UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 26, 2018
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TRON GROUP INC. | |||||
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(Exact name of registrant as specified in its charter) |
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Nevada |
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333-209166 |
N/A | ||||||||
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(State or other jurisdiction |
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(Commission |
(IRS Employer Identification No.) | ||||||||
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K-2-8 2nd Floor, Kuchai Business Park Jalan 1/127 off Jalan, Kuchai Lama |
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58200 | |||||
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(Address of principal executive offices) |
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(Zip Code) | |||||
Registrant’s telephone number, including area code: +603 7987 8688
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements. To the extent that any statements made in this report contain information that is not historical, these statements are essentially forward-looking. Forward-looking statements can be identified by the use of words such as “expects”, “plans”, “may”, “anticipates”, “believes”, “should”, “intends”, “estimates”, and other words of similar meaning. These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, our ability to raise additional capital to finance our activities; the effectiveness, profitability and marketability of our products; legal and regulatory risks associated with the share exchange; the future trading of our common stock; our ability to operate as a public company; our ability to protect our proprietary information; general economic and business conditions; the volatility of our operating results and financial condition; our ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), or otherwise. Information regarding market and industry statistics contained in this report is included based on information available to us that we believe is accurate. It is generally based on industry and other publications that are not produced for purposes of securities offerings or economic analysis. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. We do not undertake any obligation to publicly update any forward-looking statements. As a result, investors should not place undue reliance on these forward-looking statements.
EXPLANATORY NOTE
We were incorporated under the name Plush Corporation on October 20, 2015, under the laws of the State of Nevada. Our business consisted of designing, marketing and selling luxury accessories for men online through our website. Management has decided not to pursue this line of products, and has discontinued operations involving luxury accessories.
November 3, 2016, a majority of stockholders of our company and our board of directors approved a change of name of our company from Plush Corp. to TRON Group Inc., an increase to authorized capital from 75,000,000 shares of common stock, par value $0.001 to 500,000,000 shares of common stock, par value $0.001 and a forward stock split of our issued and outstanding shares of common stock on a basis of twenty (20) new shares of common stock for one (1) old share.
A Certificate of Amendment increasing our authorized capital and changing the name of our company was filed with the Nevada Secretary of State with an effective date of December 6, 2016.
The name change and forward stock split became effective with the OTC Markets at the opening of trading on December 28, 2016, and our trading symbol was changed to "TGRP". Our new CUSIP number is 897012 100.
Our principal executive offices are located at K-2-8, 2nd Floor, Kuchai Business Park, Jalan 1/127, off Jalan Kuchai Lama, Kuala Lumpur, Malaysia 58200. Our telephone number is +603 7987 8688.
We have never declared bankruptcy.
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Item 1.01 Entry into a Martial Definitive Agreement
The information contained in Item 2.01 below relating to the various agreements described therein is incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
On January 26, 2018, TRON Group Inc. (previously known as Plush Corp.), a Nevada corporation (“TGRP”, “TRON”, or the “Company”), entered into a Share Exchange Agreement with a shareholder of Talk Focus Sdn Bhd, a Malaysian corporation. The Company acquired 6,401,500 shares of capital stock of Talk Focus and in exchange issued 3,329,385 restricted shares of its common stock to Dr. Eric Yap, a Talk Focus shareholder.
As a result of the Share Exchange Agreement:
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(i) | The Company's principal business became the business of Talk Focus, and |
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(ii) | Talk Focus became a subsidiary of the Company |
The completion of the Share Exchange Agreement resulted in the Company changing its line of business, and as a result, the Company has included below the information that would be required if the Company were filing a general form for registration of securities under the Exchange Act on Form 10.
Description of Business
Previous Business
Before we went through a change of control and business focus, we were a development stage company intending to create a portfolio by designing, marketing and selling luxury accessories for men online through our website. The lack of funds and the present economy prevented the development of our business plan. As we were unable to raise the capital necessary to develop our business plan, we began a search for other business opportunities which would benefit our shareholders and allow us to raise capital and operate.
Current Business
Shortly after changing our business focus to telecommunication, which we regard as a profitable industry, we identified certain opportunities to engage in the business related to telecommunication in Malaysia, and determined that we should pursue that business opportunity. We entered into negotiations with Talk Focus Sdn Bhd, and have closed that acquisition as of January 26, 2018.
Currently TRON Group Inc. is a holding company and has no principal business. Talk Focus Sdn Bhd is the TRON Group Inc. operating subsidiary that operates in the telecommunication segment in Malaysia. All references to TRON herein include its operating subsidiary unless otherwise noted.
Telecommunication Segment
Overview: TRON is a global telecommunication group and mobile virtual network operator (MVNO) that offers borderless voice, data and other value-added services. In Malaysia, TRON received its full-fledged Network Service Provider (NSP) license from the Malaysia Communications and Multimedia Commission (MCMC) in 2011.
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TRON’s Product Portfolio
TRON offers Tron Lite Sim, a prepaid sim card which provides 365 days of validity on a single top-up. This means that with TRON, customers can remain connected for one full year every time when they reload. TRON offers voice, sms, internet data and other value-added services with a goal to connect the world at very affordable costs by facilitating customer’s digital and mobile lifestyles. TRON provides a wide range of internet data packages that serve different customers, with daily data packages starting as low as One Malaysia Ringgit.
TRON has also expanded its business into a new technology sector – Internet of Things (IoT) - by currently offering TRON’s GPS Tracker Kids Phone, which uses our services to stay connected with a device, allowing the customers’ children to contact them easily during an emergency. With this tracker and our services, our customers can track their children’s current location and monitor them easily.
Tronexus is a co-branding initiative under TRON, and which is based on referral’s member get member program. Tronexus turns the customer into distributor by introducing Tronexus membership packages to their family and friends. Tronexus offers technology and lifestyle solutions in telecommunication and merchant products to their members.
Currently TRON is working on launching a new prepaid 4G plus sim pack product at the end of Q1’18 . This new product will target on the heavy internet usage customers who using their mobile phones on web browsing, playing online games, video and music streaming.
TRON also engaging the community-based cooperative/associations to offer the communication services to their members together with the proposed mobile application service (Apps). This Apps will be a value-added service (VAS) to the associations as they will be able to connect to their members using TRON communication services. The development on the Apps will be started on Q2'18.
Market, Customer and Distribution Methods
Currently, Malaysia has a population of approximately 30.75 million, 70% of whom live in or near an urban area. Mobile penetration in Malaysia has reached over 140%, where there are more than 40 million mobile subscribers. 80% of the mobile subscribers are prepaid users. Typically, Malaysians own more than 1 mobile phone or a mobile phone with dual Sim. There are more than 10 million smartphone users in Malaysia who consume mobile internet on web browsing, social media and video streaming.
In Malaysia, anyone 12 years old and above is eligible to subscribe to TRON telecommunication services. TRON is targeting selected market segments which are not the focus of other big Telco companies. 60% of TRON subscribers’ base are between 31-60 years old, and overall 90% are Malaysians.
Sales and Marketing
TRON is currently promoting its products using traditional and online distribution channels. Traditional distribution channels require a sales team to market TRON products to the master distributors and their corresponding dealers. Branding and product advertisement in the dealer shops are done through brochures, posters, buntings, and signage.
TRON has also developed an online distribution channel by listing TRON products on own website, where customers can purchase online, pay via a payment gateway, and receive delivery provided by the Company. TRON also undertakes digital marketing through online website and social media posting.
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In addition to 365 days validity for a single reload of MYR10 and internet data starting from MYR1, TRON rewards subscribers from time to time with special promotions. TRON has offered free calls within the same network. TRON also offers reload promotions with free talktime credit on MYR30/50/100 top up. In addition, TRON subscribers can earn TRON Points thru a reload and redeem the points through merchandise products, vouchers and a TRON reload. TRON subscribers can enjoy TRON Dealz on exclusive merchant discount vouchers as well.
Government Regulation
Malaysian Communications and Multimedia Commission (MCMC) is the regulator for the converging communications and multimedia industry in Malaysia.
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies in any jurisdiction in which we conduct our current business. As of now there are no additional required government approvals present from which we need approval.
Competition
Because the telecommunication business is considered to be one of the most profitable industries, competition between competitors is increasing. Competition includes the four “Giants” in the industry, referring to a Mobile Network Operator (MNO); Maxis, Celcom, Digi and U Mobile. At TRON, we do not intend to engage in a price war or excessive spending on advertising, but will emphasize competitive advantages with our product offerings, distribution network, advertising and customer support. We cannot compete directly with the MNOs, as they are bulk suppliers. Our rates are slightly higher, but we do offer other rewards and benefits which bring more value to our subscribers.
Business Model
A Mobile Virtual Network Operator (MVNO) purchases network capacity and connectivity from major mobile carriers, and then resell services along with MVNO-specific value-added features and products, marketing services toward a niche user base or by adding unique content.
The current TRON business model is a s a wholesaler/reseller by securing capacity from MNOs, rebrand to our own brand TRON and then sell by way of business to consumer (B2C) marketing. TRON is using Digi Telecommunication’s network and infrastructure to provide services to TRON subscribers. TRON is leveraging its MNO network and infrastructure to keep the operating expenses low, since developing our own facilities would require high setup costs and investment in licensing, radio spectrum, network and billing infrastructure.
TRON revenue is generated from sim pack, device and reload sales. Subscribers’ base is the key factor to TRON monthly recurring revenue, as subscribers reload their talktime credit. Average Revenue Per User (ARPU) is defined as the total revenue divided by the number of subscribers for monthly basis.
Cost of goods sold (COGS) is charged by Digi based on usage of voice, sms and internet data. TRON will markup the retail pricing of services to achieve certain gross profit margin.
Strategic Plan
Key success factors for a leading global business telecommunication brand
As the MVNO landscape rapidly evolves, we will be facing many technical and strategic challenges.
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Internet of Things (IoT) is a new technology sector which requires data internet to connect devices to users. IoT has evolved from the convergence of wireless technologies, micro-electromechanical systems (MEMS), microservices and the internet. The convergence has the walls between operational technology (OT) and information technology (IT), allowing unstructured machine-generated data to be analyzed for insights that will drive improvements. TRON can bundle the IoT product and services together. TRON can explore further into IoT, which covers market segments in lifestyle, automotive, health, education, services, etc.
In 2015, the Ministry of Science, Innovation & Technology Malaysia launched the National IoT Strategic Roadmap, which forecasted the IoT economic potential for Malaysia to reach RM9.5 billion in 2020 and RM42.5 billion in 2025, by creating a national ecosystem to proliferate and industrialize IoT as a new source of economic growth. The vision is to make Malaysia the Premier Regional IoT Development Hub.
With this opportunity, TRON can apply for a government grant or a government link project related to IoT or technology and telecommunication, where the Malaysian government has allocated a budget for development. TRON can then provide telecommunication solutions to companies in a business to business (B2B) approach.
Value-added services, like remittance services for overseas fund transfers, can be implemented to target the migrant market. E-commerce is another market where Malaysians do shopping via smartphone instead of using computer.
TRON mart, mini center or concept store can be opened through franchises throughout Malaysia a part of joint ventures or collaboration with interested business partners. TRON can expand the business to East Malaysia – Sabah and Sarawak - to boost the brand awareness.
Employees
As of January 26, 2018, we had approximately 39 full time employees in Malaysia. We have never experienced a work stoppage.
Description of Properties
Our principal executive offices are located at K-2-8 2nd Floor, Kuchai Business Park, Jalan 1/127, off Jalan Kuchai Lama, Kuala Lumpur, 58200. Our telephone number is +603 7987 8688. We have no present intention of acquiring other facilities during our development stage.
We do not currently have any investments or interests in any real estate, nor do we have investments or an interest in any real estate mortgages or securities of persons engaged in real estate activities.
Risk Factors
You should carefully consider the risks described below and all other information contained in this report before making an investment decision. If any of the following risks actually occur, our business, financial condition and results of operations could be materially and adversely affected. In that event, the trading price of our common stock could decline, and you may lose all or a part of your investment. This report also contains forward-looking information that involves risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of many factors, including the risks described below and elsewhere in this report.
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General Risks Relating to our Business, Operations of Financial Condition
We have a limited operating history and are subject to the risks encountered by early-stage companies.
TRON officially launched its commercial service in Malaysia in October 2011. Because our operating company has a limited operating history, you should consider and evaluate our operating prospects in light of the risks and uncertainties frequently encountered by early-stage companies in rapidly evolving markets. For us, these risks include:
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· | that we may not have sufficient capital to achieve our growth strategy; |
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· | that we may not develop our product and service offerings in a manner that enables us to be profitable and meet our customers’ requirements; |
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· | that our growth strategy may not be successful; and |
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· | that fluctuations in our operating results will be significant relative to our revenues. |
These risks are described in more detail below. Our future growth will depend substantially on our ability to address these and the other risks described in this section. If we do not successfully address these risks, our business could be significantly harmed.
We have a history of net losses, may incur substantial net losses in the future and may not achieve profitability.
Although we have begun to generate revenues, we have incurred significant losses since inception. We expect to incur increased costs to implement our business plan and increase revenues, such as costs relating to expanding our subscribers’ growth. If our revenues do not increase to offset these additional expenses, or if we experience unexpected increases in operating expenses, we will continue to incur significant losses, and will not become profitable. If we are not able to significantly increase our revenues, we will likely not be able to achieve profitability in the future.
Our operating losses and working capital deficiency raise substantial doubt about our ability to continue as a going concern. If we do not continue as a going concern, investors could lose their entire investment.
Our operating losses and working capital deficiency raise substantial doubt about our ability to continue as a going concern. If we do not generate sufficient revenues, do not achieve profitability or do not have other sources of financing for our business, we may have to curtail or cease our development plans and operations, which could cause investors to lose the entire amount of their investment.
Increasing competition within our emerging industry could have an impact on our business prospects.
The telecommunication industry is very competitive, where new competitors are frequently entering the market. These competing companies may have significantly greater financial and other resources than we have, and may have been developing their products and services longer and better than we have been developing ours. Although our portfolio of products and related revenue stream sources are broad, increasing competition may have a negative impact on our profit margins.
Our operating results may fluctuate in future periods, which may adversely affect our stock price
Our operating results have been in the past, and will continue to be, subject to quarterly and annual fluctuations as a result of numerous factors, some of which may contribute to more pronounced fluctuations in an uncertain global economic environment. These factors include:
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Fluctuations in demand for our products and services, especially with respect to telecommunications service providers and Internet businesses, in part due to changes in the global economic environment |
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Changes in sales and implementation cycles for our products and reduced visibility into our customers’ spending plans and associated revenue |
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Our ability to maintain appropriate inventory levels and purchase commitments |
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Price and product competition in the communications and networking industries, which can change rapidly due to technological innovation and different business models |
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The overall movement toward industry consolidation among both our competitors and our customers |
The markets in which we compete are intensely competitive
The markets in which we compete are characterized by rapid change, converging technologies, and a migration to networking and communications solutions that offer relative advantages. These market factors represent a competitive threat to us. We compete with numerous vendors in each product category. The overall number of our competitors providing niche product solutions may increase. Also, the identity and composition of competitors may change as we increase our activity in markets for our products and in our priorities.
Industry consolidation may lead to increase competition and may harm our operating results.
There has been a trend toward industry consolidation in our markets for several years. We expect this trend to continue as companies attempt to strengthen or hold their market positions in an evolving industry, and as companies are acquired or are unable to continue operations. Companies that are strategic alliance partners in some areas of our business may acquire or form alliances with our competitors, thereby reducing their business with us. We believe that industry consolidation may result in stronger competitors that are better able to compete for customers. This could lead to more variability in our operating results and could have a material adverse effect on our business, operating results, and financial condition.
We only have one main supplier
So far, we have only contracted one main supplier. It can easily affect our operations if any problems arise between both our parties. If our supplier ceases to provide services to us, and we are unable to secure a replacement supplier, we may be unable to provide communication services, and our business may suffer or fail. .
Our stock is considered a penny stock. The market for penny stock has suffered in recent years from patterns of fraud and abuse.
Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include:
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· | Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; |
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· | Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; |
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· | Boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons; |
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· | Excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and, |
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· | The wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequential investor losses. |
Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
This report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe”, “expect”, “anticipate”, “estimate”, “intend”, “plan”, “targets”, “likely”, “aim”, “will”, “would”, “could” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs.
Forward-looking statements include, but are not limited to, statements about:
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· | Limited operating history. |
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· | History of net loses. |
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· | Competition in telecommunication industries. |
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· | Increases in the price of cost of goods sold (COGS). |
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· | Dependence on certain key personnel. |
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· | Lack of market acceptance of new products. |
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· | Inability to manage our business expansion. |
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· | Availability of skilled labor and increasing labor costs. |
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· | Political conditions and government regulations in Malaysia. |
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You should read thoroughly this report and the documents that we refer to herein with the understanding that our actual future results may be materially different from and/or worse than what we expect. We qualify all of our forward-looking statements by these cautionary statements, including those made in “Risk Factors.” Other sections of this report include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our audited financial statements and the related notes that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report.
Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Results of Operations
Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
The following comparative analysis on results of operations was based primarily on the comparative audited consolidated financial statements, footnotes and related information for the periods identified below and should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this report. Our revenues are derived mainly from our active company, Talk Focus Sdn Bhd’s mobile telecommunication services.
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Year ended December 31, 2016 compared to the period ended December 31, 2015
TALK FOCUS SDN BHD
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Amount expressed in United States Dollars (“US$”), except for number of shares)
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Years ended December 31, |
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Note |
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2016 |
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2015 |
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Revenues, net |
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$ | 1,476,235 |
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$ | 1,868,693 |
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Cost of revenues |
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(784,652 | ) |
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(1,964,871 | ) |
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Gross profit (loss) |
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691,583 |
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(96,178 | ) |
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Operating expenses: |
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General and administrative |
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(1,602,245 | ) |
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(1,717,314 | ) |
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Loss from operations |
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(910,662 | ) |
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(1,813,492 | ) |
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Other income (expense): |
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Interest expense |
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(1,370 | ) |
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(270 | ) |
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Other income |
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3,433 |
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4,567 |
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Loss before income taxes |
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(908,599 | ) |
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(1,809,195 | ) |
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Income tax expense |
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- |
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NET LOSS |
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$ | (908,599 | ) |
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$ | (1,809,195 | ) |
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Net loss attributable to non-controlling interests |
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21,673 |
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- |
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Net loss attributable to the Company |
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$ | (886,926 | ) |
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$ | (1,809,195 | ) |
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Other comprehensive income: |
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-Foreign exchange adjustment gain |
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345,374 |
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1,224,651 |
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COMPREHENSIVE LOSS |
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$ | (541,552 | ) |
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$ | (584,544 | ) |
Revenue decreased 21% to $1,476,235 in the year ended December 31, 2016, from $1,868,693 in the year ended December 31, 2015. The decrease in revenue is mainly caused by the closure of one of the company’s retail outlets in a prime location at mid-2015.
