Page
|
|
PROSPECTUS SUMMARY
|
1 |
RISK FACTORS
|
4 |
USE OF PROCEEDS
|
13 |
BUSINESS
|
13 |
DETERMINATION OF OFFERING PRICE
|
24 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
|
25 |
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
|
28 |
EXECUTIVE COMPENSATION
|
29 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
30 |
SELLING STOCKHOLDERS
|
31 |
PLAN OF DISTRIBUTION
|
33 |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|
34 |
DESCRIPTION OF SECURITIES
|
35 |
EXPERTS
|
35 |
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
|
35 |
LEGAL MATTERS
|
36 |
WHERE YOU CAN FIND MORE INFORMATION
|
36 |
PART II
|
II-1
|
Shares of our common stock offered for re-sale
by the Selling Stockholders pursuant to this prospectus
|
500,000
|
|
Common stock currently outstanding
|
51,260,000
|
|
Proceeds to the Company
|
We will not receive any proceeds from the resale or other disposition of the shares covered by this prospectus by any Selling Stockholder.
|
|
Risk Factors
|
There are significant risks involved in investing in our Company. For a discussion of risk factors you should consider before buying our common stock see “Risk Factors” beginning on page 4
|
a)
|
The agent’s customer makes an initial margin deposit into agent’s bank account or Man Loong’s bank account
|
b)
|
The agent confirms the initial margin deposit with Man Loong and Man Loong’s trading system updates the agent’s customer’s initial margin amount in the account
|
c)
|
The customer effects a purchase/sell order for a price contract for gold or silver using Man Loong’s electronic trading platform.
|
d)
|
The trade order is sent to the CGSE for confirmation. No payment is deducted from customer’s account at this stage.
|
e)
|
Immediately after the CGSE returns the confirmation code for the price contract, the profit gain/loss valuation starts taking place.
|
f)
|
The agent’s customer margin account will show gain/loss based on the gold/silver price market fluctuations while the price contract remains in open position. At this stage, no payment or cash is transferred in/out of agent’s customer account.
|
g)
|
Payment occurs only in two cases: (Case 1) the agent’s customer decides to close the trading position and places a sell contract order to close the position. If the gold/silver price appreciated and the agent’s customer made profit, the agent will make payment to the agent’s customer. (Case 2) If the agent’s customer is incurring losses from its trading position, e . g ., the market for gold has depreciated and the customer has a long position in the market, and if the loss is near 80% of the initial margin, the trading systems will request a margin call or place a stop loss order when the margin account loss is over 80%. In this case, the agent will transfer payment from agent’s customer account to the CGSE to cover the loss.
|
·
|
Has the right to collect a service fee from their customer.
|
·
|
May choose to act as counterparty to their customers’ trade.
|
·
|
Is responsible if its customer makes profit in the trade, to collect the profit from CGSE and forward it to the customers.
|
·
|
Is responsible if its customer incurs a loss in the trade, to pay the CGSE the amount of the loss if the customer defaults, such payment to be made from the agent’s or Man Loong’s bank account.
|
·
|
Is responsible to pay the trading processing fee to Man Loong. and responsible for the loss of their customers for any un-controllable trading error.
|
·
|
Owns a trading position for the amount of gold/silver stated in the price contract
|
·
|
Has the right to cancel the price contract by entering a new sell contract to offset the previous contract.
|
·
|
Has the responsibility to maintain minimum cash balance in their trading margin account
|
·
|
Is responsible for their own trading decision
|
·
|
Is responsible to pay a service fee to their agent
|
·
|
Has the right to collect a trading process fee from the agent.
|
·
|
Is responsible to provide access to its electronic trading platform to the agent’s customer
|
·
|
Is responsible to place the trade it receives from the agent’s customer into the CGSE trading platform and obtain confirmation from CGSE for the confirmation of the trade
|
·
|
Is responsible to provide the latest financial data and deliver the trade contract confirmation to the agent’s customer
|
·
|
Is responsible to provide gain/loss reports to the agent’s customer
|
●
|
To provide a trading place, facilities and related services to its members for gold, silver and precious metals transactions
|
●
|
To establish and implement rules and regulations, and to normalize transactions;
|
●
|
To supervise transaction processes, settlements and delivery arrangements;
|
●
|
To design trading contracts and regulations, and monitor the fulfillment and completion of contracts;
|
●
|
To establish and implement a risk management system to control risk in the market;
|
●
|
To establish settlement prices, and announce and disseminate market information; and
|
●
|
To supervise and examine all transactions, and to execute punishment if the act of any members violates CGSE rules and regulations.
|
Licenses
|
Issuing Authority
|
Effective Date
|
Expiration/Term
|
London Gold and Silver Trading License (AA)
|
CGSE
|
January 2010
|
N/A
|
100 Ounces Loco London Gold Contract
|
|
Fineness:
|
995 or up
|
Basic Trading Unit:
|
100 ounces
|
Price unit:
|
US/Ounces
|
Minimum Price Fluctuation:
|
USD0.01/ounces
|
10 Ounces Loco London Gold Contract
|
|
Fineness:
|
995 or up
|
Basic Trading Unit:
|
10 ounces
|
Price unit:
|
US/Ounces
|
Minimum Price Fluctuation:
|
USD0.01/ounces
|
5000 Ounces Loco London Silver Contract
|
|
Fineness:
|
9999 or up
|
Basic Trading Unit:
|
5000 ounces
|
Price unit:
|
US/Ounces
|
Minimum Price Fluctuation:
|
USD0.0001 per ounce
|
500 Ounces Loco London Silver Contract
|
|
Fineness:
|
9999 or up
|
Basic Trading Unit:
|
500 ounces
|
Price unit:
|
US/Ounces
|
Minimum Price Fluctuation:
|
USD0.0001 per ounce
|
Kilo Gold RMB Contract
|
|
Fineness:
|
9999 or up
|
Basic Trading Unit:
|
1 KG or 1000 Gram
|
Price unit:
|
RMB/Gram
|
Minimum Price Fluctuation:
|
RMB0.01 per gram
|
●
|
“Loco London Basis” refers to the method of trading used by the Loco London Gold Market in Hong Kong, which is modeled on the London Gold Market. Dealers usually quote their own books, and deal with the investors as principal. Loco London Gold is traded and quoted against US dollars and the minimum size for one contract is 100 ounces.
|
●
|
“Loco London Price” refers to the basis for virtually all market transactions in gold and silver in London. It is a quotation made by dealers based on US dollars per fine troy ounce for gold and US dollars per troy ounce for silver. Settlement and delivery for both metals is in two full business days in London after the day of the deal. From this basis price, dealers can offer material of varying fineness, bar size or form - for example, grain - at premiums to cover the costs of producing smaller, exact weight bars, or bars of a fineness above the 995 fine minimum.
|
●
|
“Troy Ounce” refers to the trading unit for gold and silver. Gold is traded in per fine troy ounce and silver is traded in per troy ounce. In the case of gold, the unit represents pure gold irrespective of the purity of a particular bar, whereas for silver it represents one ounce of material of which a minimum of 999 parts in every 1,000 will be silver. One troy ounce is equal to 1.10 ounces.
|
●
|
Customer service and trading platform capabilities. We believe that in order to compete effectively in our product market, we must constantly improve the quality of our customer service and our electronic trading platform capabilities as demanded by agents and their customers and as driven by technological change. Man Loong has established a strong team of IT specialists to help ensure that the trading platform functions without disruption and error. Man Loong has entered into licensing agreements with an affiliated company engaged in hosting its servers and the development and enhancement of its trading platform which allows Man Loong to continually improve the functionality of the trading platform in response to customer demands. In Man Loong’s offices in Hong Kong, Man Loong provides a 115 workstation trading floor where agents and their customers can access our trading platform to execute trades and obtain research information on precious metals prices and price trends.
