NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Six months ended September 30, 2020
(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.
On
February 17, 2020, Ecco Auto World Corp (the “ECCO”) and Mr Joson Yeo Hung Kwang Mr Chai Kok Leong and Mr Loke Che
Chan, Gilbert, each representing 49.5% ,49.5% and 1% shareholding of Free Share X- Change Limited, an Anguilla corporation, (“FSX”)
entered into a Sale and Purchase Agreement (the “FSX Purchase Agreement”), pursuant to which ECCO acquired 100% of
the issued and outstanding shares of FSX (the “Acquisition”). As consideration thereof, ECCO agreed to paid cash consideration
of US$15 to the sharaeholders
FSX
wholly owned a subsidiary Vtrade Technology Sdn Bhd, (the “Vtrade”) in Malaysia, is a private Limited company incorporated
in July 12th, 2018
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.
|
Free Share X-change
Limited
|
|
Anguilla,
December
17, 2013
|
|
101 shares of ordinary
shares of US$15 in total
|
|
Providing system
and software development, Information technology (IT) consultancy and managed services.
|
3.
|
Vtrade Technology
Sdn Bhd
|
|
Malaysia,
July
12, 2018
|
|
2 shares of ordinary
shares of US$0.48 in total
|
|
Providing system
and software development, Information technology (IT) consultancy and managed services.
|
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
accompanying condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles
in the United States of America (“US GAAP”).
Basis
of consolidation
The
condensed consolidated financial statements include the accounts of the Company and its subsidiary. All inter-company accounts
and transactions have been eliminated upon consolidation.
Use
of estimates
Management
uses estimates and assumptions in preparing these consolidated financial statements in accordance with US GAAP. Those estimates
and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in
the balance sheet, and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates.
Revenue
recognition
In
accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Topic 605, “Revenue Recognition”, the Company recognizes revenue from sales of goods when the following four
revenue criteria are met: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) selling price is fixed
or determinable; and (4) collectability is reasonable assured.
Revenue
is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue.
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Six months ended September 30, 2020
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The
Company derives its revenue from provision of servicing scheduling, system optimization advisory services, also providing Finance
IT solution, system and software development, Information technology (IT) consultancy and managed services. The services are billed
on a fixed-fee basis.
Cost
of revenue
Cost
of revenue includes the cost of consultation services in providing system and software development, Information technology (IT)
consultancy and managed services.
Cash
and cash equivalents
The
Company considers all highly liquid instruments with a maturity of six months or less at the time of issuance to be cash equivalents.
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 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.
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the six months ended September 30, 2020
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Foreign
currencies translation
Transactions
denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates
prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional
currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting
exchange differences are recorded in the Condensed Consolidated Statements of Operations and Comprehensive Income
The
reporting currency of the Company is United States Dollars (“US$”) and the accompanying financial statements have
been expressed in US$. In addition, the Company’s subsidiary in Malaysia maintains their books and record in their local
currency, Ringgits Malaysia (“RM”) which is functional currency as being the primary currency of the economic environment
in which the entity operates.
In
general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ 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.
Translation
of amounts from RM into US$1 has been made at the following exchange rates for the respective periods:
|
|
As of and for the period ended
September 30
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
Period-end RM : US$1 exchange rate
|
|
|
4.1551
|
|
|
|
4.1889
|
|
Period-average RM : US$1 exchange rate
|
|
|
4.2618
|
|
|
|
4.1553
|
|
Source
of currency rate: https://www.x-rates.com/
Fair
value of financial instruments
The
carrying value of the Company’s financial instruments: cash and cash equivalents, and accounts payable and approximate their
fair values because of the short-term nature of these financial instruments.
The
Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC
820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier
fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
|
Level
1: Observable inputs such as quoted prices in active markets;
|
|
|
|
Level
2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
|
|
|
|
Level
3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own
assumptions.
|
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the six months ended September 30, 2020
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Recent
accounting pronouncements
The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption
of such any 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, 2020
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Off-Balance
Sheet Arrangements
As
of September 30, 2020, we have no significant off-balance sheet arrangements that have or are reasonably likely to have a current
or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to our stockholders.
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the six months ended September 30, 2020
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
3.
PLANT AND EQUIPMENT
|
|
September 30, 2020
|
|
|
March 31, 2020
|
|
|
|
|
|
|
|
|
Computer and peripherals
|
|
$
|
51,266
|
|
|
$
|
51,266
|
|
Accumulated depreciation
|
|
|
(21,849
|
)
|
|
|
(16,796
|
)
|
Effect of translation exchange
|
|
|
(870
|
)
|
|
|
(1,921
|
)
|
Plant and equipment
|
|
$
|
28,547
|
|
|
$
|
32,549
|
|
Depreciation
expense for the three and six months ended September 30, 2020 is $953 and $5,053 respectively. Depreciation for
the three and six months ended September 30, 2019 is $183 and $366 respectively.
4. DUE FROM RELATED
PARTIES
The amount due from related parties are
unsecured, interest-free with no fixed repayment term, for working capital purpose.
5.
COMMON STOCK
As
of September 30, 2020 and March 31, 2020 the Company has 93,089,643 shares issued and outstanding respectively. There are no shares
of preferred stock issued and outstanding.
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the Six months ended September 30, 2020
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
6.
