
|
|
|
(175,298
|
)
|
|
|
B
|
|
|
|
(111,818
|
)
|
|
|
|
|
|
|
|
(39,418
|
)
|
|
|
B
|
|
|
|
|
|
Accumulated
deficit
|
|
|
(790,254
|
)
|
|
|
(191,500
|
)
|
|
|
A
|
|
|
|
(981,754
|
)
|
Noncontrolling
interests in consolidated subsidiaries
|
|
$
|
148,230
|
|
|
$
|
170,913
|
|
|
|
C
|
|
|
$
|
319,143
|
|
The
following table presents the effect of the restatements on the Company’s previously issued consolidated statement of operations
and comprehensive loss:
|
|
For
the year ended December 31, 2016
|
|
|
|
As
Previously Reported
|
|
|
Adjustments
|
|
|
Notes
|
|
|
As
Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenue
|
|
$
|
2,676,292
|
|
|
$
|
315,300
|
|
|
|
A
|
|
|
$
|
2,991,592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of service revenue
|
|
|
(997,401
|
)
|
|
|
(88,992
|
)
|
|
|
A
|
|
|
|
(1,086,393
|
)
|
General
and administrative
|
|
|
(1,869,494
|
)
|
|
|
(54,799
|
)
|
|
|
D
|
|
|
|
(1,924,293
|
)
|
Net
income (loss) attributable to common shareholders
|
|
|
(222,324
|
)
|
|
|
171,509
|
|
|
|
|
|
|
|
(50,815
|
)
|
Foreign
currency translation income (loss)
|
|
|
28,395
|
|
|
|
(39,418
|
)
|
|
|
B
|
|
|
|
(11,023
|
)
|
Comprehensive
loss
|
|
$
|
(193,928
|
)
|
|
$
|
132,091
|
|
|
|
|
|
|
$
|
(61,837
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share, basic and diluted
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(0.00
|
)
|
The
following table presents the effect of the restatements on the Company’s previously issued consolidated statement of stockholder’s
equity:
|
|
Additional
Paid-in Capital
|
|
|
Accumulated
Other Comprehensive Income (Loss)
|
|
|
Accumulated
Deficit
|
|
|
Non-
Controlling Interest
|
|
|
Total
Equity
|
|
Balance
as of December 31, 2015, as previously reported
|
|
$
|
5,915,294
|
|
|
$
|
74,503
|
|
|
$
|
(567,931
|
)
|
|
$
|
136,983
|
|
|
$
|
5,564,045
|
|
Prior
Period revisions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Correction
of errors
|
|
|
1,943
|
|
|
|
(175,298
|
)
|
|
|
(363,008
|
)
|
|
|
170,913
|
|
|
|
(365,450
|
)
|
Balance
as of December 31, 2015, as restated
|
|
$
|
5,917,237
|
|
|
$
|
(100,795
|
)
|
|
$
|
(930,939
|
)
|
|
$
|
307,896
|
|
|
$
|
5,198,595
|
|
The
following table presents the effect of the restatements on the Company’s previously issued consolidated statement of cash
flows:
|
|
For
the year ended December 31, 2016
|
|
|
|
As
Previously Reported
|
|
|
Adjustments
|
|
|
Notes
|
|
As
Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
(loss) income
|
|
$
|
(211,175
|
)
|
|
$
|
171,509
|
|
|
A
|
|
$
|
(39,666
|
)
|
Provision
for bad debts
|
|
|
-
|
|
|
|
54,799
|
|
|
D
|
|
|
54,799
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable, net
|
|
|
(254,462
|
)
|
|
|
(34,500
|
)
|
|
A,
D
|
|
|
(288,962
|
)
|
Deferred
revenue
|
|
|
(174,547
|
)
|
|
|
(280,800
|
)
|
|
A
|
|
|
(455,347
|
)
|
Deferred
costs
|
|
|
-
|
|
|
|
88,994
|
|
|
A
|
|
|
88,994
|
|
Net
cash used in operating activities
|
|
$
|
(502,388
|
)
|
|
$
|
2,160
|
|
|
|
|
$
|
(500,228
|
)
|
Net
cash used in investing activities
|
|
$
|
(14,566
|
)
|
|
$
|
(2,160
|
)
|
|
|
|
$
|
(16,726
|
)
|
The
information herein amends and supersedes the information contained in our Annual Report on Form 10-K for the year ended December
31, 2016. 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 restated financial information set forth
herein.
NOTE
3 - BUSINESS COMBINATIONS
On
April 25, 2017, the Company completed the purchase of a 60% equity interest and assets of Billion Sino Holdings Limited (“BSHL”).