|
●
|
Brand Recognition. We also plan on developing our brand recognition. In addition to providing high quality products and effective access to the bullion market through Man Loong’s electronic trading platform. Customers can access their account to check their gain/ loss position 24 hours a day 7 days a week through Man Loong’s electronic trading platform. We believe that in order to promote our brand recognition, strengthen the management of our distribution network and improve our sales revenue and market share, we will also need to continue expanding our sales channels in Hong Kong, China, Singapore and Vietnam. With adequate funding, we plan to acquire a number of local and overseas foreign exchange providers as well as precious metals and commodities brokers that can complement our strengths in services, integration, and implementation. We expect that this strategy will result in expanding our services to a wider customer base. As part of Man Loong’s growth strategy, in July 2013, Man Loong advanced $997,393 (RMB6,100,000) to eBullion Trade Company Limited (“eBullion Trade”), a company incorporated in the Peoples’ Republic of China formed by shareholders unrelated to both us and Man Loong for the purpose of engaging in trading silver contracts as an electronic member of the Guangdong Precious Metal Exchange (the “GPME”). This loan was repaid in full on May 2, 2014. In September 2013, eBullion Trade submitted its application for membership in the GPME and has been advised that application reviews typically take between six (6) and nine (9) months. If its membership application is accepted, eBullion Trade intends to operate an electronic trading platform for the processing of silver trades through the GPME on behalf of its agents’ customers in China. Inasmuch as the GPME only authorizes electronic trading of silver, through our relationship with eBullion Trade we intend to expand our access to the Chinese market by the receipt of referrals from it for the electronic trading of gold, a trading activity that they will not be engaged in. No assurance can be given however, if and when eBullion Trade’s application for membership in the GPME may be approved or whether we will derive referral business from eBullion Trade.
|
●
|
Customers of agents use the electronic trading platform that Man Loong licenses from True Technology to place their purchase and sale of price contracts on gold and silver online. This user interface is inter-connected with a number of proxy servers and a price server which retains all pricing data feed and formulates from a spectrum of third party market pricing sources (such as M-Finance and Bloomberg). The agent’s customer’s instructions with respect to their contracts then route through the proxy servers and execute through Man Loong’s trading servers, and all trading instructions are archived in its trading database. Man Loong’s licensed electronic trading platform provides customers with information 24-hours a day regarding their account balance, number of trades they hold and up to date news regarding the trade market. Man Loong’s electronic trading platform was developed in partnership with, and is operated and maintained by our affiliate and developer of the platform, True Technology.
|
●
|
True Technology is an IT services provider owned by Mr. Choi, our Chief Executive Officer and a 49.5% stockholder and Mr. Wong, a director and a stockholder. The Company pays True Technology, a monthly flat fee for the license of the trading platform which has been customized to our specifications and hosting services. On May 27, 2011, Man Loong entered into an agreement with True Technology Company Limited for the license of the trading platform it uses and the provision of hosting services by True Technology Company Limited for an aggregate monthly fee of approximately $12,894. On April 1, 2013, Man Loong entered into a new agreement with True Technology Company Limited for the license of the technology as well as the provision of hosting services until March 31, 2015 for an aggregate monthly fee of approximately $3,868. The hosting services include physical space to house a computer system owned by True Technology Company Limited and a connection of Man Loong’s server to the internet using True Technology Company Limited’s public network connections. The agreement is subject to termination by True Technology Company Limited at any time upon provision of written notice. For the years ended March 31, 2014 and 2013, Man Loong paid True Technology an aggregate fee of $46,409 and $154,725, respectively, for the use of the platform and the hosting services.
|
Product
|
Loco London Gold*
|
Loco London Silver*
|
Contract Size (one lot)
|
100 ounces
|
500 ounces
|
Minimum price fluctuation
|
US$0.1
|
US$0.0001
|
Minimum and maximum trading volume for each order
|
Minimum: 0.1 lot
|
Minimum: 0.1 lot
|
Maximum: 100 lots
|
Maximum: 100 lots
|
|
Spread Under normal market conditions)
|
US$0.5
|
US$0.04
|
1.
|
Agent’s customer calls Man Loong’s office trade line, and is notified that the conversation will be recorded for trade record.
|
2.
|
Agent’s customer must provide his or her login ID and password for verification.
|
3.
|
Man Loong’s trading specialist provides the latest quote for gold and silver.
|
4.
|
Agent’s customer places an order based on the quote provided in step (3), and must confirm the order verbally by saying “Yes the trade is confirmed”. Confirmation is recorded and trading specialist places the order into the trading platform.
|
5.
|
The trading platform executes the trade and receives confirmation code from the CGSE. The confirmation code is updated automatically in the agent’s customer’s account statement.
|
6.
|
Phone order completed.
|
●
|
Man Loong’s Trading Platform Technology is Regularly Updated to Meet Evolving Customer Needs. Man Loong continuously carries out research and gathers data on customer behavior and trends so that it may seek to provide the best technology to meet the evolving requirements of its agents and their customers. Man Loong views itself primarily as an e-commerce trading platform provider enabling its customers to acquire and/or dispose of precious metals and precious metals contracts, at their own market risk.
|
●
|
Experienced Management Team. Man Loong’s key employees have significant experience and expertise in the application of technology and automation systems and, as significant equity owners of our Company, are heavily committed to our success. Its senior management team, in particular, has substantial experience of operating electronic trading platform an average of 10 years’ experience in the gold and silver industry between them.
|
●
|
Low Cost Structure through Automation. Man Loong's focus on automation and expense management practices enables it to operate with a low cost structure.
|
●
|
Provide 24 Hour Customer Service. We view ourselves not only as a product provider but also as a company that competes as a service provider. As such, we strive to provide first-class customer service, with a 24-hour online customer service desk to respond to customer inquiries. In addition Man Loong’s technical response team is on standby 24 hours a day, 7 days a week to provide technology assistance to agents and their customers, if and as needed.
|
Number of
|
||||
Function
|
Employees
|
|||
Senior Management
|
3 | |||
Operations
|
7 | |||
Sales and Marketing
|
4 | |||
Finance
|
5 | |||
Technology, Research and Development
|
2 | |||
Human Resource & Administration
|
2 | |||
Total
|
23 |
License
|
Issuing Authority
|
Effective Date
|
Expiration/Term
|
London Gold and Silver Trading License (AA)
|
CGSE
|
January 2010
|
N/A
|
●
|
Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) – Man Loong is subject to the laws, rules and regulations regarding trading. The Securities and Futures Commission is responsible for: maintaining and promoting the fairness, efficiency, competitiveness, transparency and orderliness of the securities and futures industry. The Commission may suppress illegal, dishonorable and improper practices in the securities and futures industry; to take appropriate steps in relation to the securities and futures industry. Regardless of the communication or delivery medium used, the Commission will continue to apply the general anti-fraud and anti-manipulation provisions of the relevant Ordinances in its enforcement actions. If any person responsible for activities over the Internet is found to have acted in contravention of the provisions of the Ordinances or appears to have been involved in any misconduct whether in Hong Kong or elsewhere, the Commission may exercise its regulatory powers (including prosecution or taking other disciplinary actions as may be required); and when necessary, the Commission may consider other regulatory means available to it including seeking cooperation from foreign regulators and law enforcement agencies to take joint enforcement action, if necessary. We are prohibited from carrying on any regulated activity, as defined under the Securities and Futures Ordinance, such as dealing in securities and/or futures contracts, unless we have been granted the appropriate license(s) from the Commission.
