NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the six months ended September 30, 2018
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
1.
DESCRIPTION OF BUSINESS AND ORGANIZATION
ECCO
Auto World Corporation is organized as a Nevada limited liability company, incorporated on June 6, 2016. For purposes of consolidated
financial statement presentation, ECCO Auto World Corporation and its subsidiary are herein referred to as “the Company”
or “we”. The Company is a business whose planned principal operations are to develop and operate an Automobile mobile
application or a platform to connect auto repair shops and car owners.
On
June 7, 2017, the Company acquired 100% interest in ECCO Auto World Corporation, a private limited liability company incorporated
in Labuan, resulting in the latter becoming a wholly-owned subsidiary company of the Company.
Details
of the Company’s subsidiary:
|
Company
name
|
|
Place
and date of incorporation
|
|
Particulars
of issued capital
|
|
Principal
activities
|
|
|
|
|
|
|
|
|
1.
|
ECCO
Auto World Corporation
|
|
Labuan,
March 1, 2017
|
|
100
shares of ordinary share of US$1 each
|
|
Investment
holding
|
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles
in the United States of America (“US GAAP”).
On
June 30, 2018, the the Company’s Board of Directors had approved a change in fiscal year end from February 28
th
to March 31
st
. Following such change, the date of the Company’s next fiscal year end is March 31
st
,
2019.
Basis
of consolidation
The
condensed consolidated financial statements include the accounts of the Company and its subsidiary. All inter-company accounts
and transactions have been eliminated upon consolidation.
Use
of estimates
Management
uses estimates and assumptions in preparing these consolidated financial statements in accordance with US GAAP. Those estimates
and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in
the balance sheet, and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates.
Revenue
recognition
In
accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 605, “
Revenue Recognition
”, the Company recognizes revenue from sales of goods when the following four
revenue criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) selling price is fixed
or determinable; and (4) collectability is reasonable assured.
Revenue
is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue.
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the six months ended September 30, 2018
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The
Company derives its revenue from provision of car maintenance and servicing scheduling and optimization advisory services. The
services are billed on a fixed-fee basis.
Cost
of revenue
Cost
of revenue includes the cost of consultation services of Automobile mobile application and related services.
Cash
and cash equivalents
Cash
and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions
and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Property
and equipment
Property
and equipment is stated at cost less accumulated depreciation and impairment. Depreciation of plant and equipment are calculated
on the straight-line method over their estimated useful lives as follows:
Classification
|
|
Estimated
useful lives
|
Computer
and peripherals
|
|
5
years
|
Expenditures
for maintenance and repairs are expenses as incurred.
Income
taxes
Income
taxes are determined in accordance with the provisions of ASC Topic 740, “
Income Taxes
” (“ASC Topic 740”).
Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax
assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which
those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date.
ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized
in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities.
Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50%
likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant
facts.
The
Company conducts major businesses in Malaysia and Hong Kong, and is expanding to China and Thailand. The Company is subject to
tax in these jurisdiction. As a result of its business activities, the Company will file tax returns that are subject to examination
by the foreign tax authority.
Net
income/(loss) per share
The
Company calculates net income/(loss) per share in accordance with ASC Topic 260,
“Earnings per Share.”
Basic
income/(loss) per share is computed by dividing the net income/(loss) by the weighted-average number of common shares outstanding
during the period. Diluted income per share is computed similar to basic income/(loss) per share except that the denominator is
increased to include the number of additional common shares that would have been outstanding if the potential common stock equivalents
had been issued and if the additional common shares were dilutive.
Foreign
currencies translation
Transactions
denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates
prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional
currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting
exchange differences are recorded in the Condensed Consolidated Statements of Operations and Comprehensive Income.
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the six months ended September 30, 2018
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The
reporting currency of the Company and its subsidiary is United States Dollars (“US$”) and the accompanying financial
statements have been expressed in US$.
In
general, for consolidation purposes, assets and liabilities of its subsidiary whose functional currency is not US$ are translated
into US$, in accordance with ASC Topic 830-30, “
Translation of Financial Statement
”, using the exchange rate
on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses
resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other
comprehensive income within the statements of stockholders’ equity.
Fair
value of financial instruments
The
carrying value of the Company’s financial instruments: cash and cash equivalents, and accounts payable and approximate their
fair values because of the short-term nature of these financial instruments.
The
Company also follows the guidance of the ASC Topic 820-10, “
Fair Value Measurements and Disclosures
” (“ASC
820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier
fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
|
Level
1
: Observable inputs such as quoted prices in active markets;
|
|
Level
2
: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
|
Level
3
: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own
assumptions.
|
Recent
accounting pronouncements
The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption
of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the six months ended September 30, 2018
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
3.
