As filed with the Securities and Exchange Commission on August 2, 2017

Registration No. 333-       

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM S-1

 

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

GREENPRO CAPITAL CORP.

(Exact name of registrant as specified in its charter)

 

Nevada   8742   98-1146821

(State or other jurisdiction of

incorporation or organization)

 

(Primary standard industrial

classification code number)

 

(I.R.S. employer

identification number)

 

Room 1701-1703, 17/F The Metropolis

Tower, 10 Metropolis Drive, Hung Hom,

Kowloon, Hong Kong

+852-3111-7718

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

VCorp Services, LLC

1645 Village Center Circle, Suite 170

Las Vegas, NV 89134

(845) 425-0077

Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

 

Mitchell S. Nussbaum, Esq.

Tahra Wright, Esq.

David J. Levine, Esq.

Loeb & Loeb LLP

345 Park Avenue New York,

New York 10154 (212) 407-4000

Fax: (212) 937-3943

 

Fang Liu, Esq.

Attorney at Law

Mei & Mark LLP

818 18th Street NW, Suite 410

Washington, DC 20006

(703) 919-7285

Fax: (888) 706-1173

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

 

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. [X]

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

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

 

  Large Accelerated Filer [  ]   Accelerated filer [  ]  
  Non-accelerated filer [  ]   Smaller reporting company [X]  
  (Do not check if smaller reporting company) Emerging growth company [X]    

 

CALCULATION OF REGISTRATION FEE

 

Title of Each Class of Security Being Registered   Amount to be Registered     Proposed Maximum Offering Price     Proposed Maximum Aggregate Offering Price(1)     Amount of Registration Fee(2)  
                         
Common Stock, $0.0001 par value               $ 15,000,000     $ 1,739  
Common Stock, $0.0001 par value (3)     7,996,123     $ 6.00     $ 47,976,738     $ 5,561  
Placement Agent Warrants (4)                        
Common Stock Underlying Placement Agent Warrants (5)     250,000       [ ]       [ ]       [ ]  
Total               $ 62,976,738     $ 7,300  

 

 

(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(2) Calculated pursuant to Rule 457(o) based on an estimate of the proposed maximum aggregate offering price.
(3) This Registration Statement also covers the resale under a separate resale prospectus (the “Resale Prospectus”) by selling stockholders of the Registrant of up to 7,996,123 shares of common stock previously issued to the selling stockholders as named in the Resale Prospectus. Estimated solely for purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, using the average of the high and low prices of the Registrant’s common stock reported by the OTCQB Marketplace on August 1, 2017.
(4) No fee is required pursuant to Rule 457(g) under the Securities Act. Resales of the placement agent warrants on a delayed or continuous basis pursuant to Rule 415 under the Securities Act are registered hereby.
(5) Resales of shares of common stock issuable upon exercise of the placement agent warrants on a delayed or continuous basis pursuant to Rule 415 under the Securities Act are also registered hereby.

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

     
 

 

EXPLANATORY NOTE

 

This Registration Statement contains two prospectuses, as set forth below.

 

Public Offering Prospectus. A prospectus to be used for the public offering of a maximum of [ ] shares of common stock of the Registrant (the “Public Offering Prospectus”) through the placement agent named on the cover page of the Public Offering Prospectus.
   
Resale Prospectus. A prospectus to be used for the resale by the selling stockholders set forth therein of 7,996,123 shares of common stock of the Registrant (the “Resale Prospectus”).

 

The Resale Prospectus is substantively identical to the Public Offering Prospectus, except for the following principal points:

 

they contain different outside and inside front covers and back covers;
   
they contain different Offering sections in the Prospectus Summary section beginning on page SS-1;
   
they contain different Use of Proceeds sections on page SS-2;
   
a Selling Stockholder section is included in the Resale Prospectus;
   
the Plan of Distribution section from the Public Offering Prospectus on page SS-12 is deleted from the Resale Prospectus and a Selling Stockholder Plan of Distribution is inserted in its place; and
   
the Legal Matters section in the Resale Prospectus on page SS-14 deletes the reference to counsel for the underwriters.

 

The Registrant has included in this Registration Statement a set of alternate pages after the back cover page of the Public Offering Prospectus (the “Alternate Pages”) to reflect the foregoing differences in the Resale Prospectus as compared to the Public Offering Prospectus. The Public Offering Prospectus will exclude the Alternate Pages and will be used for the public offering by the Registrant. The Resale Prospectus will be substantively identical to the Public Offering Prospectus except for the addition or substitution of the Alternate Pages and will be used for the resale offering by the selling stockholders.

 

     
 

 

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

Subject to Completion, Preliminary Prospectus dated August 2, 2017

 

GREENPRO CAPITAL CORP.

 

 

MINIMUM OFFERING: [ ] shares of common stock

MAXIMUM OFFERING: [ ] shares of common stock

 

Greenpro Capital Corp. is offering a minimum of [ ] shares of common stock, par value $0.0001 per share, and a maximum of [ ] shares of common stock. We currently expect the public offering price to be $[ ] per share. The offering is being made on a “best efforts” basis without a firm commitment by the placement agent who has no obligation or commitment to purchase any of our shares. The placement agent must sell the minimum number of shares offered ([ ] shares of common stock), if any are sold, and are only required to use their best efforts to sell the shares offered. See “Plan of Distribution.”

 

This offering will terminate 180 days from the date of this prospectus (the “Termination Date”), unless extended by our board of directors for an additional 90 days, although we may close the offering on any date prior to the Termination Date, if the offering is fully subscribed or upon the vote of the board of directors. Reasons the board may consider in determining whether to extend or terminate the offering may include, but are not limited to: amount of funds raised, potential to raise additional capital, and response to the offering as of that date.

 

We are a reporting company under Section 13 of the Securities Exchange Act of 1934, as amended. Our common stock is currently quoted on the OTCQB Marketplace (the “OTCQB”) under the symbol “GRNQ.” There is a limited public trading market for our common stock. We intend to apply to list our common stock on the NASDAQ Capital Market under the symbol “GRNQ.”

 

Investing in our securities involves a high degree of risk. You should carefully consider the risk factors beginning on page 8 of this prospectus before purchasing shares of our common stock.

 

      Offering Price Per Share
($)
      Commission
per Share(1)(2)
     

 

Net Proceeds
to Greenpro

 
Minimum Offering ([ ] shares)     [ ]       [ ]       [ ]  
Maximum Offering ([ ] shares)     [ ]       [ ]       [ ]  

 

 

(1) Does not include a non-accountable expense allowance equal to 1.5% of the gross proceeds of this offering, payable to Network 1 Financial Securities, Inc., the placement agent. See “Plan of Distribution” beginning on page 64 of this prospectus for additional information regarding total placement agent compensation. It also does not include our expected cash expense for this offering to be approximately $ [●] million, exclusive of the above commissions.
   
(2) We and the placement agent have agreed to pay commissions of 5.5% per share (or $[ ] per share).

 

In addition to the placement agent commissions listed above and the non-accountable expense allowance described in the footnote, we have agreed to issue share purchase warrants, exercisable commencing 180 days immediately following the date of effectiveness of the registration statement of which this prospectus forms a part or the commencement of sales in this offering for a period of five years, to purchase shares of common stock equal to 10% of the total number of shares sold in this offering and may be exercisable at a per share price equal to 120% of the public offering price (the “Placement Agent Warrants”). The registration statement of which this prospectus is a part also covers the Placement Agent. Warrants and the shares of common stock issuable upon the exercise thereof. For additional information regarding our arrangement with the placement agent, please see “Plan of Distribution” beginning on page 64 .

 

Until we sell at least [ ] shares of common stock, all investor funds will be held in an escrow account at _________________, as agent, for the benefit of the investors. If we do not sell at least [ ] shares of common stock by ___________________, all funds will be returned to investors without interest or deduction by noon of the next business day after the Termination Date. If we complete this offering, net proceeds will be promptly delivered to us on the closing date. Affiliates of the company and affiliates and associated persons of the placement agent may invest in this offering on the same terms and conditions as the public investors participating in this offering, and any shares of common stock purchased will make up a portion of the minimum offering needed to complete this offering.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

The placement agent expects to deliver the shares of common stock to purchasers no later than ________________, subject to the condition that at least [ ] shares of common stock have been subscribed and paid for.

 

 

The date of this prospectus is                     , 2017

 

     
 

 

 

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TABLE OF CONTENTS

 

ABOUT THIS PROSPECTUS viii
SUMMARY 1
THE OFFERING 5
SUMMARY FINANCIAL AND OTHER DATA 7
RISK FACTORS 8
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 15
USE OF PROCEEDS 16
CAPITALIZATION 17
DILUTION 18
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS 19
EXCHANGE RATE INFORMATION 20
SELECTED HISTORICAL FINANCIAL AND OPERATING DATA 21
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 22
BUSINESS 35
DIRECTORS AND EXECUTIVE OFFICERS 53
EXECUTIVE COMPENSATION 58
CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS 59
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 60
DESCRIPTION OF SECURITIES 62
SHARES ELIGIBLE FOR FUTURE SALE 63
PLAN OF DISTRIBUTION 64
LEGAL MATTERS 68
EXPERTS 68
WHERE YOU CAN FIND MORE INFORMATION 68
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS F-1

 

    vii  
 

 

ABOUT THIS PROSPECTUS

 

You should rely only on the information contained in this prospectus or any supplement or amendment hereto. We have not authorized any person to provide you with different information. We are not offering to sell, or seeking an offer to buy, our common stock in any jurisdiction where such offer or sale is not permitted. You should assume that the information contained in this prospectus and any supplement or amendment hereto is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

 

Unless the context otherwise indicates, all references in this prospectus to:

 

  The “Company,” “we,” “us,” or “our,” “Greenpro” are references to Greenpro Capital Corp., a Nevada corporation.
     
  “China” or “PRC” are references to People’s Republic of China;
     
  “HK” refers to the Hong Kong Special Administrative Region;
     
  “U.S. dollar,” “$” and “US$” refer to the legal currency of the United States;

 

Unless otherwise noted, all currency figures in this filing are in U.S. dollars. References to “yuan” or “RMB” are to the Chinese yuan (also known as the renminbi). References to “MYR” are to the Malaysian Ringgit. References to “HK$” are to the Hong Kong Dollar.

 

    viii  
 

 

 

SUMMARY

 

This summary highlights certain information appearing elsewhere in this prospectus. For a more complete understanding of this offering, you should read the entire prospectus carefully, including the information under “Risk Factors” and our financial statements and the related notes included elsewhere in this prospectus before investing in our common stock.

 

Overview

 

We currently operate and provide a wide range of business solution services to small and medium-size businesses located in Asia, with an initial focus on Hong Kong, China and Malaysia. Our comprehensive range of services includes cross-border business solutions, record management services, and accounting outsourcing services. Our cross border business services include, among other services, tax planning, trust and wealth management, cross border listing advisory services and transaction services. As part of the cross border business solutions, we have developed a package solution of services (“Package Solution”) that can reduce business costs and improve revenues.

 

We also operate a venture capital business through Greenpro Venture Capital Limited, an Anguilla corporation. Our venture capital business is focused on (1) establishing a business incubator for start-up and high growth companies to support such companies during critical growth periods, which includes education and support services, and (2) searching for investment opportunities in selected start-up and high growth companies, which we expect can generate significant returns to the Company. We expect to target companies located in Asia and South-East Asia including Hong Kong, Malaysia, China, Thailand and Singapore. We anticipate our venture capital business will also engage in the purchase, acquisition and rental of commercial properties in the same Asia and South-East Asia region.

 

To support our venture capital business, we partnered with QSC Asia Sdn. Bhd., an education and training company that arranges seminars and courses in Malaysia, to provide business, educational and support services. We operate our venture capital related education and support services through our subsidiary, Greenpro Capital Village Sdn. Bhd. We have started arranging seminars called the CEO & Business Owners Strategic Session (CBOSS) in Malaysia and Singapore for business owners who are interested in the following:

 

  Developing business globally,
     
  Expanding business with increased capital funds,
     
  Creating a sustainable SME business model,
     
  Accelerating the growth of the business, or
     
  Increasing company cash flow significantly.

 

The objective of the CBOSS seminars is to educate the chief executive officers or business owners on how to acquire “smart capital” and the considerations involved. The seminars include an introduction to the basic concepts of “smart capital,” “wealth and value creation,” recommendation and planning and similar topics. We believe that the seminar will synergistically support our venture capital business segment.

 

Our Growth Strategy

 

Our growth strategy is highly dependent on our ability to market our services effectively. We are focused on three primary marketing strategies, which include offline marketing, online marketing and content marketing.

 

Offline Marketing

 

Due to the nature of our business where trust is a critical element in client engagement, we are focusing approximately 60% of our time on our offline marketing activities and approximately 40% of our time on our online marketing activities. For offline marketing, we believe physical presence in the market is a key to build trust from the public and targeted marketing.