The Company acquired BSHL to expand insurance services. BSHL, through its wholly owned subsidiary, Parich Wealth Management Limited
(Hong Kong), provides insurance intermediary services in Hong Kong, which include long term and general insurance. Due to the
thinly traded market of the Company’s common stock, the purchase price consideration was based on the latest offering price
in a contemporaneous private placement to a third party, which was $2.50 per share of common stock, and the total purchase consideration
of $851,613.
As
of the acquisition date, the allocations of the purchase price are stated as follows:
|
|
BSHL
|
|
Cash
and cash equivalents
|
|
$
|
145,354
|
|
Deposits
|
|
|
3,481
|
|
Amount
due to a director
|
|
|
(16,597
|
)
|
Accrued
expenses
|
|
|
(90,939
|
)
|
Intangible
assets
|
|
|
94,057
|
|
Deferred
tax liabilities
|
|
|
(15,519
|
)
|
Goodwill
|
|
|
1,299,518
|
|
Fair
value of BSHL
|
|
|
1,419,355
|
|
Noncontrolling
interest
|
|
|
(567,742
|
)
|
Total
purchase consideration
|
|
$
|
851,613
|
|
The
following unaudited pro forma information presents the combined results of operations as if the acquisition of BSHL had been completed
on January 1, 2016, the beginning of the comparable prior annual reporting period. These unaudited pro forma results are presented
for informational purpose only and are not necessarily indicative of what the actual results of operations of the combined company
would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results
of operations:
|
|
For
the years ended
December
31
|
|
|
|
2017
|
|
|
2016
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Revenue
|
|
$
|
4,204,075
|
|
|
$
|
3,302,198
|
|
Gross
profit
|
|
|
2,438,003
|
|
|
|
2,070,759
|
|
Operating
income (loss)
|
|
|
(2,839,246
|
)
|
|
|
32,282
|
|
Net
income (loss)
|
|
$
|
(2,939,808
|
)
|
|
$
|
(38,919
|
)
|
Net
income (loss) per share
|
|
$
|
(0.06
|
)
|
|
$
|
(0.00
|
)
|
Subsequent
to the acquisition of Billion Sino Holdings Limited (“BSHL”), the operating performance of the BSHL reporting unit
decreased and began to be affected by reduced margins as a result of certain regulatory changes. Specifically, the Chinese government
introduced certain capital controls that curtailed certain types of revenue in the insurance market. As a result of this decline,
particularly in future expected cash flows, along with comparable fair value information, management concluded that the carrying
value of goodwill of $1,299,518 and intangible asset of $68,087 for BSHL exceeded its fair value. In addition, at December 31,
2017, the Company determined that $434,865 of goodwill and $96,250 of an intangible asset recorded in 2015 arising from the acquisition
of Yabez (Hong Kong) Company Limited was impaired. Accordingly, at December 31, 2017, the Company recorded a total impairment
of goodwill and intangible assets of $1,898,720.
On
July 21, 2017, Greenpro Resources Limited, the wholly owned subsidiary of the Company, acquired 51% of the shareholdings of Greenpro
Family Office Limited (“GFOL”). Loke Che Chan Gilbert, our Chief Financial Officer,
was
the sole shareholder of GFOL before the transaction and the acquisition is accounted for as a transfer among entities under common
control. GFOL had net assets of $1 at the time of the transaction.
NOTE
4 – PROPERTY AND EQUIPMENT, NET
|
|
As
of
|
|
|
As
of
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
|
|
Office
leasehold
|
|
$
|
3,194,858
|
|
|
$
|
-
|
|
Furniture
and fixtures
|
|
|
46,890
|
|
|
|
26,048
|
|
Office
equipment
|
|
|
43,076
|
|
|
|
31,890
|
|
Leasehold
improvement
|
|
|
41,340
|
|
|
|
13,586
|
|
|
|
|
3,326,164
|
|
|
|
71,524
|
|
Less:
Accumulated depreciation and amortization
|
|
|
(59,335
|
)
|
|
|
(32,993
|
)
|
Total
|
|
$
|
3,266,829
|
|
|
$
|
38,531
|
|
Office
leasehold represents three adjoining office units used by the Company located in a commercial building in Shenzhen, China. The
office leasehold is subject to a 50 year land lease with a remaining term of 27 years, and is being amortized over the remaining
lease term. Depreciation and amortization expense, classified as operating expenses, was $21,992 and $15,292 for the years ended
December 31, 2017 and 2016, respectively.
At
December 31, 2017, the Company’s office leasehold was pledged to banks as security collateral for loans of $1,383,360 (see
Note 10).