|
●
|
Personal Data (Privacy) Ordinance (Cap. 486 of the Laws of Hong Kong) – Man Loong is subject to data privacy laws, rules and regulations that regulate the use of customer data. In Hong Kong we are governed by the Personal Data (Privacy) Ordinance and as a data user we are prohibited from doing or engaging in any practice that contravenes the data protection principles set out therein.
|
●
|
Telecommunications Ordinance (Cap. 106 of the Laws of Hong Kong), Crimes Ordinance (Cap. 200 of the Laws of Hong Kong) and Theft Ordinance (Cap. 210 of the Laws of Hong Kong) – Provisions under the Telecommunications Ordinance, Crimes Ordinance and Theft Ordinance make it an offense for unauthorized access to computers by telecommunication, to access a computer with criminal or dishonest intent, and extend the meaning of criminal damage to include misuse of computer programs or data, and burglary to include unlawfully causing a computer to function other than as it has been established and altering, erasing or adding any computer program or data. In this respect, any of the above mentioned computer related crimes committed by any staff, employees or agents, will subject us to possible criminal charges and/or investigations.
|
Year ending March 31:
|
||||
2015
|
613,238
|
|||
2016
|
377,886
|
|||
$
|
991,124
|
True Technology
trading platform fees
|
Office lease
payments
|
Management
fees
|
||||||||||||||
2015
|
46,409
|
462,392
|
104,437
|
613,238
|
||||||||||||
2016
|
-
|
308,261
|
69,625
|
377,886
|
||||||||||||
46,409
|
770,653
|
174,062
|
$
|
991,124
|
Name
|
Age
|
Office(s) Held
|
||
Kee Yuen Choi
|
59
|
President, Chief Executive Officer and Director
|
||
Chui Chui Li
|
30
|
Chief Financial Officer, Treasurer, Secretary and Director
|
||
Hak Yim Wong
|
63
|
Director
|
||
Joseph Havlin
|
58
|
Director
|
||
Lai Keung Chan
|
44
|
Director
|
Name and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards
($)
|
Non-Equity Incentive
Plan Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All Other
Compensation
($)
|
Total
($)
|
|||||||||||||||||||||||
Kee Yuen Choi
President, Chief Executive Officer
|
2014
2013
|
18,047
15,473
|
21,658
-
|
-
-
|
-
-
|
-
-
|
-
-
|
39,705
15,473
|
|||||||||||||||||||||||
Chui Chui Li
|
2014 | 50,276 | 2,362 | - | - | - | - | 52,638 | |||||||||||||||||||||||
Chief Financial Officer,
Treasurer, Secretary
|
2013 | 43,557 | 5,269 | - | - | - | - | 48,826 |
Fees Earned
|
Option
|
Other
|
||||||||||||||
Name
|
Paid in Cash
|
Awards
|
Compensation
|
Total
|
||||||||||||
Hak Yim Wong
|
||||||||||||||||
2014
|
$
|
15,470
|
$
|
-
|
$
|
-
|
$
|
15,470
|
||||||||
2013
|
15,472
|
15,472
|
Name and Address of Beneficial Owner (2)
|
Amount and
Nature of
Beneficial
Ownership
|
Percentage
of Class
Beneficially
Owned (1)
|
||||||
Kee Yuen Choi(3)
|
25,384,000
|
49.5
|
%
|
|||||
Hak Yim Wong
|
1,878,120
|
3.7
|
%
|
|||||
Lai Keung Chan
|
14,009,760
|
27.3
|
%
|
|||||
Chui Chui Li(4)
|
20,000
|
*
|
||||||
Joseph Havlin
|
10,000
|
*
|
||||||
All directors and executive officers as a group (5 persons)
|
41,287,8800
|
80.55
|
%
|
Name and Address of Beneficial Owner (2)
|
Amount and
Nature of
Beneficial
Ownership
|
Percentage
of Class
Beneficially
Owned (1)
|
||||||
Man Hap Dennis Yim
|
5,938,920
|
11.6
|
%
|
|||||
Yuen Fay Tse
|
3,553,200
|
6.9
|
%
|
|||||
All other shareholders with over 5% ownership as a group (2 persons)
|
9,492,1200
|
18.5
|
%
|
(1)
|
Percentage of class beneficially owned is calculated by dividing the amount and nature of beneficial ownership by the total shares of common stock outstanding plus the shares subject to warrants and options that are currently exercisable or exercisable within 60 days of January 31, 2014.
|
(2)
|
Unless otherwise set forth herein, the address of each beneficial owner is 80 Broad Street, 5th Floor, New York, New York 10004
|
(3) | Includes 4,000 shares of common stock owned by Mr . Choi’s wife, Sin Yin Cheung. |
(4) |
Includes 10,000 shares of common stock owned by Ms Li’s husband Ka Ming Lau.
|
Shareholder and Name of Person Controlling
|
Number of Shares
Before Offering
|
Number of
Shares Offered
|
Date Acquired
|
Amount of Shares
Owned After Offering
|
Percent of Shares
Held After Offering
|
|||||||||
Ka Wing Kwan
|
24,000
|
24,000
|
April 5, 2013
|
0
|
0%
|
|||||||||
Yin Ng Ka
|
20,000
|
20,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Chu Kwan Siu
|
12,000
|
12,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Chi Ming Tsang
|
10,000
|
10,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Lee Mui Wong
|
16,000
|
16,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Suet Mei Chan
|
10,000
|
10,000
|
April 2, 2013
|
0
|
0%
|
|||||||||
Sau Yin Choi
|
10,000
|
10,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Francisco Maria Xavier
|
10,000
|
10,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Ka Ying Au
|
10,000
|
10,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Ying Hung Yuen
|
10,000
|
10,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Ka Ming Lau(1)
|
20,000
|
20,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Mei Ling Kwok
|
10,000
|
10,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Ming Fai Alexander Chan
|
8,000
|
8,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Chun Yiu Chan
|
6,000
|
6,000
|
March 28, 2013
|
0
|
0%
|
Siu Yin Cheung(2)
|
25,384,000
|
4,000
|
March 27, 2013
|
25,380,000
|
49.5%
|
|||||||||
Siu Lun Kwok
|
4,000
|
4,000
|
March 27, 2013
|
0
|
0%
|
Chi Ming Wong
|
4,000
|
4,000
|
March 27, 2013
|
0
|
0%
|
|||||||||
Tsz Yin Stanly Chu
|
4,000
|
4,000
|
March 27, 2013
|
0
|
0%
|
|||||||||
Hiu Yin Wong
|
4,000
|
4,000
|
March 27, 2013
|
0
|
0%
|
|||||||||
Kwok Keung Dick Wong
|
4,000
|
4,000
|
March 27, 2013
|
0
|
0%
|
|||||||||
Wai Ling Ko
|
4,000
|
4,000
|
March 27, 2013
|
0
|
0%
|
|||||||||
Hing Pan So
|
2,000
|
2,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Yuk Kit Ngai
|
2,000
|
2,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Wai Keung Hui
|
2,000
|
2,000
|
March 28, 2013
|
0
|
0%
|
|||||||||
Yusheng He
|
50,000
|
50,000
|
April 5, 2013
|
0
|
0%
|
|||||||||
Yee Tung Lai
|
219,500
|
219,500
|
April 3, 2013
|
0
|
0%
|
|||||||||
Chui Chui Li (3)
|
20,000
|
20,000
|
April 3, 2013
|
0
|
0%
|
|||||||||
Joseph Havlin
|
10,000
|
10,000
|
April 5, 2013
|
0
|
0%
|
|||||||||
Daniel Schweiger
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Ivonete Desovza
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Maria Ribeiro
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Antonio Garcia
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Sunil Garcia
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Chris Leone
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Nieolan M. Desooza
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Vincent R. Palmer
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Jacob Yoogin
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Liang Yu
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Chung Hsiang
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Liang Hui Jung
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Lily Li
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Yang Arnold
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Jimmy Tung
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Yuen Siu Mo Tung
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Anne Yon Yee Tung
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Tso Liang Dominic Tung
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Karen Hoiyan Wong
|
500
|
500
|
April 5, 2013
|
0
|
0%
|
|||||||||
Raymond Kong Kim
|
1,000
|
1,000
|
April 5, 2013
|
0
|
0%
|
|||||||||
Total
|
500,000
|
500,000
|
25,390,000
|
49.5%
|
●
|
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
|
●
|
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
|
●
|
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
|
●
|
an exchange distribution in accordance with the rules of the applicable exchange;
|
●
|
privately negotiated transactions;
|
●
|
broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share;
|
●
|
a combination of any such methods of sale; or
|
●
|
any other method permitted pursuant to applicable law.
