10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

For The Quarterly Period Ended March 31, 2018

 

or

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________ to _______________

 

Commission File Number 333-214139

 

HWH International Corp

(Exact name of registrant issuer as specified in its charter)

 

Nevada   37-1796912
(State or other jurisdiction   (I.R.S. Employer
of incorporation or organization)   Identification No.)

 

Suite 19, 8th Floor,

WismaZelan, JalanTasikPermaisuri 2,

Bandar TunRazak 56100, Kuala Lumpur, Malaysia

(Address of principal executive offices, including zip code)

 

Registrant’s phone number, including area code (603) 5634-2383

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES [X] NO [  ]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding twelve months (or shorter period that the registrant was required to submit and post such files).

YES [  ] NO [X]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

  Large Accelerated Filer [  ] Accelerated Filer [  ] Non-accelerated Filer [  ] Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Class  Outstanding at March 31, 2018 
Common Stock, $.0001 par value   451,711,093 

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
PART I FINANCIAL INFORMATION  
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS: F-2
  Condensed Consolidated Balance Sheets as of March 31, 2018 and June 31, 2017 (audited) F-2
  Condensed Consolidated Statements of Operations and Comprehensive Losses for the Three and Nine Months Ended March 31, 2018 and 2017 (Unaudited) F-3
  Condensed Consolidated Statement of Cash Flows for the Nine Months Ended March 31, 2018 and 2017 F-4
  Notes to the Condensed Consolidated Financial Statements F-5 – F-14
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 3
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 5
ITEM 4. CONTROLS AND PROCEDURES 5
PART II OTHER INFORMATION  
ITEM 1 LEGAL PROCEEDINGS 6
ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 6
ITEM 3 DEFAULTS UPON SENIOR SECURITIES 6
ITEM 4 MINE SAFETY DISCLOSURES 6
ITEM 5 OTHER INFORMATION 6
ITEM 6 EXHIBITS 6
SIGNATURES 7

 

2

 

 

HWH INTERNATIONAL CORP

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

  Page
Condensed Consolidated Financial Statements  
   
Condensed Consolidated Balance Sheets as of March 31, 2018 and June 30, 2017 (Audited) F-2
Condensed Consolidated Statements of Operations and Comprehensive Losses for the Three and Nine Months Ended March 31, 2018 and 2017 (Unaudited) F-3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2018 and 2017 (Unaudited) F-4
Notes to the Consolidated Financial Statements F-5 – F-14

 

F-1

 

 

PART I FINANCIAL INFORMATION

 

Item 1. Unaudited Condensed Consolidated Financial Statements:

 

HWH INTERNATIONAL CORP

CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2018 and June 30, 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

 

   March 31, 2018   June 30, 2017 
   Unaudited   Audited 
ASSETS          
CURRENT ASSETS          
Cash and cash equivalents  $73,399   $88,119 
Prepayments, other receivables and deposits   6,829    182 
Prepaid income tax   3,624    1,972 
Simple Investment   9,368    - 
Account receivables   46,629    31,450 
Total Current Assets   139,849    121,723 
           
NON-CURRENT ASSETS          
Investment in investee company   777    699 
Plant and equipment, net   24,088    19,526 
Intangible assets, net   923    999 
Total Non-Current Assets   25,788    21,224 
           
TOTAL ASSETS  $165,637   $142,947 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
CURRENT LIABILITIES          
Other payables and accrued liabilities  $12,379   $12,403 
Current portion of obligation under finance lease   2,275    1,974 
Amount due to a director   34,516    45,642 
Total Current Liabilities   49,170    60,019 
           
NON- CURRENT LIABILITIES          
Obligation under finance lease   7,445    8,239 
Total Non-Current Liabilities   7,445    8,239 
           
TOTAL LIABILITIES  $56,615   $68,258 
           
STOCKHOLDERS’ EQUITY          
Preferred stock, $0.0001 par value, 200,000,000 shares authorized, none issued and outstanding   -    - 
Common stock, $0.0001 par value, 600,000,000 shares authorized, 451,711,093 and 451,375,000 shares issued and outstanding respectively   45,171    45,138 
Additional paid in capital   316,717    215,922 
Other comprehensive income   11,337    4,272 
Accumulated losses   (264,203)   (190,643)
TOTAL STOCKHOLDERS’ EQUITY  $109,022   $74,689 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $165,637   $142,947 

 

See accompanying notes to consolidated financial statements.