NOTE
5 - REAL ESTATE HELD FOR SALE
At
December 31, 2017 and 2016, real estate held for sale totaled $3,430,641 and $3,747,732, respectively. Real estate held for sale
represents multiple units in a building located in Hong Kong. During the year ended December 31, 2017, the Company sold three
units for $423,871, with related costs of sales of $347,479. The property was developed for resale on a unit by unit basis and
is stated at the lower of cost or estimated fair value, less estimated costs to sell. Real estate held for sale represents properties
for which a committed plan to sell exists and an active program to market such properties has been initiated. Real estate held
for sale is stated at cost less costs to sell unless the inventory is determined to be impaired in which case the impaired inventory
is written down to fair value. At December 31, 2017, the Company’s real estate held for sale was pledged to a non-banking
lender as security collateral for loans of $774,194 (see Note 10).
NOTE
6 - REAL ESTATE HELD FOR INVESTMENT
|
|
As
of
|
|
|
As
of
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
|
|
Office
leasehold
|
|
$
|
851,120
|
|
|
$
|
766,674
|
|
Furniture
and fixtures
|
|
|
57,814
|
|
|
|
48,174
|
|
Office
equipment
|
|
|
15,378
|
|
|
|
9,989
|
|
Leasehold
improvement
|
|
|
75,210
|
|
|
|
65,334
|
|
|
|
|
999,522
|
|
|
|
890,171
|
|
Less:
Accumulated depreciation and amortization
|
|
|
(130,538
|
)
|
|
|
(88,657
|
)
|
Total
|
|
$
|
868,984
|
|
|
$
|
801,514
|
|
Real
estate held for investment represents three office units located in two commercial buildings in Kuala Lumpur, Malaysia. Two adjoining
offices in one building are used or rented by the Company, and one office in another building is rented. Depreciation and amortization
expense, classified as cost of rental, was $30,570 and $30,050 for the years ended December 31, 2017 and 2016, respectively. At
December 31, 2017, the Company’s real estate held for investment was pledged to banks as security collateral for loans of
$613,433 (see Note 10).
NOTE
7 – OTHER INVESTMENTS
|
|
As
of
|
|
|
As
of
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
|
|
(A)
Investment in Greenpro Trust Limited – related party
|
|
$
|
51,613
|
|
|
$
|
51,613
|
|
(B)
Investments in unconsolidated subsidiaries
|
|
|
3,500
|
|
|
|
582
|
|
Cash
surrender value of life insurance, net of policy loan
|
|
|
75,344
|
|
|
|
56,058
|
|
Total
|
|
$
|
130,457
|
|
|
$
|
108,253
|
|
(A)
|
At
December 31, 2017 and 2016, the Company had an investment in Greenpro Trust Limited of $51,613, which is approximately 12%
of the equity interest of Greenpro Trust Limited and is accounted for under the cost method of accounting. Greenpro Trust
Limited is a company incorporated in Hong Kong and Mr. Lee Chong Kuang and Mr. Loke Che Chan, Gilbert are common directors
of Greenpro Trust Limited and the Company.
|
|
|
(B)
|
At
December 31, 2017, the Company had investments in two unconsolidated entities with investment amounts aggregating $3,500.
The Company’s ownership was less than 5% in each investment and each investment is accounted for under the cost method
of accounting. At December 31, 2016, the Company had investments in two other unconsolidated entities aggregating $582.
|
|
|
|
During
2017, the Company invested $196,082 into an investment fund. At December 31, 2017, the Company determined that the investment
was impaired and recorded a loss on other investments of $196,082.
|
NOTE
8 – INTANGIBLE ASSETS
|
|
As
of
|
|
|
As
of
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
|
|
Trademarks
|
|
$
|
6,186
|
|
|
$
|
5,127
|
|
Customer
Lists and order backlog
|
|
|
703,037
|
|
|
|
624,500
|
|
|
|
|
709,223
|
|
|
|
629,627
|
|
Less:
Accumulated amortization
|
|
|
(293,231
|
)
|
|
|
(157,307
|
)
|
Less:
Impairment
|
|
|
(164,337
|
)
|
|
|
-
|
|
Total
|
|
$
|
251,655
|
|
|
$
|
472,320
|
|
Amortization
expense for the years ended December 31, 2017 and 2016 were $135,925 and $121,862, respectively.
At
December 31, 2017, the Company’s management determined that an impairment indicator was present for intangible assets acquired
from BSHL and Yabez (Hong Kong) Company Limited. Based on the results of managements impairment analysis, it was determined that
customer lists of $96,250 and order backlog of $68,087 were impaired, resulting in an impairment charge of $164,337. At December
31, 2016, there were no impairments of intangible assets recorded.