Cost of revenues decreased 60.07% to $784,652 in the year ended December 31, 2016, from $1,964,871 in the year ended December 31, 2015. The decrease in cost of revenue is mainly due to the new contract signed with the main supplier. The rates provided in the new contract are much lower as compared to the old contract.
General and administrative expenses decreased 6.70% to $1,602,245 in the year ended December 31, 2016, from $1,717,314 in the year ended December 31, 2015. The decrease in general and administrative expenses is due to the reduction in Director’s Remuneration and Salaries in 2016 as compared to 2015.
Net interest expenses increased 407.41% to $1,370 in the year ended December 31, 2016, from $270 in the year ended December 31, 2015. The increase in net interest expenses is due to the company acquiring a hire purchase asset in 2016.
Net other income decreased 24.83% to $3,433 in the year ended December 31, 2016, from $4,567 in the year ended December 31, 2015. The decrease in net other income is due to a one off income acquired in 2015.
| 10 |
Net loss decreased 49.78% to $908,599 in the year ended December 31, 2016, from $1,809,195 in the year ended December 31, 2015. The main contributing factor that caused the decrease in net loss is the reduction in cost of revenues caused by the new contract signed with the main supplier in 2016.
Period ended September 30, 2017 compared to the period ended September 30, 2016
|
|
|
|
|
|
Period ended Sept 30 |
| ||||||
|
|
|
|
Note |
|
2017 |
|
|
2016 |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Revenues, net |
|
|
|
|
$ | 1,375,276 |
|
|
$ | 1,003,303 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Cost of revenues |
|
|
|
|
|
(1,131,755 | ) |
|
|
(733,088 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Gross (loss) profit |
|
|
|
|
|
243,521 |
|
|
|
270,215 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |
|
General and administrative |
|
|
|
|
|
(869,033 | ) |
|
|
(1,091,632 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Loss from operations |
|
|
|
|
|
(625,512 | ) |
|
|
(821,417 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
| |
|
Interest expense |
|
|
|
|
|
(1,403 | ) |
|
|
(772 | ) | |
|
Other income |
|
|
|
|
|
9,441 |
|
|
|
2,275 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Loss before income taxes |
|
|
|
|
|
(617,474 | ) |
|
|
(819,914 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Income tax expense |
|
|
|
|
|
- |
|
|
|
- |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
NET LOSS |
|
|
|
|
$ | (617,474 | ) |
|
$ | (819,914 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Net income (loss) attributable to non-controlling interests |
|
|
|
|
|
21,466 |
|
|
|
- |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Net loss attributable to the Company |
|
|
|
|
$ | (596,008 | ) |
|
$ | (819,914 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other comprehensive (expense) income: |
|
|
|
|
|
|
|
|
|
|
| |
|
|
-Foreign exchange adjustment (loss) income |
|
|
|
|
|
(448,409 | ) |
|
|
(212,306 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS) PROFIT |
|
|
|
|
$ | (1,044,417 | ) |
|
$ | (1,032,220 | ) | |
Revenue increased 37% to $1, 375 , 276 in the period ended September 30, 2017, from $1, 003 , 303 in the period ended September 30, 2016 . The increase in revenue is mainly caused by a contest being held during December 2016 to March 2017 which boosted sales during that period .
Cost of revenues increased 54% to $ 1,131,755 in the period ended September 30, 2017 , from $ 733,088 in the period ended September 30, 2016 . The increase in cost of revenue is mainly due to the credit notes given by the main supplier for the period ended September 30, 2016 was not repeated in 2017 .
General and administrative expenses decreased 20 % to $ 869,033 in the period ended September 30, 2017 , from $ 1,091,632 in the period ended September 30, 2016 . The decrease in general and administrative expenses is due to the reduction in Salaries and Marketing Expenses in 201 7 as compared to 2016.
Net interest expenses increased 82 % to $1, 403 in the period ended September 30, 2017 , from $ 772 in the period ended September 30, 2016 . The increase in net interest expenses is due to the company acquiring a hire purchase asset in the middle of 2016.
Net other income increased 315 % to $ 9,441 in the period ended September 30, 2017 , from $ 2,275 in the period ended September 30, 2016 . The increase in net other income is due to the interest gained from a fixed deposit maturing in 2017 .
Net loss decreased 25 % to $ 617,474 in the period ended September 30, 2017 , from $ 819,914 in the period ended September 30, 201 6 . The main contributing factor that caused the decrease in net loss is the reduction in Salaries and Marketing Expenses in 2017 as compared to 2016 .
| 11 |
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of May 11, 2017, certain information with respect to the beneficial ownership of our common shares by each shareholder known by us to be the beneficial owner of more than 5% of our common shares, as well as by each of our current directors and executive officers as a group. Each person has sole voting and investment power with respect to the shares of common stock, except as otherwise indicated. Beneficial ownership consists of a direct interest in the shares of common stock, except as otherwise indicated.
|
Name and Address of Beneficial Owner |
|
Amount and Nature of Beneficial Ownership |
|
Percentage of Class(1) |
| |
|
|
|
|
|
|
| |
| Eric Yap
K-2-8 2nd Floor, Kuchai Business Park Jalan 1/127 off Jalan Kuchai Lama, Kuala Lumpur MY 58200 |
|
81,600,000 Common Direct |
|
|
51.00 | % |
|
|
|
|
|
|
|
|
| Peng Soon Yap
K-2-8 2nd Floor, Kuchai Business Park Jalan 1/127 off Jalan Kuchai Lama, Kuala Lumpur MY 58200 |
|
9,980,000 Common Direct |
|
|
6.24 | % |
|
|
|
|
|
|
|
|
| Chui Mean Yap
K-2-8 2nd Floor, Kuchai Business Park Jalan 1/127 off Jalan Kuchai Lama, Kuala Lumpur MY 58200 |
|
18,400,000 Common Direct |
|
|
11.50 | % |
|
|
|
|
|
|
|
|
| Man Tat Teh
K-2-8 2nd Floor, Kuchai Business Park Jalan 1/127 off Jalan Kuchai Lama, Kuala Lumpur MY 58200 |
|
8,000,000 Common Direct |
|
|
5.00 | % |
|
|
|
|
|
|
|
|
| Kian Chye Teh
K-2-8 2nd Floor, Kuchai Business Park Jalan 1/127 off Jalan Kuchai Lama, Kuala Lumpur MY 58200 |
|
8,000,000 Common Direct |
|
|
5.00 | % |
|
|
|
|
|
|
|
|
|
Directors and Executive Officers as a Group |
|
125,980,000Common Shares |
|
|
78.74 | % |
|
|
|
|
|
|
|
|
| Chee Hou Yap
A-12-6 Pelangi Condo, Jalan Pelangi 9 Taman Pelangi, Sentul, Kuala Lumpur 51000, MY |
|
8,000,000 Common Direct |
|
|
5.00 | % |
|
|
|
|
|
|
|
|
| Chui Chi Yap
A-12-6 Pelangi Condo, Jalan Pelangi 9 Taman Pelangi, Sentul, Kuala Lumpur 51000, MY |
|
8,000,000 Common Direct |
|
|
5.00 | % |
|
|
|
|
|
|
|
|
| Chee Hua Yap
K-2-8 2nd Floor, Kuchai Business Park Jalan 1/127 off Jalan Kuchai Lama, Kuala Lumpur MY 58200 |
|
8,000,000 Common Direct |
|
|
5.00 | % |
|
|
|
|
|
|
|
|
| Yoke Fun Pan
K-2-8 2nd Floor, Kuchai Business Park Jalan 1/127 off Jalan Kuchai Lama, Kuala Lumpur MY 58200 |
|
8,000,000 Common Direct |
|
|
5.00 | % |
|
|
|
|
|
|
|
|
|
Beneficial Holder – 5% or greater as a Group |
|
32,000,000 Common |
|
|
20 | % |
_______________
|
(1) |
Under Rule 13d-3, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on January 26, 2018. As of January 26, 2018 there were 160,000,000 shares of our company’s common stock issued and outstanding. |
| 12 |
Changes in Control
We are unaware of any contract or other arrangement or provisions of our Articles or Bylaws the operation of which may at a subsequent date result in a change of control of our company. There are not any provisions in our Articles or Bylaws, the operation of which would delay, defer, or prevent a change in control of our company.
Directors, Executive Officers, Promoters and Control Persons
All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
|
Name |
|
Position Held with the Company |
|
Age |
|
Date First Elected or Appointed |
|
Eric Yap |
|
Chief Executive Officer and Director |
|
53 |
|
September 1, 2016 |
|
Peng Soon Yap |
|
Chief Operating Officer |
|
36 |
|
September 1, 2016 |
|
Man Tat Teh |
|
Chief Financial Officer |
|
25 |
|
September 1, 2016 |
|
Kian Chye Teh |
|
Secretary |
|
53 |
|
September 1, 2016 |
|
Chui Mean Yap |
|
Director |
|
29 |
|
September 30, 2016 |
Business Experience
The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
Eric Yap –Chief Executive Officer and Director
Dr. Yap has been serving as CEO and President of TRON Communications, a telecommunication company in Malaysia since April 2015. Dr. Yap holds an advanced diploma in international marketing, a master’s degree in business administration and an honorary doctorate of philosophy degree in business administration from the United States. His career as an entrepreneur for the past 20 years has led him to venture into various industries including insurance, property, construction, travel, security and telecommunication.
Dr. Yap started his career as an insurance agent before promoted to agency supervisor and later agency manager. With an outstanding sales record in his company, he earned a place in the Million Dollar Round Member. In 2009, he established Quality Quest International Sdn Bhd and is holding a non-executive director position. He also established Quality Quest International (HK) Ltd in 2010, and is an executive director there. Both companies deal in investment and property holdings in Malaysia and Hong Kong respectively.
Dr. Yap earned numerous awards such as The Asia Pacific Entrepreneur Award 2016, The Brandlaureate Best Brand Award, The Brandlaureate Leadership Award, First Diamond Entrepreneur Award 2015, The Malaysia 2016 CSR Award, The Malaysia 2017 CSR Award, The SME And Entrepreneurship Business Award 2017 and The Top 100 Most Influential Sustainable Entrepreneur in 2017. Dr. Yap was also been nominated as an Honorary Member for various organizations such as Malaysia Crime Awareness And Prevention Board (LKPJM), Association Of Malaysian Ex-police Forces (PBPM), Association Of Malaysia Ex-security Forces (PBPKM), Consumer Welfare And Protection Board of Malaysia (LPKPM) and The Emergency Action Forces Of Malaysia (PTCM).
Our company believes that Dr. Yap's professional background experience give him the qualifications and skills necessary to serve as a director and officer of our company.
| 13 |
Peng Soon Yap – Chief Operating Officer
Peng Soon Yap graduated as an Electrical/Electronic Engineer in the University of Technology Malaysia in year 2005. He joined Talk Focus Sdn Bhd in September, 2015, and is now serving as the Executive Vice President in charge of the overall execution of company strategic plans and directions through overseeing operations, sales and marketing and overseeing operations to help Talk Focus achieve its financial goals and objectives. Previously, he was Product Manager responsible for the planning of product roadmap, costing, pricing, simcard provisioning and production. Prior to joining Talk Focus, he was working in Intel Microelectronics (M) Sdn Bhd for 10 years as Senior Technical Software Development Engineer. His responsibilities include path-finding on new software solution, tools architecture and projects roadmap planning. He was assigned for two years’ relocation at Intel Oregon, USA for on-site support and few business trips to USA for customer face to face meetings and attending global technical conferences.
Our company believes that Peng Soon Yap's professional background experience give him the qualifications and skills necessary to serve as a director and officer of our company.
Man Tat Teh – Chief Financial Officer
Man Tat Teh is a chartered accountant under the Association of Chartered Certified Accountants (ACCA) from the Sunway University, Malaysia in 2015. Mr. Teh is also a Bachelor of Arts (honors) degree holder from Taylors University majoring in Accounting and Finance. Mr. Teh has been servicing as executive director and treasurer of TRON Communications since 2015. His key responsibilities are to manage all accounts related matters of the company and its subsidiaries from AP/AR to preparation of full consolidated accounting reports. Mr. Teh also handles the taxation for TRON to ensure all regulatory requirements are met.
Our company believes that Man Tat Teh's professional background experience give him the qualifications and skills necessary to serve as a director and officer of our company.
Kian Chye Teh – Secretary
Kian Chye Teh has joined Technology Revolution On-Net Sdn Bhd (“TRON”) as a managing director handling marketing and corporate affairs matters since August 2015. He successfully raised the image of TRON by emphasizing corporate social responsibility and awareness. He is responsible for managing the operational activities, coordinating and executing the business plan. Kian Chye will also be responsible for designing the reward compensation for the staff.
Previously he had established GPT Ventures Sdn Bhd with partners, a logistics company in 2011, he is the managing director of that company till to date.
Our company believes that Kian Chye Teh's professional background experience give him the qualifications and skills necessary to serve as a director and officer of our company.
| 14 |
Chui Mean Yap – Director
Chui Mean Yap is a member of TRON’s board of directors, a role she has held since 2016. She is appointed to act on behalf of the shareholders to oversee the activities of the company. She graduated from University of Sheffield, UK with a Bachelor’s Degree in Psychology and later on pursued two Master’s degrees, namely Social & Organizational Psychology and Consumer Psychology from Leiden University, Netherlands. Previously, she worked in Allocacoc, a Dutch industrial design firm as Social Media Manager since 2015, helping the frim to design online marketing, campaign so they could reach out to their potential customers.
Executive Compensation
The particulars of the compensation paid to the following persons:
|
|
(a) |
our principal executive officer; |
|
|
(b) |
each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended December 31, 2016 and 2015; and |
|
|
(c) |
up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended December 31, 2016 and 2015, who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year: |
|
SUMMARY COMPENSATION TABLE | ||||||||||||||||||||||||||||||||||
|
Name and Principal Position |
|
Year |
|
Salary |
|
|
Bonus |
|
|
Stock |
|
|
Option Awards |
|
|
Non-Equity Incentive Plan Compensa-tion |
|
|
Change in Pension |
|
|
All |
|
|
Total |
| ||||||||
|
Eric Yap(1) |
|
2016 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
| |||||||||||||||
|
Chief Executive Officer and Director |
|
2015 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||
|
Man Tat Teh(2) |
|
2016 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
| |||||||||||||||
|
Chief Financial Officer |
|
2015 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||
|
Peng Soon Yap(3) |
|
2016 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
| |||||||||||||||
|
Chief Operating Officer |
|
2015 |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
|
N/A |
||||||||||||||||
_______________
|
(1) |
Eric Yap was appointed as Chief Executive Officer and as a director on September 1, 2016 |
|
| |
|
(2) |
Man Tat Teh was appointed Chief Financial Officer on September 1, 2016 |
|
| |
|
(3) |
Peng Soon Yap was appointed Chief Operating Officer on September 1, 2016 |
|
| |
|
(4) |
Numan Ijaz resigned as President and Chief Executive Officer on September 1, 2016, and as a director on September 30, 2016 |
|
| |
|
(5) |
Alexander Bains resigned as Chief Financial Officer, Secretary, Treasurer on September 1, 2016, and as a director on September 30, 2016 |
|
|
|
|
(6) |
Chui Mean Yap was appointed as a director on September 30, 2016 |
| 15 |
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive share options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that share options may be granted at the discretion of our board of directors.
Grants of Plan-Based Awards
During the fiscal year ended December 31, 2016 we did not grant any stock options.
Option Exercises and Stock Vested
During our fiscal year ended December 31, 2016 there were no options exercised by our named officers or directors.
Compensation of Directors
We do not have any agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our board of directors.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years, is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.
Certain Relationships and Related Transactions, and Director Independence
Director Eric Yap and Chui Mean Yap are father and daughter. No director, executive officer, shareholder or any family member thereof, had any material interest, direct or indirect, in any transaction, or proposed transaction since the year ended December 31, 2016, in which the amount involved in the transaction exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at the year-end for the last three completed fiscal years.
Director Independence
We currently act with two directors, consisting of Eric Yap and Chui Mean Yap.
We have determined that we do not have an independent director, as that term is used in Rule 4200(a)(15) of the Rules of National Association of Securities Dealers.
Currently our audit committee consists of our entire board of directors. We currently do not have nominating, compensation committees or committees performing similar functions. There has not been any defined policy or procedure requirements for shareholders to submit recommendations or nomination for directors.
From inception to present date, we believe that the members of our audit committee and the board of directors have been and are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.
| 16 |
Market Price of and Dividends on Common Equity and Related Stockholder Matters
Market Information
Our common stock has been quoted on the OTCQB tier of the OTC Markets Group, Inc. since December 28, 2016, and is traded under the symbol “TGRP”. Our stock is thinly traded on the OTCQB and there can be no assurance that a liquid market for our common stock will ever develop. The closing share price for March 31st 2017 (Q1’17) is at $.52, and for June 30th 2017 (Q2’17) and September 30th 2017 (Q3’17) are at $0.11 respectively.
Our shares are issued in registered form. Globex Transfer, LLC., 780 Deltona Blvd., Suite 202, Deltona, FL 32725 (Telephone: (813) 344-4490; Facsimile: (386) 267-3124 is the registrar and transfer agent for our common shares.
Security Holders
On January 26, 2018, the shareholders’ list showed 10 registered shareholders with 160,000,000 shares of common stock outstanding.
Dividend Policy
We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to increase our working capital and do not anticipate paying any cash dividends in the foreseeable future.