OTHER PAYABLES AND ACCRUED LIABILITIES
|
|
September
30, 2020
|
|
|
March
31, 2020
|
|
|
|
|
|
|
|
|
Accrued
audit fee
|
|
$
|
19,345
|
|
|
$
|
28,991
|
|
Accrued
review fee
|
|
|
7,000
|
|
|
|
3,800
|
|
Other
payable
|
|
|
160,445
|
|
|
|
148,894
|
|
Total
other payables and accrued liabilities
|
|
$
|
186,790
|
|
|
$
|
181,685
|
|
As
of March 31, 2020, the other payable is made up of loan from non-trade third party amounted to US$148,894.
As
of September 30, 2020, the other payable is made up of loan from non-trade third party amounted to US$160,445. There is no
interest incur and
repayment period is upon request by non-trade third party.
7.
INCOME TAXES
For
the six months ended September 30, 2020, the local (United States) and foreign components of income/(loss) before income taxes
were comprised of the following:
|
|
Six
months ended
|
|
|
Six
months ended
|
|
|
|
September 30, 2020
|
|
|
September 30, 2019
|
|
|
|
|
|
|
|
|
Tax jurisdictions from:
|
|
|
|
|
|
|
|
|
- Local
|
|
$
|
(19,666
|
)
|
|
$
|
(26,717
|
)
|
- Foreign, representing
|
|
|
-
|
|
|
|
-
|
|
Labuan
|
|
$
|
(143
|
)
|
|
|
(1,576
|
)
|
Malaysia
|
|
|
8,379
|
|
|
|
-
|
|
Anguilla
|
|
|
21,125
|
|
|
|
-
|
|
Loss before income tax
|
|
$
|
9,695
|
|
|
$
|
(28,293
|
)
|
The
provision for income taxes consisted of the following:
|
|
|
Six
months ended
|
|
|
|
Six
months ended
|
|
|
|
|
September
30, 2020
|
|
|
|
September
30, 2019
|
|
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, 2020
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
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, 2020, 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, 2020,
the operations in the United States of America incurred $667,189 of cumulative net operating loss which can be carried forward
to offset future taxable income. The net operating loss carryforwards begin to expire in 2040, if unutilized. The Company has
provided for a full valuation allowance of $140,110 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.
Malaysia
Vtrade
Technology Sdn Bhd is subject to Malaysia Corporate Tax, which is charged at the statutory income tax rate range from 17% to 24%
on its assessable income. As of September 30, 2020, the operations in the Malaysia incurred $285,266 of cumulative net operating
loss. The Company has provided for a full valuation allowance of $48,495 against the deferred tax assets on the expected future
tax benefits from the net operating loss carry forwards as the management believes it is more likely than not that these assets
will not be realized in the future.
Anguilla
Under
the current laws of the Anguilla Free Share Xchange Limited is registered as an international business company which governs by
the International Business Companies Act of Anguilla and there is no income tax charged in Anguilla.
8.
CONCENTRATIONS OF RISK
The
Company is exposed to the following concentrations of risk:
(a)
Major customers
For
the year ended September 30, 2020 and 2019, 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 year ended September 30
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
Revenue
|
|
|
Percentage of
Revenue
|
|
|
Accounts Receivable, Trade
|
|
Customer A
|
|
$
|
17,500
|
|
|
$
|
-
|
|
|
|
49
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
$
|
-
|
|
Customer B
|
|
$
|
18,100
|
|
|
$
|
-
|
|
|
|
51
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
$
|
35,600
|
|
|
$
|
-
|
|
|
|
100
|
%
|
|
|
-
|
%
|
|
$
|
-
|
|
|
$
|
-
|
|
(b)
Major vendor
For
the six ended September 30, 2020 and 2019, no vendor accounted for 10% or more of the Company’s cost of revenues, or accounts
payable at period-end.
(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, 2020, the Company has no commitments or contingencies involved.
ECCO
AUTO WORLD CORPORATION
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For
the six months ended September 30, 2020
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
10.
RELATED PARTY TRANSACTIONS
|
|
Six months ended
September 30, 2020
|
|
|
Six months ended
September 30, 2019
|
|
Asia UBS Global Limited (1)
|
|
|
|
|
|
|
|
|
- Professional Fee
|
|
|
4,000
|
|
|
|
7,400
|
|
- Company Renewal Fee
|
|
|
2,200
|
|
|
|
550
|
|
|
|
|
6,200
|
|
|
|
7,950
|
|
(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, 2020. For the six months ended September
30, 2020, the Company has incurred professional fee of $4,000 and company renewal fees of $2,200. For the six months ended September
30, 2019, the Company has $7,400 professional fee and $550 company renewal fees incurred.
(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, 2020. For the six months ended
September 30, 2019, the Company incurred no professional fees.
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 March 31, 2020 up through the date the Company issued the audited consolidated financial statements.
During this period, there was no subsequent event that required recognition or disclosure
12. SIGNIFICANT EVENTS
During
the fiscal year, the World Health Organization declared the Coronavirus (COVID-19) outbreak to be a pandemic, which has caused
severe global social and economic disruptions and uncertainties, including markets where the Company operates.
The
Company considers this outbreak as non-adjusting-events. The consequences brought about by Covid-19 continue to evolve and whilst
the Company actively monitoring and managing its operations to respond to these changes, the Company does not consider it practicable
to provide any quantitative estimate on the potential impact it may have on the Company.