Special Note Regarding Forward Looking Statements
In addition to historical information, this report contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We
use words such as "believe," "expect," "anticipate," "project," "target,"
"plan," "optimistic," "intend," "aim," "will" or similar expressions which are
intended to identify forward-looking statements. Such statements include, among
others, those concerning market and industry segment growth and demand and
acceptance of new and existing products; any projections of sales, earnings,
revenue, margins or other financial items; any statements of the plans,
strategies and objectives of management for future operations; any statements
regarding future economic conditions or performance; as well as all assumptions,
expectations, predictions, intentions or beliefs about future events. You are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, including those identified in
Item 1A "Risk Factors" included in our Annual Report on Form 10-K for the year
ended March 31, 2015 as well as assumptions, which, if they were to ever
materialize or prove incorrect, could cause the results of the Company to differ
materially from those expressed or implied by such forward-looking statements.
Readers are urged to carefully review and consider the various disclosures made
by us in this report and our other filings with the SEC. These reports attempt
to advise interested parties of the risks and factors that may affect our
business, financial condition and results of operations and prospects. The
forward-looking statements made in this report speak only as of the date hereof
and we disclaim any obligation, except as required by law, to provide updates,
revisions or amendments to any forward-looking statements to reflect changes in
our expectations or future events.
Use of Terms
Except where the context otherwise requires and for the purposes of this report
only:
· "Glorywin", "Company," "we," "us," or "our" are to the combined business of
Glorywin Entertainment Group Inc., a Nevada corporation, and its
consolidated subsidiaries: Wonderful Gate Strategy Company Limited, Top
Point Limited and GWIN Co Ltd;
· "Wonderful Gate" is to Wonderful Gate Strategy Company Limited, a company
incorporated in Macau;
· "Top Point" is to Top Point Limited, a company incorporated in Samoa;
· "Gwin" is to Gwin Co Lrd, a company incorporated in Kingdom of Cambodia;
· "Cambodia" is to the Kingdom of Cambodia;
· "SEC" is to the Securities and Exchange Commission;
· "Exchange Act" is to the Securities Exchange Act of 1934, as amended;
· "Securities Act" is to the Securities Act of 1933, as amended; and
· "U.S. dollars," "dollars" and "$" are to the legal currency of the United
States.
Overview of our Business
The Company was formed in the state of Nevada on August 26, 2010 under the name
"Zippy Bags, Inc." to provide retail sales of snowboard carrying bags to the
general public.
After the takeover by new management on June 17, 2014, the Company, through its
100% indirectly owned subsidiary, Wonderful Gate, became principally engaged in
the service of introducing sub-junkets and information technology infrastructure
to land-based casinos. For sub-junkets introduction service and IT
infrastructure introduction service performed, we charge 0.2% and 0.05%,
respectively, of total bets played by players introduced by sub-junkets to the
casinos located in Cambodia.
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On October 30, 2014, the Company filed a certificate of amendment (the
"Amendment") to its Certificate of Incorporation with the Secretary of State of
the State of Nevada in order to change its name to "Glorywin Entertainment
Group, Inc." in order to better reflect the direction and business of the
Company. The Company has adopted a fiscal year end of March 31.
We have established a website (www.glorywinentertainment.com) which sets forth
general information for the Company.
Based on our current operating plan, we expect that we will be able to generate
revenue that is sufficient to cover our expenses for the next twelve months. Our
ability to maintain sufficient liquidity is dependent on our ability to raise
additional capital.
Recent Development
In January 2016, we have started preparing ourselves to achieve all requirements
in order to up-list to NASDAQ. We are confident to achieve all up-listing
requirements in the next 6 months then we will submit our application for
up-listing.
After the Company launched mobile application for Android operating system phone
users on August 1, 2015, the Company started the process to develop the mobile
applications for IOS operating system phone users. Mobile applications are
intended to provide online gaming to customers where such activity is legal. The
software is provided by a third party vendor who is providing the on-line casino
platform in selected markets. Development of the gaming mobile applications
requires the Company to customize the appearance and branding of the third party
software, and establish merchant services to accept payments and facilitate
distribution of winnings profits.
Player acquisition is a key factor for organic growth in the online gaming
industry. Players are primarily acquired from affiliates for a fixed fee or
percentage of earnings based on negotiated predetermined criteria. Affiliates
are websites or individuals that attract players through various means such as
player news/interest websites, email campaigns or other relationships. The key
is that payment to affiliates takes place only when negotiated criteria are met.
The criteria may be player minimum deposit, level of play, or revenue earned.
The critical element is that unlike most marketing campaigns, the revenues
returned by marketing are generally predictable.
The key elements of player retention are the creation of exciting opportunities
to maintain player interest and increase play frequency. Similar to land-based
casino's compensation programs, the tools used for this purpose include prizes,
"free money," opportunities to play against famous (or infamous) players, and
tournament qualifications.
Results of Operations
Comparison of Three Months Ended December 31, 2016 and 2015
Sales revenue . Our sales revenue is primarily generated from introducing
players to casinos throughout the Asian region. Sales revenue decreased by
$1,948,295 or 43%, to $NIL for the three months ended December 31, 2016, from
$1,948,295 for the same period in 2015. The decrease was due to the cessation
of operations.
Cost of sales . We have no cost of sales in view of the nature of our business
as earning commission from land based casinos. Hence our cost of sales is Nil
for both three months ended December 31, 2016 and 2015.
Gross profit . Our gross profit is equal to the difference between our sales
revenue and our cost of sales. Due to the nature of our business merely earning
commission from land based casinos, we have no cost of sales and gross profit
remained 100% of sales. Gross profit decreased to $(41,513) for the three months
ended December 31, 2016, from $1,274,590 for the same period in 2015. The
decrease in our gross profit margin was mainly attributable to cessation of
operations.