Amortization
for each of the five years and thereafter following December 31, 2017 are as follows:
Year
ending December 31:
|
|
|
|
2018
|
|
$
|
90,000
|
|
2019
|
|
|
90,000
|
|
2020
|
|
|
69,055
|
|
Thereafter
|
|
|
2,600
|
|
|
|
|
|
|
Total
|
|
$
|
251,655
|
|
NOTE
9 - DUE TO RELATED PARTIES
|
|
As
of
|
|
|
As
of
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
|
|
Due
to noncontrolling interests
|
|
$
|
1,617,241
|
|
|
$
|
1,441,548
|
|
Due
to shareholders
|
|
|
3,993
|
|
|
|
4,880
|
|
Due
to directors
|
|
|
85,212
|
|
|
|
46,109
|
|
Due
to related companies
|
|
|
107,484
|
|
|
|
16,955
|
|
Total
|
|
$
|
1,813,930
|
|
|
$
|
1,509,492
|
|
At
December 31, 2017 and 2016, $1,441,548, was due to the noncontrolling interest in Forward Win International Limited, and is unsecured,
bears no interest, is payable upon demand, and related to the initial acquisition of the Company’s real estate held for
sale property. At December 31, 2017, $175,693 was due to the noncontrolling interest in BSHL, and is unsecured, bears no interest,
and is payable upon demand.
Due
to shareholders, directors, and related companies represents expenses paid by the related companies or shareholder or director
to third parties on behalf of the Company, are non-interest bearing, and are due on demand.
NOTE
10 – LOANS SECURED BY REAL ESTATE
|
|
As
of
|
|
|
As
of
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
|
|
|
|
|
|
|
(A)
Standard Chartered Saadiq Berhad, Malaysia
|
|
$
|
363,974
|
|
|
$
|
337,464
|
|
|
|
|
|
|
|
|
|
|
(B)
United Overseas Bank (Malaysia) Berhad
|
|
|
249,459
|
|
|
|
229,706
|
|
|
|
|
|
|
|
|
|
|
(C)
Bank of China Limited, Shenzhen, PRC
|
|
|
1,383,360
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
(D)
Loan from non-banking lender, Hong Kong
|
|
|
774,194
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,770,987
|
|
|
|
567,170
|
|
Less:
current portion
|
|
|
(928,147
|
)
|
|
|
(13,042
|
)
|
Loans
secured by real estate, net of current portion
|
|
$
|
1,842,840
|
|
|
$
|
554,128
|
|
(A)
|
In
May 2013, the Company obtained a loan in the principal amount of MYR1,629,744 (approximately $495,170) from Standard Chartered
Saadiq Berhad, a financial institution in Malaysia to finance the acquisition of leasehold office units at Skypark One City,
Selangor in Kuala Lumpur, Malaysia. The loan bears interest at the base lending rate less 2.1% per annum (6.7% at December
31, 2017 and 2016) with 300 monthly installments of MYR9,287 (approximately $2,840) each and will mature in May 2038. The
mortgage loan is secured by (i) the first legal charge over the property, (ii) personally guaranteed by Mr. Lee Chong Kuang
and Mr. Loke Che Chan Gilbert, the directors of the Company, and (iii) guaranteed by a related corporation which is controlled
by the directors of the Company.
|
|
|
(B)
|
In
August 2013, the Company, through Mr. Lee Chong Kuang, the chief executive officer of the Company, obtained a loan in the
principal amount of MYR1,074,696 (approximately $326,530) from United Overseas Bank (Malaysia) Berhad, a financial institution
in Malaysia to finance the acquisition of a leasehold office unit at Northpoint, Mid Valley City in Kuala Lumpur, Malaysia.
The loan bears interest at the base lending rate less 2.2% per annum (6.81% at December 31, 2017 and 2016) with 360 monthly
installments of MYR5,382 (approximately $1,645) each and will mature in August 2043. The mortgage loan is secured by the first
legal charge over the property.
|
|
|
(C)
|
In
December 2017, the Company obtained a loan in the principal amount of RMB 9,000,000 (approximately $1,383,360) from Bank of
China Limited, a financial institution in China, to finance the acquisition of leasehold office units of approximately 5,000
square feet at the Di Wang Building (Shun Hing Square), Shenzhen, China (the “Property”). The loan bears interest
at a 25% premium above the 5-year-or-above RMB base lending rate per annum (6.125% at December 31, 2017) with 120 monthly
installments and will mature in December 2027. The monthly installments will be determined by the sum of (i) a 25% premium
above the 5-year-or-above RMB base lending rate per annum on the 20
th
day of each month for the interest payment
and (ii) RMB75,000 (approximately $11,528) for the fixed repayment of principal. The mortgage loan is secured by (i) the first
legal charge over the Property, (ii) a restricted-cash fixed time deposit of RMB 1,000,000 (approximately $153,707) of the
Company, (iii) the accounts receivable of Greenpro Management Consultancy (Shenzhen) Limited, (iv) corporate guaranteed by
the Company and by a related company which is controlled by Loke Che Chan Gilbert, and (v) personally guaranteed by Ms. Chen
Yanhong, the legal representative of Greenpro Management Consultancy (Shenzhen) Limited and a shareholder of the Company.