 

F-2

 

 

HWH INTERNATIONAL CORP

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

For the three and nine months ended March 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

   Three months ended March 31,   Nine months ended March 31, 
   2018   2017   2018   2017 
REVENUE  $3,681   $3,736   $10,792   $10,572 
                     
COST OF REVENUE   (3,905)   (3,260)   (13,177)   (10,204)
                     
GROSS (LOSS) / PROFIT   (224)   476    (2,385)   368 
                     
OTHER INCOME   -    -    -    238 
                     
GENERAL AND ADMINISTRATIVE EXPENSES   (22,286)   (13,011)   (70,843)   (64,481)
                     
LOSS FROM OPERATIONS   (22,510)   (12,535)   (73,228)   (63,875)
                     
INTEREST EXPENSE   (112)   (207)   (332)   (333)
                     
LOSS BEFORE INCOME TAX   (22,622)   (12,742)   (73,560)   (64,208)
                     
INCOME TAX PROVISION   -    -    -    - 
                     
NET LOSS  $(22,622)  $(12,742)  $(73,560)   (64,208)
                     
Other comprehensive income/(loss):                    
- Foreign currency translation adjustment   5,026    1,333    7,065    (3,622)
                     
Comprehensive loss   (17,596)   (11,409)   (66,495)   (67,830)
                     
Net loss per share- Basic and diluted   (0.00)   (0.00)   (0.00)   (0.00)
                     
Weighted average number of common shares outstanding – Basic and diluted   451,664,882    451,339,444    451,544,082    451,336,606 

 

See accompanying notes to consolidated financial statements.

 

F-3

 

 

HWH INTERNATIONAL CORP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended March 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

   Nine months ended March 31, 
   2018   2017 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net Loss  $(73,560)  $(64,208)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation and amortization   2,920    1,209 
Interest expense   332    333 
Changes in operating assets and liabilities:          
Accounts receivables   (15,179)   (11,467)
Prepayment, deposits and other receivables   (6,647)   102 
Other payables and accrued liabilities   (24)   (4,743)
Cash used in operating activities   (92,158)   (78,774)
Income taxes (paid) / refunded   (1,652)   1,514 
Net cash used in operating activities   (93,810)   (77,260)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchases of plant and equipment   (5,221)   - 
Simple Investment   (9,368)   - 
Net cash used in investing activities   (14,589)   - 
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Issuance of share capital   33    4 
Additional paid in capital   100,795    11,996 
Repayment to directors   (11,126)   (38,218)
Interest paid   (332)   (333)
Payments on finance lease   (493)   (2,726)
Net cash used by financing activities   88,877    (29,277)
           
Effect of exchange rate changes on cash and cash equivalent   4,802    5,033 
           
Net decrease in cash and cash equivalents   (14,720)   (101,504)
Cash and cash equivalents, beginning of period   88,119    223,220 
CASH AND CASH EQUIVALENTS, END OF PERIOD  $73,399   $121,716 
SUPPLEMENTAL CASH FLOWS INFORMATION          
Income taxes (paid) / refunded  $(1,652)  $1,514 
Interest paid  $(332)  $(333)

 

See accompanying notes to consolidated financial statements.

 

F-4

 

 

HWH INTERNATIONAL CORP

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the nine months ended March 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

1. BASIS OF PRESENTATION

 

The accompanying unaudited condensed consolidated financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Certain information and note disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.