|
●
|
On April 3, 2013, we acquired Man Loong from its five shareholders, whereby we acquired 100% of the issued and outstanding capital stock of Man Loong, in exchange for 50,760,000 shares of our common stock. Kee Yuen Choi, our Chief Executive Officer and a director and the Chief Executive Officer and a director of Man Loong, Hak Yim Wong, our director and a director of Man Loong, Lai Keung Chan, our director and a shareholder of Man Loong, Man Hap Dennis Yim, a shareholder of ours and Man Loong’s and Yuen Fay Tse, a shareholder of ours and Man Loong’s, exchanged 5,076,000, 375,624, 2,801,952, 1,187,784 and 710,640 shares of common stock of Man Loong for 25,380,000, 1,878,120, 14,009,760, 5,938,920 and 3,553,200 shares of our common stock
|
●
|
Man Loong’s electronic precious metals trading platform was developed for its use by True Technology Company Limited, an IT services provider owned by Mr. Choi, our Chief Executive Officer and a 49.5% stockholder and Mr Wong, a director and a 3.7% stockholder. Man Loong pays True Technology, a monthly flat fee for the license of the trading platform which has been customized to our specifications and hosting services. On May 27, 2011, Man Loong entered into an agreement with True Technology Company Limited for the license of the trading platform it uses and the provision of hosting services by True Technology Company Limited for an aggregate monthly fee of $12,894. On April 1, 2013, Man Loong entered into a new agreement with True Technology Company Limited for the license of the technology as well as the provision of hosting services until March 31, 2015 for a monthly fee of approximately $3,868. The hosting services include physical space to house a computer system owned by True Technology Company Limited and a connection of Man Loong’s server to the internet using True Technology Company Limited’s public network connections. The agreement is subject to termination by True Technology Company Limited at any time upon provision of written notice. For the years ended March 31, 2014 and 2013, Man Loong paid True Technology $46,409 and $154,725, respectively for the use of the platform and hosting services.
|
●
|
Included in Man Loong’s financial statements line item “employee compensation and benefits” for the years ended March 31, 2014 and 2013 are salaries paid to Mr. Choi of $39,705 and $15,473, respectively and directors’ compensation paid to Mr. Wong of $15,470 and $15,472, respectively. In January 2014, Mr. Choi entered into a new employment contract pursuant to which his annual salary was increased to to HK$240,000 (US$30,940) and to provide an annual bonus of HK$20,000 (US$2,578). Additionally on 31 January 2014, Mr. Choi was paid a bonus of HK$168,000 (US$21,658). Mr. Choi is Man Loong’s chief executive officer, director and 49.5% shareholder. Mr. Wong is a director and 3.7% shareholder.
|
●
|
Included in Man Loong’s financial statements line item “related party receivable” at March 31, 2013 is a receivable of $20,257 which consist of courier charges and legal and professional fees which Man Loong paid on eBullion’s behalf.
As at December 31, 2014 and for the year then ended, related party receivables and payables are eliminated in the preparation of the consolidated condensed financial statements of eBullion.
|
●
|
On April 5, 2013, Joseph Havlin, one of our directors, participated in our private placement as an investor and we issued 10,000 shares of our common stock to Joseph Havlin in consideration of his payment of $5,000.
|
● |
On April 5, 2013, Ms. Li Chui Chui, a director and our Chief Financial Officer, participated in our private placement as an investor and we issued 10,000 shares of our common stock to Ms Li in consideration of her payment of $5,000
|
●
|
In December 2012, Man Loong entered into a consulting agreement with Mr. Havlin for the provision by Mr. Havlin of financial advisory services for an hourly fee of $120 per hour to be increased to $150 per hour. The agreement can be terminated by Man Loong with 7 days’ notice prior to the end of any month and the agreement can be terminated by Mr. Havlin upon 30 days’ notice. During the years ended March 31, 2014 and 2013, Man Loong paid Mr. Havlin $24,524 and $8,879, respectively for financial consulting services advising us on the preparation of US GAAP financial statements, the preparation of SEC related filings and assisting with completing the audits of our financial statements and those of Man Loong.
|
●
|
diluting the voting or other rights of the proposed acquirer or insurgent stockholder group;
|
●
|
putting a substantial voting block in institutional or other hands that might undertake to support the incumbent board of directors; or
|
●
|
effecting an acquisition that might complicate or preclude the takeover.
|
2014
|
2013
|
|||||||
ASSETS
|
||||||||
Current Assets:
|
||||||||
Cash
|
$ | 808,039 | $ | 1,415,630 | ||||
Commissions receivable
|
34,125 | 390,441 | ||||||
Related party receivable
|
- | 20,257 | ||||||
Deposits and prepaid expenses
|
58,368 | 163,199 | ||||||
Prepaid income taxes
|
96,305 | - | ||||||
Loan receivable from eBullion Trade
|
997,049 | - | ||||||
Total current assets
|
1,993,886 | 1,989,527 | ||||||
Noncurrent Assets:
|
||||||||
Deposits and prepaid expenses
|
219,913 | 191,714 | ||||||
Equipment, net
|
305,842 | 334,909 | ||||||
Deferred income taxes
|
150 | - | ||||||
Total noncurrent assets
|
525,905 | 526,623 | ||||||
Total assets
|
$ | 2,519,791 | $ | 2,516,150 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current Liabilities:
|
||||||||
Bank overdraft
|
$ | - | $ | 55,283 | ||||
Accounts payable and accrued liabilities
|
66,658 | 9,017 | ||||||
Customer deposits
|
38,990 | 269,478 | ||||||
Income taxes
|
40,091 | 43,675 | ||||||
Total current liabilities
|
145,739 | 377,453 | ||||||
Non-Current Liabilities:
|
||||||||
Deferred income taxes
|
- | 9,285 | ||||||
Total liabilities
|
145,739 | 386,738 | ||||||
Commitments
|
||||||||
Shareholders’ Equity
|
||||||||
Common stock, $0.0001 par value, 500,000,000 shares authorized, 51,260,000 and 50,760,000 shares issued and outstanding as of March 31, 2014 and 2013
|
5,126 | 5,076 | ||||||
Additional paid in capital (1)
|
1,523,538 | 1,304,602 | ||||||
Retained earnings
|
846,405 | 821,982 | ||||||
Accumulated other comprehensive loss
|
(1,017 | ) | (2,248 | ) | ||||
Total shareholders’ equity
|
2,374,052 | 2,129,412 | ||||||
Total liabilities and shareholders’ equity
|
$ | 2,519,791 | $ | 2,516,150 |
(1)
|
The capital accounts of the Company have been retroactively restated to reflect the equivalent number of common shares based on the exchange ratio of the merger transaction in determining the basic and diluted weighted average shares. See note 1.
