NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the nine months ended December 31, 2019
(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$1 each
|
|
Investment
holding
|
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles
in the United States of America (“US GAAP”).
Basis
of consolidation
The
condensed consolidated financial statements include the accounts of the Company and its subsidiary. All inter-company accounts
and transactions have been eliminated upon consolidation.
Use
of estimates
Management
uses estimates and assumptions in preparing these consolidated financial statements in accordance with US GAAP. Those estimates
and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in
the balance sheet, and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates.
Revenue
recognition
The
Company follows the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts. ASC 606 creates a
five-step model that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying
the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining
the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue
as each performance obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that
the Company will collect the consideration it is entitled to in exchange for the services it transfers to its clients.
The
Company’s revenue is providing consultancy and advisory in Financial IT solution (“service revenue”),
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the nine months ended December 31, 2019
(Currency
expressed in United States Dollars (“US$”), 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.
Plant
and equipment
Plant
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 jurisdictions. 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 nine months ended December 31, 2019
(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$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate
on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses
resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other
comprehensive income within the statements of stockholders’ equity.
Fair
value of financial instruments
The
carrying value of the Company’s financial instruments: cash and cash equivalents, and accounts payable and approximate their
fair values because of the short-term nature of these financial instruments.
The
Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC
820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier
fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
|
Level
1: Observable inputs such as quoted prices in active markets;
|
|
|
|
Level
2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
|
|
|
Level
3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own
assumptions.
|
Recent
accounting pronouncements
The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption
of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the nine months ended December 31, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
3.
EQUIPMENT
|
|
As of
December
31, 2019
|
|
|
As of
March
31, 2019
|
|
|
|
|
|
|
|
|
Computer and peripherals
|
|
$
|
3,656
|
|
|
$
|
3,656
|
|
Accumulated depreciation
|
|
|
(1,523
|
)
|
|
|
(975
|
)
|
Equipment, net
|
|
$
|
2,133
|
|
|
$
|
2,681
|
|
Depreciation
for the three and nine months period ended December 31, 2019 is $183 and $548 respectively.
Depreciation
for the three and nine months period ended December 31, 2018 is $183 and $548 respectively.
4.
COMMON STOCK
As
of December 31, 2019, the Company has 93,089,643 shares issued and outstanding. There are no shares of preferred stock issued
and outstanding as of December 31, 2019.
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the nine months ended December 31, 2019
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
5.
OTHER PAYABLES AND ACCRUED LIABILITIES
|
|
As of
December
31, 2019
|
|
|
As of
March
31, 2019
|
|
|
|
|
|
|
|
|
Accrued audit fee
|
|
$
|
-
|
|
|
$
|
14,000
|
|
Accrued filling fee
|
|
|
1,167
|
|
|
|
|
|
Accrued professional fee
|
|
|
3,279
|
|
|
|
80
|
|
Accrued review fee
|
|
|
3,000
|
|
|
|
1,500
|
|
Total other payables and accrued liabilities
|
|
$
|
7,446
|
|
|
$
|
15,580
|
|
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 nine months ended December 31, 2019, the local (United States) and foreign components of income/(loss) before income taxes
were comprised of the following:
|
|
Nine Months Ended
|
|
|
|
December
31, 2019
|
|
|
December
31, 2018
|
|
|
|
|
|
|
|
|
Tax jurisdictions from:
|
|
|
|
|
|
|
|
|
- Local
|
|
$
|
(29,834
|
)
|
|
$
|
(148,543
|
)
|
- Foreign, representing
|
|
|
-
|
|
|
|
|
|
Labuan
|
|
|
(2,363
|
)
|
|
|
(7,487
|
)
|
Loss before income tax
|
|
$
|
(32,197
|
)
|
|
$
|
(156,030
|
)
|
The
provision for income taxes consisted of the following:
|
|
Nine Months Ended
|
|
|
|
December 31, 2019
|
|
|
December 31, 2018
|
|
|
|
|
|
|
|
|
Current:
|
|
|
|
|
|
|
|
|
- Local
|
|
$
|
-
|
|
|
$
|
-
|
|
- Foreign
|
|
|
-
|
|
|
|
-
|
|
Deferred:
|
|
|
|
|
|
|
|
|
- Local
|
|
|
-
|
|
|
|
-
|
|
- Foreign
|
|
|
-
|
|
|
|
-
|
|
Income tax expense
|
|
$
|
-
|
|
|
$
|
-
|
|
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the nine months ended December 31, 2019
(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 Company is registered in the State of
Nevada and is subject to the tax laws of the United States of America. As of December 31, 2019, the operations in the United States
of America incurred $602,681 of cumulative net operating losses which can be carried forward to offset future taxable income.