|
|
|
(D)
|
In
September, 2017, the Company borrowed HKD 8,000,000 (approximately $1,032,258) from Laboratory JaneClare Limited, a non-banking
lender located in Hong Kong. The loan is secured by the Company’s real estate held for sale, bears interest at 8.4%
per annum, and is due September 12, 2018.
|
Maturity
dates of the loan secured by real estate for each of the five years and thereafter are as follows:
Year
ending December 31:
|
|
|
|
2018
|
|
$
|
928,147
|
|
2019
|
|
|
154,703
|
|
2020
|
|
|
155,413
|
|
2021
|
|
|
156,311
|
|
2022
|
|
|
157,175
|
|
Thereafter
|
|
|
1,219,238
|
|
|
|
|
|
|
Total
|
|
$
|
2,770,987
|
|
NOTE
11 – STOCKHOLDERS’ EQUITY
Our
authorized capital consists, of 600,000,000 shares, of which 500,000,000 shares are designated as shares of common stock, par
value $0.0001 per share, and 100,000,000 shares are designated as shares of preferred stock, par value $0.0001 per share. No shares
of preferred stock are currently outstanding. Shares of preferred stock may be issued in one or more series, each series to be
appropriately designated by a distinguishing letter or title, prior to the issuance of any shares thereof. The voting powers,
designations, preferences, limitations, restrictions, relative, participating, options and other rights, and the qualifications,
limitations, or restrictions thereof, of the preferred stock are to be determined by the Board of Directors before the issuance
of any shares of preferred stock in such series.
In
2016, the Company sold a total of 424,004 shares of common stock in private placements at prices ranging from $1.60 to $1.80 per
share, for aggregate gross proceeds of $711,707.
In
2017, the Company sold a total of 505,556 shares of common stock in private placements at prices ranging from of $1.80 to $2.50
per share, for aggregate gross proceeds of $984,864.
On
April 25, 2017, the Company completed the acquisition of a 60% equity interest and assets of Billion Sino Holdings Limited (“BSHL”)
and issued 340,645 shares of its restricted common stock at $2.50 per share to the stockholders of BSHL for consideration of $851,613.
Due to the thinly traded market of the Company’s common stock, the purchase price consideration was based on the latest
offering price in a contemporaneous private placement to a third party.
NOTE
12 - INCOME TAXES
The
income (loss) before income taxes of the Company for the years ended December 31, 2017 and 2016 were comprised of the following:
|
|
For
the years ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Tax
jurisdictions from:
|
|
|
|
|
|
|
|
|
–
Local
|
|
$
|
(723,141
|
)
|
|
$
|
(817,722
|
)
|
–
Foreign, representing:
|
|
|
|
|
|
|
|
|
Hong
Kong
|
|
|
(2,174,011
|
)
|
|
|
12,846
|
|
The
PRC
|
|
|
114,443
|
|
|
|
(42,092
|
)
|
Malaysia
|
|
|
(172,593
|
)
|
|
|
(65,776
|
)
|
Other
(primarily nontaxable jurisdictions)
|
|
|
(93,235
|
)
|
|
|
880,537
|
|
|
|
|
|
|
|
|
|
|
Loss
before income taxes
|
|
$
|
(3,048,537
|
)
|
|
$
|
(32,207
|
)
|
Provision
for income taxes consisted of the following:
|
|
For
the years ended
December
31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
–
Local
|
|
$
|
-
|
|
|
$
|
-
|
|
–
Foreign:
|
|
|
|
|
|
|
|
|
Hong
Kong
|
|
|
20,286
|
|
|
|
7,459
|
|
The
PRC
|
|
|
48,086
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
–
Local
|
|
|
-
|
|
|
|
-
|
|
–
Foreign
|
|
|
-
|
|
|
|
-
|
|
|
|
$
|
68,372
|
|
|
$
|
7,459
|
|
Effective
and Statutory Rate Reconciliation
The
following table summarizes a reconciliation of the Company’s blended statutory income tax rate to the Company’s effective
tax rate as a percentage of income from continuing operations before taxes:
|
|
For
the years ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
|
|
|
|
|
Statutory
blended tax rate
|
|
|
(24
|
)%
|
|
|
(24
|
)%
|
Goodwill
impairment
|
|
|
16
|
%
|
|
|
-
|
|
Increase
in valuation allowance
|
|
|
10
|
%
|
|
|
47
|
%
|
–
Foreign
|
|
|
|
|
|
|
|
|
Effective
tax rate
|
|
|
2
|
%
|
|
|
23
|
%
|
The
effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply
a broad range of income tax rates. During the periods presented, the Company has a number of subsidiaries that operates in different
countries and is subject to tax in the jurisdictions in which its subsidiaries operate, as follows:
United
States of America
The
Company (GRNQ) is registered in the State of Nevada and is subject to United States of America tax law. As of December 31, 2017,
the operations in the United States of America incurred $1,899,797 of cumulative net operating losses (NOL’s) which can
be carried forward to offset future taxable income. The NOL carryforwards begin to expire in 2037, if unutilized. The Company
has provided for a full valuation allowance of approximately $398,957 against the deferred tax assets on the expected future tax
benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets will
not be realized in the future.