|
2014
|
2013
|
|||||||
REVENUES
|
||||||||
Commission revenue
|
$ | 2,963,889 | $ | 2,825,167 | ||||
EXPENSES
|
||||||||
General and administrative
|
2,036,420 | 1,613,447 | ||||||
Employee compensation and benefits
|
792,498 | 546,344 | ||||||
Depreciation and amortization
|
80,339 | 23,210 | ||||||
Total expenses
|
2,909,257 | 2,183,001 | ||||||
INCOME BEFORE INTEREST AND INCOME TAXES
|
54,632 | 642,166 | ||||||
Interest income, net
|
439 | 47 | ||||||
INCOME BEFORE INCOME TAXES
|
55,071 | 642,213 | ||||||
PROVISION FOR INCOME TAXES
|
||||||||
Current
|
40,091 | 95,033 | ||||||
Deferred
|
(9,443 | ) | 9,294 | |||||
Total provision for income taxes
|
30,648 | 104,327 | ||||||
NET INCOME
|
24,423 | 537,886 | ||||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
||||||||
Foreign currency translation
|
1,231 | (247 | ) | |||||
COMPREHENSIVE INCOME
|
$ | 25,654 | $ | 537,639 | ||||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
|
||||||||
Basic and diluted (1)
|
51,260,000 | 50,760,000 | ||||||
BASIC AND DILUTED EARNINGS PER COMMON SHARE
|
||||||||
Basic and diluted earnings per common share
|
$ | 0.00 | $ | 0.01 |
(2)
|
The capital accounts of the Company have been retroactively restated to reflect the equivalent number of common shares based on the exchange ratio of the merger transaction in determining the basic and diluted weighted average shares. See note 1.
|
Common Stock
|
Additional
|
Accumulated
Other |
Total
|
|||||||||||||||||||||
Number of
|
Paid in
|
Retained
|
Comprehensive
|
Shareholders’
|
||||||||||||||||||||
Shares
|
Par Value
|
Capital
|
Earnings
|
Income (Loss)
|
Equity
|
|||||||||||||||||||
BALANCE, March 31, 2012 (1)
|
50,760,000 | $ | 5,076 | $ | 1,304,602 | $ | 284,096 | $ | (2,001 | ) | $ | 1,591,773 | ||||||||||||
Net income
|
- | - | - | 537,886 | - | 537,886 | ||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | - | (247 | ) | (247 | ) | ||||||||||||||||
BALANCE, March 31, 2013 (1)
|
50,760,000 | $ | 5,076 | $ | 1,304,602 | $ | 821,982 | $ | (2,248 | ) | $ | 2,129,412 | ||||||||||||
Proceeds from private placement
|
500,000 | 50 | 239,994 | - | - | 240,044 | ||||||||||||||||||
Recapitalization
|
(21,058 | ) | (21,058 | ) | ||||||||||||||||||||
Net income
|
- | - | - | 24,423 | - | 24,423 | ||||||||||||||||||
Foreign currency translation adjustment
|
- | - | - | - | 1,231 | 1,231 | ||||||||||||||||||
BALANCE, March 31, 2014
|
51,260,000 | $ | 5,126 | $ | 1,523,538 | $ | 846,405 | $ | (1,017 | ) | $ | 2,374,052 |
(1)
|
The capital accounts of the Company have been retroactively restated to reflect the equivalent number of common shares based on the exchange ratio of the merger transaction in determining the basic and diluted weighted average shares. See note 1.
|
2014
|
2013
|
|||||||
OPERATING ACTIVITIES:
|
||||||||
Net income
|
$ | 24,423 | $ | 537,886 | ||||
Adjustments to reconcile net income to net cash provided by operating activities
|
||||||||
Depreciation and amortization
|
80,339 | 28,861 | ||||||
Changes in operating assets and liabilities:
|
||||||||
Commissions receivable
|
356,620 | (5,788 | ) | |||||
Related party receivable
|
- | (20,277 | ) | |||||
Deposits and prepaid expenses
|
76,910 | (249,407 | ) | |||||
Accounts payable and accrued liabilities
|
56,313 | 3,868 | ||||||
Customer deposits
|
(230,697 | ) | (122,600 | ) | ||||
Prepaid income taxes
|
(96,304 | ) | - | |||||
Income taxes payable
|
(3,618 | ) | (6,051 | ) | ||||
Deferred income taxes
|
(9,443 | ) | 9,294 | |||||
Net cash provided by operating activities
|
254,543 | 175,786 | ||||||
INVESTING ACTIVITIES:
|
||||||||
Purchase of equipment
|
(50,921 | ) | (352,291 | ) | ||||
Loan receivable from eBullion Trade
|
(997,037 | ) | - | |||||
Net cash used in investing activities
|
(1,047,958 | ) | (352,291 | ) | ||||
FINANCING ACTIVITIES:
|
||||||||
Bank overdraft
|
(55,324 | ) | (111,386 | ) | ||||
Net proceeds from private placement
|
240,044 | - | ||||||
Net cash provided by (used in) investing activities
|
184,720 | (111,386 | ) | |||||
NET DECREASE IN CASH
|
(608,695 | ) | (287,891 | ) | ||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH
|
1,104 | 502 | ||||||
Cash, beginning of period
|
1,415,630 | 1,703,019 | ||||||
Cash, end of period
|
$ | 808,039 | $ | 1,415,630 | ||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
||||||||
Cash paid during the year for income taxes
|
140,013 | $ | 101,041 |
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
1.
|
Nature of Operations and Basis of Presentation
|
eBullion, Inc. (“eBullion” or “the Company”) was incorporated in Delaware on January 28, 2013. On April 3, 2013, the Company’s shareholders exchanged 100% of their shares for 100% of the shares of Man Loong Bullion Company Limited (“Man Loong”) a company which was incorporated in Hong Kong in 1974, and in 2007, was re-registered under Hong Kong law as a limited liability company. Upon completion of this transaction, Man Loong became a 100% owned subsidiary of eBullion. This transaction was accounted for as a reverse take-over.
The Company provides trading services for gold and silver trading positions on Man Loong’s proprietary, 24-hour electronic trading platform, and its telephone transaction system located in Hong Kong. The Company is licensed through the Chinese Gold and Silver Exchange Society (“CGSE”) a self-regulatory organization located in Hong Kong which acts as an exchange for the trading of Kilo gold and Loco London gold and silver price indices quoted on the London Metals Exchange.
The Company is not a counter party for trades entered through its trading platform and telephone transaction system, and instead, contracts with agents who pay Man Loong a fixed commission on each trade that the Company executes for its agents and their customers.
|
|
Reverse Merger Accounting
The share exchange transaction (the “Merger”) completed on April 3, 2013 was accounted for as a recapitalization in accordance with Accounting Principles Generally Accepted in the United States of America (“U.S. GAAP”). Man Loong was the acquirer for financial reporting purposes and eBullion was the acquired company. Consequently, the assets and liabilities and the results of operations that are reflected in the historical financial statements prior to the Merger are those of Man Loong and are recorded using the historical cost basis. The consolidated financial statements after completion of the Merger include the assets and liabilities of eBullion and Man Loong, historical results of operations of Man Loong and results of operations of eBullion from the closing date of the Merger. Common stock and the corresponding capital amounts of the Company pre-Merger have been retroactively restated reflecting the exchange ratio in the Merger. In conjunction with the Merger, Man Loong received no cash and assumed no liabilities of eBullion. All members of eBullion’s executive management are from Man Loong.
|
|
Basis of Presentation
The Company’s consolidated financial statements are expressed in U.S. Dollars and are presented in accordance with U.S. GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company’s and Man Loong’s fiscal year end is March 31.
|
|
Principles of Consolidation
The consolidated financial statements for the year ended March 31, 2014 include the accounts of eBullion and its wholly owned subsidiary, Man Loong. All significant intercompany transactions have been eliminated.
|
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
2.
|
Summary of Significant Accounting Policies
|
Use of Estimates
|
|
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Changes in these estimates are recorded when known. Significant estimates made by management include:
· Valuation of assets and liabilities
· Useful lives of equipment
· Other matters that affect the reported amounts and disclosures of contingencies in the consolidated financial statements.