 

 

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Educational Events & Seminars

 

Consistent with this principal of physical engagement, we organize frequent and targeted events, such as workshops, industry conferences and other investor education and social events to share our knowledge with prospective clients. We invite potential clients and prospects through our collaborated partners and existing database to attend our events. At these events, we introduce our services to see if any potential clients would like to engage in any of our services. These events are often organized in cooperation with chambers of commerce, distinguished alumni associations and high-profile entrepreneurs.

 

Roadshow Platform & Networking Events

 

For our venture capital portfolio and our business solution services, our priority objective is to identify potential investments with solid and sound businesses. Consistent with this objective, we participate in company roadshow events. These roadshow events allow companies to showcase themselves and their potential for future development. From these events, we are able to promote and source potential projects or companies that need our business solution services in their corporate development.

 

Word of Mouth

 

Word of mouth is one of the most effective marketing tools for our business. We intend to engage in nationwide marketing initiatives to further raise our brand awareness while continuing to improve client satisfaction to strengthen our word of mouth referrals. We intend to continue to focus on referrals as the major avenue of new client development. We also encourage our employees to introduce or recommend new clients to us by providing incentive bonuses.

 

Online Marketing

 

We believe our public brand awareness will further contribute to our brand recognition and improve our performance. We also believe the most cost effective way to gain awareness is by leveraging the use of the internet and various mobile social network applications.

 

Social Network Marketing

 

Wechat has been the mainstream mobile online marketing tool for companies in China. According to a 2017 Wechat User Behavior Report, published by Tencent Penguin Intelligence as of the fourth quarter of 2016, Wechat had 889 million monthly active users worldwide. The top two reasons for group chats through Wechat are corporate internal communications and professional networking. As a result of the work-related features of Wechat, we believe that using Wechat can bolster our brand and networking opportunities.

 

Weibo is a leading social media platform for people to create, distribute and discover Chinese-language content. Weibo combines the means of public self-expression in real time with a powerful platform for social interaction, as well as content aggregation and distribution. Weibo Corporation reported in their official website that in December 2016, Weibo had 313 million monthly active users, which had increased from 236 million monthly active users in December 2015. Weibo serves a wide range of users including ordinary citizens, celebrities and other public figures, as well as media outlets, businesses, government agencies, charities and other organizations, making it a microcosm of Chinese society. For many people in China, Weibo allows them to be heard publicly and exposed to the rich ideas, cultures and experiences of the broader world.

 

We have an official company account in Wechat and Weibo, serving as contact platforms for potential clients to contact us. At the same time, we continuously introduce basic products and services information, market research and updates to our members, as well as publish articles and proprietary research reports on major business and finance to our accounts.

 

 

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Search Engine Optimization (SEO) & Search Engine Marketing

 

Search Engine Optimization and Search Engine Marketing are current strategies we implement to enhance our online appearance in search engines. We have recruited an internal SEO team to handle technical operations in order to improve our exposure by enhancing higher rankings in key word searching.

 

Content Marketing

 

Knowledge sharing & publication

 

We have a team of editors who prepare market research and updates to our members. We also publish articles and proprietary research reports in major business and finance. These contents are the substance and tools to support our existing marketing channel and activities.

 

Competitive Advantages

 

Cross Border Advantages :

 

  With our offices setup across the East Asia and South-East Asia regions, we have better information flow within those markets and a better understanding of the needs in those markets, which allow us to provide services to our clients and fulfill their needs in a better manner.  
       
  We have an advantage in sourcing better investment opportunities with our local teams who understand risk-opportunity in the local industry.  
       
  With our offices throughout the regions we serve, we have better connectivity as we have more contact points reaching out to potential local clients, in another way, achieving timely and effective communication.  

 

Multi-lingual :

 

  Our professional teams are multi nationals who add value to our operations. They are proficient in English, Chinese, Malay, Thai, Cantonese Dialect, and other local dialects in the East Asia and South-East Asia regions. The multi-national teams allow us to easily adapt and communicate with clients from all areas in the regions. Such strength is an added value as we are facing clients from all over the East Asia and South-East Asia regions with different default languages during interaction.  
       
  Such capabilities enable us to produce efficient and effective communication with our clients.  

 

Company Secretarial Services :

 

 

We have professional and experienced teams established in Hong Kong, China and Malaysia specializing in corporate advisory services and company secretarial services that range from advising local and overseas clients for company formation in Hong Kong, U.S., China and other overseas jurisdictions, maintaining of statutory records and filing statutory returns of respective clients with local companies’ registry, applying for business licenses and preparing meeting minutes or resolutions.

 

 

  With our offices and experienced teams in Hong Kong, China and Malaysia, we have better knowledge, skills and resources for servicing our clients.  

 

 

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Risk Related to Our Business

 

Our ability to implement our business strategy is subject to numerous risks and uncertainties that you should be aware of before making an investment decision. As a technology company, we face many risks inherent in our business and our industry generally. You should carefully consider all of the information set forth in this prospectus and, in particular, the information under the heading “Risk Factors,” prior to making an investment in our common stock. These risks include, among others, the following:

 

  We have business operations in Hong Kong, China and Malaysia and we may be negatively affected by any instability in the economic and political development of any of the above region.  
       
  We have incurred operating losses since we began operations and may not be profitable in the future.  
       
  We may be unable to gain any significant market acceptance for our services and establish a significant market presence to attract customers under increasing competition.  
       
  If we fail to cost-effectively acquire new customers or retain our existing customers, our business could be materially adversely affected.  
       
  If we fail to manage future growth effectively, our business could be materially adversely affected.  

 

Our Corporate Information

 

We were incorporated on July 19, 2013 in the State of Nevada. Our principal executive offices are located at Room 1701-1703, 17/F, The Metropolis Tower, 10 Metropolis Drive, Hung Hom, Kowloon, Hong Kong. Our telephone number is +852 3111 7718. We maintain a website at www.greenprocapital.com. The information contained on our website is not, and should not be interpreted to be, a part of this prospectus.

 

 

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THE OFFERING

 

The offering is being made on a “best efforts, minimum/maximum” basis. The offering is being made without a firm commitment by the placement agent, who has no obligation or commitment to purchase any of our shares. The closing of the offering and delivery of the shares is expected to occur no later than ___________________. See “Plan of Distribution.” The placement agent must sell the minimum number of shares offered ( [●] shares of common stock), if any are sold, and are only required to use their best efforts to sell the shares offered. If the placement agents did not sell the minimum number of shares, the offering will be terminated at____________________.

 

  Common stock being offered

Minimum: [●] shares

Maximum: [●] shares

 
       
  Shares of common stock outstanding before this offering 53,233,960 shares  
       
  Shares of common stock outstanding after this offering

Minimum: [●] shares

Maximum: [●] shares

 
       
  Offering price per share $[ ] per share  
       
  Use of proceeds Our net proceeds from this offering, assuming the minimum number of shares of common stock offered ( [●] shares) is sold are expected to be approximately $ [●] million, and assuming the maximum number of shares of common stock offered ( [●] shares) is sold are expected to be approximately $ [●] million, each assuming a public offering price of $[ ]. We intend to use the net proceeds from this offering for the development of financial technology, China Service Centre expansion and worldwide business expansion.  
       
 

Best efforts

The placement agent is selling our common stock on a “best efforts” basis. Accordingly, the placement agent has no obligation or commitment to purchase any common stock. The placement agent is not required to sell any specific number or dollar amount of common stock but will use its best efforts to sell the common stock offered.

We do not intend to close this offering unless we sell at least a minimum number of shares of common stock, at the price per share set forth on the cover page of this prospectus, to result in sufficient proceeds to list our common stock on the NASDAQ Capital Market.

 
       
  Offering period The common stock is being offered for a period of 180 days commencing on the date of this prospectus, unless extended by our board of directors for an additional 90 days. If the minimum offering amount is not raised within such time period, all subscription funds from the escrow account will be returned to investors promptly by noon of the next business day after the Termination Date without interest or deduction of fees. The offering may close or terminate, as the case may be, on the earlier of (i) any time after the minimum offering amount of our common stock is raised, or (ii) 180 days from the date of this prospectus, unless extended by our board of directors for an additional 90 days, although we retain the right to terminate the offering prior to the expiration of the 180-day period.  

 

 

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Escrow

Unless sooner withdrawn or cancelled by either us or the placement agent, the offering will continue through _________________. Until we sell at least [●] shares of common stock, all investor funds will be held in a non-interest bearing escrow account at _________________ as agent, for the benefit of the investors. If we do not sell at least [●] shares of common stock by ________________, unless we determine to extend the offering, all funds will be promptly returned to investors by noon of the next business day after the termination without interest or deduction. If we complete this offering, net proceeds will be promptly delivered to us on the closing date. See “Plan of Distribution — Escrow Agent and Deposit of Offering Proceeds.”

 
       
  Proposed NASDAQ trading symbol “ GRNQ”  
       
  Risk factors The securities offered by this prospectus are speculative and involve a high degree of risk and investors purchasing securities should not purchase the securities unless they can afford the loss of their entire investment. See “Risk Factors” beginning on page 8.  
       
  Lock-up agreements See “Plan of Distribution” for more information.  

 

The number of shares of our common stock to be outstanding after this offering is based on the number of shares outstanding as of [_________], 2017.

 

 

 

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SUMMARY FINANCIAL AND OTHER DATA

 

The following tables set forth our summary historical financial data for the periods presented. The following summary financial data for the years ended December 31, 2016 and 2015 are derived from our audited financial statements appearing elsewhere in this prospectus. The following summary financial data for the three-month periods ended March 31, 2017 and 2016 and the selected balance sheet data as of March 31, 2017 are derived from our unaudited financial statements appearing elsewhere in this prospectus.

 

This summary financial data should be read together with the historical financial statements and related notes to those statements, as well as “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which are included elsewhere in this prospectus.

 

The pro forma as adjusted balance sheet data reflects the balance sheet data as of March 31, 2017, as adjusted to reflect our receipt of the estimated net proceeds from our sale of the minimum offering amount ([●] shares) and maximum offering amount ([●] shares) in this offering at an assumed public offering price of $[●] per share, which is set forth on the cover page of this prospectus, after deducting the estimated placement agent commissions and estimated offering expenses payable by us.

 

    As of December 31,           As of March 31  
    2016     2015           2017  
                      Pro Forma, as adjusted  
                      Actual       Minimum Offering       Maximum Offering  
      (Audited)       (Audited)       (Unaudited)       (Unaudited)       (Unaudited)  
Balance Sheet Data:                                        
Current Assets   $ 5,323,480     $ 5,823,970     $ 5,909,660                  
Other Assets   $ 3,106,122     $ 3,244,396     $ 3,270,304                  
Total Assets   $ 8,429,602     $ 9,068,366     $ 9,179,964                  
Total Current Liabilities   $ 1,782,403     $ 2,912,003     $ 1,731,878                  
Total Liabilities   $ 2,336,531     $ 3,504,321     $ 2,288,937                  
Total Stockholders’ Equity   $ 6,093,071     $ 5,564,045     $ 6,891,027                  

 

    Year Ended
December 31,
    Three Months Ended
March 31,
 
    2016     2015     2017     2016  
    (Audited)     (Audited)     (Unaudited)     (Unaudited)  
Statements of Operations Data:                        
Revenues   $ 2,776,435     $ 2,946,164     $ 775,323     $ 451,663  
                                 
Cost and Expense                                
Cost of Revenues   $ (1,046,315 )   $ (1,852,865 )   $ (156,563 )   $ (236,057 )
General and Administrative Expenses   $ (1,869,494 )   $ (1,382,424 )   $ (710,748 )   $ (416,816 )
                               
Loss From Operations   $ (139,374 )   $ (289,125 )   $ (91,988 )   $ (201,210 )
                               
Loss before Income Tax and Non-Controlling Interest   $ (203,715 )   $ (341,496 )   $ (98,950 )   $ (227,595 )
                               
Loss before Non-Controlling Interest   $ (211,174 )   $ (348,929 )   $ (111,796 )   $ (233,184 )
                                 
Comprehensive Loss   $ (193,928 )   $ (299,728 )   $ (114,919 )   $ (188,753 )
                                 
Basic and diluted loss per common share     0.00       0.00       0.00       0.00  
Basic and diluted loss per common share  - pro forma – minimum offering [●]     0.00       0.00       0.00       0.00  
Basic and diluted loss per common share  - pro forma – maximum offering [●]     0.00       0.00       0.00       0.00  

 

 

* The pro forma number of shares to be outstanding immediately after this offering as shown above is based on shares outstanding as of March 31, 2017, on an as adjusted basis to give effect to the sale of the minimum and maximum number of shares of common stock by us in this offering at the assumed public offering price of $[●] per share, which is the set forth on the cover page of this prospectus.  
   

 

  7  
 

 

RISK FACTORS

 

You should carefully consider the risks described below and elsewhere in this report, which could materially and adversely affect our business, results of operations or financial condition. Our business faces significant risks and the risks described below may not be the only risks we face. Additional risks not presently known to us or that we currently believe are immaterial may materially affect our business, results of operations, or financial condition. If any of these risks occur, the trading price of our common stock could decline and you may lose all or part of your investment.

 

Risks Related to our Business

 

We have a limited operating history that you can use to evaluate us, and the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small developing company.

