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INVESTMENT PROPERTIES

3 Months Ended

Sep. 30, 2018

The following table presents the Company’s investment in properties in China as of September 30, 2018. The exchange rate is based on the market rate as of September 30, 2018.

	Investment Date / Reclassification Date	Investment Amount (RMB)			Investment Amount (U.S. Dollars)
Purchase of rental property – Property I - MaoYe Property	Jan 04, 2008		5,554			894
Purchase of rental property – Property II - JiangHuai	Jan 06, 2010		3,600			580
Purchase of rental property – Property III - Fu Li	Apr 08, 2010		4,025			648
Reclassification of Mao Ye Property as "Asset held for sale"	July 01, 2018		(5,554	)		(894	)
Currency translation			—			(118	)
Gross investment in rental property			7,625			1,110
Accumulated depreciation on rental property	Sep 30, 2018		(5,691	)		(889	)
Reclassified as "Asset for sale"	July 01, 2018		2,822			472
Net investment in property – China			4,756			693

The following table presents the Company’s investment in properties in China as of June 30, 2018. The exchange rate is based on the market rate as of June 30, 2018.

	Investment Date	Investment Amount (RMB)			Investment Amount (U.S. Dollars)
Purchase of rental property – Property I - MaoYe Property	Jan 04, 2008		5,554			894
Purchase of rental property – Property II - JiangHuai	Jan 06, 2010		3,600			580
Purchase of rental property – Property III - Fu Li	Apr 08, 2010		4,025			648
Currency translation			—			(131	)
Gross investment in rental property			13,179			1,991
Accumulated depreciation on rental property	June 30, 2018		(5,596	)		(845	)
Net investment in property – China			7,583			1,146

The following table presents the Company’s investment properties in Malaysia as of September 30, 2018 and June 30, 2018. The exchange rate is based on the exchange rate as of June 30, 2015 published by the Monetary Authority of Singapore.

	Investment Date	Investment Amount (RM)			Investment Amount (U.S. Dollars)
Reclassification of Penang Property I	Dec 31, 2012		681			181
Gross investment in rental property			681			181

Accumulated depreciation on rental property	June 30, 2015		(310	)		(83	)
Reclassified as “Assets held for sale”	June 30, 2015		(371	)		(98	)
Net investment in rental property - Malaysia			—			—

Rental Property I - Mao Ye Property

In fiscal 2008, TTCQ purchased an office in Chongqing, China from MaoYe Property Ltd. (“MaoYe”), for a total cash purchase price of RMB 5,554, or approximately $894. TTCQ identified a new tenant and signed a new rental agreement (653 square meters at a monthly rent of RMB 39, or approximately $6) on August 1, 2015. This rental agreement provides for a rent increase of 5% every year on January 31, commencing with 2017 until the rental agreement expires on July 31, 2020. TTCQ signed a new rental agreement (451 square meters at a monthly rent of RMB 24, or approximately $4) on February 1, 2018. This rental agreement provides for a rent increase of 6% from the second year of the contract onwards until the rental agreement expires on January 31, 2021.

During the first quarter of 2019, management decided to sell our Mao Ye Property, which is one of our earlier investment properties. In order to monetize the capital gain on property, TTCQ appointed a sole agent for 6 months as of September 1, 2018 to search for suitable buyers for this property. The Company believes that it has the ability to complete the sale transaction within a period of one year since the asset can be transferred to the buyer in its present condition and the target price given to the sole agent is reasonable in relation to its current fair value. In accordance with ASC Topic 360, as there was an intention to sell the investment properties within 1 year, the property was reclassified from investment property, which had a net book value of RMB 2,729, or approximately $397 as at September 30,2018 and RMB 2,729, or approximately $412 as at June 30,2018 to assets held for sale.

Property purchased from MaoYe generated a rental income of $22 during the three months ended September 30, 2018 as compared to $27 for the same period in last fiscal year.

Rental Property II - JiangHuai

In fiscal year 2010, TTCQ purchased eight units of commercial property in Chongqing, China from Chongqing JiangHuai Real Estate Development Co. Ltd. (“JiangHuai”) for a total purchase price of RMB 3,600, or approximately $580. TTCQ rented all of these commercial units to a third party until the agreement expired in January 2012. TTCQ then rented three of the eight commercial units to another party during the fourth quarter of fiscal year 2013 under a rental agreement that expired on March 31, 2014. Currently all the units are vacant and TTCQ is working with the developer to find a suitable buyer to purchase all the commercial units. TTCQ has yet to receive the title deed for these properties; however, TTCQ has the vacancies in possession with the exception of two units, which are in the process of clarification. TTCQ is in the legal process to obtain the title deed, which is dependent on JiangHuai completing the entire project. In August 2016, TTCQ performed a valuation on one of the commercial units and its market value was higher than the carrying amount.

Property purchased from JiangHuai did not generate any rental income during the three months ended September 30, 2018 or during the same period in the prior fiscal year.

Rental Property III – FuLi

In fiscal 2010, TTCQ entered into a Memorandum Agreement with Chongqing FuLi Real Estate Development Co. Ltd. (“FuLi”) to purchase two commercial properties totaling 311.99 square meters (“office space”) located in Jiang Bei District Chongqing. Although TTCQ currently rents its office premises from a third party, it intends to use the office space as its office premises. The total purchase price committed and paid was RMB 4,025, or approximately $648. The development was completed, and the property was handed over in April 2013 and the title deed was received during the third quarter of fiscal 2014.

The two commercial properties were leased to third parties under two separate rental agreements, one of which expires in April 2019 and provides for a rent increase of 5% every year on May 1, commencing in 2017 until the rental agreement expires on April 30, 2019 and the other of which expired in March 31, 2018. Management continues to follow-up closely on getting a new tenant for this vacant unit despite the slow current market rental situation.

Properties purchased from Fu Li generated a rental income of $5 for the three months ended September 30, 2018, and $12 for the same period in the last fiscal year.

Summary

Total rental income for all investment properties in China was $27 for the three months ended September 30, 2018 and $39 for the same period in the last fiscal year.

Depreciation expenses for all investment properties in China were $14 for the three months ended September 30, 2018 and $25 for the same period in the last fiscal year.