Actual results could differ from those estimates.
|
|
Reclassifications
Certain reclassifications have been made to amounts reported in the previous periods to conform to the current presentation. Such reclassifications had no effect on net income.
|
eBullion, Inc..
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
2.
|
Summary of Significant Accounting Policies - continued
|
Revenue Recognition
|
|
The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 605, Revenue Recognition, which requires that four basic criteria must be met before revenue can be recognized: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed and determinable; and (4) collectability is reasonably assured. The Company is not a counter party for trades executed through its trading platform and telephone transaction system and, instead, recognizes revenue to the extent of the flat-fee commission it receives on each trade.
|
|
Advertising
|
|
Advertising costs are incurred for the production and communication of advertising, as well as other marketing activities. The Company expenses the cost of advertising as incurred. The Company did not capitalize any production costs associated with advertising for the years ended March 31, 2014 and 2013. The total amount charged to advertising expense was $1,702 and $13,951 for the years ended March 31, 2014 and 2013, respectively.
|
|
Cash and cash equivalents
|
|
Cash and cash equivalents consist primarily of cash on deposit, certificates of deposits, money market accounts, and investment grade commercial paper that are readily convertible to cash and purchased with original maturities of three months or less. As of March 31, 2014 and 2013, the Company had no cash equivalents.
|
eBullion, Inc..
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
2.
|
Summary of Significant Accounting Policies - continued
|
Fair Value of Financial Instruments
|
|
ASC 820, “Fair Value Measurements”, defines fair value and establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for cash, commissions and related party receivables, loan receivable from eBullion Trade, bank overdraft, accounts payable and accrued expenses and customer deposits qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
The standard establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). The three levels of the fair value hierarchy defined by the standard are as follows:
Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, listed equities and U.S. government treasury securities.
Level 2 - Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange-traded derivatives such as over the counter forwards, options and repurchase agreements.
Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant. Level 3 instruments include those that may be more structured or otherwise tailored to customers’ needs.
Commissions Receivable
Commissions receivable represent commissions to be collected from agents for their customers’ trades executed through the balance sheet date. Commissions receivable are typically remitted to the Company within 30 days of trade execution. The Company has not historically incurred credit losses on these commissions receivable. As of and for the years ended March 31, 2014 and 2013, the Company has no reserve for credit losses nor has it incurred any bad debts.
|
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
2.
|
Summary of Significant Accounting Policies – continued
|
Deposits and Prepaid Expenses
|
|
The Company records goods and services paid for but not received until a future date as deposits and prepaid expenses. These primarily include deposits and prepayments for occupancy related expenses. Any deposit or prepaid expense to be realized beyond the next 12 months is classified as a non-current asset in the accompanying consolidated balance sheets.
|
|
Equipment
|
|
Equipment is stated at cost. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and location for its intended use.
|
|
Equipment is depreciated using the straight-line method over the estimated useful lives of the assets as follows:
|
Office equipment
|
5 years
|
Furniture and fixtures
|
5 years
|
Computer equipment
|
5 years
|
Expenditures for maintenance and repairs are charged to expense as incurred. Additions, renewals and betterments are capitalized.
Gain or loss on disposal of equipment is the difference between net sales proceeds and the carrying amount of the relevant assets, if any, and is recognized as income or loss in the accompanying consolidated statements of comprehensive income.
|
eBullion, Inc..
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
2.
|
Summary of Significant Accounting Policies – continued
|
Variable Interest Entity
A variable interest entity (“VIE”) is a legal entity, other than an individual, used for business purposes that either (a) has equity investors that do not provide sufficient financial resources for the entity to support its activities, or (b) the equity investors lack any one of the following three criteria:
· The power to direct activities that most significantly impact the entity’s economic performance
· The obligation to absorb the expected losses of the entity
· The right to receive the expected residual returns.
A VIE is required to be consolidated by a reporting entity if it has a controlling financial interest in a VIE. A reporting entity is deemed to have a controlling financial interest in a VIE if it both has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb the losses or the rights to receive the benefits from the VIE that could potentially be significant to the VIE.
Reporting Currency and Foreign Currency Translation
|
|
As of and for the years ended March 31, 2014 and 2013, the accounts of the Company were maintained in their functional currencies, which is the U.S. dollar for eBullion and the Hong Kong dollar ("HK dollar") for Man Loong. The financial statements of Man Loong have been translated into U.S. dollars which is its reporting currency. All assets and liabilities of Man Loong are translated at the exchange rate on the balance sheet date, shareholders’ equity is translated at historical rates and the statements of comprehensive income, and statements of cash flows are translated at the weighted average exchange rate for the periods. The resulting translation adjustments are reported under other comprehensive income (loss) and accumulated translation adjustments are reported as a separate component of shareholders’ equity.
|
|
Foreign exchange rates used:
|
2014
|
2013
|
||||
Period end USD/HKD exchange rate
|
7.7570
|
7.7632
|
|||
Average USD/HKD exchange rate:
|
7.7571
|
7.7557
|
|||
Period end USD/RMB exchange rate
|
6.1619
|
-
|
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
2.
|
Summary of Significant Accounting Policies – continued
|
Long-Lived Assets
|
|
The Company periodically evaluates the carrying value of long-lived assets when events and circumstances warrant such review. The carrying value of a long-lived assets is considered impaired when the anticipated undiscounted cash flow from such an asset is separately identifiable and is less than the carrying value. In that event, a loss is recognized in the amount by which the carrying value exceeds the fair market value of the long-lived asset. The Company has identified no such impairment losses.
|
|
Accounts payable and accrued liabilities
|
|
Accounts payable and accrued liabilities at March 31, 2014 and 2013 primarily represent accrued statutory bonus payable to employees in Hong Kong and audit fees payable to the Company’s auditors and accountants.
|
|
Customer Deposits
|
|
Customer deposits at March 31, 2014 and 2013 were opened pursuant to the Company’s agreements with certain of its independent agents. Under terms of those agreements, the Company’s accepts margin deposits for certain of the agents’ customers who prefer that the Company hold those deposits. If an agent’s customer suffers a trading loss equaling 80% or more of the customers’ deposit balance, the customer is required to increase the balance of his deposit or the customer’s trading position is closed and the remaining deposit balance is remitted to the agent in order to fund the customers’ trading losses.
Accordingly, the Company had no risk of loss related to customer deposits at March 31, 2014 and 2013.
|
|
Accumulated Other Comprehensive Loss
|
|
The Company’s accumulated other comprehensive loss as of March 31, 2014 and 2013 consists of adjustments resulting from translating the Company’s functional currency, the HK dollar, to its reporting currency, the U.S. dollar.
|
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
2.
|
Summary of Significant Accounting Policies - continued
|
Income Taxes
|
|
The Company utilizes ASC 740, Income Taxes, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
|
|
The Company has adopted the provisions of the interpretation, of ASC 740, Accounting for Uncertainty in Income Taxes. The Company did not have any material unrecognized tax benefits and there was no effect on its financial condition or results of operations as a result of implementing the interpretation. The Company files income tax returns in the United States and we are subject to federal income tax examinations for the fiscal year ended 2014 and 2013. Man Loong files income tax returns in Hong Kong and is no longer subject to tax examinations by tax authorities for years before 2007. At March 31, 2014 and 2013, Man Loong had no uncertain tax positions.