PROPERTY AND EQUIPMENT
|
|
As of
September 30,
2018
|
|
|
As of
March 31,
2018
|
|
|
|
|
|
|
|
|
Computer and peripherals
|
|
$
|
3,412
|
|
|
$
|
3,656
|
|
Accumulated depreciation
|
|
|
(365
|
)
|
|
|
(244
|
)
|
Property and equipment, net
|
|
$
|
3,047
|
|
|
$
|
3,412
|
|
Depreciation
for the three and six months period ended September 30, 2018 is $183 and $365 respectively.
No
depreciation has been incurred for both three and six months period ended September 30, 2017.
4.
COMMON STOCK
On
June 6, 2016, the founder of the Company, Ms. Woo Shuk Fong purchased 100,000 shares of restricted common stock of the Company
at a par value of $0.0001 per share for the Company’s initial working capital.
On
September 22, 2016, the other founder of the Company, Mr. Yiap Soon Keong purchased 24,000,000 shares of restricted common stock
of the Company at a par value of $0.0001 per share for the Company’s initial working capital. Greenpro Venture Capital Limited
and Greenpro Asia Strategic SPC purchased 4,000,000 and 52,000,000 shares of restricted common stock of the company respectively
at par value of $0.0001 per share for the Company’s initial working capital.
On
September 25, 2016, Ms. Woo Shuk Fong purchased 20,000 shares of restricted common stock of the Company, at $0.1 per share, for
$2,000.
On
December 28, 2016, Ms. Wong Yuen Ling purchased 100,000 shares of restricted common stock of the Company, at $0.1 per share, for
$10,000.
On
January 19, 2017, Mr. Yiap Soon Keong purchased 10,000,000 shares of restricted common stock of the Company, at par value of $0.0001
per share, for $1,000.
On
November 20, 2017, the Company resolved to close the initial public offering from the registration statement on Form S-1/A,
dated September 6, 2017, that had been declared effective by the Securities and Exchange Commission on September 14, 2017. The
Offering resulted in 1,669,644 shares of common stock being sold at $0.15 per share for a total of $250,447.
On
January 23, 2018, Home Boutique International Limited purchased 666,666 shares of common stock of the Company at $0.30
per share, for $199,999.
On August 24, 2018, Home Boutique International
Limited subscribed 333,333 shares of common stock of the Company at $0.30 per share,
for
$100,000.
On September
26, 2018, Home Boutique International Limited further subscribed 200,000 shares of common stock of the Company at $0.30
per share, for
$60,000.
All
proceeds received are used for the Company’s working capital.
As
of September 30, 2018, the Company has 93,089,643 shares issued and outstanding respectively. No preference stock were issued
and outstanding.
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the six months ended September 30, 2018
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
5.
OTHER PAYABLES AND ACCRUED LIABILITIES
|
|
As
of
September
30,
2018
|
|
|
As
of
March
31,
2018
|
|
|
|
|
|
|
|
|
Due
to related party
|
|
$
|
-
|
|
|
$
|
-
|
|
Accrued
audit fee
|
|
|
-
|
|
|
|
9,000
|
|
Accrued
professional fee
|
|
|
-
|
|
|
|
5,500
|
|
Accrued
review fee
|
|
|
1,500
|
|
|
|
-
|
|
Total
other payables and accrued liabilities
|
|
$
|
1,500
|
|
|
$
|
14,500
|
|
6.
DUE TO RELATED PARTIES
The
amount due to related parties are unsecured, interest-free with no fixed repayment term, for working capital purpose.
7.
INCOME TAXES
For
the six months ended September 30, 2018, the local (United States) and foreign components of income/(loss) before income taxes
were comprised of the following:
|
|
Six
months ended
|
|
|
|
September
30,
2018
|
|
|
September
30,
2017
|
|
|
|
|
|
|
|
|
Tax jurisdictions
from:
|
|
|
|
|
|
|
|
|
- Local
|
|
$
|
(141,977
|
)
|
|
$
|
(7,745
|
)
|
- Foreign, representing
|
|
|
|
|
|
|
|
|
Labuan
|
|
|
(3,876
|
)
|
|
|
(604
|
)
|
Loss
before income tax
|
|
$
|
(145,853
|
)
|
|
$
|
(8,349
|
)
|
The
provision for income taxes consisted of the following:
|
|
|
Six
months ended
|
|
|
|
|
September
30, 2018
|
|
|
|
September
30, 2017
|
|
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
-
Local
|
|
$
|
-
|
|
|
$
|
-
|
|
- Foreign
|
|
|
-
|
|
|
|
-
|
|
Deferred:
|
|
|
|
|
|
|
|
|
- Local
|
|
|
-
|
|
|
|
-
|
|
-
Foreign
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the six months ended September 30, 2018
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
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. The Company has subsidiaries that operate in various countries: United States and Malaysia
that are subject to taxes in the jurisdictions in which they operate, as follows:
United
States of America
The
Tax Cuts and Jobs Act was enacted in the United States on December 22, 2017. The Act reduces the US federal corporate tax rate
from 35% to 21%, requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously
tax deferred, and creates new taxes on certain foreign sourced earnings. In December 2017, the SEC issued SAB 118, which directs
taxpayers to consider the impact of the U.S. legislation as “provisional” when it does not have the necessary information
available, prepared or analyzed (including computations) in reasonable detail to complete its accounting for the change in tax
law.