 

We were incorporated in Nevada in July 2013. We have significant financial resources and as of December 31, 2016, we have generated $2,776,435 in revenues and incurred net losses of $222,323. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by a small company starting a new business enterprise and the highly competitive environment in which we will operate. We have a limited operating history upon which an evaluation of our future success or failure can be made. Our ability to achieve and maintain profitability and positive cash flow is dependent upon:

 

  our ability to market our product and services;
     
  our ability to generate revenues; and
     
  our ability to raise the capital necessary to continue marketing and developing our product.

 

We are not currently profitable and may not become profitable.

 

As of December 31, 2016, we had $1,021,351 cash on hand, our stockholder’s equity was $6,093,071. We have generated $2,776,435 in revenue to date and have incurred operating losses of $139,374 and net losses of $222,323. We expect to incur losses and negative operating cash flows for the foreseeable future, and we may not achieve profitability. We also expect to experience negative cash flow for the foreseeable future as we fund our operating losses and capital expenditures. As a result, we will need to generate significant revenues in order to achieve and maintain profitability. We may not be able to generate these revenues or achieve profitability in the future. Our failure to achieve or maintain profitability could negatively impact the value of our business.

 

We are dependent upon the proceeds of this offering to fund our business. If we do not sell enough shares in this offering to continue operations, this could have a negative effect on the value of your common stock.

 

As of December 31, 2016, we had $8,429,602 in assets and limited capital resources. In order to continue operating for the next twelve months, in the event that we do not generate sufficient revenues, we must raise approximately $[●] in gross proceeds from this offering.

 

Unless we begin to generate sufficient revenues to finance operations as a going concern, we may experience liquidity and solvency problems. Such liquidity and solvency problems may force us to cease operations if additional financing is not available.

 

Also, as a public company, we will incur professional and other fees in connection with our quarterly and annual reports and other periodic filings with the SEC. Such costs can be substantial and we must generate enough revenue or raise money from offerings of securities or loans in order to meet these costs and our SEC filing requirements. We are offering our securities to the public; however, there is no guarantee that we will be able to sell the securities. And even if we sell the securities, there is no guarantee that the proceeds will be sufficient to fund our planned operations. We anticipate a burn rate of approximately $200,000 per month. At 10% of the minimum offering sold, our burn rate would be __ months, if 25% of the minimum offering is sold, our burn rate would be __ months, if 50% of the minimum offering is sold, our burn rate would be __ months, and if 100% of the minimum offering is sold, our burn rate would be __ months. At 10% of the maximum offering sold, our burn rate would be ___ months, if 25% of the maximum offering is sold, our burn rate would be __ months, if 50% of the maximum offering is sold, our burn rate would be __ months, and if 100% of the maximum offering shares is sold, our burn rate would be __ months.

 

  8  
 

 

The report of our independent registered public accounting firm has previously expressed substantial doubt about the Company’s ability to continue as a going concern and future reports may similarly express a going concern.

 

Our auditors indicated in their report on the Company’s financial statements for the fiscal year ended December 31, 2015 that conditions existed that raise a substantial doubt about our ability to continue as a going concern due to our net loss for the year ended December 31, 2015. A similar future “going concern” opinion could impair our ability to finance our operations through the sale of equity, incurring debt, or other financing alternatives and/or negatively affect our relationships with customers and suppliers and/or negatively affect the willingness of our suppliers to allow us to maintain credit with them. Our ability to continue as a going concern will depend upon our ability to grow our operations and integrate newly acquired assets and operations, our ability to acquire additional assets and operations, and our ability to improve operating margins and regain profitability. If we are unable to achieve these goals, our business would be jeopardized and the Company may not be able to continue. If we ceased operations, it is likely that all of our investors would lose their investment.

 

Our operating results may prove unpredictable which could negatively affect our profit.

 

Our operating results are likely to fluctuate significantly in the future due to a variety of factors, many of which we have no control. Factors that may cause our operating results to fluctuate significantly include: our inability to generate enough working capital from future equity sales; the level of commercial acceptance by clients of our services; fluctuations in the demand for our service the amount and timing of operating costs and capital expenditures relating to expansion of our business, operations and infrastructure and general economic conditions. If realized, any of these risks could have a material adverse effect on our business, financial condition and operating results.

 

If we are unable to gain any significant market acceptance for our service or establish a significant market presence, we may be unable to generate sufficient revenue to continue our business.

 

Our growth strategy is substantially dependent upon our ability to successfully market our service to prospective clients. However, our planned services may not achieve significant acceptance. Such acceptance, if achieved, may not be sustained for any significant period of time. Failure of our services to achieve or sustain market acceptance could have a material adverse effect on our business, financial conditions and the results of our operations.

 

Management’s ability to implement the business strategy may be slower than expected and we may be unable to generate a profit.

 

Our business plans, including offering a cloud auditing system and consulting services, may not occur. Our growth strategy is subject to significant risks which you should carefully consider before purchasing the shares we are offering.

 

Our services may be slow to achieve profitability, or may not become profitable at all, which will result in losses. There can be no assurance that we will succeed.

 

We may be unable to enter into our intended markets successfully. The factors that could affect our growth strategy include our success in (a) developing the our business plan, (b) obtaining our clients, (c) obtaining adequate financing on acceptable terms, and (d) adapting our internal controls and operating procedures to accommodate our future growth.

 

Our systems, procedures and controls may not be adequate to support the expansion of our business operations. Significant growth will place managerial demands on all aspects of our operations. Our future operating results will depend substantially upon our ability to manage changing business conditions and to implement and improve our technical, administrative and financial controls and reporting systems.

 

Competitors may enter this sector with superior service which would affect our business adversely.

 

We have identified a market opportunity for our business. We believe that barriers to entry are low to medium because of economies of scale, cost advantage and brand identity. Potential competitors may enter this sector with superior services. This would have an adverse effect upon our business and our results of operations. In addition, a high level of support is critical for the successful marketing and recurring sales of our services. Despite having accumulated customers from the past four years, we may still need to continue to improve our platform and software in order to assist potential customers in using our platform, and we also need to provide effective support to future clients. If we are unable to increase customer support and improve our platform in the face of increasing competition, with the increase in competition, our ability to sell our services to potential customers could adversely affect our brand, which would harm our reputation.

 

  9  
 

 

Our use of open source and third-party software could impose limitations on our ability to commercialize our services.

 

We intend to incorporate open source software into our platform. Although we monitor our use of open source closely, the terms of many open source licenses have not been interpreted by U.S. courts or jurisdictions elsewhere, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our services. We could also be subject to similar conditions or restrictions should there be any changes in the licensing terms of the open source software incorporated into our products. In either event, we could be required to seek licenses from third parties in order to continue our services in the event re-engineering cannot be accomplished on a timely or successful basis, any of which could adversely affect our business, operating results and financial condition.

 

We also intend to incorporate certain third-party technologies, including software programs, into our website and may need to utilize additional third-party technologies in the future. However, licenses to relevant third-party technology may not continue to be available to us on commercially reasonable terms, or at all. Therefore, we could face delays in releases of our platform until equivalent technology can be identified, licensed or developed, and integrated into our current products. These delays, if they occur, could materially adversely affect our business, operating results and financial condition. Any disruption in our access to software programs or third-party technologies could result in significant delays in releases of our platform and could require substantial effort to locate or develop a replacement program. If we decide in the future to incorporate into our products any other software program licensed from a third party, and the use of such software program is necessary for the proper operation of our appliances, then our loss of any such license would similarly adversely affect our ability to release our products in a timely fashion.

 

The security of our computer systems may be compromised and harm our business.

 

A significant portion of our business operations is conducted through use of our computer network. Although we intend to implement security systems and procedures to protect the confidential information stored on these computer systems, experienced computer programmers and hackers may be able to penetrate our network security and misappropriate our confidential information or that of third parties. As well, they may be able to create system disruptions, shutdowns or effect denial of service attacks. Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our networks or client computers, or otherwise exploit any security vulnerabilities, or that misappropriate and distribute confidential information stored on these computer systems. Any of the foregoing could result in damage to our reputation and customer confidence in the security of our products and services, and could require us to incur significant costs to eliminate or alleviate the problem. Additionally, our ability to transact business may be affected. Such damage, expenditures and business interruption could seriously impact our business, financial condition and results of operations.

 

Adverse developments in our existing areas of operation could adversely impact our results of operations, cash flows and financial condition.

 

Our operations are focused on utilizing our sales efforts which are principally located in South-East Asia. As a result, our results of operations, cash flows and financial condition depend upon the demand for our services in these regions. Due to the lack of broad diversification in industry type and geographic location, adverse developments in our current segment of the midstream industry, or our existing areas of operation, could have a significantly greater impact on our results of operations, cash flows and financial condition than if our operations were more diversified.

 

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

 

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

 

  10  
 

 

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An “emerging growth company” can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to follow the extended transition period, and as a result, we will delay adoption of certain new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

 

Risks Related to Doing Business in East Asia and South-East Asia

 

Our contractual arrangements may not be as effective in providing control over the variable interest entities as direct ownership.

 

We rely on contractual arrangements with our variable interest entities to hold part of our assets in Hong Kong. For a description of these contractual arrangements, see “Acquisition and Reorganization History - VIE Structure And Arrangements.” These contractual arrangements may not be as effective as direct ownership in providing us with control over our variable interest entities.

 

If we had direct ownership of the variable interest entities, we would be able to exercise our rights as an equity holder directly to effect changes in the boards of directors of those entities, which could effect changes at the management and operational level. Under our contractual arrangements, we may not be able to directly change the members of the boards of directors of these entities and would have to rely on the variable interest entities and the variable interest entity equity holders to perform their obligations in order to exercise our control over the variable interest entities. The variable interest entity equity holders may have conflicts of interest with us or our shareholders, and they may not act in the best interests of our company or may not perform their obligations under these contracts. For example, our variable interest entities and their respective equity holders could breach their contractual arrangements with us by, among other things, failing to conduct their operations, including maintaining our websites and using our domain names and trademarks which the relevant variable interest entities have exclusive rights to use, in an acceptable manner or taking other actions that are detrimental to our interests. Pursuant to the call option, we may replace the equity holders of the variable interest entities at any time pursuant to the contractual arrangements. Consequently, the contractual arrangements may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership.

 

Our business is subject to the risks of international operations.

 

Substantially all of our business operations are conducted in South-East Asia. Accordingly, our results of operations, financial condition and prospects are subject to a significant degree to economic, political and legal developments in the Asian countries we intend to develop business. Following the closing of our initial public offering, we will derive a significant portion of our revenue and earnings from the operation in Hong Kong, our principal business place and also in Malaysia and other South-East Asian countries. Operating in multiple foreign countries involves substantial risk. For example, our business activities subject us to a number of laws and regulations, such as anti-corruption laws, tax laws, foreign exchange controls and cash repatriation restrictions, data privacy and security requirements, labor laws, intellectual property laws, privacy laws, and anti-competition regulations. As we expand into additional countries, the complexity inherent in complying with these laws and regulations increases, making compliance more difficult and costly and driving up the costs of doing business in foreign jurisdictions. Any failure to comply with foreign laws and regulations could subject us to fines and penalties, make it more difficult or impossible to do business in that country and harm our reputation.

 

We may be exposed to liabilities under the Foreign Corrupt Practices Act, and any determination that we violated the foreign corrupt practices act could have a material adverse effect on our business.

 

We are subject to the Foreign Corrupt Practice Act, or FCPA, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute for the purpose of obtaining or retaining business. We will have operations, agreements with third parties and make sales in South-East Asia, which may experience corruption. Our proposed activities in Asia create the risk of unauthorized payments or offers of payments by one of the employees, consultants, or sales agents of our Company, because these parties are not always subject to our control. It will be our policy to implement safeguards to discourage these practices by our employees. Also, our existing safeguards and any future improvements may prove to be less than effective, and the employees, consultants, or sales agents of our Company may engage in conduct for which we might be held responsible. Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the government may seek to hold our Company liable for successor liability FCPA violations committed by companies in which we invest or that we acquire.

 

  11  
 

 

You may have difficulty enforcing judgments against us.

 

We are a Nevada corporation and most of our assets are and will be located outside of the United States. Almost all of our operations will be conducted in Hong Kong. In addition, our officers and directors are nationals and residents of a country other than the United States. All of their assets are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon them. It may also be difficult for you to enforce in U.S. courts judgments on the civil liability provisions of the U.S. federal securities laws against us and our officer and director, since he is not a resident in the United States. In addition, there is uncertainty as to whether the courts of Hong Kong or other Asian countries would recognize or enforce judgments of U.S. courts.

 

Payment of dividends is subject to restrictions under Nevada, Hong Kong, Malaysia and the PRC laws.

 

Under Nevada law, we may only pay dividends subject to our ability to service our debts as they become due and provided that our assets will exceed our liabilities after the dividend. Our ability to pay dividends will therefore depend on our ability to generate sufficient profits. Under the Hong Kong Companies Ordinance, we are permitted to make payments of dividends from distributable profits (that is, accumulated realized profits less its accumulated realized losses). Under the Laws of Malaysia, we may only make a distribution to the shareholders out of our profits available if we are solvent. The Company is regarded as solvent if the Company is able to pay its debts as and when the debts become due within twelve months immediately after the distribution is made. In addition, because of the various rules applicable to our operations in China and the regulations on foreign investments as well as the applicable tax law, we may be subject to further limitations on our ability to declare and pay dividends to our shareholders.