Equity Compensation Plan Information
We do not have any equity compensation plans.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
We did not sell any equity securities which were not registered under the Securities Act during the year ended December 31, 2016, that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended December 31, 2016.
Purchase of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended December 31, 2016.
Litigation
The Company is currently not a party to any pending or threatened litigation, the outcome of which would be expected to have a material adverse effect on its financial condition or the results of its operations.
Description of Issuer’s Securities
Common Stock
Holders of our common stock are entitled to one vote per share. Our Articles of Incorporation do not provide for cumulative voting. Holders of our common stock are entitled to receive ratably such dividends, if any, as may be declared by our board of directors out of legally available funds. However, the current policy of our board of directors is to retain earnings, if any, for the operation and expansion of the Company. Upon liquidation, dissolution or winding-up, the holders of our common stock are entitled to share ratably in all of our assets which are legally available for distribution, after payment of or provision for all liabilities and the liquidation preference of any outstanding preferred stock. The holders of our common stock have no preemptive, subscription, redemption or conversion rights.
| 17 |
Preferred Stock
We have no shares of preferred stock issued or outstanding
Cash Dividends
We have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our Board of Directors, and will depend upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations. Payment of dividends in the future will depend on our future earnings, future capital needs and our operating and financial condition, among other factors.
Anti-Takeover Law, Limitations of Liability and Indemnification
Nevada Anti-Takeover Law . Our Articles of Incorporation and bylaws exclude us from the restrictions imposed by Nevada Revised Statutes ("NRS"), 78.378 to 78.3793, inclusive. Pursuant to Section 78.434 of the NRS, upon incorporation we elected not to be governed by Sections 78.411 to 78.444, inclusive, and Sections 78.378 to 78.3793, inclusive, of the NRS. These sections prevent many Nevada corporations from engaging in a business combination with any interested stockholder, under specified circumstances. For these purposes, a business combination includes a merger or sale of more than 10% of our assets, and an interested stockholder includes a stockholder who owns 15% or more of our outstanding voting stock, as well as affiliates and associates of these persons. Under these provisions, this type of business combination is prohibited for three years following the date that the stockholder became an interested stockholder unless
|
|
· | the transaction in which the stockholder became an interested stockholder is approved by the board of directors prior to the date the interested stockholder attained that status, |
|
|
|
|
|
|
· | upon consummation of the transaction that resulted in the stockholder's becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction was commenced, excluding those shares owned by persons who are directors and also officers, or |
|
|
|
|
|
|
· | on or subsequent to that date, the business combination is approved by the board of directors and authorized at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that is not owned by the interested stockholder. |
Because we elected upon incorporation to be exempt from the provisions of these provisions, there are no Nevada anti-takeover provisions that may have the effect of delaying or preventing a change in control.
Limited Liability and Indemnification . Our Articles of Incorporation eliminate the personal liability of our directors for monetary damages arising from a breach of their fiduciary duty as directors to the fullest extent permitted by Nevada law. This limitation does not affect the availability of equitable remedies, such as injunctive relief or rescission. Our Articles of Incorporation require us to indemnify our directors and officers to the fullest extent permitted by Nevada law, including in circumstances in which indemnification is otherwise discretionary under Nevada law.
Under Nevada law, we may indemnify our directors or officers or other persons who were, are or are threatened to be made a named defendant or respondent in a proceeding because the person is or was our director, officer, employee or agent, if we determine that the person:
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· | conducted himself or herself in good faith; |
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· | reasonably believed, in the case of conduct in his or her official capacity as our director or officer, that his or her conduct was in our best interests, and, in all other cases, that his or her conduct was at least not opposed to our best interests; and |
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· | in the case of any criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful. |
These persons may be indemnified against expenses, including attorney fees, judgments, fines, including excise taxes, and amounts paid in settlement, actually and reasonably incurred, by the person in connection with the proceeding. If the person is found liable to the Company, no indemnification shall be made unless the court in which the action was brought determines that the person is fairly and reasonably entitled to indemnity in an amount that the court will establish.
Disclosure of SEC Position on Indemnification for Securities Act Liabilities. Insofar as indemnification for liabilities under the Securities Act of 1933 (the "Securities Act") may be permitted to directors, officers or persons controlling us pursuant to the above provisions, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
Item 5.06 Change in Shell Company Status
As a result of the consummation of the Transactions described in Item 2.01 of this Form 8-K, we are no longer a shell company as that term is defined in Rule 405 of the Securities Act of 1933, as amended, and Rule 12b-2 of the Exchange Act of 1934, as amended.
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Item 9.01 Financial Statements and Exhibits
(a) Financial statements of business acquired.
In accordance with Item 9.01(a), Talk Focus Sdn Bhd audited financial statements as of, and for the fiscal years ended, December 31, 2016 and 2015, and Talk Focus Sdn Bhd’s unaudited condensed financial statements as of, and for the nine months ended September, 2017, and the accompanying notes, are included in this Current Report beginning on Page F-3.
(b) Pro forma financial information
In accordance with Item 9.01(b), unaudited condensed financial statements as of, and for the nine months ended, September 30, 2017, and the accompanying notes, are included in this Current Report beginning on Page F-34.
(c) Change of auditor
In accordance with Item 9.01(c), on March 16, 2018, TRON Group Inc has engaged Total Asia Associates, Chartered Accountants, an independent certified public accounting firm, as the principal independent accountant with the approval of the board of directors.
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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 hereunto duly authorized.
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TRON GROUP INC. |
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/s/ Eric Yap |
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Eric Yap |
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Chief Executive Officer and Director |
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Date: April 9, 2018 |
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EXHIBIT 10.1
AGREEMENT AND PLAN OF SHARE EXCHANGE
THIS AGREEMENT AND PLAN OF SHARE EXCHANGE (hereinafter referred to as the “Agreement”), is entered into as of January ____, 2018 by and among, Tron Group Inc., a publicly-owned Nevada corporation (“TRON”), Talk Focus Sdn Bhd., a Malaysian corporation (“Talk Focus”) and one of the shareholders of Talk Focus , a common shareholder of both corporations (“Talk Focus Shareholder”), sometimes hereinafter collectively referred to as the “Parties” and individually as a “Party.”)
W I T N E S S E T H
A) WHEREAS, TRON is a publicly-owned Nevada corporation with approximately 160,000,000 shares of common stock, 0.001 USD value per share, issued and outstanding (the “TRON Common Stock”) and is quoted on the Over the Counter Bulletin Board under the symbol (“TGRP”).
B) WHEREAS, the Talk Focus Shareholder listed on Schedule I hereto own 6,401,500 shares of common stock the issued of Talk Focus (the “Talk Focus Shares”).
C) WHEREAS, the Parties desire that TRON acquire the Talk Focus Shares from the Talk Focus Shareholder in exchange for an aggregate of 3,329,385 newly issued shares of common stock of TRON (the “Exchange Shares”) pursuant to the terms and conditions set forth in this Agreement.
D) WHEREAS, immediately upon consummation of the Closing (as hereinafter defined), the Exchange Shares will be issued to the Talk Focus Shareholder.
E) WHEREAS, following the Closing, Talk Focus will become a subsidiary of TRON.
G) NOW THEREFORE, on the stated premises and for and in consideration of the foregoing recitals which are hereby incorporated by reference, the mutual covenants and agreements hereinafter set forth and the mutual benefits to the Parties to be derived herefrom and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Parties hereto agree as follows:
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 1 |
ARTICLE I
PLAN OF EXCHANGE
1.1 The Exchange. At the Closing (as hereinafter defined), the Talk Focus Shares shall be exchanged for 3,329,385 shares of TRON common stock. From and after the Closing Date, the certificates or book entry shares formerly representing Talk Focus Shareholder’s shares of common stock of Talk Focus.
1.2 No Dilution. TRON shall neither effect, nor fix any record date with respect to, any stock split, stock dividend, reverse stock split, recapitalization, or similar change in the TRON Stock between the date of this Agreement and the Effective Time other than the corporate actions authorized by Talk Focus Shareholder.
1.3 Closing. The closing (“Closing”) of the transactions contemplated by this Agreement shall occur immediately following the execution of this Agreement providing the closing conditions set forth in Articles V and VI have been satisfied or waived (the “Closing Date”).
1.4 Closing Events. At the Closing, each of the respective parties hereto shall execute, acknowledge and deliver (or shall cause to be executed, acknowledged, and delivered) any and all stock certificates, officers’ certificates, opinions, financial statements, schedules, agreements, resolutions, rulings, or other instruments required by this Agreement to be so delivered at or prior to the Closing, and the documents and certificates provided in Sections 5.2, 5.4, 6.2, 6.4 and 6.5, together with such other items as may be reasonably requested by the parties hereto and their respective legal counsel in order to effectuate or evidence the transactions contemplated hereby. If agreed to by the parties, the Closing may take place through the exchange of documents (other than the exchange of stock certificates) by efax, fax, email and/or express courier. At the Closing, the Exchange Shares shall be issued in the names and denominations provided by Talk Focus.
ARTICLE II
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF TALK FOCUS AND THE TALK FOCUS SHAREHOLDERS
As an inducement to, and to obtain the reliance of TRON, Talk Focus represents and warrants as follows:
2.1 Organization. Talk Focus is a corporation duly organized, validly existing, and in good standing under the laws of the Malaysia. Talk Focus has the power and is duly authorized, qualified and licensed under all applicable laws, regulations, ordinances, and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, including qualification to do business as a foreign corporation in jurisdictions in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement in accordance with the terms hereof will not violate any provision of Talk Focus’s organizational documents. Talk Focus has taken all action required by laws, its Certificate of Incorporation, certificate of business registration, or otherwise to authorize the execution and delivery of this Agreement. Talk Focus has full power, authority, and legal right and has taken or will take all action required by law, its Certificate of Incorporation, and otherwise to consummate the transactions herein contemplated.
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 2 |
2.2 Capitalization. All issued and outstanding shares of common stock of Talk Focus are legally issued, fully paid and non-assessable, and were not issued in violation of the pre-emptive or other rights of any person. Talk Focus has no shares of preferred stock issued and outstanding. Talk Focus has no outstanding options, warrants, or other convertible securities.
2.3 Financial Statements.
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(a) |
Talk Focus has filed all local income tax returns required to be filed by it from its inception to the date hereof. All such returns are complete and accurate in all material respects. |
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(b) |
Talk Focus has no undisclosed liabilities with respect to the payment of federal, county, local, or other taxes (including any deficiencies, interest, or penalties), except for taxes accrued but not yet due and payable, for which Talk Focus may be liable in its own right or as a transferee of the assets of, or as a successor to, any other corporation or entity. |
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(c) |
No deficiency for any taxes has been proposed, asserted or assessed against Talk Focus. There has been no tax audit, nor has there been any notice to Talk Focus by any taxing authority regarding any such tax audit, or, to the knowledge of Talk Focus, is any such tax audit threatened with regard to any taxes or Talk Focus tax returns. Talk Focus does not expect the assessment of any additional taxes of Talk Focus for any period prior to the date hereof and has no knowledge of any unresolved questions concerning the liability for taxes of Talk Focus. |
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(d) |
The books and records, financial and otherwise, of Talk Focus are in all material respects complete and correct and have been maintained in accordance with good business and accounting practices. |
2.4 Information. The information concerning Talk Focus set forth in this Agreement and the Talk Focus Schedules (as that term is defined herein) are and will be complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading as of the date hereof and as of the Closing Date.
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 3 |
2.5 Common Stock Equivalents. There are no existing options, warrants, calls, commitments of any character or other share equivalents relating to the authorized and unissued Talk Focus common stock.
2.6 Absence of Certain Changes or Events. Except as set forth in this Agreement or the Talk Focus Schedules (as that term is defined herein):
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(a) |
except in the normal course of business, there has not been (i) any material adverse change in the business, operations, properties, assets, or condition of Talk Focus; or (ii) any damage, destruction, or loss to Talk Focus (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets, or condition of Talk Focus; |
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(b) |
Talk Focus has not (i) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) not otherwise in the ordinary course of business, and except for capital raised by issuance of debt or equity in a private placement or other capital raising transaction deemed advisable by Talk Focus; (ii) paid any material obligation or liability not otherwise in the ordinary course of business (absolute or contingent) other than current liabilities reflected in or shown on the most recent Talk Focus consolidated balance sheet, and current liabilities incurred since that date in the ordinary course of business; (iii) sold or transferred, or agreed to sell or transfer, any of its assets, properties, or rights not otherwise in the ordinary course of business; (iv) made or permitted any amendment or termination of any contract, agreement, or license to which they are a party not otherwise in the ordinary course of business if such amendment or termination is material, considering the business of Talk Focus; or (v) issued, delivered, or agreed to issue or deliver any common stock (whether authorized and unissued or held as treasury stock). |
2.7 Litigation and Proceedings. There is currently a legal suit going on in Talk Focus, whereby Talk Focus is the plaintiff pursuing compensation from another company in the Malaysian Court on grounds of Breach of Contract.
2.8 No Conflict with Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute an event of default under, any material indenture, mortgage, deed of trust, or other material contract, agreement, or instrument to which Talk Focus is a party or to which any of its properties or operations are subject.
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 4 |
2.9 Contracts. Talk Focus has provided, or will provide TRON, copies of all material contracts, agreements, franchises, license agreements, or other commitments to which Talk Focus is a party or by which it or any of its assets, products, technology, or properties are bound.
2.10 Compliance with Laws and Regulations. To the best of its knowledge of the knowledge of the Talk Focus Shareholders, Talk Focus has complied with all applicable statutes and regulations of any national, county, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of Talk Focus.
2.11 Approval of Agreement. The members of Talk Focus’s Board of Directors (the “Talk Focus Board”) and the Talk Focus Shareholders have authorized the execution and delivery of this Agreement by Talk Focus and have approved the transactions contemplated hereby.
2.12 Talk Focus Schedules. Talk Focus has delivered, or will deliver, as soon as practicable, the following schedules, which are collectively referred to as the “Talk Focus Schedules” and which consist of separate schedules dated as of the date of execution of this Agreement and instruments and data as of such date, all certified by the chief executive officer of Talk Focus as complete, true and correct:
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a schedule containing complete and correct copies of the organizational documents, as amended, of Talk Focus in effect as of the date of this Agreement; and |
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(b) |
a schedule as requested by TRON, containing true and correct copies of all material contracts, agreements, or other instruments to which Talk Focus is a party or by which it or its properties are bound, specifically including all contracts, agreements, or arrangements referred to in Section 2.9. |
2.13 Title and Related Matters. Talk Focus has good and marketable title to all of its properties, interest in properties, and assets, real and personal, which are reflected in the Talk Focus balance sheet or acquired after that date (except properties, interest in properties, and assets sold or otherwise disposed of since such date in the ordinary course of business), free and clear of all liens, pledges, charges, or encumbrances except:
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statutory liens or claims not yet delinquent; and |
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(b) |
as described in the Talk Focus Schedules. |
2.14 Governmental Authorizations. Talk Focus has all licenses, franchises, permits, and other government authorizations, that are legally required to enable it to conduct its business operations in all material respects as conducted on the date hereof. Except for compliance with federal and state securities or corporation laws, as hereinafter provided, no authorization, approval, consent, or order of, or registration, declaration, or filing with, any court or other governmental body is required in connection with the execution and delivery by Talk Focus of this Agreement and the consummation by Talk Focus of the transactions contemplated hereby.
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 5 |
2.15 Continuity of Business Enterprises. Talk Focus has no commitment or present intention to liquidate Talk Focus or sell or otherwise dispose of a material portion of its business or assets following the consummation of the transactions contemplated hereby.
2.16 Ownership of Talk Focus Shares. The Talk Focus Shareholder is the legal and beneficial owners of 64% of Talk Focus total common stock, which shareholder is set forth on Schedule I, free and clear of any claims, charges, equities, liens, security interests, and encumbrances whatsoever, and the Talk Focus Shareholder has full right, power, and authority to transfer, assign, convey, and deliver his respective Talk Focus Shares and delivery of such Talk Focus Shares at the Closing will convey to TRON good and marketable title to such The Talk Focus Shares, free and clear of any claims, charges, equities, liens, security interests, and encumbrances except for any such claims, charges, equities, liens, security interests, and encumbrances arising out of such shares being held by TRON.
2.17 Brokers. Talk Focus has not entered into any contract with any person, firm or other entity that would obligate Talk Focus or TRON to pay any commission, brokerage or finders’ fee in connection with the transactions contemplated herein.
2.18 Talk Focus Shareholder Representations. By entering into this Agreement, the Talk Focus Shareholders, individually, represent and warrant the following:
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(a) | Talk Focus Shareholder is purchasing the TRON Shares for his own account and for investment purposes only, and has no present intention, agreement or arrangement for the distribution, transfer, assignment, resale or subdivision thereof. The Talk Focus Shareholder understands that, due to the restrictions on transfer set forth in the legend that will be placed on the TRON Share certificates that the TRON Shares must be held for a length of time which cannot be determined as of the date this agreement is signed. The time that Talk Focus Shareholder must hold the Shares before sale could be increased or decreased by the Securities and Exchange Commission or a State Securities Division. IN ADDITION, TALK FOCUS SHAREHOLDER UNDERSTANDS THAT HE IS SUBJECT TO CERTAIN LIMITATIONS ON RESALE AS SET FORTH BELOW. |
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(b) | Talk Focus Shareholder is fully aware that the TRON Shares subscribed for hereunder have not been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and have been offered pursuant to the exemption from registration contained in Section 4(2) of said Act and Regulation D promulgated thereunder on the ground that no public offering is involved, which reliance is based in part upon the representations set forth herein. Talk Focus Shareholder further understands and agrees that the TRON Shares subscribed for hereunder may not be offered, sold, transferred, pledged or hypothecated to any persons in the absence of registration under the Securities Act of 1933 and applicable state securities laws, or an opinion of counsel satisfactory to the Company that such registration is not required. Talk Focus Shareholder further understands that a legend will be placed on his certificate which sets forth the restrictions set forth herein |
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 6 |
ARTICLE III
REPRESENTATIONS, COVENANTS, AND WARRANTIES OF TRON
As an inducement to, and to obtain the reliance of Talk Focus, TRON represents and warrants as follows:
3.1 Organization. TRON is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, and has the corporate power and is duly authorized, qualified, franchised, and licensed under all applicable laws, regulations, ordinances, and orders of public authorities to own all of its properties and assets and to carry on its business in all material respects as it is now being conducted, and there is no jurisdiction in which it is not qualified in which the character and location of the assets owned by it or the nature of the business transacted by it requires qualification. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of TRON’s Articles of Incorporation or bylaws. TRON has taken all action required by law, its Certificate of Incorporation, its bylaws, or otherwise to authorize the execution and delivery of this Agreement, and TRON has full power, authority, and legal right and has taken all action required by law, its Certificate of Incorporation, By-Laws, or otherwise to consummate the transactions herein contemplated.