Hong
Kong
The
Company’s subsidiaries operating in Hong Kong are subject to the Hong Kong Profits Tax at the statutory income tax rate
of 16.5% on its assessable income for its tax year. For the year ended December 31, 2017, certain subsidiaries in Hong Kong incurred
an aggregate operating loss of $2,323,953 (including goodwill and impairment loss of $1,898,721), while other subsidiaries generated
aggregate operating income of $149,942. For the year ended December 31, 2016, certain subsidiaries in Hong Kong incurred an aggregate
operating loss of $32,514, while other subsidiaries generated aggregate operating income of $45,360. As of December 31, 2017,
the cumulative operating losses and cumulative operating income for operations in Hong Kong was $3,154,457 and $140,779 respectively.
The cumulative operating losses can be carried forward to offset future taxable income. The Company has provided for a full valuation
allowance against the deferred tax assets of $520,486 (including goodwill and intangibles of $313,289) on the expected future
tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets
will not be realized in the future.
The
PRC
GMC(SZ),
SZ Falcon and GSNSZ are operating in the PRC subject to the Corporate Income Tax governed by the Income Tax Law of the People’s
Republic of China with a unified statutory income tax rate of 25%. For the year ended December 31, 2017, GMC(SZ), SZ Falcon and
GSNSZ recorded aggregate operating income of $77,851. For the year ended December 31, 2016, GMC(SZ) and SZ Falcon recorded an
aggregate operating loss of $42,092. As of December 31, 2017, the operations in the PRC had $162,985 of cumulative net operating
losses which can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2023,
if unutilized. The Company has provided for a full valuation allowance against the deferred tax assets of $40,747 on the expected
future tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these
assets will not be realized in the future.
Malaysia
GRSB,
GCVSB and GWSB are subject to the Malaysia Corporate Tax Laws at a progressive income tax rate starting from 20% on the assessable
income for its tax year. For the years ended December 31, 2017 and 2016, GRSB, GCVSB and GWSB incurred an aggregate operating
loss of $174,998 and $65,776, respectively, which can be carried forward indefinitely to offset its taxable income. As of December
31, 2017, the operations in Malaysia incurred $403,224 of cumulative net operating losses which can be carried forward to offset
future taxable income. The net operating loss can be carried forward indefinitely. The Company has provided for a full valuation
allowance against the deferred tax assets of $80,645 on the expected future tax benefits from the net operating loss carryforwards
as the management believes it is more likely than not that these assets will not be realized in the future.
The
following table sets forth the significant components of the aggregate deferred tax assets of the Company as of December 31, 2017
and December 31, 2016:
|
|
As
of
|
|
|
As
of
|
|
|
|
December
31, 2017
|
|
|
December
31, 2016
|
|
Deferred
tax assets:
|
|
|
|
|
|
|
|
|
Goodwill
and intangibles
|
|
$
|
313,389
|
|
|
$
|
-
|
|
Net
operating loss carryforwards
|
|
|
|
|
|
|
|
|
–
United States of America
|
|
|
398,857
|
|
|
|
431,009
|
|
–
Hong Kong
|
|
|
207,197
|
|
|
|
26,506
|
|
–
The PRC
|
|
|
40,747
|
|
|
|
60,209
|
|
–
Malaysia
|
|
|
80,645
|
|
|
|
45,645
|
|
|
|
|
1,040,835
|
|
|
|
563,369
|
|
Less:
valuation allowance
|
|
|
(1,040,835
|
)
|
|
|
(563,369
|
)
|
Deferred
tax assets
|
|
$
|
-
|
|
|
$
|
-
|
|
Management
believes that it is more likely than not that the deferred tax assets will not be fully realizable in the future. Accordingly,
the Company provided for a full valuation allowance against its deferred tax assets of $1,040,835 as of December 31, 2017. For
the year ended December 31, 2017, the valuation allowance increased by $477,466, primarily relating to the impairment of goodwill
and intangible assets and loss carryforwards from the various tax regimes.