 

We can give no assurance that we will declare dividends of any amounts, at any rate or at all in the future. The declaration of future dividends, if any, will be at the discretion of our board of directors and will depend upon our future operations and earnings, capital requirements, general financial conditions, legal and contractual restrictions and other factors that our board of directors may deem relevant.

 

We face the risk that changes in the policies of the PRC government could have a significant impact upon the business we may be able to conduct in the PRC and the profitability of such business.

 

The PRC’s economy is in a transition from a planned economy to a market oriented economy subject to five-year and annual plans adopted by the central government that set national economic development goals. Policies of the PRC government can have significant effects on the economic conditions of the PRC. The PRC government has confirmed that economic development will follow the model of a market economy. Under this direction, we believe that the PRC will continue to strengthen its economic and trading relationships with foreign countries and business development in the PRC will follow market forces. While we believe that this trend will continue, we cannot assure you that this will be the case. A change in policies by the PRC government could adversely affect our interests by, among other factors: changes in laws, regulations or the interpretation thereof, confiscatory taxation, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises. Although the PRC government has been pursuing economic reform policies for more than two decades, we cannot assure you that the government will continue to pursue such policies or that such policies may not be significantly altered, especially in the event of a change in leadership, social or political disruption, or other circumstances affecting the PRC’s political, economic and social environment.

 

Introduction of new laws or changes to existing laws by the PRC government may adversely affect our business.

 

The PRC legal system is a codified legal system made up of written laws, regulations, circulars, administrative directives and internal guidelines. Unlike common law jurisdictions like the U.S., decided cases (which may be taken as reference) do not form part of the legal structure of the PRC and thus have no binding effect on subsequent cases with similar issues and fact patterns. Furthermore, in line with its transformation from a centrally-planned economy to a more free market-oriented economy, the PRC government is still in the process of developing a comprehensive set of laws and regulations. As the legal system in the PRC is still evolving, laws and regulations or the interpretation of the same may be subject to further changes. For example, the PRC government may impose restrictions on the amount of service fees that may be payable by municipal governments to wastewater and sludge treatment service providers. Also, the PRC central and municipal governments may impose more stringent environmental regulations which would affect our ability to comply with, or our costs to comply with, such regulations. Such changes, if implemented, may adversely affect our business operations and may reduce our profitability

 

  12  
 

 

The Hong Kong economy may be vulnerable to slowdown in Chinese activity and world trade.

 

Since Hong Kong is now closely linked to China with respect to economic and political development, Hong Kong economic and political development will be more likely to be affected by China’s development. As there are more and more mainland Chinese companies listed on The Hong Kong Stock Exchange and industries in general are becoming delocalized to mainland China, the Hong Kong stock market and local economy will become more vulnerable to the economic development in the mainland China. If the economic development in China becomes unstable, the Hong Kong economy will be negatively affected. Besides, the Hong Kong economy is externally oriented and highly dependent on trade with the rest of the world. Our business may be subject to the cyclical effect of the economic development in the world.

 

We face the risk that changes in the world economy and political developments in Malaysia may adversely affect our business.

 

In recent years, there have been political instabilities in Malaysian government which may reduce investors’ confidence, result in reduction in foreign direct investment and weigh on consumer and business sentiment, depressing growth. In addition, the Malaysian economy is reliant on external demand. Any possible worsening global demand is likely to hinder the export development and any economic weakness may possibly lead to market intervention and the government may impose capital controls. Under these circumstances, our business operation may be adversely affected.

 

Risks Related to this Offering

 

Prior to this offering, we had a limited public market for our shares of common stock and you may not be able to resell our shares at or above the price you paid, or at all.

 

Prior to this offering, there was a limited public market for our common stock in the OTC Market. We cannot assure you that an active public market for our common stock will develop or that the market price of our shares will not decline below the public offering price. The public offering price of our shares may not be indicative of prices that will prevail in the trading market following the offering.

 

Together, our Chief Executive Officer, Mr. Lee Chong Kuang, and our Chief Financial Officer, Mr. Loke Che Chan Gilbert, own a large percentage of our outstanding stock and could significantly infiuence the outcome of our corporate matters.

 

Mr. Lee Chong Kuang, our CEO, beneficially owns 47.15% of our outstanding shares of common stock, and Mr. Loke Che Chan Gilbert, our CFO, beneficially owns 44.03% of our outstanding shares of common stock. As a result, Messrs. Lee and Loke are able to exercise significant influence over all matters that require us to obtain shareholder approval, including the election of directors to our board and approval of significant corporate transactions that we may consider, such as a merger or other sale of our company or its assets. This concentration of ownership in our shares by executive officers will limit the other shareholders’ ability to influence corporate matters and may have the effect of delaying or preventing a third party from acquiring control over us.

 

Future sales of substantial amounts of the shares of common stock by existing shareholders could adversely affect the price of our common stock.

 

If our existing shareholders sell substantial amounts of the shares following this offering, the market price of our common stock could fall. Such sales by our existing shareholders might make it more difficult for us to issue new equity or equity-related securities in the future at a time and place we deem appropriate. The shares of common stock offered in this offering will be eligible for immediate resale in the public market without restrictions. All remaining shares, which are currently held by our existing shareholders, may be sold in the public market in the future subject to the lock-up agreements and the restrictions contained in Rule 144 under the Securities Act. If any existing shareholders sell a substantial amount of shares, the prevailing market price for our shares could be adversely affected.

 

  13  
 

 

The market price of our shares is likely to be highly volatile and subject to wide fluctuations in response to factors such as:

 

  variations in our actual and perceived operating results;
     
  news regarding gains or losses of customers or partners by us or our competitors;
     
  news regarding gains or losses of key personnel by us or our competitors;
     
  announcements of competitive developments, acquisitions or strategic alliances in our industry by us or our competitors;
     
  changes in earnings estimates or buy/sell recommendations by financial analysts;
     
  potential litigation;
     
  general market conditions or other developments affecting us or our industry; and
     
  the operating and stock price performance of other companies, other industries and other events or factors beyond our control.

 

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are not related to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of the shares.

 

In the event that our shares are traded, they may trade under $5.00 per share and thus will be a penny stock. Trading in penny stocks has many restrictions and these restrictions could severely affect the price and liquidity of our shares.

 

In the event that our shares are traded, and our stock trades below $5.00 per share, our stock would be known as a “penny stock”, which is subject to various regulations involving disclosures to be given to you prior to the purchase of any penny stock. The U.S. Securities and Exchange Commission (the “SEC”) has adopted regulations which generally define a “penny stock” to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Depending on market fluctuations, our common stock could be considered to be a “penny stock”. A penny stock is subject to rules that impose additional sales practice requirements on broker/dealers who sell these securities to persons other than established Members and accredited investors. For transactions covered by these rules, the broker/dealer must make a special suitability determination for the purchase of these securities. In addition, he must receive the purchaser’s written consent to the transaction prior to the purchase. He must also provide certain written disclosures to the purchaser. Consequently, the “penny stock” rules may restrict the ability of broker/dealers to sell our securities, and may negatively affect the ability of holders of shares of our common stock to resell them. These disclosures require you to acknowledge that you understand the risks associated with buying penny stocks and that you can absorb the loss of your entire investment. Penny stocks are low priced securities that do not have a very high trading volume. Consequently, the price of the stock is often volatile and you may not be able to buy or sell the stock when you want to.

 

We do not anticipate paying cash dividends on our common stock in the foreseeable future.

 

We do not anticipate paying cash dividends in the foreseeable future. Presently, we intend to retain all of our earnings, if any, to finance development and expansion of our business. Consequently, your only opportunity to achieve a positive return on your investment in us will be if the market price of our common stock appreciates.

 

We will have discretion in applying a portion of the net proceeds of this offering and may not use these proceeds in ways that will enhance the market value of our common stock.

 

Our management will have considerable discretion in the application of the proceeds received by us from this offering. Such proceeds may be used to development of Financial Technology, China Service Centre Expansion and Worldwide Business Expansion and for working capital and general corporate purposes. You will not have the opportunity, as part of your investment decision, to assess whether the proceeds are being used appropriately. You must rely on the judgment of our management regarding the application of the net proceeds of this offering. The net proceeds may be used for corporate purposes that do not improve our profitability or increase our common stock price. The net proceeds from this offering may also be placed in investments that do not produce income or that lose value. Future issuances of capital stock may depress the trading price of our common stock. Any issuance of shares of our common stock after this offering could dilute the interests of our existing stockholders and could substantially decrease the trading price of our common stock. We may issue additional shares of common stock in the future for a number of reasons, including to finance our operations and business strategy (including in connection with acquisitions, strategic collaborations or other transactions).

 

Sales of a substantial number of shares of our common stock in the public market could depress the market price of our common stock, and impair our ability to raise capital through the sale of additional equity securities. We cannot predict the effect that future sales of our common stock or other equity-related securities would have on the market price of our common stock.

 

  14  
 

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Statements in this prospectus that are not descriptions of historical facts are forward-looking statements that are based on management’s current expectations and are subject to risks and uncertainties that could negatively affect our business, operating results, financial condition and stock price. We have attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “can,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should,” or “will” or the negative of these terms or other comparable terminology.

 

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements. We operate in a very competitive and rapidly changing environment. It is not possible for our management to predict all risks, 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 we may make. Accordingly, you should not place undue reliance on our forward-looking statements. We have included important factors in the cautionary statements included in this prospectus, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make.

 

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement of which this prospectus is a part completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as required by law.

 

  15  
 

 

USE OF PROCEEDS

 

After deducting the estimated placement agent commissions and estimated offering expenses payable by us, we expect to receive net proceeds of $ [●] from this offering, if the minimum offering amount is sold, or $ [●] , if the maximum offering amount is sold. We anticipate that the proceeds of a minimum and a maximum offering would be applied approximately as follows:

 

MINIMUM OFFERING ( [ ] Shares)

 

USE OF PROCEEDS   AMOUNT(US$)
Development of Financial Technology   [●]
     
China Service Centre Expansion   [●]
     
Worldwide Wealth Wisdom Development   [●]
     
Greenpro Synergy Network Expansion   [●]
     
Development of Hong Kong Securities and Futures Commission Regulated Activity Type 1 – Dealing in Securities and Type 6 – Advising on Corporate Finance   [●]

 

MAXIMUM OFFERING ( [ ] Shares)

 

USE OF PROCEEDS   AMOUNT(US$)
Development of Financial Technology   [●]
     
China Service Centre Expansion   [●]
     
Worldwide Wealth Wisdom Development   [●]
     
Greenpro Synergy Network Expansion   [●]
     
Development of Hong Kong Securities and Futures Commission Regulated Activity Type 1 – Dealing in Securities and Type 6 – Advising on Corporate Finance   [●]

 

The amounts and timing of these expenditures will vary depending on a number of factors, including the amount of cash generated by our operations, competitive and technological developments, and the rate of growth, if any, of our business.

 

Although we may use a portion of the proceeds for the acquisition of, or investment in, companies, technologies, products or assets that complement our business, we have no present understandings, commitments or agreements to enter into any acquisitions or make any investments. We cannot assure you that we will make any acquisitions or investments in the future.

 

  16  
 

 

CAPITALIZATION

 

The following table sets forth our capitalization as of March 31, 2017:

 

  On an actual basis; and
     
  On a pro forma, as adjusted basis to give effect to the sale of the minimum and maximum number of shares of common stock by us in this offering at the assumed public offering price of $[●] per share, which is set forth on the cover page of this prospectus, and after deducting the estimated placement agent commissions and estimated offering expenses payable by us.

 

You should read this table in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and related notes included elsewhere in this prospectus.

 

MINIMUM OFFERING ( [●] Shares)

 

    March 31, 2017  
    Actual     Pro forma  
    (unaudited)     (unaudited)  
Assets:                
Current Assets     5,909,660          
Other Assets     3,270,304        
Total Assets     9,179,964          
Liabilities:                
Current Liabilities     1,731,878          
Other Liabilities     557,059          
Total Liabilities     2,288,937          
Stockholder’s Equity:                

Common stock, $0.0001 par value; 500,000,000 shares authorized; 52,865,843 shares issued and outstanding as of March 31, 2017 actual; 500,000,000 shares authorized, [●] shares issued and outstanding, pro forma (1)

    5,286          
Additional paid-in capital     7,543,095          
Accumulated other comprehensive(loss) income     96,467          
Accumulated deficit     (898,743 )        
Non-controlling interest     144,922          
Total stockholders’ equity     6,891,027          
Total Liabilities and Stockholders’ Equity     9,179,964          

 

(1) The pro forma number of shares to be outstanding immediately after this offering as shown above is based on shares outstanding as of March 31, 2017, assumes the minimum offering amount ([●] shares) has been sold assuming a public offering price $[●], which is set forth on the cover page of this prospectus, and after deducting the estimated placement agent commissions and estimated offering expenses payable by us.