3.2 Capitalization. TRON’s authorized capitalization (without including pending corporate actions) consists of 500,000,000 shares of Common Stock. All presently issued and outstanding shares are legally issued, fully paid, and non-assessable and not issued in violation of the pre-emptive or other rights of any person. The Exchange Shares will be legally issued, fully paid and non-assessable and shall not be issued in violation of the pre-emptive or other rights of any other person.
3.3 Financial Statements. Except as set forth within its filing of reports with the Securities and Exchange Commission (the “SEC Reports”):
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TRON has no liabilities with respect to the payment of any federal, state, county, local or other taxes (including any deficiencies, interest, or penalties), except for taxes accrued but not yet due and payable, for which TRON may be liable in its own right, or as a transferee of the assets of, or as a successor to, any other corporation or entity. |
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(b) |
TRON has filed all federal, state, or state tax returns required to be filed by it from inception. |
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 7 |
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(c) |
The books and records, financial and otherwise, of TRON are in all material respects complete and correct and have been maintained in accordance with good business and accounting practices. |
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(d) |
No deficiency for any taxes has been proposed, asserted or assessed against TRON. There has been no tax audit, nor has there been any notice to TRON by any taxing authority regarding any such tax audit, or, to the knowledge of TRON, is any such tax audit threatened with regard to any taxes or TRON tax returns. TRON does not expect the assessment of any additional taxes of TRON for any period prior to the date hereof and has no knowledge of any unresolved questions concerning the liability for taxes of TRON. |
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(e) |
TRON has good and marketable title to its assets and, except as set forth in the TRON Schedules, has no material contingent liabilities, direct or indirect, matured or unmatured. |
3.4 Information. The information concerning TRON set forth in this Agreement is and will be complete and accurate in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading as of the date hereof and as of the Closing Date.
3.5 Common Stock Equivalents. Except as set forth herein, there are no existing options, warrants, calls, commitments of any character or other common stock equivalents relating to authorized and unissued stock of TRON.
3.6 Absence of Certain Changes or Events. Except as described herein:
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(a) |
There has not been (i) any material adverse change, financial or otherwise, in the business, operations, properties, assets, or condition of TRON (whether or not covered by insurance) materially and adversely affecting the business, operations, properties, assets, or condition of TRON; |
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(b) |
TRON, (except for pending corporate actions not included herein) has not (i) amended its Articles of Incorporation or by-laws; (ii) declared or made, or agreed to declare or make any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii) waived any rights of value which in the aggregate are extraordinary or material considering the business of TRON; (iv) made any material change in its method of management, operation, or accounting; (v) entered into any other material transactions; (vi) made any accrual or arrangement for or payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee; (vii) increased the rate of compensation payable or to become payable by it to any of its officers or directors or any of its employees; or (viii) made any increase in any profit sharing, bonus, deferred compensation, insurance, pension, retirement, or other employee benefit plan, payment, or arrangement, made to, for, or with its officers, directors, or employees; |
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 8 |
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(c) |
Except for grants made pursuant to any equity or option incentive plan, TRON has not (i) granted or agreed to grant any options, warrants, or other rights for its stocks, bonds, or other corporate securities calling for the issuance thereof; (ii) other than any convertible promissory note(s) issued, borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (iii) paid or agreed to pay any material obligation or liability (absolute or contingent) other than current liabilities reflected in or shown on the most recent TRON balance sheet and current liabilities incurred since that date in the ordinary course of business and professional and other fees and expenses incurred in connection with the preparation of this Agreement and the consummation of the transactions contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer, any of its assets, property, or rights (except assets, property, or rights not used or useful in its business which, in the aggregate have a value of less than $1,000), or canceled, or agreed to cancel, any debts or claims (except debts or claims which in the aggregate are of a value of less than $1,000); or (v) made or permitted any amendment or termination of any contract, agreement, or license to which it is a party if such amendment or termination is material, considering the business of TRON; |
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To the best knowledge of TRON, it has not become subject to any law or regulation which materially and adversely affects, or in the future may adversely affect, the business, operations, properties, assets, or condition of TRON. |
3.7 Title and Related Matters. TRON has good and marketable title to all of its properties, interest in properties, and assets, real and personal, which are reflected in the TRON balance sheet or acquired after that date (except properties, interest in properties, and assets sold or otherwise disposed of since such date in the ordinary course of business), free and clear of all liens, pledges, charges, or encumbrances except:
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statutory liens or claims not yet delinquent; and |
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such imperfections of title and easements as do not and will not materially detract from or interfere with the present or proposed use of the properties subject thereto or affected thereby or otherwise materially impair present business operations on such properties. |
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3.8 Litigation and Proceedings. There are no actions, suits, or proceedings pending or, to the knowledge of TRON, threatened by or against or affecting TRON, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind, except which has been disclosed in TRON’s filings with the SEC.
3.9 Contracts. TRON is not a party to any material contract, agreement, or other commitment, except as specifically disclosed in its filings with the SEC.
3.10 No Conflict with Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the breach of any term or provision of, or constitute a default under, any indenture, mortgage, deed of trust, or other material agreement or instrument to which TRON is a party or to which it or any of its assets or operations are subject.
3.11 Governmental Authorizations. TRON is not required to have any licenses, franchises, permits, and other government authorizations, that are legally required to enable it to conduct its business operations in all material respects as conducted on the date hereof. Except for compliance with federal and state securities or corporation laws, as hereinafter provided, no authorization, approval, consent, or order of, or registration, declaration, or filing with, any court or other governmental body is required in connection with the execution and delivery by TRON of this Agreement and the consummation by TRON of the transactions contemplated hereby.
3.12 Compliance with Laws and Regulations. To the best of its knowledge, TRON has complied with all applicable statutes and regulations of any federal, state, or other applicable governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or conditions of TRON or except to the extent that noncompliance would not result in the incurrence of any material liability.
3.13 Insurance. TRON owns no insurable properties, but does carry director and officer liability insurance.
3.14 Approval of Agreement. The board of directors of TRON (the “TRON Board”) has authorized the execution and delivery of this Agreement by TRON and has approved this Agreement and the transactions contemplated hereby.
3.15 Material Transactions of Affiliations. Except as disclosed herein and TRON’s filings with the SEC, there exists no material contract, agreement, or arrangement between TRON and any person who was at the time of such contract, agreement, or arrangement an officer or director and which is to be performed in whole or in part after the date hereof or was entered into not more than two years prior to the date hereof, and which has not been disclose in TRON’s filings with the SEC. Neither any officer or director has, or has had during the last preceding full fiscal year, any known interest in any material transaction with TRON which was material to the business of TRON and which has not been disclosed by TRON in its filings with the SEC.
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3.17 Brokers. TRON has not entered into any contract with any person, firm or other entity that would obligate Talk Focus or TRON to pay any commission, brokerage or finders’ fee in connection with the transactions contemplated herein.
ARTICLE IV
SPECIAL COVENANTS
4.1 Access to Properties and Records. TRON and Talk Focus will each afford to the officers and authorized representatives of the other reasonable access to the properties, books, and records of TRON or Talk Focus in order that each may have full opportunity to make such reasonable investigation as it shall desire to make of the affairs of the other, and each will furnish the other with such additional financial and operating data and other information as to the business and properties of TRON or Talk Focus as the other shall from time to time reasonably request.
4.2 Delivery of Books and Records. At the Closing, Talk Focus shall deliver to TRON, the originals of the corporate minute books, books of account, contracts, records, and all other books or documents of Talk Focus now in the possession or control of Talk Focus or its representatives and agents.
4.3 Actions Prior to Closing by both Parties.
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From and after the date of this Agreement until the Closing Date and except as permitted or contemplated by this Agreement, TRON and Talk Focus will each: (i) carry on its business in substantially the same manner as it has heretofore; (ii) maintain and keep its properties in states of good repair and condition as at present, except for depreciation due to ordinary wear and tear and damage due to casualty; (iii) maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained by it; (iv) perform in all material respects all of its obligation under material contracts, leases, and instruments relating to or affecting its assets, properties, and business; (v) use its best efforts to maintain and preserve its business organization intact, to retain its key employees, and to maintain its relationship with its material suppliers and customers; and (vi) fully comply with and perform in all material respects all obligations and duties imposed on it by all federal and state laws and all rules, regulations, and orders imposed by federal or state governmental authorities. |
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 11 |
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(b) |
From and after the date of this Agreement until the Closing Date, neither TRON nor Talk Focus will: (i) make any change in their organizational documents, charter documents or bylaws; (ii) take any action described in Section 2.6 in the case of Talk Focus, or in Section 3.6, in the case of TRON (all except as permitted therein or as disclosed in the applicable party’s schedules); (iii) enter into or amend any contract, agreement, or other instrument of any of the types described in such party’s schedules, except that a party may enter into or amend any contract, agreement, or other instrument in the ordinary course of business involving the sale of goods or services, or (iv) make or change any material tax election, settle or compromise any material tax liability or file any amended tax return. |
4.4 Indemnification. TRON hereby agrees to indemnify Talk Focus and each of the officers, agents and directors of Talk Focus as of the date of execution of this Agreement against any loss, liability, claim, damage, or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made under Article III. The indemnification provided for in this paragraph shall not survive the Closing and consummation of the transactions contemplated hereby but shall survive the termination of this Agreement pursuant to Section 7.1(c) of this Agreement
ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF TRON
The obligations of TRON under this Agreement are subject to the satisfaction, at or before the Closing, of the following conditions:
5.1 Accuracy of Representations; Performance. The representations and warranties made by Talk Focus in this Agreement were true when made and shall be true at the Closing Date with the same force and effect as if such representations and warranties were made at and as of the Closing Date (except for changes therein permitted by this Agreement), and Talk Focus shall have performed or complied with all covenants and conditions required by this Agreement to be performed or complied with by Talk Focus prior to or at the Closing. TRON may request to be furnished with a certificate, signed by a duly authorized officer of Talk Focus and dated the Closing Date, to the foregoing effect.
5.2 Officer’s Certificates. TRON may request that it be furnished with a certificate dated the Closing Date and signed by a duly authorized officer of Talk Focus to the effect that no litigation, proceeding, investigation, or inquiry is pending or, to the best knowledge of Talk Focus threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement, or, to the extent not disclosed in the Talk Focus Schedules, by or against Talk Focus which might result in any material adverse change in any of the assets, properties, business, or operations of Talk Focus.
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 12 |
5.3 No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business, or operations of Talk Focus, nor shall any event have occurred which, with the lapse of time or the giving of notice, may cause or create any material adverse change in the financial condition, business, or operations.
5.4 Other Items.
|
|
(a) |
TRON shall have received such further documents, certificates, or instruments relating to the transactions contemplated hereby as TRON may reasonably request. |
|
|
(b) |
Complete and satisfactory due diligence review of Talk Focus by TRON. |
|
|
(c) |
Approval of the Agreement by the Talk Focus Board and the Talk Focus Shareholders. |
|
|
(d) |
Any necessary third-party consents shall be obtained prior to Closing, including but not limited to consents necessary from Talk Focus’s lenders, creditors, vendors and lessors. |
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF TALK FOCUS
The obligations of Talk Focus under this Agreement are subject to the satisfaction, at or before the Closing, of the following conditions:
6.1 Accuracy of Representations; Performance. The representations and warranties made by TRON in this Agreement were true when made and shall be true as of the Closing Date (except for changes therein permitted by this Agreement) with the same force and effect as if such representations and warranties were made at and as of the Closing Date, and TRON shall have performed and complied with all covenants and conditions required by this Agreement to be performed or complied with by TRON prior to or at the Closing.
6.2 Officer’s Certificate. Upon the request of Talk Focus, it shall be furnished with a certificate dated the Closing Date and signed by a duly authorized executive officer of TRON to the effect that no litigation, proceeding, investigation, or inquiry is pending or, to the best knowledge of TRON threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement.
6.3 No Material Adverse Change. Prior to the Closing Date, there shall not have occurred any material adverse change in the financial condition, business, or operations of TRON nor shall any event have occurred which, with the lapse of time or the giving of notice, may cause or create any material adverse change in the financial condition, business, or operations of TRON.
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 13 |
6.4 Other Items.
|
|
(a) |
Talk Focus shall have received such further documents, certificates, or instruments relating to the transactions contemplated hereby as Talk Focus may reasonably request. |
|
|
(b) |
Complete and satisfactory due diligence review of TRON by Talk Focus. |
|
|
(c) |
Approval of the Agreement by the TRON Board and the stockholders of TRON. |
|
|
(d) |
There shall have been no material adverse changes in TRON, financial or otherwise. |
ARTICLE VII
MISCELLANEOUS
7.1 Governing Law. This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of the United States of America and, with respect to matters of state law, with the laws of the state of Washington. Any dispute arising under or in any way related to this Agreement will be submitted to binding arbitration before a single arbitrator by the American Arbitration Association in accordance with the Association’s commercial rules then in effect. The arbitration will be conducted in Bellevue, Washington. The decision of the arbitrator will set forth in reasonable detail the basis for the decision and will be binding on the parties. The arbitration award may be confirmed by any court of competent jurisdiction.
7.2 Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if personally delivered to it or sent by registered mail or certified mail, postage prepaid, or by prepaid telegram and any such notice or communication shall be deemed to have been given as of the date so delivered, mailed, or telegraphed.
7.3 Attorney’s Fees. In the event that any party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the breaching party or parties shall reimburse the non-breaching party or parties for all costs, including reasonable attorneys’ fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein.
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 14 |
7.4 Confidentiality. TRON, on the one hand, and Talk Focus and the Talk Focus Shareholder, on the other hand, will keep confidential all information and materials regarding the other Party designated by such Party as confidential. The provisions of this Section 7.4 shall not apply to any information which is or shall become part of the public domain through no fault of the Party subject to the obligation from a third party with a right to disclose such information free of obligation of confidentiality. TRON and Talk Focus agree that no public disclosure will be made by either Party of the existence of the Transaction or the letter of intent or any of its terms without first advising the other Party and obtaining its prior written consent to the proposed disclosure, unless such disclosure is required by law, regulation or stock exchange rule. Notwithstanding the aforesaid, the parties understand and agree that this Agreement must and will be filed with the SEC a TRON material event.
7.5 Expenses. Except as otherwise set forth herein, each party shall bear its own costs and expenses associated with the transactions contemplated by this Agreement. Without limiting the generality of the foregoing, all costs and expenses incurred by Talk Focus and TRON after the Closing shall be borne by the surviving entity. After the Closing, the costs and expenses of the Talk Focus Shareholder shall be borne by the Talk Focus Shareholder.
7.6 Third Party Beneficiaries. This contract is solely between TRON, Talk Focus and the Talk Focus Shareholder, and, except as specifically provided, no director, officer, stockholder, employee, agent, independent contractor, or any other person or entity shall be deemed to be a third-party beneficiary of this Agreement.
7.7 Entire Agreement. This Agreement represents the entire agreement between the parties relating to the Transaction. There are no other courses of dealing, understandings, agreements, representations, or warranties, written or oral, except as set forth herein.
7.8 Survival. The representations and warranties of the respective parties shall survive the Closing Date and the consummation of the transactions herein contemplated.
7.9 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument. Signatures may be made electronically and transmitted via electronic mail, facsimile or other similar electronic medium commonly used at the time. Signatures transmitted electronically will be considered originals when received.
7.10 Amendment or Waiver. Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. At any time prior to the Closing Date, this Agreement may be amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance hereof may be extended by a writing signed by the party or parties for whose benefit the provision is intended.
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 15 |
IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly authorized, as of the date first above-written.
TRON GROUP INC., a Nevada corporation
|
By : |
/s/ Eric Yap |
|
|
Its : |
CEO |
|
TALK FOCUS SDN. BHD., a Malaysian corporation
|
By: |
/s/ Yap Chee Hou |
|
|
Its: |
DIRECTOR |
|
| TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 16 |
SCHEDULE I
Dated: January 26, 2018
The following person are the one of owners of the capital stock of Talk Focus:
SCHEDULE 1
TALK FOCUS SDN BHD. SHARES
|
Shareholders |
|
Common Stock |
|
|
% of ownership |
| ||
|
|
|
|
|
|
|
| ||
|
DATO SRI DR ERIC YAP |
|
|
6,401,500 |
|
|
|
64.015 | % |
|
|
|
|
|
|
|
|
|
|
|
Total Held |
|
|
6,401,500 |
|
|
|
64.015 | % |
|
TRON – TALK FOCUS STOCK EXCHANGE AGREEMENT - 17 |
EXHIBIT 99.1
INDEX TO FINANCIAL STATEMENTS
|
Report of Independent Registered Public Accounting Firm |
|
|
F-2 |
|
|
|
|
|
| |
|
Financial Statements: |
|
|
| |
|
|
|
|
|
|
|
Balance Sheet as of December 31, 2016 and 2015 |
|
|
F-3 |
|
|
|
|
|
| |
|
Statements of Operations for Years Ended December 31, 2016 and 2015 |
|
|
F-4 |
|
|
|
|
|
| |
|
Statement of Cash Flows for the Years Ended December 31, 2016 and 2015 |
|
|
F-5 |
|
|
|
|
|
| |
|
Statement of Stockholders’ Equity |
|
|
F-6 |
|
|
|
|
|
| |
|
Notes to Financial Statements |
|
|
F-7 |
|
| F-1 |
|
Total Chartered Accountants |
|
TOTAL ASIA ASSOCIATES (AF 002128) (Registered with US PCAOB and Malaysia MIA} 106-2A, Jalan PJU l/3B, Sunway Mas Commercial Centre, 4730 1 Petaling Jaya, Selangor Darul Ehsan
Tel : (603)-7805 2850; Fax : (603)-7803 8 134 |
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders of
Talk Focus Sdn. Bhd.