NOTE
13 - RELATED PARTY TRANSACTIONS
|
|
For
the years ended December 31,
|
|
|
|
2017
|
|
|
2016
|
|
Revenue
from related parties is comprised of the following:
|
|
|
|
|
|
|
Service
revenue
|
|
|
|
|
|
|
|
|
-
Related party A
|
|
$
|
10,065
|
|
|
$
|
1,500
|
|
-
Related party B
|
|
|
181,696
|
|
|
|
196,621
|
|
-
Related party C
|
|
|
-
|
|
|
|
44,216
|
|
-
Related party D
|
|
|
-
|
|
|
|
1,688
|
|
-
Related party E
|
|
|
-
|
|
|
|
446
|
|
-
Related party F
|
|
|
90,201
|
|
|
|
155,321
|
|
Total
|
|
$
|
281,962
|
|
|
$
|
399,792
|
|
|
|
|
|
|
|
|
|
|
Rental
revenue
|
|
|
|
|
|
|
|
|
-
Related party A
|
|
$
|
3,484
|
|
|
$
|
2,323
|
|
-
Related party F
|
|
|
44,199
|
|
|
|
4,516
|
|
Total
|
|
$
|
47,683
|
|
|
$
|
6,839
|
|
Related
parties A and E is under common control of Mr. Loke Che Chan, Gilbert, a director of the Company.
Related
party B represent companies where Greenpro Venture Capital Limited owns a certain percentage of their company shares.
Related
party C is under common control of Ms. Chen Yanhong, the director of GMC(SZ), a wholly-owned subsidiary of the Company.
Related
party D is both under common control of Mr. Lee Chong Kuang and Mr. Loke Che Chan, Gilbert, the directors of the Company.
Related
party F represents companies that we have determined that we can significantly influence based on our common business relationships.
NOTE
14 - SEGMENT INFORMATION
ASC
280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent
with the Company’s internal organization structure as well as information about services categories, business segments and
major customers in financial statements. The Company has two reportable segments that are based on the following business units:
service business and real estate business. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s
chief operating decision maker has been identified as the Chief Executive Officer and President, who reviews operating results
to make decisions about allocating resources and assessing performance for the entire Company. Existing guidance, which is based
on a management approach to segment reporting, establishes requirements to report selected segment information quarterly and to
report annually entity-wide disclosures about products and services, major customers, and the countries in which the entity holds
material assets and reports revenue. All material operating units qualify for aggregation under “Segment Reporting”
due to their similar customer base and similarities in: economic characteristics; nature of products and services; and procurement,
manufacturing and distribution processes. The Company operates two reportable business segments:
●
|
Service
business – provision of corporate advisory and business solution services
|
|
|
●
|
Real
estate business – leasing and trading of commercial real estate properties in Hong Kong and Malaysia
|
The
Company had no inter-segment sales for the periods presented. Summarized financial information concerning the Company’s
reportable segments is shown as below:
(a)
By Categories
|
|
For
the year ended December 31, 2017
|
|
|
|
Real
estate business
|
|
|
Service
business
|
|
|
Corporate
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
602,553
|
|
|
$
|
3,313,819
|
|
|
$
|
-
|
|
|
$
|
3,916,372
|
|
Cost
of revenues
|
|
|
(415,891
|
)
|
|
|
(1,071,910
|
)
|
|
|
|
|
|
|
(1,487,801
|
)
|
Depreciation
and amortization
|
|
|
20,091
|
|
|
|
155,681
|
|
|
|
12,715
|
|
|
|
188,487
|
|
Net
income (loss)
|
|
|
99,181
|
|
|
|
(2,300,881
|
)
|
|
|
(915,209
|
)
|
|
|
(3,116,909
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
3,549,950
|
|
|
|
7,282,745
|
|
|
|
181,612
|
|
|
|
11,014,307
|
|
Capital
expenditures for long-lived assets
|
|
$
|
-
|
|
|
$
|
3,109,152
|
|
|
$
|
44,445
|
|
|
$
|
3,153,597
|
|
|
|
For
the year ended December 31, 2016
|
|
|
|
Real
estate business
|
|
|
Service
business
|
|
|
Corporate
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