 

MAXIMUM OFFERING ( [●] Shares)

 

    March 31, 2017  
    Actual     Pro forma  
    (unaudited)     (unaudited)  
Assets:                
Current Assets     5,909,660          
Other Assets     3,270,304          
Total Assets     9,179,964          
Liabilities:                
Current Liabilities     1,731,878          
Other Liabilities     557,059        
Total Liabilities     2,288,937          
Stockholder’s Equity:                
Common stock, $0.0001 par value; 500,000,000 shares authorized; 52,865,843 shares issued and outstanding as of March 31, 2017 actual; 500,000,000 shares authorized, [●] shares issued and outstanding, pro forma (1)     5,286          
Additional paid-in capital     7,543,095          
Accumulated other comprehensive(loss) income     96,467          
Accumulated deficit     (898,743 )        
Non-controlling interest     144,922          
Total stockholders’ equity     6,891,027          
Total Liabilities and Stockholders’ Equity     9,179,964          

 

(1) The pro forma number of shares to be outstanding immediately after this offering as shown above is based on shares outstanding as of March 31, 2017, assumes the maximum offering amount ([●] shares) has been sold assuming a public offering price of $[●] which is set forth on the cover page of this prospectus, and after deducting the estimated placement agent commissions and estimated offering expenses payable by us.

 

  17  
 

 

DILUTION

 

If you invest in our common stock, your interest will be diluted immediately to the extent of the difference between the public offering price per share you will pay in this offering and the pro forma as adjusted net tangible book value per share of our common stock after this offering. Our net tangible book value as of March 31, 2017 was $4,977,331, or $0.09 per share of common stock. Our pro forma net tangible book value per share set forth below represents our total tangible assets less total liabilities, divided by the number of shares of our common stock outstanding.

 

If the minimum offering amount is sold at an assumed public offering price of $[●] per share, which is set forth on the cover page of this prospectus, after deducting the estimated placement agent commissions and offering expenses payable by us, the pro forma as adjusted net tangible book value as of March 31, 2017 would have been $[●], or $[●] per share. This represents an immediate increase in net tangible book value to existing shareholders of $[●] per share. The public offering price per share will significantly exceed the net tangible book value per share. Accordingly, new investors who purchase shares of common stock in this offering will suffer an immediate dilution of their investment of $[●] per share. 

 

The following table illustrates this per share dilution to the new investors assuming the minimum offering amount is sold:

 

Assumed public offering price per share   $ [●]  
         
Net tangible book value per share as of March 31, 2017   $ 0.09  
         
Increase in net tangible book value per share attributable to the offering   $ [●]  
         
Pro forma net tangible book value per share as of after giving effect to the offering   $ [●]  
         
Dilution per share to new investors   $ [●]  

 

A $1.00 increase in the assumed public offering price of $[●] per share, which is set forth on the cover page of this prospectus, would increase the pro forma net tangible book value by $[●], the pro forma net tangible book value per share after this offering by $[●] per share and the dilution in pro forma net tangible book value per share to investors in this offering by $[●] per share, assuming that all of the shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated offering expenses payable by us.

 

If the maximum offering amount is sold at an assumed public offering price of $[●] per share, which is set forth on the cover page of this prospectus, after deducting the estimated placement agent commissions and offering expenses payable by us, the pro forma as adjusted net tangible book value as of March 31, 2017 would have been $[●], or $[●] per share. This represents an immediate increase in net tangible book value to existing shareholders of $[●] per share. The public offering price per share will significantly exceed the net tangible book value per share. Accordingly, new investors who purchase shares of common stock in this offering will suffer an immediate dilution of their investment of $[●] per share. The following table illustrates this per share dilution to the new investors assuming the minimum offering amount is sold:

 

The following table illustrates this per share dilution to the new investors assuming the maximum offering amount is sold:

 

Assumed public offering price per share   $ [●]  
         
Net tangible book value per share as of March 31, 2017   $ 0.09  
         
Increase in net tangible book value per share attributable to the offering   $ [●]  
         
Pro forma net tangible book value per share as of after giving effect to the offering   $ [●]  
         
Dilution per share to new investors   $ [●]  

 

  18  
 

 

A $1.00 increase in the assumed public offering price of $[●] per share, which is set forth on the cover page of this prospectus, would increase the pro forma net tangible book value by $[●] , the pro forma net tangible book value per share after this offering by $[●] per share and the dilution in pro forma net tangible book value per share to investors in this offering by $[●] per share, assuming that all of the shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated offering expenses payable by us.

 

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

Our common stock is currently quoted on the OTCQB under the trading symbol “GRNQ.” Our common stock did not trade prior to July 9, 2015.

 

Trading in stocks quoted on the OTCQB is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company’s operations or business prospects. We cannot assure you that there will be a market for our common stock in the future.

 

For the periods indicated, the following table sets forth the high and low bid prices per share of common stock based on inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.

 

Fiscal Year 2017   High Bid     Low Bid  
First Quarter   $ 5.70     $ 5.70  
Second Quarter   $ 5.70     $ 5.70  
Third Quarter (through July 31)   $ 6.20     $ 5.70  

 

Fiscal Year 2016   High Bid     Low Bid  
First Quarter   $ 5.25     $ 5.20  
Second Quarter   $ 5.25     $ 5.20  
Third Quarter   $ 5.70     $ 5.20  
Fourth Quarter   $ 5.70     $ 5.70  

 

Fiscal Year 2015   High Bid     Low Bid  
First Quarter   $ N/A     $ N/A  
Second Quarter   $ N/A     $ N/A  
Third Quarter   $ 11.00     $ 0.35  
Fourth Quarter   $ 5.25     $ 2.35  

 

Holders

 

As of August 2, 2017, we had 53,233,960 shares of our common stock issued and outstanding. There were approximately 301 record holders of our common stock. Such number does not include any shareholders holding shares in nominee or “street name.”

 

Dividend Policy

 

We have not declared or paid dividends on our common stock since our formation, and we do not anticipate paying dividends in the foreseeable future. Declaration or payment of dividends, if any, in the future, will be at the discretion of our board of directors and will depend on our then current financial condition, results of operations, capital requirements and other factors deemed relevant by the board of directors. There are no contractual restrictions on our ability to declare or pay dividends.

 

Equity Compensation Plan Information

 

We have not adopted an equity compensation plan. There are not securities that have been issued under or outside of such plan.

 

  19  
 

 


EXCHANGE RATE INFORMATION

 

Substantially all of our business operations are conducted in South-East Asia. We will derive a significant portion of our revenue and earnings from the operation in Hong Kong, our principal business place and also in Malaysia and other South-East Asian countries. Our reporting currency is the United States Dollars (“US$”) and the audited financial statements have been expressed in US$. Our operating subsidiaries maintain their books and records in a local currency, Malaysian Ringgit (“MYR”), Renminbi (“RMB”), and Hong Kong Dollars (“HK$”), which is also the respective functional currencies for each subsidiary as they are the primary currency of the economic environment in which each subsidiary operates.

 

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity. No representation is made that the MYR, RMB and HKD amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.

 

The following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated.

 

Assets and liabilities are translated at the exchange rates as of the balance sheet date.

 

Balance sheet items, except for equity accounts   March 31, 2017     December 31, 2016  
MYR:USD     4.43       4.48  

RMB:US D

    6.89       6.95  
HKD:USD     7.75       7.75  

 

Items in the statements of operations and comprehensive loss, and statements cash flows are translated at the average exchange rate of the period.

 

    Three Months ended  
    March 31,  
    2017     2016  
MYR:USD     4.43       3.85  
RMB:USD     6.88       6.27  
HKD:USD     7.75       7.75  

 

  20  
 

 

SELECTED HISTORICAL FINANCIAL AND OPERATING DATA

 

The following table presents our selected historical financial data for the periods presented and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statement and notes thereto included elsewhere in this prospectus.

 

The following selected consolidated financial and operating data for the fiscal years ended December 31, 2016 and 2015, and the consolidated balance sheet data as of December 31, 2016 and 2015, have been derived from our consolidated financial statements included elsewhere in this prospectus.

 

The selected consolidated statements of operations data for the three months ended March 31, 2017 and 2016, and the summary consolidated balance sheet data as of March 31, 2017, have been derived from our unaudited consolidated financial statements included elsewhere in this prospectus. We have prepared the unaudited consolidated financial statements on the same basis as our audited consolidated financial statements. The unaudited consolidated financial statements include all adjustments, consisting only of normal and recurring adjustments that we consider necessary to fairly present our financial position and results of operations for the periods presented.

 

    As of December 31,     As of March 31  
    2016     2015     2017  
    (Audited)     (Audited)     (Unaudited)  
Balance Sheet Data:                        
Current assets   $ 5,323,480     $ 5,823,970     $ 5,909,660  
Other assets   $ 3,106,122     $ 3,244,396     $ 3,270,304  
Total Assets   $ 8,429,602     $ 9,068,366     $ 9,179,964  
Total Current Liabilities   $ 1,782,403     $ 2,912,003     $ 1,731,878  
Total Liabilities   $ 2,336,531     $ 3,504,321     $ 2,288,937  
Total Stockholders’ equity   $ 6,093,071     $ 5,564,045     $ 6,891,027  

 

    Year Ended  
December 31,
    Three Months Ended
March 31,
 
    2016     2015     2017     2016  
    (Audited)     (Audited)     (Unaudited)     (Unaudited)  
Statements of Operations Data:                                
Revenues   $ 2,776,435     $ 2,946,164     $ 775,323     $ 451,663  
                                 
Cost and Expense                                
Cost of Revenues   $ (1,046,315 )   $ (1,852,865 )   $ (156,563 )   $ (236,057 )
General and Administrative Expenses   $ (1,869,494 )   $ (1,382,424 )   $ (710,748 )   $ (416,816 )
                                 
Loss From Operations   $ (139,374 )   $ (289,125 )   $ (91,988 )   $ (201,210 )
                                 
Loss before Income Tax and Non-Controlling Interest   $ (203,715 )   $ (341,496 )   $ (98,950 )   $ (227,595 )
                                 
Loss before Non-Controlling Interest   $ (211,174 )   $ (348,929 )   $ (111,796 )   $ (233,184 )
                                 
Comprehensive Loss   $ (193,928 )   $ (299,728 )   $ (114,919 )   $ (188,753 )
                                 
Basic and diluted loss per common share     0.00       0.00       0.00       0.00  

 

  21  
 

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

The following discussion of our financial condition and results of operations should be read in conjunction with our audited financial statements and the related notes thereto and other financial information appearing elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategy for our business and related financing, includes forward looking statements that involve risks, uncertainties and assumptions. As a result of many factors, including those factors set forth in the “Risk Factors” section of this prospectus, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in this prospectus.

 

Company Overview

 

Greenpro Capital Corp. (the “Company” or “Greenpro”), was incorporated in the State of Nevada on July 19, 2013. We provide cross-border business solutions and accounting outsourcing services to small and medium-size businesses located in Asia, with an initial focus on Hong Kong, Malaysia and China. Greenpro provides a range of services as a package solution (the “Package Solution”) to our clients and we believe that our clients can reduce their business costs and improve their revenues.

 

In addition to our business solution services, we also operate a venture capital business through Greenpro Venture Capital Limited, an Anguilla corporation. One of our venture capital business segments is focused on (1) establishing a business incubator for start-up and high growth companies to support such companies during critical growth periods, which will include education and support services, and (2) searching the investment opportunities in selected start-up and high growth companies, which we expect can generate significant returns to the Company. Our venture capital business is focused on companies located in Asia and Southeast Asia including Hong Kong, Malaysia, China, Thailand and Singapore. Another one of our venture capital business segments is focused on rental activities of commercial properties and the sale of investment properties.

 

Results of Operations

 

Three Months Ended March 31, 2017 Compared to the Three Months Ended March 31, 2016

 

For the three-month period ended March 31, 2017 and 2016, we operated in three regions: Hong Kong, Malaysia and China. We derived income from rental activities of our commercial properties, the sale of our investment properties and the provision of services. A table further describing our revenue and cost of revenues is set forth below:

 

    Three-month ended March 31,     Three-month ended March 31,  
    2017     2016  
REVENUES, NET                
- Rental income   $ 29,156     $ 23,255  
- Sale of properties             -  
- Service income                
Related parties     77,771       45,103  
Unrelated parties     668,396       383,305  
Total revenues   $ 775,323     $ 451,663  
                 
COST OF REVENUES                
- Cost of rental     (12,084 )     (10,318 )
- Cost of properties sold                
- Cost of service     (144,479 )     (225,739 )
Total cost of revenues     (156,563 )     (236,057 )
                 
GROSS PROFIT     618,760       215,606  
                 
OPERATING EXPENSES:                
General and administrative     (710,748 )     (416,816 )
                 
(LOSS) FROM OPERATIONS     (91,988 )     (201,210 )

 

  22  
 

 

Revenues, net

 

Total revenue was $775,323 and $451,663 for the three months ended March 31, 2017 and 2016, respectively. The increased amount of $323,660 was due to the broadening of the range of services offered and the increase in our client base. We expect revenue from our business services segment to increase as we continue to grow our business and expand into new territories.