We have audited the accompanying consolidated balance sheets of Talk Focus Sdn. Bhd. ("the Company") as of December 31, 2016 and 2015, the related statements of operations and comprehensive loss, cash flows and changes in stockholders' deficit for the years ended December 31, 2016 and 2015. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years ended December 31, 2016 and 2015, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has incurred continuous losses and has a capital deficit, all of which raise substantial doubt about its ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Total Asia Associates
TOTAL ASIA ASSOCIATES
Kuala Lumpur, Malaysia
Date: January 26, 2018
| F-2 |
TALK FOCUS SDN BHD
CONSOLIDATED BALANCE SHEETS
(Amount expressed in United States Dollars (“US$”), except for number of shares)
|
|
|
|
|
|
As of December 31, |
| |||||
|
|
|
Note |
|
|
2016 |
|
|
2015 |
| ||
|
ASSETS |
|
|
|
|
|
|
|
|
| ||
|
Current assets: |
|
|
|
|
|
|
|
|
| ||
|
Cash and cash equivalents |
|
|
|
|
$ | 352,238 |
|
|
$ | 464,274 |
|
|
Accounts receivables, net |
|
4 |
|
|
|
187,224 |
|
|
|
220,844 |
|
|
Other receivables, deposits and prepayments |
|
|
|
|
|
340,673 |
|
|
|
134,803 |
|
|
Inventories |
|
|
|
|
|
180,027 |
|
|
|
207,079 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
1,060,162 |
|
|
|
1,027,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
5 |
|
|
|
327,531 |
|
|
|
412,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
|
|
$ | 1,387,693 |
|
|
$ | 1,439,883 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payables, trade |
|
|
|
|
$ | 298,794 |
|
|
$ | 135,008 |
|
|
Amounts due to related parties |
|
|
|
|
|
7,233,417 |
|
|
|
6,836,719 |
|
|
Amount due to a director |
|
|
|
|
|
3,809 |
|
|
|
3,276 |
|
|
Current portion of obligation under finance lease |
|
6 |
|
|
|
15,790 |
|
|
|
1,301 |
|
|
Other payables and accrued liabilities |
|
|
|
|
|
764,583 |
|
|
|
850,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
8,316,393 |
|
|
|
7,827,244 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current portion of obligation under finance lease |
|
6 |
|
|
|
23,861 |
|
|
|
2,094 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
|
|
$ | 8,340,254 |
|
|
$ | 7,829,338 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit: |
|
|
|
|
|
|
|
|
|
|
|
|
Issued capital, US$0.2861 par value; 10,000,000 shares authorized; 10,000,000 shares issued and outstanding as of December 31, 2016 and 2015, respectively |
|
7 |
|
|
$ | 2,861,230 |
|
|
$ | 2,861,230 |
|
|
Accumulated other comprehensive income |
|
|
|
|
|
1,570,025 |
|
|
|
1,224,651 |
|
|
Accumulated deficit |
|
|
|
|
|
(11,362,262 | ) |
|
|
(10,475,336 | ) |
|
Total stockholders’ deficit |
|
|
|
|
|
(6,931,007 | ) |
|
|
(6,389,455 | ) |
|
Non-controlling interests |
|
|
|
|
|
(21,554 | ) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deficit |
|
|
|
|
|
(6,952,561 | ) |
|
|
(6,389,455 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND DEFICIT |
|
|
|
|
$ | 1,387,693 |
|
|
$ | 1,439,883 |
|
See accompanying notes to consolidated financial statements.
| F-3 |
TALK FOCUS SDN BHD
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Amount expressed in United States Dollars (“US$”), except for number of shares)
|
|
|
|
|
|
|
Years ended December 31, |
| |||||
|
|
|
|
Note |
|
|
2016 |
|
|
2015 |
| ||
|
|
|
|
|
|
|
|
|
|
|
| ||
|
Revenues, net |
|
|
|
|
|
$ | 1,476,235 |
|
|
$ | 1,868,693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
(784,652 | ) |
|
|
(1,964,871 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss) |
|
|
|
|
|
|
691,583 |
|
|
|
(96,178 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
(1,602,245 | ) |
|
|
(1,717,314 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
|
|
|
|
(910,662 | ) |
|
|
(1,813,492 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
(1,370 | ) |
|
|
(270 | ) |
|
Other income |
|
|
|
|
|
|
3,433 |
|
|
|
4,567 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
|
|
|
|
(908,599 | ) |
|
|
(1,809,195 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
8 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
|
|
|
|
$ | (908,599 | ) |
|
$ | (1,809,195 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to non-controlling interests |
|
|
|
|
|
|
21,673 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to the Company |
|
|
|
|
|
$ | (886,926 | ) |
|
$ | (1,809,195 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
|
|
| -Foreignexchangeadjustmentgain |
|
|
|
|
|
|
345,374 |
|
|
|
1,224,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS |
|
|
|
|
|
$ | (541,552 | ) |
|
$ | (584,544 | ) |
See accompanying notes to consolidated financial statements.
| F-4 |
TALK FOCUS SDN BHD
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amount expressed in United States Dollars (“US$”))
|
|
|
Years ended December 31 |
| |||||
|
|
|
2016 |
|
|
2015 |
| ||
|
Cash flows from operating activities: |
|
|
|
|
|
| ||
|
Net loss |
|
$ | (908,599 | ) |
|
$ | (1,809,195 | ) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
|
|
216,097 |
|
|
|
198,152 |
|
|
Bad debts written off |
|
|
1,604 |
|
|
|
- |
|
|
Deposits written off |
|
|
13,390 |
|
|
|
- |
|
|
Plant and equipment written off |
|
|
205 |
|
|
|
1,247 |
|
|
Loss /(gain) on disposal of plant and equipment |
|
|
22 |
|
|
|
(466 | ) |
|
Operating loss before working capital changes |
|
|
(677,281 | ) |
|
|
(1,610,262 | ) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Inventories |
|
|
27,052 |
|
|
|
82,925 |
|
|
Accounts receivable, net |
|
|
(157,256 | ) |
|
|
(105,178 | ) |
|
Accounts payable, other payables and accrued liabilities |
|
|
77,429 |
|
|
|
(1,597,158 | ) |
|
Net cash used in operating activities |
|
|
(730,056 | ) |
|
|
(3,229,673 | ) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(88,469 | ) |
|
|
(157,920 | ) |
|
Proceeds from disposal of plant and equipment |
|
|
724 |
|
|
|
2,065 |
|
|
Net cash used in investing activities |
|
|
(87,745 | ) |
|
|
(155,855 | ) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Advances from/ (Repayment to) directors |
|
|
533 |
|
|
|
(33,404 | ) |
|
Advances from related parties |
|
|
396,698 |
|
|
|
3,369,726 |
|
|
Payments on finance lease |
|
|
(8,327 | ) |
|
|
(1,328 | ) |
|
Net cash from financing activities |
|
|
388,904 |
|
|
|
3,334,994 |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
316,861 |
|
|
|
109,139 |
|
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS |
|
|
(112,036 | ) |
|
|
58,605 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR |
|
|
464,274 |
|
|
|
405,669 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF YEAR |
|
$ | 352,238 |
|
|
$ | 464,274 |
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
||||||||
|
Cash paid for interest |
|
$ | 1,370 |
|
|
$ | 270 |
|
|
Cash paid for tax |
|
$ | - |
|
|
$ | - |
|
See accompanying notes to consolidated financial statements.
| F-5 |
TALK FOCUS SDN BHD
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amount expressed in United States Dollars (“US$”), except for number of shares)
|
|
|
Common stock |
|
|
Accumulated other |
|
|
|
|
|
Talk Focus |
|
|
Non- |
|
|
|
| ||||||||||
|
|
|
No. of |
|
|
Amount |
|
|
comprehensive income |
|
|
Accumulated deficit |
|
|
stockholders’ deficit |
|
|
controlling interests |
|
|
Total deficit |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
Balance as of December 31, 2014 |
|
|
10,000,000 |
|
|
$ | 2,861,230 |
|
|
$ | - |
|
|
$ | (8,666,141 | ) |
|
$ | (5,804,911 | ) |
|
$ | - |
|
|
$ | (5,804,911 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1,809,195 | ) |
|
|
(1,809,195 | ) |
|
|
- |
|
|
|
(1,809,195 | ) |
|
Foreign currency translation adjustment |
|
|
- |
|
|
|
- |
|
|
|
1,224,651 |
|
|
|
- |
|
|
|
1,224,651 |
|
|
|
- |
|
|
|
1,224,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2015 |
|
|
10,000,000 |
|
|
$ | 2,861,230 |
|
|
$ | 1,224,651 |
|
|
$ | (10,475,336 | ) |
|
$ | (6,389,455 | ) |
|
$ | - |
|
|
$ | (6,389,455 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(886,926 | ) |
|
|
(886,926 | ) |
|
|
(21,673 | ) |
|
|
(908,599 | ) |
|
Foreign currency translation adjustment |
|
|
- |
|
|
|
- |
|
|
|
345,374 |
|
|
|
- |
|
|
|
345,374 |
|
|
|
- |
|
|
|
345,374 |
|
|
Acquisition of subsidiary with non-controlling interest |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
119 |
|
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2016 |
|
|
10,000,000 |
|
|
$ | 2,861,230 |
|
|
$ | 1,570,025 |
|
|
$ | (11,362,262 | ) |
|
$ | (6,931,007 | ) |
|
$ | (21,554 | ) |
|
$ | (6,952,561 | ) |
See accompanying notes to consolidated financial statements.
| F-6 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
1. ORGANIZATION AND BUSINESS BACKGROUND
Talk Focus Sdn Bhd (“Talk Focus” or the “Company”) was incorporated and registered as a private limited liability company in Malaysia on November 10, 2006. The Company is organized for investment holding and its principal place of operation is located at K-2-8, 2nd floor, Kuchai Business Park, Jalan 1/127, off Jalan Kuchai Lama, 58200 Kuala Lumpur.
Currently, the Company, through its subsidiaries, is principally engaged in the provision of telecommunication related services in Malaysia.
Pursuant to its Memorandum and Articles of Association, the authorized issued capital is 10,000,000 Malaysian Ringgit, denoted by MYR, representing the number of 10,000,000 shares with a par value of MYR1 (equivalent to US$0.2861).
The Company’s fiscal year end is December 31.
Summary of the Company’s subsidiaries
|
Name of entities |
|
Place of |
|
Date of |
|
Issued |
|
Nature of |
|
Equity interests owned by the Company |
| ||
|
|
| ||||||||||||
|
1. |
|
Technology Revolution On Net Distribution Sdn. Bhd. |
|
Malaysia |
|
July 11, 2011 |
|
100 issued shares of ordinary shares of MYR 1 each |
|
Dormant |
|
100 |
% |
|
|
| ||||||||||||
|
2. |
|
Technology Revolution On Net Marketing Sdn. Bhd. |
|
Malaysia |
|
July 11, 2011 |
|
100 issued shares of ordinary shares of MYR 1 each |
|
Dormant |
|
100 |
% |
|
|
| ||||||||||||
|
3. |
|
Technology Revolution On Net System Sdn. Bhd. |
|
Malaysia |
|
December 12, 2011 |
|
100 issued shares of ordinary shares of MYR 1 each |
|
Dormant |
|
100 |
% |
|
|
| ||||||||||||
|
4. |
|
TF Learning Centre Sdn. Bhd. |
|
Malaysia |
|
March 18, 2016 |
|
2 issued shares of ordinary shares of MYR 1 each |
|
Dormant |
|
100 |
% |
|
|
| ||||||||||||
|
5. |
|
Tronexus Global Sdn. Bhd. |
|
Malaysia |
|
April 13, 2016 |
|
1,000 issued shares of ordinary shares of MYR 1 each |
|
Sales of prepaid sim-cards, reload coupons and other related products through a referral program module |
|
51 |
% |
Talk Focus and its subsidiaries are hereinafter referred to as (the “Company”).
| F-7 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
2. GOING CONCERN UNCERTAINTY
The accompanying consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
For the year ended December 31, 2016, the Company reported a net loss of $886,926 and working capital deficit of $7,256,231 as of December 31, 2016. The Company had total stockholders’ deficit of $6,931,007 as of December 31, 2016 from recurring losses and significant short-term debt obligations maturing in less than one year. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon improving the profitability and the continuing financial support from its stockholders or other capital sources. Management believes that the continuing financial support from the existing shareholders or external debt financing will provide the additional cash to meet the Company’s obligations as they become due.
These consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
·
Basis of presentation
These accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
·
Use of estimates
In preparing these consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the years reported. Actual results may differ from these estimates.
·
Basis of consolidation
The consolidated financial statements include the accounts of Talk Focus and its subsidiaries. All significant inter-company balances and transactions between the Company and its subsidiaries have been eliminated upon consolidation.
During the year, the Company has acquired for 51% equity interests in Tronexus Global Sdn. Bhd. comprising 510 ordinary shares of MYR 1 each.
| · | Cash and cash equivalents |
Cash and cash equivalents represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
| F-8 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
| · | Accounts receivable |
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and determined based on managements’ assessment of known requirements, aging of receivables, payment history, the customer’s current credit worthiness and the economic environment. The Company considers the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.
·
Property, plant and equipment
Property and plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:
|
Categories |
|
Expected |
|
|
Furniture and fittings |
|
5 years |
|
|
Hostel, shop and office equipment |
|
5 years |
|
|
Computer software and equipment |
|
5 years |
|
|
Motor vehicles |
|
5 years |
|
|
Signboard |
|
10 years |
|
|
Renovation |
|
5 years |
|
Expenditure for maintenance and repairs is expensed as incurred. The gain or loss on the disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the statement of operations.
·
Impairment of long-lived assets
Long-lived assets primarily include goodwill and property, plant and equipment. In accordance with the provision of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually in the fourth quarter of each fiscal year, or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate. The recoverability of long-lived assets is measured at the lowest level group. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There has been no impairment charge for the years presented.
·
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”.
| F-9 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
| · | Revenue recognition |
The Company recognizes its revenue in accordance with ASC Topic 605, “Revenue Recognition”, upon the delivery of its products when: (1) title and risk of loss are transferred; (2) persuasive evidence of an arrangement exists; (3) there are no continuing obligations to the customer; and (4) the collection of related accounts receivable is reasonably assured. The Company’s sale arrangements do not contain general rights of return.
Prepaid telecom revenues are collected by its distributors and/or resellers through the sale of our branded prepaid or reload cards, which are sold in a form of SIM/reload cards to its final customers through its distributors and/or resellers. The sale of SIM, prepaid or reload cards is recognized as revenue when the products are delivered to its distributors and/or resellers, based upon their request. Prepaid cards will expire two years after the date of card production if they have never been activated. The proceeds from the expired cards are recognized as revenue upon expiration of cards.
·
Cost of revenues
Cost of revenue consists primarily of cost of SIM and prepaid/reload cards, telecommunication services and traffic charges which are directly attributable to the delivery of telecom service upon the activation of prepaid and/or reload cards.
·
Comprehensive income
ASC Topic 220, “Comprehensive Income” establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statements of stockholders’ equity consists of changes in unrealized gains and losses on foreign currency translation and cumulative net change in the fair value of available-for-sale investments held at the balance sheet date. This comprehensive income is not included in the computation of income tax expense or benefit.
·
Non-controlling interests
Non-controlling interests represent the equity interest in the capital contributions, income and loss of less than wholly-owned and consolidated entities that is not attributable to the Company.
·
Income tax expense
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 years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
The Company conducts major businesses in Malaysia and Indonesia and is subject to tax in their own jurisdictions. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the local and foreign tax authorities.
| F-10 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
·
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 statement of operations.
The functional currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the Company maintains its books and record in a local currency, Malaysian Ringgit (“MYR” or “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.
Translation of amounts from the local currency of the Company into US$1 has been made at the following exchange rates for the respective years:
|
|
|
As of and for the year ended |
| |||||
|
|
|
2016 |
|
|
2015 |
| ||
|
Year-end MYR : US$1 exchange rate |
|
|
4.4860 |
|
|
|
4.2920 |
|
|
Yearly average MYR : US$1 exchange rate |
|
|
4.1450 |
|
|
|
3.9411 |
|
·
Retirement plan costs
Contributions to retirement schemes (which are defined contribution plans) are charged to general and administrative expenses in the statements of operation and comprehensive loss as and when the related employee service is provided.
·
Related parties
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
·
Segment reporting
ASC Topic 280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organization structure as well as information about geographical areas, business segments and major customers in financial statements. During the years ended December 31, 2016 and 2015, the Company operates in one reportable operating segment in Malaysia.
·
Fair value of financial instruments
The carrying value of the Company’s financial instruments (excluding obligation under finance lease): cash and cash equivalents, time deposits, accounts receivable, deposits and other receivables, amount due to related parties and other payables approximate at their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of its obligation under finance lease approximates the carrying amount.
| F-11 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
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 |
As of December 31, 2016 and 2015, the Company did not have any nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Company have any assets or liabilities measured at fair value on a non-recurring basis.
·
Recent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
In April 2014, the FASB issued ASU 2014-08 “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity”, which changes the threshold for reporting discontinued operations and adds new disclosures. The new guidance defines a discontinued operation as a disposal that “represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results.” The standard is required to be adopted by public business entities in annual periods beginning on or after December 15, 2014, and interim periods within those annual periods. Entities may “early adopt” the guidance for new disposals. The Company does not expect that the adoption will have a material impact on its consolidated financial statementsIn May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606)" which clarifies and improves the principles for recognizing revenue and develops a common revenue standard for United States generally accepted accounting principles (U.S. GAAP) and International Financial Reporting Standards (IFRS) that among other things, improves comparability of revenue recognition practices and provides more useful information to users of financial statements through improved disclosure requirements. The amendments in ASU 2014-09 are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date. The amendment in this ASU defers the effective date of ASU No. 2014-09 for all entities for 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 31, 2016, including interim reporting periods with that reporting period. The Company is currently reviewing the effect of this guidance on its revenue recognition.