 

In the opinion of management, the consolidated balance sheets as of June 30, 2017 which has been derived from audited financial statements and these unaudited condensed consolidated financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the nine months ended March 31, 2018 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 2018 or for any future period.

 

These unaudited condensed consolidated financial statements and notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto included in the Form 10-K for the year ended June 30, 2017.

 

2. DESCRIPTION OF BUSINESS AND ORGANIZATION

 

HWH International Corp. is organized as a Nevada limited liability company, incorporated on November 20, 2015. For purposes of financial statement presentation, HWH International Corp. and its subsidiaries are herein referred to as “the Company” or “we”. The purpose of the Company and its subsidiaries is to engage in the business of digital marketing and hospitality software services through wholly owned subsidiaries.

 

We have historically conducted our business through Resilient Digital Sdn Bhd, a private limited liability company, incorporated in Malaysia. HWH Limited, incorporated in Anguilla, is an investment holding company with 100% equity interest in HWH Investment Limited, a company incorporated in Hong Kong, which subsequently hold 100% equity interest in Resilient Digital Sdn Bhd. On March 2, 2016, HWH International Corp. was organized to be the holding company parent to, and succeed to the operations of, HWH Limited. The former unit holder of HWH Limited became the unit holder of HWH International Corp. and HWH Limited became a wholly-owned subsidiary of HWH International Corp. This transaction was accounted for as a transaction among entities under common control and the assets, liabilities, revenues and expenses of HWH Limited were carried over to and combined with HWH International Corp. at historical cost, and as if the transfer occurred at the beginning of the period. Prior periods have been retrospectively adjusted to furnish comparative information.

 

The Company, through its subsidiaries, mainly provides digital marketing and hospitality software services.

 

Details of the Company’s subsidiaries:

 

  Company name   Place and date of incorporation   Particulars of issued capital   Principal activities
               
1. HWH Limited   Anguilla,
November 20, 2015 		  1 share of ordinary share of US$1 each   Investment holding
               
2.

HWH Investment

Limited

   Hong Kong,
November 20, 2015		   1 share of ordinary share of HK$1 each   Investment holding
               
3.

Resilient Digital

Sdn Bhd

   Malaysia,
September 15, 2009 		   100 shares of ordinary share of RM 1 each   Digital Marketing and Hospitality software services

 

F-5

 

 

HWH INTERNATIONAL CORP

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the nine months ended March 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

Going Concern

 

These financial statements have been prepared on a going concern basis. The Company has incurred accumulated losses amounting of $264,203 at March 31, 2018 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. Management has plans to seek additional capital through a private placement of its Common Stock or further director loans as needed. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue.

 

3. 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”).

 

The Company has adopted its fiscal year-end to be June 30.

 

Basis of consolidation

 

The condensed consolidated financial statements include the accounts of the Company, its subsidiaries and its VIEs in which the Company is the primary beneficiary. All inter-company accounts and transactions have been eliminated upon consolidation.

 

Use of estimates

 

Management uses estimates and assumptions in preparing these 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 sheets, and the reported revenue and expenses during the periods reported. Actual results may differ from these estimates.

 

Cash and cash equivalents

 

The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.

 

Plant and equipment

 

Plant and equipment are 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 or lease terms generally as follows:

 

Classification   Estimated useful lives
Furniture and fittings   10 years
Office equipment   10 years
Motor vehicle   10 years
Computer   10 years
Ai-Robots   10 years

 

Expenditures for maintenance and repairs are expensed as incurred.