 

Rental Income

 

Revenue from rental was $29,156 and $23,255 for the three months ended March 31, 2017 and 2016, respectively. It was derived principally from leasing properties in Malaysia and Hong Kong. We believe our rental income will be stable in the near future.

 

Service Income

 

Revenue from the provision of services was $746,167 and $428,408 for the three months ended March 31, 2017 and 2016, respectively. It was derived principally from the provision of business consulting and advisory services as well as company secretarial, accounting and financial review. We experienced an increase in service income as a result of our integration of clients in connection with our acquisitions and increased focus on high-end services.

 

Cost of Revenues

 

Total cost of revenues was $156,563 and $236,057 for the three months ended March 31, 2017 and 2016, respectively. The decrease was primarily attributed to more profitable contracts with fewer costs incurred.

 

The overall gross profit for the Company was $618,760 and $215,606 for the three months ended March 31, 2017 and 2016, respectively. Gross profit as a percentage of total revenues was 78% and 47.7% for the same period ended March 31, 2017 and 2016, respectively. The increase was due to cost savings and high profit margin projects in our Cross-Border Business Solutions.

 

Cost of rental

 

Cost of revenue on rental was $12,084 and $10,318 for the three months ended March 31, 2017 and 2016, respectively. It includes the costs associated with government rent and rates, repairs, maintenance, property insurance, depreciation and other related administrative costs.

 

Cost of service

 

Costs of revenue on provision of services were $144,479 and $225,739 for the three months ended March 31, 2017 and 2016, respectively. It primarily consists of company formation cost, government fees and other professional fees. The decrease in the cost of service is mainly due to competitive prices from service providers and professional parties.

 

Operating Expenses

 

General and administrative expenses

 

General and administrative expenses were $710,748 and $416,816 for the three months ended March 31, 2017 and December 31, 2016, respectively. The general and administrative expenses consist primarily of salary and wages of $244,329, rent and rates of $147,323, directors’ remuneration of $54,908 and consulting fees of $60,358. We expect our G&A to continue to increase as we integrate our business acquisitions, expand our offices into new jurisdictions and deepen our existing businesses.

 

  23  
 

 

Attributable to non-controlling interest

 

The Company records income attributable to non-controlling interest in the consolidated statements of operations for any non-owned portion of consolidated subsidiaries. As of December 31, 2016, the Company holds 60% of the shareholdings of Forward Win International Limited and attributed a net income of $2,313 to the non-controlling interest of Forward Win International Limited for the year ended December 31, 2016. As of December 31, 2016, the Company holds 60% of the shareholdings of Yabez (Hong Kong) Company Limited and attributed a net income of $2,688 to the non-controlling interest of Yabez (Hong Kong) Company Limited for the year ended December 31, 2016. As of December 31, 2016, the Company holds 51% of the shareholdings of Greenpro Capital Village Sdn Bhd and attributed a net income of $7,262 to the non-controlling interest of Greenpro Capital Village Sdn Bhd for the year ended December 31, 2016. As of December 31, 2016, the Company holds 60% of the shareholdings of Greenpro Wealthon Sdn Bhd and attributed a net loss of $1,114 to the non-controlling interest of Greenpro Wealthon Sdn Bhd for the year ended December 31, 2016.

 

Net Loss

 

The net loss was $108,488 and $235,263 for the three months ended March 31, 2017 and 2016, respectively. The decrease in net loss is due to the cost control and increase in services income.

 

There were no seasonal aspects that had a material effect on the financial condition or results of operations of the Company.

 

Other than as disclosed elsewhere in this prospectus, we are not aware of any trends, uncertainties, demands, commitments or events for the three months ended March 31, 2017 that are reasonably likely to have a material adverse effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

 

Off Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of March 31, 2017.

 

Contractual Obligations

 

As of March 31, 2017, the Company leases an office in Hong Kong under a non-cancellable operating lease that expires in August 2018. The lease, which covers a term of two years, generally provides for renewal options at specified rental amounts. The Company’s subsidiaries lease certain office premises in the PRC under a non-cancellable operating lease that expire in December 2017. The leases, which cover a term of two years, generally provide for renewal options at specified rental amounts.

 

Related Party Transactions

 

Related party transactions amounted to $77,771 and $45,103 for the three months ended March 31, 2017 and 2016, respectively, in business consulting and advisory income.

 

The amount due from related parties was $14,421 and $69,664 as of March 31, 2017 and 2016, respectively. The amounts due to related parties were $1,443,760 and $2,013,635 as of March 31, 2017 and 2016, respectively.

 

Our related parties are those companies where Greenpro Venture Capital Limited owns a certain percentage of their company shares. One related party is under common control of Mr. Loke Che Chan Gilbert, a director of the Company. All of these related party transactions are generally transacted in an arm-length basis at the current market value in the normal course of business.

 

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

 

For the year ended December 31, 2016 and 2015, we operated in three regions: Hong Kong, Malaysia and China. We derived income from rental activities of our commercial properties, the sale of our investment properties and the provision of services. A table further describing our revenue and cost of revenues is set forth below:

 

  24  
 

 

    For the year ended
December 31,
    For the year ended
 December 31,
 
    2016     2015  
REVENUES, NET                
- Rental income   $ 100,143     $ 51,464  
- Sale of properties     -       1,637,548  
- Service income                
Related parties     222,493       243,916  
Unrelated parties     2,453,799       1,013,236  
Total revenues   $ 2,776,435     $ 2,946,164  
                 
COST OF REVENUES                
- Cost of rental     (48,914 )     (38,354 )
- Cost of properties sold     -       (1,308,205 )
- Cost of service     (997,401 )     (506,306 )
Total cost of revenues     (1,046,315 )     (1,852,865 )
                 
GROSS PROFIT     1,730,120       1,093,299  
                 
OPERATING EXPENSES:                
General and administrative     (1,869,494 )     (1,382,424 )
                 
(LOSS) FROM OPERATIONS     (139,374 )     (289,125 )

 

Revenues, net

 

Total revenue was $2,776,435 and $2,946,164 for the years ended December 31, 2016 and December 31, 2015, respectively. The decrease was primarily due to no revenue received from the sale of properties, an increase in service income of $1,419,140 and an increase in rental income of $48,679.

 

Rental Income

 

Revenue from rental was $100,143 and $51,464 for the years ended December 31, 2016 and December 31, 2015, respectively. It was derived principally from leasing properties in Malaysia and Hong Kong. We believe our rental income will be stable in the near future.

 

Service Income

 

Revenue from the provision of services was $2,676,292 and $1,257,152 for the years ended December 31, 2016 and December 31, 2015, respectively. It was derived principally from the provision of business consulting and advisory services as well as company secretarial, accounting and financial review. We experienced an increase in service income as a result of our integration of clients in connection with our acquisitions and increased focus on high-end services.

 

Sale of properties

 

There was no revenue generated from the sale of properties for the year ended December 31, 2016. Revenue from the sale of properties was $1,637,548 for the year ended December 31, 2015, which was derived from the sale of certain commercial properties located in Hong Kong. During the same period ended December 31, 2015, the Company also purchased property located at Tuen Mun, Hong Kong.

 

As opportunities permit, management expects to continue to purchase and sell commercial real estate in the near future. Accordingly, we expect revenue and costs attributable to the sale of properties to fluctuate on a going forward basis.

 

Cost of Revenues

 

Total cost of revenues was $1,046,315 and $1,852,865 for the years ended December 31, 2016 and December 31, 2015, respectively. The decrease was primarily attributed to the lack of activity in the real estate business in 2016.

 

The overall gross profit for the Company was $1,730,120 and $1,093,299 for the years ended December 31, 2016 and December 31, 2015, respectively. Gross profit as a percentage of total revenues was 62.3% and 37.1% for the same period ended December 31, 2016 and 2015, respectively. The increase was due to cost savings and no sale of properties with lower profit margin ratios.

 

  25  
 

 

Cost of rental

 

Cost of revenue on rental was $48,914 and $38,354 for the years ended December 31, 2016 and December 31, 2015, respectively. It includes the costs associated with government rent and rates, repairs, maintenance, property insurance, depreciation and other related administrative costs.

 

Cost of service

 

Costs of revenue on provision of services were $997,401 and $506,306 for the years ended December 31, 2016 and December 31, 2015, respectively. It primarily consists of employee compensation and related payroll benefits, company formation cost and other professional fees. We expect the increase in the cost of service to be aligned with an increase in service income.

 

Cost of properties sold

 

Cost of revenue on properties sold was $1,308,205 for the year ended December 31, 2015. It primarily consisted of the purchase price of property located at Tuen Mun, Hong Kong, legal fees, improvement costs to the building structure and other acquisition costs.

 

As opportunities permit, management expects to continue to purchase and sell commercial real estate in the near future. Accordingly, we expect revenue and costs attributable to the sale of properties to fluctuate on a going forward basis.

 

Operating Expenses

 

General and administrative expenses

 

General and administrative expenses were $1,869,494 and $1,382,424 for the years ended December 31, 2016 and December 31, 2015, respectively. The increase in general and administrative expenses was primarily due to the increase in directors’ remuneration and housing allowance, salary, office rent, professional and legal fees. We expect our G&A to continue to increase as we integrate our business acquisitions, expand our offices into Thailand and Australia and deepen our existing businesses.

 

Other Incomes (Expenses)

 

Other incomes were $12,064 and $0 for the years ended December 31, 2016 and December 31, 2015, respectively. Other expenses were $76,405 and $52,371 for the years ended December 31, 2016 and December 31, 2015, respectively. The increase was primarily due to the interest expense paid to a shareholder for a loan advance and bank loan borrowed by our subsidiary in Malaysia.

 

Attributable to non-controlling interest

 

The Company records income attributable to non-controlling interest in the consolidated statements of operations for any non-owned portion of consolidated subsidiaries. As of December 31, 2016, the Company holds 60% of the shareholdings of Forward Win International Limited and attributed a net income of $2,313 to the non-controlling interest of Forward Win International Limited for the year ended December 31, 2016. As of December 31, 2016, the Company holds 60% of the shareholdings of Yabez (Hong Kong) Company Limited and attributed a net income of $2,688 to the non-controlling interest of Yabez (Hong Kong) Company Limited for the year ended December 31, 2016. As of December 31, 2016, the Company holds 51% of the shareholdings of Greenpro Capital Village Sdn Bhd and attributed a net income of $7,262 to the non-controlling interest of Greenpro Capital Village Sdn Bhd for the year ended December 31, 2016. As of December 31, 2016, the Company holds 60% of the shareholdings of Greenpro Wealthon Sdn Bhd and attributed a net loss of $1,114 to the non-controlling interest of Greenpro Wealthon Sdn Bhd for the year ended December 31, 2016.

 

Net Loss

 

The net loss was $222,323 and $383,772 for the years ended December 31, 2016 and December 31, 2015, respectively. The decrease in net loss is due to the cost control and increase in services income.

 

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Other than as disclosed elsewhere in this prospectus, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2016 that are reasonably likely to have a material adverse effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

 

Off Balance Sheet Arrangements

 

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders as of December 31, 2016.

 

Contractual Obligations

 

As of December 31, 2016, the Company leases an office in Hong Kong under a non-cancellable operating lease that expires in August 2018. The lease, which covers a term of two years, generally provides for renewal options at specified rental amounts. The Company’s subsidiaries lease certain office premises in the PRC under a non-cancellable operating lease that expires in December 2017. The leases, which cover a term of two years, generally provide for renewal options at specified rental amounts.

 

Related Party Transactions

 

Related party transactions amounted of $222,493 and $243,916 for the years ended December 31, 2016 and December 31, 2015, respectively, in business consulting and advisory income.

 

Our related parties are those companies where Greenpro Venture Capital Limited owns certain percentage of their company shares. One related party is under common control of Mr. Loke, Che Chan Gilbert, director of the Company. One related party is under common control of Ms. Chen, Yanhong, one of the subsidiaries’ directors. One related party is under common control of Mr. Lee, Chong Kuang and Mr. Loke, Che Chan Gilbert, the directors of the Company. All of these related party transactions are generally transacted in an arm-length basis at the current market value in the normal course of business.

 

Critical Accounting Policies and Estimates

 

Our unaudited condensed interim consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States, or US GAAP. The preparation of these unaudited condensed interim consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We base our estimates on historical experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ significantly from the estimates made by our management. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected. We believe that the following critical accounting policies involve a greater degree of judgment and complexity than our other accounting policies. Accordingly, these are the policies we believe are the most critical to understanding and evaluating our unaudited condensed interim consolidated financial condition and results of operations.

 

Inventory – finished property

 

Inventory – finished property represents a multi-unit property developed for resale on a unit by unit basis. Inventory is stated at cost unless the inventory is determined to be impaired in which case the impaired inventory is written down to fair value. The cost of inventory – finished property includes the purchase price of property, legal fees, improvement costs to the building structure, and other acquisition costs. Project wide costs such as land acquisition and certain development costs are allocated to the specific units based upon their relative fair value before construction. All property is finished and ready for sale.