As
of September 30, 2018, the Company does not recognize any provisional amount for the transition tax.
We
re-measured certain deferred tax assets and liabilities based on the rates at which they are anticipated to reverse in the future,
which is generally 21%. However, we are still examining certain aspects of the Act and refining our calculations.
The
Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of September
30, 2018, the operations in the United States of America incurred $550,767 of cumulative net operating losses which
can be carried forward to offset future taxable income. The net operating loss carryforwards begin to expire in 2036, if unutilized.
The Company has provided for a full valuation allowance of $115,661 against the deferred tax assets on the expected future
tax benefits from the net operating loss carryforwards as the management believes it is more likely than not that these assets
will not be realized in the future.
Labuan
Under
the current laws of the Labuan, ECCO Auto World Corporation is governed under the Labuan Business Activity Act, 1990. The tax
charge for such company is based on 3% of net audited profit or at a fixed rate of RM 20,000
.
8.
CONCENTRATIONS OF RISK
The
Company is exposed to the following concentrations of risk:
(a)
Major customer
For the three
and six months ended September 30, 2018, the Company has not generated any revenue and doesn’t have any outstanding
trade receivables.
(b)
Major vendor
For the three
and six months ended September 30, 2018, the Company has not incurred any cost of revenue and doesn’t have any outstanding
trade payables.
(c)
Exchange rate risk
The
Company cannot guarantee that the current exchange rate will remain stable, therefore there is a possibility that the Company
could post the same amount of income for two comparable periods and because of the fluctuating exchange rate actually post higher
or lower income depending on exchange rate of RM converted into US$ on that date. The exchange rate could fluctuate depending
on changes in political and economic environments without notice.
9.
COMMITMENTS AND CONTINGENCIES
As
of September 30, 2018, the Company has no commitments or contingencies involved.
10.
RELATED PARTY TRANSACTIONS
For
the six months ended September 30, 2018 and 2017, the Company has an outstanding balance with respective related
parties:
|
|
As
of
September
30, 2018
|
|
|
As
of
September
30, 2017
|
|
|
|
|
|
|
|
|
Asia UBS Global Limited
(1)
|
|
$
|
-
|
|
|
$
|
1,000
|
|
|
|
|
|
|
|
|
|
|
GreenPro Financial Consulting Limited (2)
|
|
|
10,650
|
|
|
|
500
|
|
|
|
|
|
|
|
|
|
|
Imocha Sdn
Bhd (3)
|
|
|
125,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
135,650
|
|
|
$
|
1,500
|
|
|
(1)
|
Asia
UBS Global Limited is a subsidiary of Greenpro Capital Corp. through its subsidiary Greenpro
Venture Capital Limited owns approximately 4.30% of the Company issued and outstanding
shares as of September 30, 2018. For the six months ended September 30,
2018, the Company has settled an outstanding accounting fee due to AsiaUBS Global Limited
amounted to $1,000.
|
|
(2)
|
Greenpro
Financial Consulting Limited is a subsidiary of Greenpro Capital Corp., through its subsidiary
Greenpro Venture Capital Limited owns approximately 4.30% of the Company issued
and outstanding shares as of September 30, 2018. For the six months ended September
30, 2018 and 2017, the Company has incurred professional fees of $10,650 and
$500 respectively.
|
|
(3)
|
For
the six months ended September 30, 2019, the Company has enter into and settle transaction with Imocha Sdn Bhd amounted to
$125,000 regarding the mobile application development. Both the Company and Imocha Sdn Bhd share common director as summarize
below:
|
|
-
Mr. Jason Wong Chee Hong, is the President, Secretary, Treasurer and Director of the Company;
|
|
-
Mr. Koh Kok Wei, is the Director of the Company.
|
11.
SUBSEQUENT EVENTS
In
accordance with ASC Topic 855, “
Subsequent Events
”, which establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before financial statements are issued, the Company has evaluated
all events or transactions that occurred after September 30, 2018 up through the date the Company presented these unaudited financial
statements.