 

F-6

 

 

HWH INTERNATIONAL CORP

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the nine months ended March 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

Finance leases

 

Leases that transfer substantially all the rewards and risks of ownership to the lessee, other than legal title, are accounted for as finance leases. Substantially all of the risks or benefits of ownership are deemed to have been transferred if any one of the four criteria is met: (i) transfer of ownership to the lessee at the end of the lease term, (ii) the lease containing a bargain purchase option, (iii) the lease term exceeding 75% of the estimated economic life of the leased asset, (iv) the present value of the minimum lease payments exceeding 90% of the fair value. At the inception of a finance lease, the Company as the lessee records an asset and an obligation at an amount equal to the present value of the minimum lease payments. The leased asset is amortized over the shorter of the lease term or its estimated useful life if title does not transfer to the Company, while the leased asset is depreciated in accordance with the Company’s depreciation policy if the title is to eventually transfer to the Company. The periodic rent payments made during the lease term are allocated between a reduction in the obligation and interest element using the effective interest method in accordance with the provisions of ASC Topic 835-30, “Imputation of Interest”.

 

Intangible Assets

 

Intangible assets are stated at cost less accumulated amortization. Intangible assets represent the registration costs of trademarks in China, which are amortized on a straight-line basis over a useful life of ten years.

 

The Company follows ASC Topic 350 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. There were no impairment losses recorded on intangible assets for the 9 months ended March 31, 2018.

 

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 reasonably assured.

 

Revenue is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue.

 

The Company derives its revenue from provision of digital marketing and hospitality software services based upon the customer’s specifications. The services are billed either on a fixed-fee basis or on a time-and-material basis. Generally, the Company recognizes revenue when services are performed and accepted by the customers.

 

Cost of revenue

 

Cost of revenue includes the acquired cost of website hosting and related services.

 

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.

 

F-7

 

 

HWH INTERNATIONAL CORP

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the nine months ended March 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

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 is subject to tax in this jurisdiction. As a result of its business activities, the Company will file tax returns that are subject to examination by the foreign tax authority.

 

Income tax receivables is a prepayment of corporate income tax paid by the Malaysia subsidiary company, Resilient Digital Sdn Bhd, as a compliance to Malaysia tax requirements.

 

Investment in Investee Company

 

Investee Company that is not consolidated, but over which the Company exercises significant influence, are accounted for under the equity method of accounting. Whether or not the Company exercises significant influence with respect to an investee depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee company. Under the equity method of accounting, an investee company’s accounts are not reported in the Company’s consolidated balance sheets and statements of operations and comprehensive income; however, the Company’s share of the earnings or losses of the investee company is reflected in the caption ‘‘Equity in loss of Investee Company” in the consolidated statements of operations. The Company’s carrying value in an equity method investee company is reported in the caption ‘‘Investment in investee company’’ in the Company’s consolidated balance sheets.

 

When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals or exceeds the amount of its share of losses not previously recognized.

 

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.

 

F-8

 

 

HWH INTERNATIONAL CORP

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the nine months ended March 31, 2018 and 2017

(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 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 its books and record in its local currency, Ringgit 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
nine months ended		   As of and for the
nine months ended		 
   March 31, 2018   March 31, 2017 
         
Period-end RM : US$1 exchange rate   3.86    4.42 
Period-average RM : US$1 exchange rate   4.07    4.18 
Period-end HKD$ : US$1 exchange rate   7.85    7.77 
Period-average HKD$ : US$1 exchange rate   7.82    7.76 

 

Fair value of financial instruments:

 

The carrying value of the Company’s financial instruments: cash and cash equivalents, and accounts payable and approximate at 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.

 

Segment reporting

 

ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. For the 9 months ended March 31, 2018 and 2017, the Company operates in one reportable operating segment in Malaysia.

 

Recent accounting pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material on its financial position or results of operations.

 

F-9

 

 

HWH INTERNATIONAL CORP

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the nine months ended March 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

4. PLANT AND EQUIPMENT

 

Plant and equipment as of March 31, 2018 and June 30, 2017 are summarized below:

 

   March 31, 2018   June 30, 2017 
Furniture and fittings  $712   $640 
Office equipment   9,964    8,961 
Motor vehicle   22,490    20,225 
Computer   1,852    1,666 
Ai-Robots   5,221    - 
Total plant and equipment  $40,239   $31,492 
Accumulated depreciation   (16,151)   (11,966)
Plant and equipment, net  $24,088   $19,526 

 

Depreciation expense for the three and nine months ended March 31, 2018 were $948 and $2,844 respectively.