 

In conducting its reviews for indicators of impairment, the Company evaluates, among other things, the margins on units already sold within the project, margins on units under contract but not closed (none as of March 31, 2017 and December 31, 2016), and projected margin on future unit sales. The Company pays particular attention to discern if inventory is moving at a slower than expected pace or where margins are trending downward.

 

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Investment Property

 

Investment Property is 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 and after taking into account their estimated residual values:

 

Categories   Expected useful life   Residual value  
Leasehold land and buildings   50 years     -  
Furniture and fixtures   3 - 10 years     5 %
Office equipment   3 - 10 years     5% - 10 %
Leasehold improvement   Over the shorter of estimated useful life or term of lease     -  

 

The cost of leasehold land and buildings includes the purchase price of property, legal fees, and other acquisition costs.

 

Plant and equipment

 

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 and after taking into account their estimated residual values:

 

Categories   Expected useful life   Residual value  
Furniture and fixtures   3 - 10 years     5 %
Office equipment   3 - 10 years     5% - 10 %
Leasehold improvement   Over the shorter of estimated useful life or term of lease     -  

 

 

Expenditures for maintenance and repairs are expensed as incurred. The gain or loss on the disposal of 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.

 

Intangible assets

 

Intangible assets are stated at cost less accumulated amortization. Intangible assets represented the registration costs of trademarks registered in Hong Kong, the PRC, and Malaysia, which are amortized on a straight-line basis over a useful life of ten year. Intangible assets acquired in business combinations are provisionally considered customer lists amortized on a straight-line basis over a useful life of five year.

 

The Company follows ASC Topic 350 in accounting for intangible assets, which requires impairment losses to be recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by the assets are less than the assets’ carrying amounts. There were no impairment losses recorded on intangible assets for the three months ended March 31, 2017 and 2016 and for the year ended December 31, 2016 and 2015

 

Goodwill

 

Goodwill is the excess of cost of an acquired entity over the fair value of amounts assigned to assets acquired and liabilities assumed in a business combination. With the provision of ASC 350 “Goodwill and Other” , goodwill is not amortized, rather it is tested for impairment annually, and will be tested for impairment between annual tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit and would be measured as the excess carrying value of goodwill over the derived fair value of goodwill. The Company’s policy is to perform its annual impairment testing for its reporting units on December 31, of each fiscal year.

 

In assessing the fair value of goodwill, we first make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying amount before applying the two-step goodwill impairment test. If, after completing our qualitative assessment, we determine that it is more likely than not that the carrying value exceeds estimated fair value, we compare the fair value to our carrying value (including goodwill). If the estimated fair value is greater than the carrying value, we conclude that no impairment exists. If the estimated fair value of the reporting unit is less than the carrying value, a second step is performed in which the implied fair value of goodwill is compared to its carrying value. If the implied fair value of goodwill is less than its carrying value, goodwill must be written down to its implied fair value, resulting in goodwill impairment.

 

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The qualitative analysis included assessing the impact of changes in certain factors including: (1) changes in the overall economy, our market share and market interest rates (2) changes in forecasted operating results and a comparison of actual results to projections, (3) changes in the industry or our competitive environment since the acquisition date.

 

Based on our qualitative assessment performed during the fourth quarter of 2016, we concluded that it was more likely than not that the estimated fair values of our reporting units exceeded their carrying values as of December 31, 2016 and, therefore, determined it was not necessary to perform the two-step goodwill impairment test.

 

Impairment of long-lived assets

 

Long-lived assets primarily include property, plant and equipment and intangible assets. In accordance with the provision of ASC Topic 360-10-5, “ 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 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 reporting unit level. 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.

 

Investments in unconsolidated entities

 

Under the equity method of accounting, investments in unconsolidated entities are initially recognized in the consolidated balance sheet at cost and are subsequently adjusted to reflect the Company’s proportionate share of net earnings or losses of the entity, distributions received, contributions and certain other adjustments, as appropriate. The Company’s share of the income or loss of the unconsolidated entity is reflected in the consolidated statements of operations and will increase or decrease, as applicable, the carrying value of the Company’s investments in unconsolidated entities on the consolidated balance sheet.

 

When the investment cost in an unconsolidated entity is reduced to zero, the Company records no further losses in its consolidated statements of operations unless the Company has an outstanding guarantee obligation or has committed additional funding to the entity. When such entity subsequently reports income, the Company will not record its share of such income until it exceeds the amount of the Company’s share of losses not previously recognized.

 

Revenue recognition

 

The Company recognizes its revenue in accordance with ASC Topic 605, “ Revenue Recognition ”, upon the delivery of its products when: (1) delivery has occurred or services rendered; (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 probable.

 

(a) Rental income

 

Revenue from rental of leasehold land and buildings are recognized on a straight-line basis over the lease term when collectability is reasonably assured and the tenant has taken possession or controls the physical use of the leased assets.

 

(b) Service income

 

Revenue from the provision of (i) business consulting and advisory services and (ii) company secretarial, accounting and financial review services are recognized when there is (i) an existence of contract or an arrangement (ii) services are rendered, (iii) the service price is fixed or determinable, and (iv) collectability is reasonable assured.

 

(c) Sale of properties

 

Revenue from the sale of properties is recognized at the time each unit is delivered and title and possession are transferred to the buyer. Specifically, the Company utilizes the full accrual method where recognition occurs when (i) the collectability of the sales price is reasonably assured, (ii) the seller is not obligated to perform significant activities after the sale, (iii) the initial investment from the buyer is sufficient, and (iv) the Company recognizes revenue when it satisfies a performance obligation by transferring control of a promised property to a customer.

 

Revenue on sales of properties may be deferred in whole or in part until the requirements for revenue recognition have been met.

 

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Cost of revenues

 

Cost of revenue on rental shown on the accompanying statements of operations include costs associated with government rent and rates, repairs and maintenance, property insurance, depreciation and other related administrative costs. Property management fee and utility expenses are paid directly by tenants.

 

Costs of revenue on provision of services primarily consist of employee compensation and related payroll benefits, company formation cost and other professional fees directly attributable to cost in related to the services rendered.

 

Cost of revenues on sale of properties primary consist of the purchase price of property, legal fees, improvement costs to the building structure, and other acquisition costs. Selling and advertising costs are expensed as incurred.

 

Income taxes

 

Income taxes are determined in accordance with the provisions of ASC Topic 740, “ Income Taxes ” (“ASC 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.

 

Furthermore, significant judgment is required in evaluating our tax positions. In the ordinary course of business, there are many transactions and calculations for which the ultimate tax settlement is uncertain. As a result, we recognize the effect of this uncertainty on our tax attributes based on our estimates of the eventual outcome. These effects are recognized when, despite our belief that our tax return positions are supportable, we believe that it is more likely than not that those positions may not be fully sustained upon review by tax authorities. The Company conducts major businesses in Hong Kong, Malaysia and China and is subject to tax in its own jurisdiction. As a result of its business activities, the Company will file separate tax returns that are subject to examination by the foreign tax authorities. Such returns are subject to audit by the various foreign taxing authorities, who may disagree with respect to our tax positions. We believe that our consideration is adequate for all open audit years based on our assessment of many factors, including past experience and interpretations of tax law. We review and update our estimates in light of changing facts and circumstances, such as the closing of a tax audit, the lapse of a statute of limitations or a change in estimate. To the extent that the final tax outcome of these matters differs from our expectations, such differences may impact income tax expense in the period in which such determination is made. The eventual impact on our income tax expense depends in part if we still have a valuation allowance recorded against our deferred tax assets in the period that such determination is made.

 

Related parties

 

Related 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.

 

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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. The Company operates in two reportable operating segments in Hong Kong, China, and Malaysia.

 

Liquidity and Capital Resources

 

As of March 31, 2017, we had working capital of $4,177,782 as compared to working capital of $3,541,077 as of December 31, 2016. The increase was due to increase in cash and cash equivalents, and prepayment and other receivables. We had total current assets of $5,909,660 consisting of cash on hand of $1,459,608 and Inventory – finished property of $3,747,732 compared to total current assets of $5,323,480 as of December 31, 2016. The increase was due to the increase in cash and cash equivalents. We had current liabilities of $1,731,878 consisting of amounts due to related parties of $1,443,760, and accounts payable and accrued liabilities of $205,402. The Company’s net loss was $108,488 and $235,263 for the three months ended March 31, 2017 and 2016, respectively. The Company’s comprehensive loss was $114,919 and $188,753 for the three months ended March 31, 2017 and 2016, respectively. The decrease in net loss and comprehensive loss were due to a significant increase in revenue from the service income as a result of the acquisitions in previous years.

 

As of March 31, 2017, the Company had cash on hand of $1,459,608 and expects to be able to maintain its basic operating requirements for approximately twelve months and to meet its current obligations.

 

As of March 31, 2017, a related party advanced $1,443,760 to the Company for purchasing the inventory – finished property. This loan carries no interest and is convertible into shares of our common stock in the future at the discretion of the holder.

 

As of March 31, 2017, our long-term liabilities consist of bank loans from Standard Chartered Saadiq Berhad, with 300 monthly installments of MYR9,287 (approximately $2,840) each and will mature in May 2038, and from United Overseas Bank (Malaysia) Berhad, with 360 monthly installments of MYR5,382 (approximately $1,645) each and will mature in August 2043. The maturities of the long-term bank loans for each of the five years and thereafter following March 31, 2017 are as follows:

 

Year ending March 31:      
2018   $ 13,451  
2019     14,416  
2020     15,040  
2021     15,831  
2022     16,592  
Thereafter     495,180  
         
Total   $ 570,510  

 

We believe long maturity and relatively small amounts outstanding for the current portion of our bank loans will not impair our ability to improve our operating margins and regain profitability. Therefore, we believe they do not cause a substantial doubt over going concern.

 

Operating activities

 

Net cash used in operating activities was $263,089 for the three months ended March 31, 2017 as compared to net cash used in operating activities of $304,033 for the three months ended March 31, 2016. Less operating cash was used in 2017 because of the decrease in net loss.

 

The cash used in operating activities in 2017 was mainly from the net loss for the period, an increase in prepayment and other receivables and a decrease in other payable and accrued liabilities, while the cash used in operating activities in 2016 consisted primarily of a net loss for the period, a decrease in payables and accrued liabilities, offset by a decrease in prepayments and other receivables. Non-cash expenses totaled $40,862 and $23,125 for the three months ended March 31, 2017 and 2016, respectively, which were primarily composed of depreciation and amortization of $41,677 and a decrease in surrender charge on life insurance of $815 for the three months ended March 31, 2017.

 

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The Company has incurred operating losses and used cash in its operating activities for the past two years. In fiscal 2016, the Company suffered an increase in accounts receivable and decrease in other payable and accrued liabilities and deferred revenue, which resulted in negative operating cash flow. The increase in accounts receivable was due to pending receipt of service income. The Company believes it will have an improvement in accounts receivable turnover and accounts payable turnover ratios in fiscal 2017. Nevertheless, the cash inflow may be still insufficient to fund its operations in the ordinary course of business through at least the next twelve months. Moreover, there can be no assurance that the anticipated sales level will be achieved.

 

Investing activities

 

Net cash used in investing activities was $206,003 for the three months ended March 31, 2017. Net cash provided by investing activities was $11,690 for the three months ended March 31, 2016.

 

The cash used in investing activities were mainly for the long-term investment and purchase of property, plant and equipment in 2017. The Company invested in two unconsolidated entities, namely Dongjia, Inc. and Aquarius Protection Fund SPC – ACP Link Segregated Portfolio, with initial investment amounts of $1,500 and $200,000, respectively. Net Cash provided by investing activities consisted primarily of a refund of life insurance premiums, offset by purchases of property, plant and equipment in 2016 .

 

Financing activities

 

Net cash provided by financing activities was $905,033 for the three months ended March 31, 2017 and net cash used in financing activities was $129,994 for the three months ended March 31, 2016, respectively. The cash provided by financing activities was mainly resulted from the proceeds from share issuance of 916,183 in 2017.

 

Below is the tabular summary of the financing activities of the Company from January 1, 2017 to March 31, 2017:

 

Date   Shares issued   Cash Proceeds
from share
issuance
    Recipients of Shares
                   
January 13, 2017 (1)     199,922   $ 359,859.6     Two shareholders
March 8, 2017 (2)     278,162   $ 556,324     Two shareholders

 

1. The Company completed the sale of 199,922 shares of our restricted common stock at a price of $1.80 per share for aggregate gross proceeds of $359,859.6 in a private placement to Dato Seri, Dr. How Kok Choong and Fortune Wealth (Asia) Limited.
   
2. The Company completed the sale of 278,162 shares of our restricted common stock at a price of $2.00 per share for aggregate gross proceeds of $556,324 in a private placement to CPN Investment Ltd and Fortune Wealth (Asia) Limited.