In June 2014, the FASB issued ASU 2014-15, "Presentation of Financial Statements-Going concern (Subtopic 205-40) which provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. This guidance in ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not expect that the adoption will have a material impact on its consolidated financial statements.
In November 2014, FASB issued Accounting Standards Update No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity (a consensus of the FASB Emerging Issues Task Force).The amendments permit the use of the Fed Funds Effective Swap Rate (also referred to as the Overnight Index Swap Rate, or OIS) as a benchmark interest rate for hedge accounting purposes. Public business entities are required to implement the new requirements in fiscal years (and interim periods within those fiscal years) beginning after December 15, 2015. All other types of entities are required to implement the new requirements in fiscal years beginning after December 15, 2015, and interim periods beginning after December 15, 2016. The Company does not expect the adoption of ASU 2014-16 to have a material impact on its consolidated financial statements.
| F-12 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
In February 2015, the FASB issued ASU 2015-02 "Consolidation (Topic 810): Amendments to the Consolidation Analysis." ASU 2015-02 changes the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. It is effective for annual reporting periods, and interim periods within those years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. The Company is currently in the process of evaluating the impact of the adoption of ASU 2015-02 on its consolidated financial statements.
In April 2015, the FASB issued ASU 2015-03 “Simplifying the Presentation of Debt Issuance Costs”, which changes the presentation of debt issuance costs in the financial statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. The guidance is effective for annual reporting periods beginning after December 15, 2016, with early adoption permitted. The guidance will be applied retrospectively to each period presented. The adoption of this standard update is not expected to have any impact on the Company's financial statements.
In July 2015, the FASB issued ASU 2015-11, Inventory, which requires an entity to measure inventory within the scope at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The effective date for the standard is for fiscal years beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the adoption of ASU 2015-11 to have a material impact on its consolidated financial statements.
In September 2015, the FASB issued ASU No. 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments. To simplify the accounting for adjustments made to provisional amounts recognized in a business combination, the amendments eliminate the requirement to retrospectively account for those adjustments. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. For all other entities, the amendments in this update are effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments should be applied prospectively to adjustments to provisional amounts that occur after the effective date with earlier application permitted for financial statements that have not been issued. The Company does not expect the adoption of ASU 2015-16 to have a material impact on its consolidated financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption.
| F-13 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
4. ACCOUNT RECEIVABLES, NET
|
|
|
As of December 31, |
| |||||
|
|
|
2016 |
|
|
2015 |
| ||
|
|
|
|
|
|
|
| ||
|
Trade Receivables due from: |
|
|
|
|
|
| ||
|
Third parties |
|
$ | 78,010 |
|
|
$ | 107,230 |
|
|
Related parties |
|
|
109,214 |
|
|
|
113,614 |
|
|
|
|
$ | 187,224 |
|
|
$ | 220,844 |
|
5. PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consisted of the following:
|
|
|
As of December 31, |
| |||||
|
|
|
2016 |
|
|
2015 |
| ||
|
|
|
|
|
|
|
| ||
|
Furniture and fittings |
|
$ | 75,734 |
|
|
$ | 74,390 |
|
|
Hostel, shop and office equipment |
|
|
34,259 |
|
|
|
33,027 |
|
|
Computer software and equipment |
|
|
797,896 |
|
|
|
831,765 |
|
|
Motor vehicles |
|
|
119,766 |
|
|
|
8,155 |
|
|
Signboard |
|
|
8,512 |
|
|
|
8,081 |
|
|
Renovation |
|
|
55,866 |
|
|
|
50,405 |
|
|
|
|
|
1,092,033 |
|
|
|
1,005,823 |
|
|
Less: accumulated depreciation |
|
|
(752,376 | ) |
|
|
(496,483 | ) |
|
Less: foreign translation difference |
|
|
(12,126 | ) |
|
|
(96,457 | ) |
|
Property, plant and equipment, net |
|
$ | 327,531 |
|
|
$ | 412,883 |
|
Depreciation expense for the years ended December 31, 2016 and 2015 amounted to $216,097 and $198,152, respectively.
As of December 31, 2016, and 2015, the Company has motor vehicles under finance lease with a carrying value of $109,571 and $4,440, respectively.
| F-14 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
6. OBLIGATION UNDER FINANCE LEASE
The Company purchased motor vehicles under a finance lease agreement with the effective interest rate ranging from 2.74 to 3.30% (2015: 3.30%) per annum. The obligation under the finance lease is as follows:
|
|
|
As of December 31, |
| |||||
|
|
|
2016 |
|
|
2015 |
| ||
|
|
|
|
|
|
|
| ||
|
Finance lease |
|
$ | 42,303 |
|
|
$ | 3,659 |
|
|
Less: interest expense |
|
|
(2,652 | ) |
|
|
(264 | ) |
|
|
|
|
|
|
|
|
|
|
|
Net present value of finance lease |
|
$ | 39,651 |
|
|
$ | 3,395 |
|
|
|
|
|
|
|
|
|
|
|
|
Current portion |
|
$ | 15,790 |
|
|
$ | 1,301 |
|
|
Non-current portion |
|
|
23,861 |
|
|
|
2,094 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ | 39,651 |
|
|
$ | 3,395 |
|
As of December 31, 2016, the maturities of the finance lease for each of the three years are as follows:
|
Years ending December 31: |
|
|
| |
|
2017 |
|
$ | 15,790 |
|
|
2018 |
|
|
15,941 |
|
|
2019 |
|
|
7,920 |
|
|
|
|
|
|
|
|
Total |
|
$ | 39,651 |
|
7. STOCKHOLDERS’ EQUITY
As of December 31, 2016, and 2015, the number of shares of the Company’s stock issued and outstanding was 10,000,000 shares, at par value of US$0.2861.
| F-15 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
8. INCOME TAX EXPENSE
The foreign component of loss before income taxes were comprised of the following:
Provision for income taxes consisted of the following:
|
|
|
Years ended December 31, |
| |||||
|
|
|
2016 |
|
|
2015 |
| ||
|
|
|
|
|
|
|
| ||
|
Current |
|
$ | - |
|
|
$ | - |
|
|
Deferred |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | - |
|
|
$ | - |
|
The effective tax rate in the years presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rates. During the years presented, the Company has a number of subsidiaries that operates in different countries and is subject to tax in the jurisdictions in which it subsidiaries operate, as follows:
Malaysia
All of the Company’s subsidiaries operating in Malaysia are subject to the Malaysia Corporate Tax Laws at a progressive income tax rate of 19% (2015:20%) (for Company with paid up capital not more than RM2.5 million and on the first RM 500,000 income) and 24% (2015:25%) (on all income for Company with paid up capital more than RM2.5 million and on the remaining balance of income after the first RM500,000 income charged at 19% (2015:20%) for Company with paid up capital not more than RM2.5 million) on the assessable income for its tax year. A reconciliation of loss before income taxes to the effective tax rate as follows:
|
|
|
Years ended December 31, |
| |||||
|
|
|
2016 |
|
|
2015 |
| ||
|
|
|
|
|
|
|
| ||
|
Loss before income taxes |
|
$ | (908,599 | ) |
|
$ | (1,809,195 | ) |
|
Statutory income tax rate |
|
|
24 | % |
|
|
25 | % |
|
Income tax at statutory tax rate |
|
|
(218,064 | ) |
|
|
(452,299 | ) |
|
Non-deductible expenses |
|
|
179,134 |
|
|
|
9,843 |
|
|
Net operating loss carryforward |
|
|
38,930 |
|
|
|
442,456 |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
$ | - |
|
|
$ | - |
|
Unrecognised deferred tax assets at December 31, 2016 and 2015 are as follows:
|
|
|
As at December 31, |
| |||||
|
|
|
2016 |
|
|
2015 |
| ||
|
|
|
|
|
|
|
| ||
|
Unabsorbed capital allowances |
|
$ | 815,471 |
|
|
$ | 830,895 |
|
|
Unabsorbed loss carryforward |
|
|
7,609,541 |
|
|
|
7,442,615 |
|
|
|
|
|
8,425,012 |
|
|
|
8,273,510 |
|
|
Less: valuation allowance |
|
|
(8,425,012 | ) |
|
|
(8,273,510 | ) |
|
|
|
$ | - |
|
|
$ | - |
|
As of December 31, 2016 and 2015, the Company incurred unabsorbed capital allowances of $815,471 and unabsorbed tax losses of $7,609,541 which can be carried forward to offset future taxable income at no expiration. The Company has provided for a full valuation allowance against the deferred tax assets on the expected future tax benefits from the unabsorbed capital allowances and unabsorbed tax losses as the management believes it is more likely than not that these assets will not be realized in the future.
| F-16 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
9. PENSION PLAN
The Company is required to make contribution on behalf of its employees under a government-mandated defined contribution pension scheme for its eligible full-times employees in Malaysia. The Company is required to contribute a specified percentage of the participants’ relevant income based on their ages and wages level. The total contributions made by the Company were $70,085 and $96,028 for the years ended December 31, 2016 and 2015, respectively.
10. CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
(a) Major customers
There is no single customer who accounted for 10% or more of the Company’s sales during the years ended December 31, 2016 and 2015.
(b) Major vendors
For the years ended December 31, 2016 and 2015, the vendor who accounted for 10% or more of the Company’s purchases is presented as follows:
|
|
|
Year ended December 31, |
|
|
December 31, |
| ||||||
|
|
|
Purchase |
|
|
Percentage of purchase |
|
|
Trade accounts payable |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Vendor A |
|
$ | 715,280 |
|
|
|
96 | % |
|
$ | 155,156 |
|
|
|
|
Year ended December 31, |
|
|
December 31, |
| ||||||
|
|
|
Purchase |
|
|
Percentage of purchase |
|
|
Trade accounts payable |
| |||
|
|
|
|
|
|
|
|
|
|
| |||
|
Vendor A |
|
$ | 1,867,695 |
|
|
|
95 | % |
|
$ | 569,095 |
|
The vendor is located in Malaysia.
(c) Credit risk
Financial instruments that are potentially subject to credit risk consist principally of trade receivables. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.
(d) Interest rate risk
The Company’s exposure to interest rate risk primarily relates to the interest income generated from excess cash invested in time deposits, and interest expense incurred on finance leases. The Company has not used derivative financial instruments in its investment portfolio in order to reduce this risk. The Company has not been exposed nor does it anticipate being exposed to material risks due to changes in interest rates.
| F-17 |
TALK FOCUS SDN BHD
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
(e) Exchange rate risk
The reporting currency of the Company is US$. To date the majority of the revenues and costs are denominated in MYR, and a significant portion of the assets and liabilities are denominated in MYR. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$, MYR. If MYR depreciates against US$, the value of MYR revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.
(f) Economic and political risks
Substantially all of the Company’s services are conducted in Malaysia and Asian region. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in Malaysia. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations in Malaysia.
11. RELATED PARTIES TRANSACTIONS
|
|
|
As of
December 31, 2016 |
|
|
As of
December 31, 2015 |
| ||
|
|
|
|
|
|
|
| ||
|
Transaction with company in which a shareholder has substantial financial interest |
|
|
|
|
|
| ||
|
Sales |
|
$ | 742 |
|
|
$ | 40,822 |
|
|
Purchases |
|
|
- |
|
|
|
32,972 |
|
|
Advances received |
|
|
1,260,299 |
|
|
|
3,796,972 |
|
|
Repayment of advances |
|
|
545,772 |
|
|
|
228,363 |
|
These transactions are carried out at the commercial term in the normal course of business.
12. COMMITMENTS AND CONTINGENCIES
(a) Capital commitment
As of December 31, 2016, the Company does not have any significant capital commitments.
(b) Operating lease commitment
As of December 31, 2016, the Company has no significant future minimum rental payments due under various operating leases in the next twelve months.
13. 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 December 31, 2016 up through the issue date of these consolidated financial statements. During the period, the Company did not have any material recognizable subsequent events.
| F-18 |
EXHIBIT 99.2
TALK FOCUS SDN BHD
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
Page |
| |
|
|
|
|
| |
|
Condensed Consolidated Balance Sheets |
|
|
F-2 |
|
|
|
|
|
| |
|
Condensed Consolidated Statements of Operations and Comprehensive Loss |
|
|
F-3 |
|
|
|
|
|
| |
|
Condensed Consolidated Statements of Cash Flows |
|
|
F-4 |
|
|
|
|
|
| |
|
Condensed Consolidated Statement of Stockholders’ Equity |
|
|
F-5 |
|
|
|
|
|
| |
|
Notes to Condensed Consolidated Financial Statements |
|
|
F-6 |
|
| F-1 |
TALK FOCUS SDN BHD
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amount expressed in United States Dollars (“US$”), except for number of shares)
|
|
|
Note |
|
|
September 30, |
|
|
December 31, |
| ||
|
|
|
|
|
(Unaudited) |
|
|
(Audited) |
| |||
|
ASSETS |
|
|
|
|
|
|
|
|
| ||
|
Current assets: |
|
|
|
|
|
|
|
|
| ||
|
Cash and cash equivalents |
|
|
|
|
$ | 75,043 |
|
|
$ | 352,238 |
|
|
Accounts receivables |
|
5 |
|
|
|
274,545 |
|
|
|
187,224 |
|
|
Other receivables, deposits and prepayments |
|
|
|
|
|
722,716 |
|
|
|
340,673 |
|
|
Inventories |
|
|
|
|
|
429,003 |
|
|
|
180,027 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
|
|
|
1,501,307 |
|
|
|
1,060,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current asset: |
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net |
|
|
|
|
|
275,695 |
|
|
|
327,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
|
|
$ | 1,777,002 |
|
|
$ | 1,387,693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payables, trade |
|
|
|
|
$ | 240,875 |
|
|
$ | 298,794 |
|
|
Amounts due to a related company |
|
|
|
|
|
7,948,593 |
|
|
|
7,233,417 |
|
|
Amounts due to directors |
|
|
|
|
|
- |
|
|
|
3,809 |
|
|
Current portion of obligation under finance lease |
|
6 |
|
|
|
15,641 |
|
|
|
15,790 |
|
|
Other payables and accrued liabilities |
|
|
|
|
|
1,577,805 |
|
|
|
764,583 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
|
|
|
9,782,914 |
|
|
|
8,316,393 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term liability: |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current portion of obligation under finance lease |
|
6 |
|
|
|
12,532 |
|
|
|
23,861 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
|
|
$ | 9,795,446 |
|
|
$ | 8,340,254 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 11) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deficit: |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ deficit: |
|
|
|
|
|
|
|
|
|
|
|
|
Issued capital, US$0.2861 par value; 10,000,000 shares authorized; 10,000,000 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively |
|
7 |
|
|
$ | 2,861,230 |
|
|
$ | 2,861,230 |
|
|
Accumulated other comprehensive income |
|
|
|
|
|
1,121,616 |
|
|
|
1,570,025 |
|
|
Accumulated deficit |
|
|
|
|
|
(11,958,270 | ) |
|
|
(11,362,262 | ) |
|
Total stockholders’ deficit |
|
|
|
|
|
(7,975,424 | ) |
|
|
(6,931,007 | ) |
|
Non-controlling interest |
|
|
|
|
|
(43,020 | ) |
|
|
(21,554 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deficit |
|
|
|
|
|
(8,018,444 | ) |
|
|
(6,952,561 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND DEFICIT |
|
|
|
|
$ | 1,777,002 |
|
|
$ | 1,387,693 |
|
See accompanying notes to condensed consolidated financial statement
| F-2 |
TALK FOCUS SDN BHD
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Amount expressed in United States Dollars (“US$”), except for number of shares)
|
|
|
|
|
|
|
Three Months ended Sept 30 |
|
|
Nine Months ended |
| ||||||||||
|
|
|
|
Note |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Revenues, net |
|
|
|
|
|
$ | 338,394 |
|
|
$ | 313,507 |
|
|
$ | 1,375,276 |
|
|
$ | 1,003,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues |
|
|
|
|
|
|
(192,935 | ) |
|
|
(170,510 | ) |
|
|
(1,131,755 | ) |
|
|
(733,088 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross (loss) profit |
|
|
|
|
|
|
145,459 |
|
|
|
142,997 |
|
|
|
243,521 |
|
|
|
270,215 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
(255,144 | ) |
|
|
(404,130 | ) |
|
|
(869,033 | ) |
|
|
(1,091,632 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
|
|
|
|
(109,685 | ) |
|
|
(261,133 | ) |
|
|
(625,512 | ) |
|
|
(821,417 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
|
|
|
|
(588 | ) |
|
|
(673 | ) |
|
|
(1,403 | ) |
|
|
(772 | ) |
|
Other income |
|
|
|
|
|
|
9,304 |
|
|
|
46 |
|
|
|
9,441 |
|
|
|
2,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income taxes |
|
|
|
|
|
|
(100,969 | ) |
|
|
(261,760 | ) |
|
|
(617,474 | ) |
|
|
(819,914 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
8 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS |
|
|
|
|
|
$ | (100,969 | ) |
|
$ | (261,760 | ) |
|
$ | (617,474 | ) |
|
$ | (819,914 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to non-controlling interests |
|
|
|
|
|
|
23,473 |
|
|
|
- |
|
|
|
21,466 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable to the Company |
|
|
|
|
|
$ | (77,496 | ) |
|
$ | (261,760 | ) |
|
$ | (596,008 | ) |
|
$ | (819,914 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| -Foreignexchangeadjustment(loss)income |
|
|
|
|
|
|
(218,907 | ) |
|
|
395,286 |
|
|
|
(448,409 | ) |
|
|
(212,306 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE (LOSS) PROFIT |
|
|
|
|
|
$ | (296,403 | ) |
|
$ | 133,526 |
|
|
$ | (1,044,417 | ) |
|
$ | (1,032,220 | ) |
See accompanying notes to condensed consolidated financial statements.