 

Depreciation expense for the three and nine months ended March 31, 2017 were $349 and $1,095 respectively.

 

5. INTANGIBLE ASSETS

 

Intangible assets as of March 31, 2018 and June 30, 2017 are summarized as below:

 

   March 31, 2018   June 30, 2017 
Trademarks  $1,025   $1,025 
Amortization   (102)   (26)
Intangible assets, net  $923   $999 

 

Amortization for the three and nine months ended March 31, 2018 were $25 and $76, respectively.

 

Amortization for the three and nine months ended March 31, 2017 were $38 and $114, respectively.

 

6. PREPAYMENTS, OTHER RECEIVALBES AND DEPOSITS

 

Prepayments, other receivables and deposits consisted of the following at March 31, 2018 and June 30, 2017:

 

   March 31, 2018   June 30, 2017 
Prepaid expenses  $218   $182 
Other receivables   5,687    - 
Due from Investee company   924    - 
Total prepaid expenses  $6,829   $182 

 

7. OTHER PAYABLES AND ACCRUED LIABILITIES

 

Other payables and accrued liabilities consisted of the following at March 31, 2018 and June 30, 2017:

 

   March 31, 2018   June 30, 2017 
Other payables  $1,578   $2,120 
Accrued audit fees   10,801    8,000 
Accrued other expenses   -    2,283 
Total payables and accrued liabilities  $12,379   $12,403 

 

F-10

 

 

HWH INTERNATIONAL CORP

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the nine months ended March 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

8. AMOUNT DUE TO A DIRECTOR

 

As of March 31, 2018and June 30, 2017, a director of the Company advanced $34,516 and $45,642, respectively to the Company, which is unsecured, interest-free with no fixed repayment term, for working capital purpose. Imputed interest is considered insignificant.

 

9. OBLIGATION UNDER FINANCE LEASE

 

The Company purchased a motor vehicle under a finance lease agreement with the effective interest rate of 2.46% per annum, due through February, 2022, with principal and interest payable monthly. The obligation under the finance lease is as follows:

 

   March 31, 2018   June 30, 2017 
Finance lease  $10,583   $11,303 
Less: interest expense   (863)   (1,090)
Net present value of finance lease  $9,720   $10,213 
           
Current portion   2,275    1,974 
Non-current portion   7,445    8,239 
Total  $9,720   $10,213 

 

As of March 31, 2018, the maturities of the finance lease for each of the years are as follows:

 

2019   2,275 
2020   2,380 
2021   2,486 
2022   2,579 
Total  $9,720 

 

10. COMMON STOCKS

 

For the 9 months ended March 31, 2018, the Company issued an aggregate of 336,093 shares of its common stock at $0.30 per share foraggregate gross proceeds of $100,828 from IPO subscriptions.

 

As of March 31, 2018 and June 30, 2017, the Company has a total of 451,711,093 and 451,375,000 shares, respectively of its common stock issued and outstanding. There are no shares of preferred stock issued and outstanding.