100,143
|
|
|
$
|
2,991,592
|
|
|
$
|
-
|
|
|
$
|
3,091,735
|
|
Cost
of revenues
|
|
|
(48,914
|
)
|
|
|
(1,086,393
|
)
|
|
|
-
|
|
|
|
(1,135,307
|
)
|
Depreciation
and amortization
|
|
|
30,050
|
|
|
|
136,671
|
|
|
|
483
|
|
|
|
167,204
|
|
Net
income (loss)
|
|
|
(73,366
|
)
|
|
|
98,060
|
|
|
|
(64,360
|
)
|
|
|
(39,666
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
4,648,141
|
|
|
|
3,601,943
|
|
|
|
161,152
|
|
|
|
8,411,236
|
|
Capital
expenditures for long-lived assets
|
|
$
|
10,076
|
|
|
$
|
6,050
|
|
|
$
|
600
|
|
|
$
|
16,726
|
|
(b)
By Geography*
|
|
For
the year ended December 31, 2017
|
|
|
|
|
|
|
Hong
Kong
|
|
|
Malaysia
|
|
|
China
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,705,182
|
|
|
$
|
604,112
|
|
|
$
|
607,078
|
|
|
$
|
3,916,372
|
|
Cost
of revenues
|
|
|
(1,207,775
|
)
|
|
|
(224,963
|
)
|
|
|
(55,063
|
)
|
|
|
(1,487,801
|
)
|
Depreciation
and amortization
|
|
|
89,360
|
|
|
|
32,184
|
|
|
|
66,943
|
|
|
|
188,487
|
|
Net
income (loss)
|
|
|
(3,191,830
|
)
|
|
|
9,113
|
|
|
|
65,808
|
|
|
|
(3,116,909
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
5,396,075
|
|
|
|
1,203,016
|
|
|
|
4,415,216
|
|
|
|
11,014,307
|
|
Capital
expenditures for long-lived assets
|
|
$
|
45,503
|
|
|
$
|
12,805
|
|
|
$
|
3,095,289
|
|
|
$
|
3,153,597
|
|
|
|
For
the year ended December 31, 2016
|
|
|
|
|
|
|
Hong
Kong
|
|
|
Malaysia
|
|
|
China
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
2,449,225
|
|
|
$
|
494,743
|
|
|
$
|
147,767
|
|
|
$
|
3,091,735
|
|
Cost
of revenues
|
|
|
(980,442
|
)
|
|
|
(107,996
|
)
|
|
|
(46,869
|
)
|
|
|
(1,135,307
|
)
|
Depreciation
and amortization
|
|
|
71,524
|
|
|
|
31,600
|
|
|
|
64,080
|
|
|
|
167,204
|
|
Net
income (loss)
|
|
|
(69,725
|
)
|
|
|
88,979
|
|
|
|
(58,920
|
)
|
|
|
(39,666
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
7,210,984
|
|
|
|
1,134,046
|
|
|
|
66,206
|
|
|
|
8,411,236
|
|
Capital
expenditures for long-lived assets
|
|
$
|
3,422
|
|
|
$
|
10,583
|
|
|
$
|
2,721
|
|
|
$
|
16,726
|
|
*Revenues
and costs are attributed to countries based on the location of customers.
NOTE
15 - COMMITMENTS AND CONTINGENCIES
The
Company’s subsidiaries lease an office in Hong Kong under a non-cancellable operating lease that expires in April 2021.
In addition, the Company’s subsidiaries lease certain office premises in the PRC under a non-cancellable operating lease
that expired in December 2017. The aggregate lease expense for the years ended December 31, 2017 and 2016 were $474,741 and $273,949,
respectively.
As
of December 31, 2017, the Company has future minimum rental payments for office premises due under non-cancellable operating leases
are as follows:
Year
ending December 31:
|
|
|
|
2018
|
|
$
|
270,732
|
|
2019
|
|
|
271,104
|
|
2020
|
|
|
260,645
|
|
2021
|
|
|
87,742
|
|
Thereafter
|
|
|
-
|
|
|
|
|
|
|
Total
|
|
$
|
890,223
|
|
NOTE
16 - SUBSEQUENT EVENTS
In
February and March 2018, Greenpro Venture Capital Limited (“GPVC”) entered into stock purchase agreements to sell
an aggregate number of 14,900,000 shares of its investment in an unconsolidated subsidiary, Rito Group Corp., for total consideration
of $300,000, resulting in a gain of $300,000. As of April 13, 2018, we still hold 100,000 shares of Rito Group Corp.
MINIMUM
OFFERING: 500,000 shares of common stock
MAXIMUM OFFERING: 2,500,000 shares of common stock
PROSPECTUS
You
should rely only on the information contained in this prospectus. No dealer, salesperson or other person is authorized to give
information that is not contained in this prospectus. This prospectus is not an offer to sell nor is it seeking an offer to buy
these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is
correct only as of the date of this prospectus, regardless of the time of the delivery of this prospectus or any sale of these
securities.
The
date of this prospectus is May 25, 2018
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