We have not provided for U.S. income and foreign withholding taxes on approximately $191,000 of Man Loong’s undistributed earnings for the year ended March 31, 2014, because such earnings have been retained and reinvested by Man Loong. The Company does not intend to require Man Long to pay dividends for the foreseeable future and so additional income taxes and applicable withholding taxes that would result from the repatriation of such earnings are not practicably determinable.
|
|
Earnings per Share
|
|
The Company computes earnings per share (“EPS”) in accordance with ASC 260, Earnings Per Share. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average common shares outstanding during the period.
|
|
Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of contracts to issue ordinary common shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. The computation of diluted EPS includes the estimated impact of the exercise of contracts to purchase common stocks using the treasury stock method and the potential shares of converted common stock associated with the convertible debt using the if-converted method.
|
|
Potential common shares that have an anti-dilutive effect (i.e., those that increase earnings per share or decrease loss per share) are excluded from the calculation of diluted EPS.
|
|
The Company does not have any securities that may potentially dilute its basic earnings per share.
|
|
Comprehensive Income
Comprehensive income is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss) includes unrealized gains or losses resulting from translating Man Loong’s functional currency, the HK dollar to its reporting currency, U.S. dollar.
|
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
2.
|
Summary of Significant Accounting Policies - continued
|
Recently Adopted Accounting Standards
|
|
In January 2013, we adopted FASB ASU No. 2011-11, Balance Sheet (Topic 210), Disclosures about Offsetting Assets and Liabilities. The amendments in ASU 2011-11 require the disclosure of information on offsetting and related arrangements for financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position. Amendments under ASU 2011-11 will be applied retrospectively for fiscal years, and interim periods within those years, beginning after January 1, 2013. The adoption of this update did not have a material impact on the Company’s consolidated financial statements.
In January 2013, the FASB issued ASU 2013-01, Balance Sheet (Topic 820), Clarifying the Scope of Disclosures About Offsetting Assets and Liabilities. This standard clarifies the scope of the disclosure requirements for offsetting assets and liabilities which apply to certain derivative instruments in ASU 2011-11. ASU 2013-01 is effective for fiscal years and interim periods beginning on or after January 1, 2013 with early adoption permitted. The adoption of ASU 2013-01 did not have a material impact on the Company’s consolidated financial statements.
In February 2013, the Financial Accounting Standards Board (“FASB”) issued ASU 2013-02, Comprehensive Income (Topic 220), Reporting Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013-02 requires entities to disclose changes in accumulated other comprehensive income by component within other comprehensive income, and to make those disclosures either on the face of the income statement or in a separate footnote. ASU 2013-02 is effective for fiscal years and interim periods beginning after December 15, 2012. The adoption of ASU 2013-02 did not have a material impact on the Company’s consolidated financial statements.
Recent Accounting Pronouncements
In July 2012, the FASB issued ASU 2012-04, Technical Amendments and Corrections. The updates to current guidance make the codification easier to understand and the fair value measurement guidance easier to apply by eliminating inconsistencies and providing needed clarification. ASU 2012-04 is effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material effect on the Company’s consolidated financial statements.
In February 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405), Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The amendments in ASU 2013-04 provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this Update is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendments in this standard are effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of ASU No. 2013-04 is not expected to have a material effect on the Company’s consolidated financial statements.
|
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
2.
|
Summary of Significant Accounting Policies - continued
|
Recent Accounting Pronouncements, Continued
In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830), Parent’s Accounting for Cumulative Translation Adjustments Upon Derecognition of Certain Subsidiaries or Groups of Assets Within a Foreign Entity or an Investment in a Foreign Entity. ASU 2013-05 requires entities to release the entire balance of cumulative translation adjustment to the entity’s investment in a foreign entity when there is a; 1) sale of the subsidiary or group of net assets within the foreign entity; 2) loss of controlling financial interest in an investment in a foreign entity; or, 3) a step acquisition of a foreign entity such that the reporting entity changes from the equity method to consolidation of the foreign entity. ASU 2013-05 is effective for fiscal periods beginning after December 15, 2013. The adoption of ASU 2013-05 is not expected to have a material effect on the Company’s consolidated financial statements.
In April 2013, the FASB issued ASU 2013-07, Presentation of Financial Statements (Topic 205), Liquidation Basis of Accounting. ASU-2013-07 requires the reporting entity to use the liquidation basis of accounting to present its financial statements when it determines that liquidation is imminent. ASU 2013-07 is effective for fiscal periods beginning after December 15, 2013. The adoption of ASU 2013-07 is not expected to have a material effect on the Company’s consolidated financial statements.
In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (a consensus of the FASB Emerging Issues Task Force). The amendments in ASU 2013-11 state that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, with certain exceptions. ASU 2013-11 applies to all entities that have unrecognized tax benefits when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists at the reporting date. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The adoption of this update did not have a material impact on the consolidated financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.
|
|
3.
|
Deposits and Prepaid Expenses
|
Deposits and prepaid expenses consisted of the following as of March 31 2014 and 2013:
|
2014
|
2013
|
|||||||
Current
|
||||||||
Prepaid rent and occupancy expenses
|
$ | 58,368 | $ | 163,199 | ||||
58,368 | 163,199 | |||||||
Noncurrent
|
||||||||
Rent and occupancy deposits
|
219,913 | 191,714 | ||||||
Total deposits and prepaid expenses
|
$ | 278,281 | $ | 354,913 |
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
4.
|
Loan receivable from eBullion Trade
|
In July 2013, the Company’s wholly-owned subsidiary Man Loong, loaned eBullion Trade Company Limited (“eBullion Trade”) $997,393 (RMB 6,100,000). eBullion Trade is a development stage entity pursuing a license in the Peoples’ Republic of China for the purpose of engaging in trading silver contracts as an electronic trading member of the Guangdong Precious Metal Exchange (“GPME”).
The Company has determined that the loan to eBullion Trade gives the Company a variable interest in eBullion Trade and that eBullion Trade is a variable interest entity (“VIE”) because the equity investor of eBullion Trade on the date of the loan lacked sufficient equity at risk to finance its activities without the loan. However, the Company is not the primary beneficiary of the VIE, because Man Loong does not have the power to direct the activities of the VIE that significantly impact the entity’s economic performance. Accordingly, the Company has not consolidated eBullion Trade into its financial statements.
The loan is unsecured, bore no interest and matured on April 17, 2014. Under terms of the loan, in the event that eBullion Trade’s GPME application was approved, it had the option to repay the loan by transferring 100% of its outstanding stock to Man Loong.