| F-3 |
TALK FOCUS SDN BHD
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amount expressed in United States Dollars (“US$”))
|
|
|
Nine Months ended |
| |||||
|
|
|
2017 |
|
|
2016 |
| ||
|
Cash flows from operating activities: |
|
|
|
|
|
| ||
|
Net loss |
|
$ | (617,474 | ) |
|
$ | (819,915 | ) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
|
|
86,961 |
|
|
|
163,005 |
|
|
Plant and equipment written off |
|
|
- |
|
|
|
60 |
|
|
Loss on disposal of property, plant and equipment |
|
|
- |
|
|
|
171 |
|
|
Operating loss before working capital changes |
|
|
(530,513 | ) |
|
|
(656,679 | ) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Accounts receivables |
|
|
(469,364 | ) |
|
|
(790,742 | ) |
|
Trade and other payables |
|
|
755,303 |
|
|
|
799,686 |
|
|
Inventories |
|
|
(248,976 | ) |
|
|
41,424 |
|
|
Net cash used in operating activities |
|
|
(493,550 | ) |
|
|
(606,311 | ) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
|
(16,842 | ) |
|
|
(140,176 | ) |
|
Proceeds from disposal of plant and equipment |
|
|
- |
|
|
|
738 |
|
|
Net cash used in investing activities |
|
|
(16,842 | ) |
|
|
(139,438 | ) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
(Repayment)/Advances to directors |
|
|
(3,809 | ) |
|
|
(3,276 | ) |
|
Advances from related parties |
|
|
715,176 |
|
|
|
798,145 |
|
|
Placement of time deposits |
|
|
- |
|
|
|
(10,292 | ) |
|
Payments on finance lease |
|
|
(11,478 | ) |
|
|
43,742 |
|
|
Net cash provided by financing activities |
|
|
699,889 |
|
|
|
828,319 |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
(466,692 | ) |
|
|
(132,529 | ) |
|
|
|
|
|
|
|
|
|
|
|
NET CHANGE IN CASH AND CASH EQUIVALENTS |
|
|
(277,193 | ) |
|
|
(49,959 | ) |
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
|
352,238 |
|
|
|
173,034 |
|
|
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
|
$ | 75,043 |
|
|
$ | 123,075 |
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
|
|
|
|
|
Cash paid for income tax |
|
$ | - |
|
|
$ | - |
|
|
Cash paid for interest |
|
$ | 1,324 |
|
|
$ | 772 |
|
See accompanying notes to condensed consolidated financial statements
| F-4 |
TALK FOCUS SDN BHD
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amount expressed in United States Dollars (“US$”), except for number of shares)
|
|
|
Common stock |
|
|
Accumulated other comprehensive |
|
|
Accumulated |
|
|
Total Talk |
|
|
Non- |
|
|
Total |
| ||||||||||
|
|
|
No. of share |
|
|
Amount |
|
|
income |
|
|
deficit |
|
|
deficit |
|
|
interests |
|
|
deficit |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
|
Balance as of January 1, 2017 |
|
|
10,000,000 |
|
|
$ | 2,861,230 |
|
|
$ | 1,570,025 |
|
|
$ | (11,362,262 | ) |
|
$ | (6,931,007 | ) |
|
$ | (21,554 | ) |
|
$ | (6,952,561 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(596,008 | ) |
|
|
(596,008 | ) |
|
|
(21,466 | ) |
|
|
(617,474 | ) |
|
Foreign currency translation adjustment |
|
|
- |
|
|
|
- |
|
|
|
(448,409 | ) |
|
|
- |
|
|
|
(448,409 | ) |
|
|
- |
|
|
|
(448,409 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of September 30, 2017 |
|
|
10,000,000 |
|
|
$ | 2,861,230 |
|
|
$ | 1,121,616 |
|
|
$ | (11,958,270 | ) |
|
$ | (7,975,424 | ) |
|
$ | (43,020 | ) |
|
$ | (8,018,444 | ) |
See accompanying notes to condensed consolidated financial statements.
| F-5 |
TALK FOCUS SDN BHD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
(Unaudited)
NOTE 1 – BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”), and the instructions to Rule 10-01 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 balance sheet as of December 31, 2016 which has been derived from the audited financial statements and these unaudited condensed financial statements reflect all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period ended June 31, 2017 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2017 or for any future period.
These unaudited financial statements and notes thereto should be read in conjunction with the audited financial statements for the year ended December 31, 2016.
NOTE 2 – ORGANIZATION AND BUSINESS BACKGROUND
TALK FOCUS Sdn Bhd (“Talk Focus” or “the Company”) was incorporated and registered as a private limited liability company in Malaysia on November 10, 2006. The Company is organized for investment holding and its principal place of operation is located at K-2-8, 2nd floor, Kuchai Business Park, Jalan 1/127, off Jalan Kuchai Lama, 58200 Kuala Lumpur.
Currently, the Company, through its subsidiaries, is principally engaged in the provision of telecommunication related services in Malaysia.
Pursuant to its Memorandum and Articles of Association, the authorized issued capital is 10,000,000 Malaysian Ringgit, denoted by MYR, representing the number of 10,000,000 shares with a par value of MYR1 (equivalent to $0.2861).
The Company’s fiscal year end is December 31.
Summary of the Company’s subsidiaries
|
Name of entities |
|
Place of |
|
Date of |
|
Issued |
|
Nature of |
|
Equity interests owned by the Company |
| ||
|
|
| ||||||||||||
|
1. |
|
Technology Revolution On Net Distribution Sdn. Bhd. (Tron Distribution) |
|
Malaysia |
|
July 11, 2011 |
|
100 issued shares of ordinary shares of MYR 1 each |
|
Dormant |
|
100 |
% |
|
|
| ||||||||||||
|
2. |
|
Technology Revolution On Net Marketing Sdn. Bhd. (Tron Marketing) |
|
Malaysia |
|
July 11, 2011 |
|
100 issued shares of ordinary shares of MYR 1 each |
|
Dormant |
|
100 |
% |
| F-6 |
TALK FOCUS SDN BHD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
(Unaudited)
|
Name of entities |
Place of |
|
Date of |
|
Issued |
|
Nature of |
|
Equity interests owned by the Company |
| |||
|
|
| ||||||||||||
|
3. |
|
Technology Revolution On Net System Sdn. Bhd. |
|
Malaysia |
|
December 12, 2011 |
|
100 issued shares of ordinary shares of MYR 1 each |
|
Dormant |
|
100 |
% |
|
|
| ||||||||||||
|
4. |
|
TF Learning Centre Sdn. Bhd. |
|
Malaysia |
|
March 18, 2016 |
|
2 issued shares of ordinary shares of MYR 1 each |
|
Dormant |
|
100 |
% |
|
|
| ||||||||||||
|
5. |
|
Tronexus Global Sdn. Bhd |
|
Malaysia |
|
April 13, 2016 |
|
1,000 issued shares of ordinary shares of MYR 1 each |
|
Sales of prepaid sim-cards, reload coupons and other related products through a referral program module |
|
51 |
% |
Talk Focus and its subsidiaries are hereinafter referred to as (the “Company”).
NOTE 3 – GOING CONCERN UNCERTAINTY
The accompanying condensed consolidated financial statements have been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.
For the period ended September 30, 2017, the Company reported a net loss of $617,474 and working capital deficit of $8,281,609 as of September 30, 2017. The Company had total stockholders’ deficit of $7,975,424 as of September 30, 2017 from recurring losses and significant short-term debt obligations maturing in less than one year. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The continuation of the Company as a going concern is dependent upon improving the profitability and the continuing financial support from its stockholders or other capital sources. Management believes that the continuing financial support from the existing shareholders or external debt financing will provide the additional cash to meet the Company’s obligations as they become due.
These condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being able to continue as a going concern.
NOTE 4 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying condensed financial statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed financial statements and notes.
| · | Basis of presentation |
These accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
| F-7 |
TALK FOCUS SDN BHD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
(Unaudited)
| · | Use of estimates |
In preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheets and revenues and expenses during the periods reported. Actual results may differ from these estimates.
| · | Basis of consolidation |
The condensed consolidated financial statements include the accounts of Talk Focus and its subsidiaries. All significant inter-company balances and transactions between the Company and its subsidiaries have been eliminated upon consolidation.
| · | Cash and cash equivalents |
Cash and cash equivalents represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
| · | Accounts receivable |
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and determined based on managements’ assessment of known requirements, aging of receivables, payment history, the customer’s current credit worthiness and the economic environment. The Company considers the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.
| · | Property, plant and equipment |
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational:
|
Categories |
|
Expected |
|
|
Furniture and fittings |
|
5 years |
|
|
Hostel, shop and office equipment |
|
5 years |
|
|
Computer software and equipment |
|
5 years |
|
|
Motor vehicles |
|
5 years |
|
|
Signboard |
|
10 years |
|
|
Renovation |
|
5 years |
|
Expenditure for maintenance and repairs is expensed as incurred. The gain or loss on the disposal of property, plant and equipment is the difference between the net sales proceeds and the carrying amount of the relevant assets and is recognized in the statement of operations.
Depreciation expense for the nine months ended September 30, 2017 and 2016 amounted to $89,961 and $163,005, respectively.
| F-8 |
TALK FOCUS SDN BHD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
(Unaudited)
| · | Impairment of long-lived assets |
Long-lived assets primarily include goodwill and property, plant and equipment. In accordance with the provision of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, the Company generally conducts its annual impairment evaluation to its long-lived assets, usually in the fourth quarter of each fiscal year, or more frequently if indicators of impairment exist, such as a significant sustained change in the business climate. The recoverability of long-lived assets is measured at the lowest level group. If the total of the expected undiscounted future net cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between the fair value and carrying amount of the asset. There has been no impairment charge for the periods presented.
| · | 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”.
| · | Revenue recognition |
The Company recognizes its revenue in accordance with ASC Topic 605, “Revenue Recognition”, upon the delivery of its products when: (1) title and risk of loss are transferred; (2) persuasive evidence of an arrangement exists; (3) there are no continuing obligations to the customer; and (4) the collection of related accounts receivable is reasonably assured. The Company’s sale arrangements do not contain general rights of return.
Prepaid telecom revenues are collected by its distributors and/or resellers through the sale of our branded prepaid or reload cards, which are sold in a form of SIM/reload cards to its final customers through its distributors and/or resellers. The sale of SIM, prepaid or reload cards is recognized as revenue when the products are delivered to its distributors and/or resellers, based upon their request. Prepaid cards will expire two years after the date of card production if they have never been activated. The proceeds from the expired cards are recognized as revenue upon expiration of cards.
| · | Cost of revenues |
Cost of revenue consists primarily of cost of SIM and prepaid/reload cards, telecommunication services and traffic charges which are directly attributable to the delivery of telecom service upon the activation of prepaid and/or reload cards.
| · | Comprehensive income |
ASC Topic 220, “Comprehensive Income” establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying statements of stockholders’ equity consists of changes in unrealized gains and losses on foreign currency translation and cumulative net change in the fair value of available-for-sale investments held at the balance sheet date. This comprehensive income is not included in the computation of income tax expense or benefit.
| F-9 |
TALK FOCUS SDN BHD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
(Unaudited)
| · | Non-controlling interests |
Non-controlling interests represent the equity interest in the capital contributions, income and loss of less than wholly-owned and consolidated entities that is not attributable to the Company.
| · | Income tax expense |
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 years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
The Company conducts major businesses in Malaysia and Indonesia and is subject to tax in their own jurisdictions. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the local and foreign tax authorities.
| · | 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 statement of operations.
The functional currency of the Company is the United States Dollars (“US$”) and the accompanying financial statements have been expressed in US$. In addition, the Company maintains its books and record in a local currency, Malaysian Ringgit (“MYR” or “RM”), which is functional currency as being the primary currency of the economic environment in which the entity operates.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ 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.
Translation of amounts from the local currency of the Company into US$1 has been made at the following exchange rates for the respective periods:
|
|
|
As of and for the year ended |
| |||||
|
|
|
2017 |
|
|
2016 |
| ||
|
Period-end MYR : US$1 exchange rate |
|
|
4.2275 |
|
|
|
4.1455 |
|
|
Period average MYR : US$1 exchange rate |
|
|
4.3327 |
|
|
|
4.0649 |
|
| F-10 |
TALK FOCUS SDN BHD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
(Unaudited)
| · | Related parties |
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
| · | 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. During the periods ended September 30, 2017 and 2016, the Company operates in one reportable operating segment in Malaysia.
| · | Fair value of financial instruments |
The carrying value of the Company’s financial instruments (excluding obligation under finance lease): cash and cash equivalents, time deposits, accounts receivable, deposits and other receivables, amount due to related parties and other payables approximate at their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices or interest rates for similar debt instruments, the fair value of its obligation under finance lease approximates the carrying amount.
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 |
As of September 30, 2017, the Company did not have any nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements, at least annually, on a recurring basis, nor did the Company have any assets or liabilities measured at fair value on a non-recurring basis.
| · | Recent accounting pronouncements |
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
| F-11 |
TALK FOCUS SDN BHD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
(Unaudited)
NOTE 5- ACCOUNTS RECEIVABLES
|
|
|
|
September 30, |
|
|
December 31, |
| ||
|
|
|
|
|
|
(Audited) |
| |||
|
Trade receivables due from: |
|
|
|
|
|
| |||
|
-Third parties |
|
|
$ | 150,578 |
|
|
$ | 78,010 |
|
|
-Related parties |
|
|
|
123,967 |
|
|
|
109,214 |
|
|
|
|
|
$ | 274,545 |
|
|
$ | 187,224 |
|
NOTE 6 – OBLIGATION UNDER FINANCE LEASE
The Company purchased motor vehicles under a finance lease agreement with the effective interest rates ranging from 2.74% to 3.30% per annum. The obligation under the finance lease is as follows:
|
|
|
September 30, |
|
|
December 31, |
| ||
|
|
|
|
|
|
(Audited) |
| ||
|
Finance lease |
|
$ | 29,548 |
|
|
$ | 42,303 |
|
|
Less: interest expense |
|
|
(1,375 | ) |
|
|
(2,652 | ) |
|
|
|
|
|
|
|
|
|
|
|
Net present value of finance lease |
|
$ | 28,173 |
|
|
$ | 39,651 |
|
|
|
|
|
|
|
|
|
|
|
|
Current portion |
|
$ | 15,641 |
|
|
$ | 15,790 |
|
|
Non-current portion |
|
|
12,532 |
|
|
|
23,861 |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ | 28,173 |
|
|
$ | 39,651 |
|
|
Years ending September 30: |
|
|
| |
|
2017 |
|
$ | 15,641 |
|
|
2018 |
|
|
12,532 |
|
|
|
|
|
|
|
|
Total |
|
$ | 28,173 |
|
| F-12 |
TALK FOCUS SDN BHD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
(Unaudited)
NOTE 7 – STOCKHOLDERS’ EQUITY
As of September 30, 2017, the number of shares of the Company’s stock issued and outstanding was 10,000,000 shares, at par value of US$0.2861.
NOTE 8 – INCOME TAX EXPENSE
Malaysia
All of the Company’s subsidiaries operating in Malaysia are subject to the Malaysia Corporate Tax Laws at a progressive income tax rate of 18% (for Company with paid up capital not more than RM2.5 million and on the first RM 500,000 income) and 24% (on all income for Company with paid up capital more than RM2.5 million and on the remaining balance of income after the first RM500,000 income charged at 18% for Company with paid up capital not more than RM2.5 million) on the assessable income for its tax year. A reconciliation of loss before income taxes to the effective tax rate as follows:
|
|
|
Nine Months ended |
| |||||
|
|
|
2017 |
|
|
2016 |
| ||
|
|
|
|
|
|
|
| ||
|
Loss before income taxes |
|
$ | (617,474 | ) |
|
$ | (819,914 | ) |
|
Statutory income tax rate |
|
|
24 | % |
|
|
24 | % |
|
Income tax at statutory tax rate |
|
|
(148,194 | ) |
|
|
(196,779 | ) |
|
Net operating loss carryforward |
|
|
148,194 |
|
|
|
196,779 |
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
$ | - |
|
|
$ | - |
|
NOTE 9 – CONCENTRATIONS OF RISK
The Company is exposed to the following concentrations of risk:
(a) Major customers
There is no single customer who accounted for 10% or more of the Company’s sales during the nine months ended September 30, 2017 and 2016. All customers are located in Malaysia.
| F-13 |
TALK FOCUS SDN BHD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
(Unaudited)
(b) Major vendors
For the nine months ended September 30, 2017 and 2016, the vendor who accounted for 10% or more of the Company’s purchases is presented as follows:
|
|
|
Nine Months ended |
|
|
September 30, |
| ||||||
|
|
|
Purchase |
|
|
Percentage of purchase |
|
|
Trade accounts payable |
| |||
|
Vendor A |
|
$ | 902,352 |
|
|
|
95 | % |
|
$ | 154,164 |
|
|
|
|
Nine Months ended |
|
|
September 30, |
| ||||||
|
|
|
Purchase |
|
|
Percentage of purchase |
|
|
Trade accounts payable |
| |||
|
Vendor A |
|
$ | 679,310 |
|
|
|
92 | % |
|
$ | 271,165 |
|
The vendor is located in Malaysia
(c) Credit risk
Financial instruments that are potentially subject to credit risk consist principally of trade receivables. The Company believes the concentration of credit risk in its trade receivables is substantially mitigated by its ongoing credit evaluation process and relatively short collection terms. The Company does not generally require collateral from customers. The Company evaluates the need for an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends and other information.
(d) Interest rate risk
The Company’s exposure to interest rate risk primarily relates to the interest income generated from excess cash invested in time deposits, and interest expense incurred on finance leases. The Company has not used derivative financial instruments in its investment portfolio in order to reduce this risk. The Company has not been exposed nor does it anticipate being exposed to material risks due to changes in interest rates.
(e) Exchange rate risk
The reporting currency of the Company is US$. To date the majority of the revenues and costs are denominated in MYR, and a significant portion of the assets and liabilities are denominated in MYR. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between US$, MYR. If MYR depreciates against US$, the value of MYR revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial instruments that expose to substantial market risk.