 

F-11

 

 

HWH INTERNATIONAL CORP

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the nine months ended March 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

11. INCOME TAXES

 

For the 9 months ended March 31, 2018 and March 31, 2017, the local (United States) and foreign components of loss before income taxes were comprised of the following:

 

   For the 9 months
ended		   For the 9 months
ended		 
   March 31, 2018   March 31, 2017 
         
Tax jurisdictions from:          
- Local  $(44,695)  $(45,676)
- Foreign, representing          
Anguilla   (1,600)   (1,100)
Hong Kong   (1,177)   (1,676)
Malaysia   (26,088)   (15,756)
           
Loss before income tax  $(73,560)  $(64,208)

 

The provision for income taxes consisted of the following:

 

   For the 9 months
ended		   For the 9 months
ended		 
   March 31, 2018   March 31, 2017 
Current:        
- Local  $-   $- 
- Foreign   -    - 
           
Deferred:          
- Local   -    - 
- Foreign   -    - 
           
Income tax expense  $-   $- 

 

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. The Company has subsidiaries that operate in various countries: United States, Anguilla, Hong Kong and Malaysia that are subject to taxes in the jurisdictions in which they operate, as follows:

 

United States of America

 

The Company is registered in the State of Nevada and is subject to the tax laws of the United States of America.

 

Anguilla

 

Under the current laws of the Anguilla, HWH 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.

 

Hong Kong

 

HWH Investment Limited is subjected to Hong Kong Profits Tax, which is charged at the statutory income rate of 16.5% on its assessable income.

 

Malaysia

 

Resilient Digital Sdn Bhd is subject to Malaysia Corporate Tax, which is charged at the statutory income rate range from 18% to 24% on its assessable income.

 

F-12

 

 

HWH INTERNATIONAL CORP

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the nine months ended March 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

12. CONCENTRATIONS OF RISK

 

The Company is exposed to the following concentrations of risk:

 

(a) Major customers

 

For the 3 months ended March 31, 2018 and March 31, 2017, the customers who accounted for 10% or more of the Company’s sales and its outstanding receivables balance at period-end are presented as follows:

 

   2018   2017   2018   2017   2018   2017 
   Revenues   Percentage of revenues   Accounts receivable, trade 
                         
Customer A  $3,681    3,736    100%   100%  $46,629    22,071 
                               
   $3,681    3,736    100%   100%  $46,629    22,071 

 

For the 9 months ended March 31, 2018 and March 31, 2017, the customers who accounted for 10% or more of the Company’s sales and its outstanding receivables balance at period-end are presented as follows:

 

   2018   2017   2018   2017   2018   2017 
   Revenues   Percentage of revenues   Accounts receivable, trade 
                         
Customer A  $10,792    10,572    100%   100%  $46,629    22,071 
                               
   $10,792    10,572    100%   100%  $46,629    22,071 

 

b) Major vendors

 

For the 3 months ended March 31, 2018 and 2017, the vendors who accounted for 10% or more of the Company’s purchases and its outstanding payable balance at period-end are presented as follows:

 

   2018   2017   2018   2017   2018   2017 
   Purchases   Percentage of purchases   Accounts payable,
trade		 
                         
Vendor A  $-    1,915    -    59%   -    - 
Vendor B   2,870    -    73%   -   $-    - 
   $2,870    1,915    73%   59%  $-    - 

 

For the 9 months ended March 31, 2018and March 31, 2017, the vendors who accounted for 10% or more of the Company’s purchases and its outstanding payable balance at period-end are presented as follows:

 

   2018   2017   2018   2017   2018   2017 
   Purchases   Percentage of purchases   Accounts payable,
trade		 
                         
Vendor A  $-    5,377    -    61%  $-    - 
Vendor B   5,502    -    42%   -    -    - 
   $5,502    5,377    42%   61%  $-    - 

 

F-13

 

 

HWH INTERNATIONAL CORP

NOTES TO CONDENSED FINANCIAL STATEMENTS

For the nine months ended March 31, 2018 and 2017

(Currency expressed in United States Dollars (“US$”), except for number of shares)

(Unaudited)

 

All vendors are located in Malaysia.

 

(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 profit for two comparable periods and because of the fluctuating exchange rate actually post higher or lower profit depending on exchange rate of RM converted to US$ on that date. The exchange rate could fluctuate depending on changes in political and economic environments without notice.