Subsequent to March 31, 2014, eBullion Trade informed Man Loong that it intended to repay the loan in full and in cash in accordance with the terms of the loan agreement. The loan was repaid in full on May 2, 2014.
|
Equipment
|
|
Equipment, including leasehold improvements, consisted of the following as of March 31 2014 and 2013:
|
2014
|
2013
|
|||||||
Office equipment
|
$ | 305,557 | $ | 260,180 | ||||
Computer equipment
|
41,546 | 41,506 | ||||||
Furniture and fixtures
|
56,117 | 50,265 | ||||||
403,220 | 351,951 | |||||||
Less: Accumulated depreciation
|
(97,378 | ) | (17,042 | ) | ||||
Equipment, net
|
$ | 305,842 | $ | 334,909 |
Depreciation expense was $80,339 and $23,210 for the years ended March 31, 2014 and 2013, respectively, and was recorded as depreciation and amortization expense in the accompanying consolidated statements of comprehensive income.
|
6.
|
Customer Deposits
|
Customer deposits were $38,990 and $269,478 at March 31 2014 and 2013, respectively, and were recorded as a current liability in the accompanying consolidated balance sheets.
|
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
7.
|
General and Administrative Expenses
|
General and administrative expenses consist of the following for the years ended March 31, 2014 and 2013.
|
2014
|
2013
|
|||||||
Marketing expenses
|
$ | 758,762 | $ | 384,059 | ||||
Trading platform rent
|
141,204 | 359,267 | ||||||
Transportation
|
98,680 | 80,665 | ||||||
Internet
|
18,680 | 15,668 | ||||||
Travel and entertainment
|
67,030 | 83,052 | ||||||
Computers and software
|
39,686 | 72,801 | ||||||
Legal and professional
|
182,747 | 101,168 | ||||||
Licenses
|
5,021 | 8,320 | ||||||
Occupancy
|
591,652 | 419,555 | ||||||
Advertising
|
1,702 | 13,951 | ||||||
Other
|
131,256 | 74,941 | ||||||
Total general and administrative expense
|
$ | 2,036,420 | $ | 1,613,447 |
8.
|
Income Taxes
|
Income (loss) before income taxes as shown in the accompanying consolidated statements of comprehensive income is summarized below for the years ended March 31, 2014 and 2013.
|
2014
|
2013
|
|||||||
United States
|
$ | (135,962 | ) | $ | - | |||
Hong Kong
|
191,033 | 642,213 | ||||||
Income (loss) before income taxes
|
$ | 55,071 | $ | 642,213 |
Under Hong Kong Profits Tax Law the Company is subject to profits tax at a statutory rate of 16.5% on income reported in its statutory financial statements after appropriate tax adjustments.
|
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
8.
|
Income Taxes, Continued
|
The provision (benefit) for income taxes consists of the following for the years ended March 31, 2014 and 2013:
|
2014
|
2013
|
|||||||
Current:
|
||||||||
United States
|
$ | - | $ | - | ||||
Hong Kong
|
40,091 | 95,033 | ||||||
Total current provision
|
40,091 | 95,033 | ||||||
Deferred:
|
||||||||
United States
|
- | - | ||||||
Hong Kong
|
(9,443 | ) | 9,294 | |||||
Total deferred benefit
|
(9,443 | ) | 9,294 | |||||
Total income tax provision
|
$ | 30,648 | $ | 104,327 |
The reconciliation of the income tax provision to the amount computed by applying the U.S. statutory federal income tax rate to income before income taxes is as follows:
|
2014
|
2013
|
|||||||
Income tax provision (benefit) at the U.S. statutory tax rate
|
$ | 36,276 | $ | - | ||||
Valuation allowance on U.S. net operating loss carryforwards
|
(36,276 | ) | - | |||||
Impact of foreign operations
|
31,521 | 105,965 | ||||||
Other
|
(873 | ) | (1,638 | ) | ||||
Income tax provision (benefit)
|
$ | 30,648 | $ | 104,327 |
At March 31, 2014, we had U.S. net operating loss carryforwards of approximately $45,000 which expire in 2034. Based on the available evidence, it is uncertain whether future U.S. taxable income will be sufficient to offset the estimated net loss carryforwards, accordingly, we have recorded a valuation allowance of approximately $36,276 for the year ended December 31, 2014.
As of March 31, 2014 and 2013, the Company’s and Man Loong’s differences between the book and tax basis of equipment gave rise to deferred income tax assets of $150 and deferred tax liabilities of $9,285, respectively which are recorded as noncurrent in the accompanying consolidated balance sheets. The Company had no other differences between the book and tax basis of assets and liabilities as of March 31, 2014 and 2013.
As a result of the implementation of ASC 740, Accounting for Income Taxes, the Company recognized no material adjustment to unrecognized tax benefits. The Company will continue to classify income tax penalties and interest, if any, as part of interest and other expenses in the accompanying statements of comprehensive income. The Company has incurred no interest or penalties during the years ended March 31, 2014 and 2013.
|
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
9.
|
Earnings Per Share
|
Earnings per share (“EPS”) information for the year ended March 31, 2014 and 2013 was determined by dividing net income for the period by the weighted average number of both basic and diluted shares of common stock and common stock equivalents outstanding.
|
|
As of and for the years ending March 31, 2014 and 2013, the Company did not have any securities that may potentially dilute basic earnings per share. Therefore basic and diluted earnings per share for the respective years are the same.
|
2014
|
2013
|
|||||||
Numerator
|
||||||||
Net income attributable to common shareholders
|
$ | 24,423 | $ | 537,886 | ||||
Denominator
|
||||||||
Weighted average shares of common stock (basic and diluted)
|
51,260,000 | 50,760,000 | ||||||
Basic and diluted earnings (loss) per share
|
$ | 0.00 | $ | 0.01 |
10.
|
Related Party Transactions and Balances
|
The Company engaged in related party transactions with certain shareholders, and a company under common control as described below.
|
|
On May 27, 2011, the Company entered into an agreement with a company under common control, True Technology Company Limited (“True Technology”), under which True Technology hosts the Company’s servers and provides a connection between the customer’s servers and the internet using True Technology’s public network connections. The fee for these services was $12,894 per month through April 2013 when the fee was reduced to $3,868 per month and is recorded as trading platform rent as a component of general and administrative expenses. Included in trading platform rental fees in the accompanying consolidated statements of comprehensive income for the years ended March 31, 2014 and 2013, are rental fees which were paid to True Technology of $46,409 and $154,725 respectively.
|
|
Included in employee compensation and benefits in the accompanying statements of operations for the years ending March 31, 2014 and 2013, are salaries and director compensation of $55,175 and $30,945 respectively, which were paid to two of the Company’s shareholders.
|
|
During the year ended March 31, 2013, Man Long paid legal and professional fees amounting to $20,257 on behalf of eBullion which are recorded as a related party receivable on the accompanying balance sheet for Man Loong at March 31, 2013.
|
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
11.
|
Commitments
|
The Company leases office space under non-cancellable operating lease agreements that expire on various dates through 2016.
In December 2012, the Company entered into a new lease agreement on approximately 10,000 square feet of office space which replaced its existing office facilities. The Company occupied the new space in January 2013. Under terms of the lease, the Company paid approximately $192,000 in lease deposits and is committed to lease and management fee payments of approximately $47,236 per month for 29 months.
In May 27, 2011, the Company entered into an agreement with True Technology, a company under common control under which True Technology hosts the Company’s servers and provides a connection between the customer’s servers and the internet using True Technology’s public network connections. The fees paid to True Technology are approximately $12,894 per month for 12 months after which the fees were reduced to $3,868 per month for 24 months.
Future annual minimum lease payments, including maintenance and management fees, for non-cancellable operating leases and trading platform fees, are as follows:
|
|
Year ending March 31,
|
2015
|
613,238 | |||
2016
|
377,886 | |||
$ | 991,124 |
eBullion, Inc.
|
Notes to Consolidated Financial Statements
|
For the Years Ended March 31, 2014 and 2013
|
(Expressed in US Dollars)
|
12.
|
Common Stock
|
Prior to the Merger, the Company issued 50,760,000 shares of common stock to directors as founder shares.
On April 3, 2013, the Company issued 50,760,000 of its common stock as founder shares in exchange for 100% of Man Loong’s outstanding shares to complete the Merger.
Subsequent to the Merger, the Company issued 500,000 shares of common stock, with par value $0.0001 to various investors for total cash proceeds of $240,044.
As of March 31, 2014, the Company had a total of 51,260,000 shares issued and outstanding.
|
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