(f) Economic and political risks
Substantially all of the Company’s services are conducted in Malaysia and Asian region. The Company’s operations are subject to various political, economic, and other risks and uncertainties inherent in Malaysia. Among other risks, the Company’s operations are subject to the risks of restrictions on transfer of funds; export duties, quotas, and embargoes; domestic and international customs and tariffs; changing taxation policies; foreign exchange restrictions; and political conditions and governmental regulations in Malaysia.
| F-14 |
TALK FOCUS SDN BHD
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
(Unaudited)
NOTE 10 – RELATED PARTIES TRANSACTIONS
|
|
|
Nine Months ended |
| |||||
|
|
|
2017 |
|
|
2016 |
| ||
|
|
|
|
|
|
|
| ||
|
Transaction with a company in which a shareholder has substantial financial interest |
|
|
|
|
|
| ||
|
Sales |
|
$ | - |
|
|
$ | 8,672 |
|
|
Advances received |
|
|
1,094,671 |
|
|
|
907,141 |
|
|
Repayment of advances |
|
|
801,462 |
|
|
|
- |
|
These transactions are carried out at the commercial term in the normal course of business.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
(a) Capital commitment
As of September 30, 2017, the Company does not have any significant capital commitments.
(b) Operating lease commitment
As of September 30, 2017, the Company has no significant future minimum rental payments due under various operating leases in the next twelve months.
NOTE 12 – 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 September 30, 2017 up through the date of these consolidated financial statements. During the period, the Company did not have any material recognizable subsequent events.
| F-15 |
EXHIBIT 99.3
|
TRON GROUP INC.
Unaudited Pro forma Financial Information (Unaudited)
|
|
Pro Forma Condensed Combined Balance Sheets as of September 30, 2017 |
|
|
F-2 |
|
|
|
|
|
| |
|
Pro Forma Condensed Combined Statement of operation for the Nine Months Ended September 30, 2017 |
|
|
F-3 |
|
|
|
|
|
| |
|
Pro Forma Condensed Combined Statement of operation for the December 31, 2016 |
|
|
F-4 |
|
|
|
|
|
| |
|
Notes to Pro Forma Condensed Financial Statements as of September 30, 2017 |
|
|
F-5 |
|
| F-1 |
TRON GROUP INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEETS
AS OF SEPTEMBER 30, 2017
(Amount expressed in United States Dollars (“US$”))
|
|
|
Historical TGRP |
|
|
Historical Talk Focus |
|
|
Pro Forma Adjustments |
|
|
Pro Forma Combined |
| ||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Cash and cash equivalents |
|
$ | - |
|
|
$ | 75,043 |
|
|
|
|
|
$ | 75,043 |
| |
|
Accounts receivables |
|
|
- |
|
|
|
274,545 |
|
|
|
|
|
|
274,545 |
| |
|
Other receivables, deposits and prepayments |
|
|
- |
|
|
|
722,716 |
|
|
|
|
|
|
722,716 |
| |
|
Inventories |
|
|
- |
|
|
|
429,003 |
|
|
|
|
|
|
429,003 |
| |
|
Total current assets |
|
|
- |
|
|
|
1,501,307 |
|
|
|
|
|
|
1,501,307 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Non-current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Property, plant and equipment, net |
|
|
- |
|
|
|
275,695 |
|
|
|
|
|
|
275,695 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
TOTAL ASSETS |
|
$ | - |
|
|
$ | 1,777,002 |
|
|
|
|
|
$ | 1,777,002 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
LIABILITIES AND STOCKHOLDERS’EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Accounts payables, trade |
|
$ | 6,960 |
|
|
$ | 240,875 |
|
|
|
|
|
$ | 247,835 |
| |
|
Amounts due to related company |
|
|
25,897 |
|
|
|
7,948,593 |
|
|
|
|
|
|
7,974,490 |
| |
|
Current portion of obligation under finance lease |
|
|
- |
|
|
|
15,641 |
|
|
|
|
|
|
15,641 |
| |
|
Other payables and accrued liabilities |
|
|
- |
|
|
|
1,577,805 |
|
|
|
|
|
|
1,577,805 |
| |
|
Total current liabilities |
|
|
32,857 |
|
|
|
9,782,914 |
|
|
|
|
|
|
9,815,771 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Long-term liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Non-current portion of obligation under finance lease |
|
|
- |
|
|
|
12,532 |
|
|
|
|
|
|
12,532 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total long-term liabilities |
|
|
- |
|
|
|
12,532 |
|
|
|
|
|
|
12,532 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total liabilities |
|
|
32,857 |
|
|
|
9,795,446 |
|
|
|
|
|
|
9,828,303 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total deficit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Stockholders’ deficit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Common stock |
|
|
160,000 |
|
|
|
- |
|
|
|
3,329 | (a) |
|
|
163,329 |
|
|
Paid-in capital |
|
|
- |
|
|
|
2,861,230 |
|
|
|
(2,861,230 | )(b) |
|
|
- |
|
|
Additional paid-in capital |
|
|
(111,438 | ) |
|
|
- |
|
|
|
1,828,288 | (a),(b) |
|
|
1,716,850 |
|
|
Accumulated other comprehensive income |
|
|
- |
|
|
|
1,121,616 |
|
|
|
(403,614 | ) |
|
|
718,002 |
|
|
Accumulated deficit |
|
|
(81,419 | ) |
|
|
(11,958,270 | ) |
|
|
4,303,183 | (b) |
|
|
(7,736,506 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders’ deficit |
|
|
(32,857 | ) |
|
|
(7,975,424 | ) |
|
|
|
|
|
|
(5,138,325 | ) |
|
Non-controlling interest |
|
|
- |
|
|
|
(43,020 | ) |
|
|
(2,869,956 | )(b) |
|
|
(2,912,976 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deficit |
|
|
(32,857 | ) |
|
|
(8,018,444 | ) |
|
|
|
|
|
|
(8,051,301 | ) |
|
TOTAL LIABILITIES AND DEFICIT |
|
$ | - |
|
|
|
1,777,002 |
|
|
|
|
|
|
$ | 1,777,002 |
|
| F-2 |
TRON GROUP INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATION
FOR THE NONE MONTHS ENDED SEPT 30, 2017
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
|
|
|
Historical TGRP |
|
|
Historical Talk Focus |
|
|
Pro forma Adjustment |
|
|
Pro Forma Combined |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Revenues, net |
|
$ | - |
|
|
$ | 1,375,276 |
|
|
|
|
|
$ | 1,375,276 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Cost of revenue |
|
|
- |
|
|
|
(1,131,755 | ) |
|
|
|
|
|
(1,131,755 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Gross profit (loss) |
|
|
- |
|
|
|
243,521 |
|
|
|
|
|
|
243,521 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
General and administrative expenses |
|
|
(26,260 | ) |
|
|
(869,033 | ) |
|
|
|
|
|
(895,293 | ) | |
|
Total operating expenses |
|
|
(26,260 | ) |
|
|
(869,033 | ) |
|
|
|
|
|
(895,293 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Loss from operation |
|
|
(26,260 | ) |
|
|
(625,512 | ) |
|
|
|
|
|
(651,772 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other Income (Expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Interest expense |
|
|
- |
|
|
|
(1,403 | ) |
|
|
|
|
|
(1,403 | ) | |
|
Other income |
|
|
- |
|
|
|
9,441 |
|
|
|
|
|
|
9,441 |
| |
|
Total other expense |
|
|
- |
|
|
|
8,038 |
|
|
|
|
|
|
8,038 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
LOSS BEFORE INCOME TAXES |
|
|
(26,260 | ) |
|
|
(617,474 | ) |
|
|
|
|
|
(643,734 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Income tax expense |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
NET LOSS |
|
$ | (26,260 | ) |
|
$ | (617,474 | ) |
|
|
|
|
$ | (643,734 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Less: Net loss attributable to non-controlling interest |
|
|
- |
|
|
|
|
|
|
|
(222,198 | ) |
|
|
(222,198 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE TO THE COMPANY |
|
$ | (26,260 | ) |
|
|
|
|
|
|
|
|
|
$ | (421,536 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share * |
|
$ | (0.00 | ) |
|
|
|
|
|
|
|
|
|
$ | (0.00 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
160,000,000 |
|
|
|
|
|
|
|
|
|
|
|
163,329,385 |
|
_____
*Less than $0.001
| F-3 |
TRON GROUP INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATION
FOR THE YEAR ENDED DECEMBER 31, 2016
(Amount expressed in United States Dollars (“US$”), except for number of shares and stated otherwise)
|
|
|
Historical TGRP |
|
|
Historical Talk Focus |
|
|
Pro forma Adjustment |
|
|
Pro Forma Combined |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Revenues, net |
|
$ | - |
|
|
$ | 1,476,235 |
|
|
|
|
|
$ | 1,476,235 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Cost of revenue |
|
|
- |
|
|
|
(784,652 | ) |
|
|
|
|
|
(784,652 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Gross profit |
|
|
- |
|
|
|
691,583 |
|
|
|
|
|
|
691,583 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
General and administrative expenses |
|
|
(50,518 | ) |
|
|
(1,602,245 | ) |
|
|
|
|
|
(1,652,763 | ) | |
|
Total operating expenses |
|
|
(50,518 | ) |
|
|
(1,602,245 | ) |
|
|
|
|
|
(1,652,763 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Loss from operation |
|
|
(50,518 | ) |
|
|
(910,662 | ) |
|
|
|
|
|
(961,180 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Other Income (Expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Interest expense |
|
|
- |
|
|
|
(1,370 | ) |
|
|
|
|
|
(1,370 | ) | |
|
Other income |
|
|
- |
|
|
|
3,433 |
|
|
|
|
|
|
3,433 |
| |
|
Total other income |
|
|
- |
|
|
|
2,063 |
|
|
|
|
|
|
2,063 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
LOSS BEFORE INCOME TAXES |
|
|
(50,518 | ) |
|
|
(908,599 | ) |
|
|
|
|
|
(959,117 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Income tax expense |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
- |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
NET LOSS |
|
$ | (50,518 | ) |
|
$ | (908,599 | ) |
|
|
|
|
$ | (959,117 | ) | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Less: Net loss attributable to non-controlling interest |
|
|
- |
|
|
|
|
|
|
|
(326,959 | ) |
|
|
(326,959 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS ATTRIBUTABLE TO THE COMPANY |
|
$ | (50,518 | ) |
|
|
|
|
|
|
|
|
|
$ | (632,158 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per share * |
|
$ | (0.00 | ) |
|
|
|
|
|
|
|
|
|
$ | (0.00 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding |
|
|
142,852,400 |
|
|
|
|
|
|
|
|
|
|
|
143,016,900 |
|
________
*Less than $0.001
| F-4 |
TRON GROUP INC.
NOTES TO PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
AS OF SEPTEMBER 30, 2017
(Unaudited)
NOTE 1 – BACKGROUND OF ORGANISATION
On January 26, 2018, TRON Group Inc. or the Company or TGRP, and Talk Focus or Talk Focus, consummated a Share Exchange Agreement (the “Share Exchange Agreement”). In connection with the Share Exchange Transaction, the Company issued 3,329,385 shares of its Common Stock at $0.25 per share in acquiring 64.015% in the equity shares of Talk Focus from Eric Yap, the director of TGRP. Upon completion of the Share Exchange Transaction, the Company’s major shareholder, Eric Yap, also the prior shareholder of Talk Focus then owned approximately 51.05% of the Common Stock of TGRP.
NOTE 2 – BASIS OF PRESENTATION
Due to the control of TGRP and Talk Focus by a common director, the acquisition of Talk Focus represented a transaction among entities under common control. Pursuant to ASC 805-50-25, “Transactions Between Entities Under Common Control” and other SEC, the acquisition of Talk Focus was accounted for as a transaction among entities under common control and the assets, liabilities, revenues and expenses of Talk Focus were carried over to and combined with TGRP at their carrying values, and as if the transaction occurred at the beginning of the period.
Although the Company is the legal acquirer, Talk Focus was considered the acquirer for accounting purposes as a common director obtained control of Talk Focus, prior to obtaining control of the Company on January 26, 2018. Talk Focus will comprise the ongoing operations of the combined entity and its senior management will serve as the senior management of the combined entity. Accordingly, the consolidated assets, liabilities and results of operations of Talk Focus will become the historical financial statements of Talk Focus, and TGRP’s assets, liabilities and results of operations will be consolidated with Talk Focus beginning on the acquisition date. These pro forma financial statements are presented as a continuation of Talk Focus.
The pro forma balance sheet as of September 30, 2017 is based on the historical financial statements of TGRP after giving effect to Talk Focus’s acquisition of TGRP as a transaction among entities under common control and applying the assumptions and adjustments described in the notes to the pro forma financial statements as if such acquisition had occurred as of September 30, 2017 for the balance sheet for pro forma financial statements purposes.
The pro forma financial statements have been prepared by management for illustrative purposes only and are not necessarily indicative of the financial position or results of operations in future periods. The pro forma adjustments are based on the preliminary information available at the time of the preparation of this document and assumptions that management believes are reasonable. The pro forma financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with Talk Focus’s historical financial statements included elsewhere in this Amendment to the Current Statement on Form 8-K for the years ended December 31, 2016 and 2015, and for the period ended September 30, 2017 as Exhibits filed with SEC herewith.
The pro forma financial statements do not purport to represent what the results of operations or financial position of the combined entity would actually have been if the merger had in fact occurred on September 30, 2017, nor do they purport to project the results of operations or financial position of the combined entity for any future period or as of any date.
These pro forma financial statements do not give effect to any restructuring costs or to any potential cost savings or other operating efficiencies that could result from the merger between Talk Focus and TGRP since such amounts, if any, are not presently determinable.
NOTE 3 – PRO FORMA ADJUSTMENTS
The pro forma financial statements have been prepared as if the acquisition was completed on September 30, 2017 for combined balance sheet purpose and reflects the following pro forma adjustment(s):
(a) To reflect the issuance of 3,329,385 shares of common stock at $0.25 per share of TGRP for the acquisition of 64.015% of Talk Focus outstanding capital stock
(b) To eliminate the paid-in capital of Talk Focus and account for non-controlling interest.
| F-5 |
Division of Corporate Finance
Office of Telecommunications
Securities and Exchange Commission
Washington, D.C. 20549
|
|
Re: | TRON Group Inc. |
|
|
|
Current Report on Form 8-K Filed January 26, 2018 File No. 333-209166 |
Dear Sirs,
The following are our replies to your comments:
|
|
1) | In Section 3.2 of the Agreement and Plan of Share Exchange, filed as Exhibit 10.1, TRON’s authorized shares should be 500 million. It is an error on our part, and we will amend the Agreement accordingly. The 3.3 million shares are not expressed on a reverse stock-split basis, it is a new issuance of shares. |
|
|
|
|
|
|
2) | We have identified Dr. Yap as the majority shareholder. See page 3 of 8-K/A. |
|
|
|
|
|
|
3) | We have amended the 8-K/A to provide references to the present tense. See pages 4 and 5. |
|
|
|
|
|
|
4) | The table of ownership of shares for Talk Focus Sdn Bhd |
|
Before Agreement |
|
Number of |
|
|
Percentage |
|
|
After |
|
Number of |
|
|
Percentage |
| ||||
|
Dr. Eric Yap |
|
|
6,401,500 |
|
|
|
64.02 | % |
|
TRON Group Inc |
|
|
6,401,500 |
|
|
|
64.02 | % |
|
Technology Revolution On Net Sdn Bhd |
|
|
2,391,939 |
|
|
|
23.91 | % |
|
Technology Revolution On Net Sdn Bhd |
|
|
2,391,939 |
|
|
|
23.91 | % |
|
Netlink Technologies AG |
|
|
1,206,556 |
|
|
|
12.07 | % |
|
Netlink Technologies AG |
|
|
1,206,556 |
|
|
|
12.07 | % |
|
Ong Tiong Tjuan |
|
|
1 |
|
|
|
0.00 | % |
|
Ong Tiong Tjuan |
|
|
1 |
|
|
|
0.00 | % |
|
Dato’ Ong The Kim |
|
|
1 |
|
|
|
0.00 | % |
|
Dato’ Ong The Kim |
|
|
1 |
|
|
|
0.00 | % |
|
Dato’ Nik Ismail Bin Nik Yusoff |
|
|
1 |
|
|
|
0.00 | % |
|
Dato’ Nik Ismail Bin Nik Yusoff |
|
|
1 |
|
|
|
0.00 | % |
|
Yap Chee Hou |
|
|
1 |
|
|
|
0.00 | % |
|
Yap Chee Hou |
|
|
1 |
|
|
|
0.00 | % |
|
Teh Man Tat |
|
|
1 |
|
|
|
0.00 | % |
|
Teh Man Tat |
|
|
1 |
|
|
|
0.00 | % |
|
|
|
|
10,000,000 |
|
|
|
100.00 | % |
|
|
|
|
10,000,000 |
|
|
|
100.00 | % |
|
1 |
No changes to TRON’s shareholders’ percentage holdings, as at May 11, 2017 was the same as before the transaction.
|
|
5) |
Dr Eric Yap’s Percentage of Control: | |
|
|
|
Talk Focus Sdn Bhd |
= 64.02% |
|
|
|
TRON Group Inc |
= 51.00% |
|
|
|
|
|
|
|
|
Period of Control |
|
|
|
|
Talk Focus Sdn Bhd |
= 28th Sept 2017 to 26th Jan 2018 |
|
|
|
TRON Group Inc |
= 12th Oct 2016 to Current |
|
|
6) | We have amended the 8-K/A. Please see page 4. |
|
|
|
|
|
|
7) | We have amended the 8-K/A. Please see page 8. |
|
|
|
|
|
|
8) | We have amended the 8-K/A. Please see page 8. |
|
|
|
|
|
|
9) | Our revenue stream is mainly from our active company, Talk Focus Sdn Bhd’s mobile telecommunication services. See page 9. |
|
|
|
|
|
|
10) | Provided. See page 11. |
|
|
|
|
|
|
11) | We have amended the 8-K/A. Please see page 13. |
|
|
|
|
|
|
12) | The related parties sales and purchases stated in the Financial Statements for 2015 and 2016 and the interim financial statements 2017 are correct as the trade receivables balances was brought forward from 1.1.2015. We have amended the related parties disclosure in the 8-K/A. Please see exhibit 99.1 page F-18 and exhibit 99.2 page F-15. |
|
|
|
|
|
|
13) | We have amended the 8-K/A. Please see page 17 and 18. |
You may contact Edwin Yap, Senior Finance Executive at edwin.yap@tron.com.my or Cyrus Teh, Chief Financial Officer at cyrus.teh@tron.com.my if there’s any queries.
Best Regards
/s/ Eric Yap
CEO
TRON Group Inc
|
2 |