 

13. INVESTMENT IN INVESTEE COMPANY

 

The Company invested in Aibotec Sdn Bhd with initial investment amount of $777, approximated 30% of equity interest of Aibotec Sdn Bhd and is accounted for under the cost method of accounting. The investment is stated at cost as at March 31, 2018 and no results have been equity accounted in view that the investee company was just incorporated in May 2017 and as at March 31, 2018, it is still dormant. Aibotec Sdn Bhd is incorporated in Malaysia with 10,000 ordinary shares authorized, issued and outstanding at a par value of RM1. Mr Ho Sit Chye and Mr Hanafiah Bin Yussof are the directors of Aibotec Sdn Bhd. Mr Ho Sit Chye is the common director of Aibotec Sdn Bhd and the Company.

 

14. 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, 2018 up through the date the Company issued the unaudited consolidated financial statements. During the period, there was no subsequent event that required recognition or disclosure.

 

F-14

 

 

ITEM 2. Management’s Discussionand Analysis of Financial Condition and Results of Operations

 

The information contained in this quarter report on Form 10-Q is intended to update the information contained in our Form S-1 Post-Effective Amendment No.1, dated April 24, 2018, for the year ended June 30, 2016 and presumes that readers have access to, and will have read, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information contained in such Form S-1. The following discussion and analysis also should be read together with our consolidated financial statements and the notes to the consolidated financial statements included elsewhere in this Form 10-Q.

 

The following discussion contains certain statements that may be deemed “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Form S-1 Amendment No.8, dated January 17, 2016 in the section entitled “Risk Factors” for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this transition report on Form 10-Q. The following should also be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto that appear elsewhere in this report.

 

Company Overview

 

HWH International Corp, a Nevada corporation (“the Company”) was incorporated under the laws of the State of Nevada on November 20, 2015. HWH International Corp owns 100% of HWH Limited that owns 100% of HWH Investment Limited, a Hong Kong Company, which owns 100% of Resilient Digital Sdn Bhd, the operating Malaysia Company of which is described below.

 

Our Company is an online marketing agency specializing in providing efficient and effective online marketing services which range from our online booking engine to new media marketing. Our mission is to drive our clients’ online brand presence to meet their diverse and developing target market expectations. We seek to achieve this by utilizing several distinct methods, which shall be described in greater detail below, in order to assist our client’s hotels achieve a highly effective distribution channel to increase their online bookings.

 

At this time, we operate exclusively online through our website: http://www.hwhic.com/ and http://www.resilientdigital.com/.

 

Our company continuously strives to innovate and improve our services through educating our staff and ongoing research as well as market feedback. We plan to penetrate to South East Asia and China markets within this two years by setting up offices in the selected location and recruiting marketing and operation staff to support the business operation. We foresee to spend a substantial amount of capital in marketing via social media (e.g: Facebook and LinkedIn) in this two years to increase our market presence. We expect our high business growth in the two years through implementing our marketing strategy planned. We believe the execution of our business and marketing strategy will build a strong brand image and market presence in the market.

 

Currently, our service covers Complete All-In-One marketing solution, FlexSee online booking engine, Property management system and Conversion optimization. We will further develop our Property management system and FlexSee online booking engine to meet the satisfaction. At HWH International Corp, we are determined to bring new and innovative services to markets that we have not yet explored.

 

Our plan at the moment mainly focuses within Asia, however we already have to expand to the global market. To implement this strategy, we will need to form partnership with local companies in various countries that share the same vision to become a dominant player in the global market. We strongly believe by becoming a strong competitor, we need to collaborate with strategic partner to grow our business at a greater pace.

 

Results of Operation

 

For the Three and Nine Months Ended March 31, 2018 and March 31, 2017.