The net operating loss carryforwards begin to expire in 2039, if unutilized. The Company has provided for a full valuation
allowance of $126,613 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.
8.
CONCENTRATIONS OF RISK
The
Company is exposed to the following concentrations of risk:
(a)
Major customer
For
the three and nine months ended December 31, 2019 and 2018, the customers who accounted for 10% or more of the Company’s
sales and its outstanding receivable balance at year-end are presented as follows:
|
|
For the nine months ended December 31
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
Revenue
|
|
|
Percentage of Revenue
|
|
|
Accounts Receivable, Trade
|
|
Customer A
|
|
$
|
5,200
|
|
|
$
|
-
|
|
|
|
100
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
5,200
|
|
|
$
|
-
|
|
|
|
100
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
For three months ended December 31
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
Revenue
|
|
|
Percentage of Revenue
|
|
|
Accounts Receivable, Trade
|
|
Customer A
|
|
$
|
5,200
|
|
|
$
|
-
|
|
|
|
100
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
5,200
|
|
|
$
|
-
|
|
|
|
100
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
$
|
-
|
|
(b)
Major vendor
For
three and nine months ended December 31, 2019 and 2018, no vendor accounted for 10% or more of the Company’s cost of revenues,
or accounts payable at period-end.
9.
COMMITMENTS AND CONTINGENCIES
As
of December 31, 2019, the Company has no commitments or contingencies involved.
10.
RELATED PARTY TRANSACTIONS
For
the nine months ended December 31, 2018 and 2019, the Company has the following of transacted amount with respective related parties:
|
|
Nine Months Ended
December 31, 2019
|
|
|
Nine Months Ended
December 31, 2018
|
|
|
|
|
|
|
|
|
GreenPro Financial Consulting Limited
|
|
|
|
|
|
|
|
|
- Professional Fee
|
|
|
-
|
|
|
|
13,150
|
|
- Company Renewal Fee
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Asia UBS Global Limited (1)
|
|
|
|
|
|
|
|
|
Professional fee
|
|
|
5,800
|
|
|
|
-
|
|
Company Renewal Fee
|
|
|
3,300
|
|
|
|
6.075
|
|
|
|
|
|
|
|
|
|
|
Imocha Sdn Bhd
|
|
|
|
|
|
|
|
|
- Cost of Revenue
|
|
|
|
|
|
|
|
|
- Installation Cost
|
|
|
-
|
|
|
|
125,000
|
|
|
|
$
|
9,100
|
|
|
$
|
144,525
|
|
|
(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 December 31, 2019. For the nine months ended December
31, 2019 , the Company has incurred professional fee and company renewal fees of $5,800 and $3,300 respectively
. For the nine months ended December 31, 2018, the Company has incurred company renewal fees of 6,075.
|
11.
SUBSEQUENT EVENTS
The
Company has evaluated subsequent events that occurred after December 31, 2019 up through the date of February 12, 2020,
the Company issued audited consolidated financial statements 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.
Subsequent
to nine months ended December 31, 2019 , there are a proposed acquisition carried out by the Company to acquired 100% of the issued
and outstanding shares of Free Share X- Change Limited, a private Limited company incorporated in Anguilla ( “FSX”)
. FSX wholly owned a subsidiary Vtrade Technology Sdn Bhd, is a private Limited company incorporated in Malaysia.
FSX
and its subsidiary, is engaged in providing system and software development, Information technology (IT) consultancy and managed
services.