Selling, General and Administrative expenses . Our administrative expenses
consist of the costs associated with staff and support personnel who manage our
business activities. Our administrative expenses decreased by $897,514, or 69%,
to $407,093 for the three months ended December 31, 2015, from $1,304,607 for
the same period in 2014. As a percentage of sales revenue, administrative
expenses decreased to 21% for the three months ended December 31, 2015, as
compared to 96% for the same period in 2014. High administrative expenses in for
the same period in 2014 was primarily because there were shares issued for
services valued at fair market value in addition to salaries and rental
expenses. There were no shares issued for the same period in 2015 which led to
decrease in administrative expenses.
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Liquidity and Capital Resources
As of December 31, 2015, we had cash and cash equivalents of $13,015, primarily
consisting of cash on hand and demand deposits. We believe that our existing
sources of liquidity will be sufficient to fund our operations, anticipated
capital expenditures, working capital and other financing requirements for at
least the next twelve months.
The following table summarizes total assets, accumulated profit, stockholder's
equity and working capital as of December 31, 2016 and March 31, 2016.
December 31, 2016 March 31, 2016
Total Assets $ 252 $ 252
Accumulated Profit $ (2,022,517 ) $ (1,963,813 )
Stockholders' Equity $ (91,903 ) $ (33,011 )
Net Working Capital (Deficit) $ (91,903 ) $ (33,011 )
Operating Activities
Net cash provided by operating activities was $(188) for the nine months ended
December 31, 2016, compared with $(200,959) for the same period in 2015. The
increase in net cash provided by operating activities was mainly because net
income has increased.
Investing Activities
Net cash used in investing activities was $NIL for the nine months ended
December 31, 2016, compared with $(91,159) in the same period in 2015. The net
cash used in investing activities during the nine months ended December 31, 2015
was primarily used for refurbish cost for the casino building leased under Gwin.
Financing Activities
Net cash used in financing activities was $91,159 for the nine months ended
December 31, 2015, compared with net cash provided by financing activities of
$NIL for the same period in 2016. The decrease in net cash provided by financing
activities resulted from the Company has repaid the advances to related parties.
Inflation
Inflation and changing prices have not had a material effect on our business,
and we do not expect that inflation or changing prices will materially affect
our business in the foreseeable future. However, our management will closely
monitor price changes in the Cambodian economy and our industry and continually
maintain effective cost controls in operations.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, sales or expenses, results of operations, liquidity or
capital expenditures, or capital resources that are material to an investment in
our securities.
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Critical Accounting Policies
Critical accounting policies are those we believe are most important to
portraying our financial conditions and results of operations and also require
the greatest amount of subjective or complex judgments by management. Judgments
and uncertainties regarding the application of these policies may result in
materially different amounts being reported under various conditions or using
different assumptions. See Note 2 to our unaudited consolidated financial
statements included elsewhere in this report.
Revenue Recognition
Revenues from service contracts are recognized as services are performed if
collectability is reasonably assured.
The Company is engaged in service of introducing of sub-junkets and information
technology (IT) company to land-based casinos and receiving an agreed percentage
of total bets as revenue. For sub-junkets introduction service and IT
infrastructure introduction service performed, the Company charges 0.2% and
0.05%, respectively, of total bets played by players introduced by sub-junkets
to the casinos located in Cambodia.
Recently Issued Accounting Pronouncements
In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with
Customers (Topic 606): Deferral of the Effective Date". The amendments in ASU
2015-14 defer the effective date of ASU 2014-09 for all entities by one year.
Public business entities, certain not-for-profit entities, and certain employee
benefit plans should apply the guidance in ASU 2014-09 to annual reporting
periods beginning after December 15, 2017, including interim reporting periods
within that reporting period. Earlier application is permitted only as of annual
reporting periods beginning after December 15, 2016, including interim reporting
periods within that reporting period. The Company is currently in the process of
evaluating the impact of the adoption on its consolidated financial statements.
In September 2015, the FASB issued ASU 2015-16, "Business Combinations (Topic
805): Simplifying the Accounting for Measurement-Period Adjustments". The
amendments in ASU 2015-16 require that an acquirer recognize adjustments to
estimated amounts that are identified during the measurement period in the
reporting period in which the adjustment amounts are determined. The amendments
require that the acquirer record, in the same period's financial statements, the
effect on earnings of changes in depreciation, amortization, or other income
effects, if any, as a result of the change to the estimated amounts, calculated
as if the accounting had been completed at the acquisition date. The amendments
also require an entity to present separately on the face of the income statement
or disclose in the notes the portion of the amount recorded in current-period
earnings by line item that would have been recorded in previous reporting
periods if the adjustment to the estimated amounts had been recognized as of the
acquisition date. The adoption of this standard is not expected to have a
material impact on the Company's consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall
(Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial
Liabilities". Among other things, the amendments in ASU 2016-01 require equity
investments (except those accounted for under the equity method of accounting,
or those that result in consolidation of the investee) to be measured at fair
value with changes in fair value recognized in net income, public business
entities to use the exit price notion when measuring the fair value of financial
instruments for disclosure purposes, separate presentation of financial assets
and financial liabilities by measurement category and form of financial asset
(i.e., securities or loans and receivables), and eliminates the requirement for
public business entities to disclose the method(s) and significant assumptions
used to estimate the fair value that is required to be disclosed for financial
instruments measured at amortized cost. The adoption of this standard is not
expected to have a material impact on the Company's consolidated financial
statements.
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