 

For the three and nine months ended March 31, 2018, we realized revenue in the amount of $3,681 and $10,792 respectively, while for the three and nine months ended March 31, 2017 we realized revenues in the amount of $3,736 and $10,572 respectively. Our gross loss for the three and nine months ended March 31, 2018 were $224 and $2,385 respectively, whereby for the three and nine months ended March 31, 2017 we realized gross profit $476 and $368 respectively. We attribute the increase in revenue is due to maintain of customer and increase of gross loss is due to higher direct cost in 2018. We believe that in order to breakeven and increase profit, we need to maintain control our direct cost and increase more customers in the future by increasing our marketing efforts as well as developing new services.

 

3

 

 

Our net loss for the three and nine months ended March 31, 2018 were $22,622 and $73,560 respectively, while for the three and nine months ended March 31, 2017 were net loss of $12,742 and $64,208 respectively. We attribute this increase of loss due to additional cost incurred to increase of administrative expense and cost for business expansion.

 

The increases in general and administrative expenses are result of advertising & promotion, cost of R&D, listing cost on the OTC market and compliance costs as a public company.

 

Liquidity and Capital Resources

 

For the nine months ended March 31, 2018, we had cash and cash equivalents of $73,399. We have negative operating cash flows and our working capital has been and will continue to be significant. As a result, we depend substantially on financing activities to provide us with the liquidity and capital resources we need to meet our working capital requirements and to make capital investments in connection with ongoing operations. For the nine months ended March 31, 2018 we have meet these requirements primarily by issuance of shares. The Company also initiated for IPOs subscriptions to make capital expansion in order to meet future prospect resources and in a meanwhile existing capital resources to meet our basic operating requirements for approximately twelve months.

 

Operating Activities

 

For the nine months ended March 31, 2018, net cash used in operating activities was $93,810, compared to net cash used of $75,849 in the prior year. The operating cash flow performance primarily reflects the increase in net loss due to increase in general and administrative expenses for new company formation and preparation costs for listing on the OTC market.

 

Investing Activities

 

For the nine months ended March 31, 2018, we have invested in 1% interest for a price of $9,368 of Well Healthcare Group Sdn Bhd and acquired new equipment for $5,221.

 

Financing Activities

 

For the nine months ended March 31, 2018, net cash provided by financing activities was $88,877, mainly from issuance of shares of $100,828.

 

Capital Expenditures

 

We have no capital expenditures to date.

 

Credit Facilities

 

We do not have any credit facilities or other access to bank credit.

 

Contractual Obligations, Commitments and Contingencies

 

We currently have a lease agreement for the purchase of motor vehicle.

 

Off-balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

4

 

 

Item 3 Quantitative and Qualitative Disclosures About Market Risk.

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.

 

Item 4 Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures:

 

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2018. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2018, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.

 

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of March 31, 2018, our disclosure controls and procedures were not effective: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both US GAAP and SEC guidelines.

 

Changes in Internal Control over Financial Reporting:

 

There were no changes in our internal control over financial reporting during the quarter ending March 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

5

 

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We know of no materials, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholder are an adverse party or has a material interest adverse to us.

 

Item 1A. Risk Factors

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

Exhibit No.   Description
31.1   Rule 13(a)-14(a)/15(d)-14(a) Certification of principal executive officer*
31.2   Rule 13(a)-14(a)/15(d)-14(a) Certification of principal financial officer *
32.1   Section 1350 Certification of principal executive officer *
32.2   Section 1350 Certification of principal financial officer *

 

*Filed herewith

 

6

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  HWH International Corp
  (Name of Registrant)
     
Date: May 14, 2018    
     
  By: /s/ Ho Sit Chye
  Title: Chief Executive Officer, President, Director, Secretary and Treasurer
    (Principal Executive Officer)
     
Date: May 14, 2018    
     
  By: /s/ Mustafa Ali Merchant
  Title: Chief Financial Officer
    (Principal Financial Officer,
    Principal Accounting Officer)
     
Date: May 14, 2018    
     
  By: /s/ Ong Ann Tin
  Title: Chief Operating Officer

 

7