 

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015

 

As of December 31, 2016, we had working capital of $3,541,077 as compared to working capital of $2,911,967 as of December 31, 2015. The increase was due to the settlement of amounts due to related parties and directors. We had total current assets of $5,323,480 consisting of cash on hand of $1,021,351 and Inventory – finished property of $3,747,732 compared to total current assets of $5,823,970 as of December 31, 2015. The decrease was due to the repayment of loan from shareholder. We had current liabilities of $1,782,403 consisting of amounts due to related parties of $1,463,386, and accounts payable and accrued liabilities of $241,789. The Company’s net loss was $222,323 and $383,772 for the years ended December 31, 2016 and 2015, respectively. The Company’s comprehensive loss was $193,928 and $299,728 for the years ended December 31, 2016 and 2015, respectively. The decrease in net loss and comprehensive loss were due to a significant increase in revenue from the service income as a result of the acquisitions in 2016.

 

As of December 31, 2016, the Company had cash on hand of $1,021,351 and expects to be able to maintain its basic operating requirements for approximately twelve months and to meet its current obligations.

 

As of December 31, 2016, a related party advanced $1,441,548 to the Company for purchasing the inventory – finished property. This loan carries no interest and is convertible into common stock in the future.

 

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As of December 31, 2016, our long-term liabilities consist of bank loans from Standard Chartered Saadiq Berhad, with 300 monthly installments of MYR9,287 (approximately $2,840) each and will mature in May 2038, and from United Overseas Bank (Malaysia) Berhad, with 360 monthly installments of MYR5,382 (approximately $1,645) each and will mature in August 2043. The maturities of the long-term bank loans for each of the five years and thereafter following December 31, 2016 are as follows:

 

Year ending December 31:      
2017   $ 13,042  
2018     14,085  
2019     14,762  
2020     15,402  
2021     16,212  
Thereafter     493,668  
         
Total   $ 567,171  

 

We believe the long maturity and relatively small amount outstanding for the current portion of bank loans will not impair our ability to improve our operating margins and regain profitability, and we therefore believe they do not cause the substantial doubt over going concern.

 

Operating activities

 

Net cash used in operating activities was $502,390 for the year ended December 31, 2016 as compared to net cash used in operating activities of $3,390,397 for the year ended December 31, 2015. The decrease in cash used in operations is because we did not purchase property in 2016, as we did in 2015.

 

The cash used in operating activities in 2016 was mainly from the net loss for the year, increase in accounts receivable and decrease in other payable and accrued liabilities. Non-cash expenses totaled $153,385 and $128,083 for the years ended December 31, 2016 and 2015, respectively, which were primarily composed of depreciation and amortization of $167,204, a surrender charge on life insurance of $19,226 and a share of loss on investments in unconsolidated entities of $9,007 for the year ended December 31, 2016.

 

The Company has incurred operating losses and used cash in its operating activities for the past two years. Cash was mainly used to acquire the inventory and repay the liabilities in 2015 and 2016, respectively. In fiscal 2015, the Company initiated and executed a plan to acquire several properties as inventory, which the Company paid the purchase price of the properties, legal fees, improvement costs to the building structure, and other acquisition costs. All properties were finished and ready for sale. In fiscal 2016, the Company suffered an increase in accounts receivable and decrease in other payable and accrued liabilities and deferred revenue, which resulted in negative operating cash flow. The increase in accounts receivable was due to pending receipt of service income, but at least half of the accounts receivable were collected after December 31, 2016. The Company believes it will have an improvement in accounts receivable turnover and accounts payable turnover ratios in fiscal 2017. Nevertheless, the cash inflow may be still insufficient to fund its operations in the ordinary course of business through at least the next twelve months. Moreover, there can be no assurance that the anticipated sales level will be achieved.

 

Investing activities

 

Net cash used in investing activities was $14,566 and $151,774 for the years ended December 31, 2016 and December 31, 2015, respectively.

 

The cash used in investing activities were mainly for the purchase of property, plant and equipment of $16,126 in 2016 and $20,846 in 2015.

 

Financing activities

 

Net cash used in financing activities was $46,162 for the year ended December 31, 2016 and net cash provided by financing activities was $4,548,865 for the year ended December 31, 2015. The cash used in financing activities was mainly resulted from the repayment of a loan to shareholders and directors of $787,008 in 2016.

 

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We believe the factors of the long maturity and relatively small amount for current portion of bank loans will not impair our ability to improve our operating margins and regain profitability, and we therefore believe they do not cause the substantial doubt over going concern

 

Below is the tabular summary of the financing activities of the Company during 2016 and 2015:

 

Date   Shares issued     Cash Proceeds
from share issuance
    Recipients of Shares
December 31, 2015(1)     410,314     $ 615,471     Two shareholders
May 20, 2016 (2)     257,500     $ 412,000     Three shareholders
December 7, 2016 (3)     27,700     $ 49,860     Dato Seri Dr. How Kok Choong
December 27, 2016 (4)     138,804     $ 249,847     Two shareholders

 

1. The Company completed the sale of 410,314 shares of our restricted common stock at a price of $1.50 per share for aggregate gross proceeds of $615,471 in a private placement to Dongjia Holdings Limited and Fortune Wealth (Asia) Limited.
   
2. The Company completed the sale of 257,500 shares of our restricted common stock at a price of $1.60 per share for aggregate gross proceeds of $412,000 in a private placement to Fortune Wealth (Asia) Limited, Bosy Consultancy Sdn Bhd and Dongjia Holdings Limited.
   
3. The Company completed the sale of 27,700 shares of our restricted common stock at a price of $1.80 per share for aggregate gross proceeds of $49,860 in a private placement to Dato Seri Dr. How Kok Choong.
   
4. The Company completed the sale of 138,804 shares of our restricted common stock at a price of $1.80 per share for aggregate gross proceeds of $249,847 in a private placement to Dongjia Holdings Limited and Fortune Wealth (Asia) Limited.

 

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BUSINESS

 

Overview

 

We currently operate and provide a wide range of business solution services to small and medium-size businesses located in Asia and South-East Asia, with an initial focus on Hong Kong, China and Malaysia. Our comprehensive range of services includes cross-border business solutions, record management services, and accounting outsourcing services. Our cross border business services include, among other services, tax planning, trust and wealth management, cross border listing advisory services and transaction services. As part of the cross border business solutions, we have developed a package solution of services (“Package Solution”) that can reduce their business costs and improve their revenues.

 

We also operate a venture capital business through Greenpro Venture Capital Limited, an Anguilla corporation. Our venture capital business is focused on (1) establishing a business incubator for start-up and high growth companies to support such companies during critical growth periods, which includes education and support services that operates through our subsidiary, Greenpro Capital Village Sdn. Bhd., and (2) searching for investment opportunities in selected start-up and high growth companies, which we expect can generate significant returns to the Company. We expect to target companies located in Asia and South-East Asia including Hong Kong, Malaysia, China, Thailand and Singapore. We anticipate our venture capital business will also engage in the purchase, acquisition and rental of commercial properties in the same Asia and South-East Asia region.

 

Our Services

 

We provide a range of services to our clients as part of the Package Solution that we have developed. We believe that our clients can reduce their business costs and improve their revenues by utilizing our Package Solution.

 

Cross-Border Business Solutions/Cross-Border Listing Solutions

 

We provide a full range of cross-border services to small to medium-sized businesses to assist them in conducting their business effectively. Our “Cross-Border Business Solution” includes the following services:

 

  Advising clients on company formation in Hong Kong, the United States, the British Virgin Islands and other overseas jurisdictions;
     
  Providing assistance to set up bank accounts with banks in Hong Kong to facilitate clients’ banking operations;
     
  Providing bank loan referral services;
     
  Providing company secretarial services;
     
  Assisting companies in applying for business registration certificates with the Inland Revenue Department of Hong Kong;
     
  Providing corporate finance consulting services;
     
  Providing due diligence investigations and valuations of companies;
     
  Advising clients regarding debt and company restructurings;
     
  Providing liquidation, insolvency, bankruptcy and individual voluntary arrangement advice and assistance;
     
  Designing a marketing strategy and promoting the company’s business, products and services;
     
  Providing financial and liquidity analysis;
     
  Assisting in setting up cloud invoicing systems for clients;
     
  Assisting in liaising with investors for purposes of raising capital;
     
  Assisting in setting up cloud inventory system to assist clients to record, maintain and control their inventories and track their inventory levels;

 

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  Assisting in setting up cloud accounting system to enable clients to keep track of their financial performance;
     
  Assisting clients in payroll matters operated in our cloud payroll system;
     
  Assisting clients in tax planning, preparing the tax computation and making tax filings with the Inland Revenue Department of Hong Kong;
     
  Cross border listing advisory services, including but not limited to, United States, United Kingdom, Hong Kong, Australia;
     
  International tax planning in China;
     
  Trust and wealth management; and
     
  Transaction services.

 

There is a growing market in East Asia and South-East Asia, and to an extent this trend continues worldwide, of companies who are seeking to go public and become listed on a recognized exchange in a foreign jurisdiction. With respect to cross border listing advisory services, we are assisting private companies in their desire to list and trade on public exchanges, including the U.S. OTC markets. The Jumpstart Our Business Startups Act, or JOBS Act, signed in 2012, eases the initial public offering (“IPO”) process for “emerging growth companies” and reduces their regulatory burden, (2) improves the ability of these companies to access capital through private offerings and small public offerings without SEC registration, and (3) allows private companies with a substantial shareholder base to delay becoming a public reporting company.

 

Through our cross border listing advisory services, we seek to form the bridge between these companies seeking to conduct their IPO (or in some cases self-directed public offerings), and their goal of becoming a listed company on a recognized U.S. national exchange, such as NASDAQ and the NYSE.

 

While there are several alternatives for companies seeking to go public and trade on the U.S. OTC markets, we primarily focus on three methods:

 

  Registration Statement on Form S-1
  Regulation A+ offering
  The Form 10 shell company

 

The manner in which the OTC markets are structured provides companies the ability to “move up” in the marketplace as they provide better transparency. These markets include:

 

  OTCQX Best Marketplace: offers transparent and efficient trading of established, investor-focused U.S. and global companies.
  OTCQB Venture Marketplace: for early-stage and developing U.S. and international companies that are not yet able to qualify for OTCQX.
  OTC Pink Open Marketplace: offers trading in a wide spectrum of securities through any broker. With no minimum financial standards, this market includes foreign companies that limit their disclosure, penny stocks and shells, as well as distressed, delinquent, and dark companies not willing or able to provide adequate information to investors.

 

We act as a case reference for our clients, in which we first list on OTC market and subsequently uplist to a U.S. national exchange.

 

With growing competition and increasing economic sophistication, we believe more companies need strategies for cross-border restructuring and other corporate matters. Our plan is to bundle our Cross Border Business Solution services with our Cloud Accounting Solution and Accounting Outsourcing Services described below.

 

Accounting Outsourcing Services

 

We intend to develop relationships with professional firms from Hong Kong, Malaysia and China that can provide company secretarial, business centers and virtual offices, book-keeping, tax compliance and planning, payroll management, business valuation, and wealth management services to our clients. We intend to include local accounting firms within this network to provide general accounting, financial evaluation and advisory services to our clients. Our expectation is that firms within our professional network will refer their international clients to us that may need our book-keeping, payroll, company secretarial and tax compliance services. We believe that this accounting outsourcing service arrangement will be beneficial to our clients by providing a convenient, one-stop firm for their local and international business and financial compliance and governance needs.

 

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Our Service Rates

 

We intend to have a two-tiered rate system based upon the type of services being offering. We may impose project-based fees, where we charge 10% -25% of the revenues generated by the client on projects that are completed using our services, such as transaction projects, contract compliance projects, and business planning projects. We may also charge a flat rate fee or fixed fee based on the estimated complexity and timing of a project when our professionals provide specified expertise to our clients on a project. For example, for the Cross-Border Business Solutions, we plan to charge our client a monthly fixed fee.

 

Our Venture Capital Business Segment

 

Venture Capital Investment

 

As a result of our acquisition of Greenpro Venture Capital Limited (“GPVC”) in 2015, we entered the venture capital business in Hong Kong with a focus on companies located in Asia and South-East Asia, including Hong Kong, Malaysia, China, Thailand and Singapore. Our venture capital business is focused on (1) establishing a business incubator for start-up and high growth companies to support such companies during critical growth periods and (2) investment opportunities in select start-up and high growth companies.

 

We believe that a company’s life cycle can be divided into five stages, including the seed stage, start up stage, expansion stage, mature stage and decline stage.

 

  Seed stage: Financing is needed for assets, and research and development of an initial business concept. The company usually has relatively low costs in developing the business idea. The ownership model is considered and implemented.
     
  Start-up stage: Financing is needed for product development and initial marketing. Firms in this phase may be in the process of setting up a business or they might have been in operating the business for a short period of time, but may not have sold their products commercially. In this phase, costs are increasing due to. product development, market research and the need to recruit personnel. Low levels of revenues are starting to generate.
     
  Expansion stage: Financing is needed for growth and expansion. Capital may be used to finance increased production capacity, product or marketing development or to hire additional personnel. In the early expansion phase, sales and production increases but there is not yet any profit. In the later expansion stage, the business typically needs extra capital in addition to organically generated profit, for further development, marketing or product development.

 

We anticipate that most of a company’s funding needs will occur during these first three stages.

 

We intend for our business incubators to provide valuable support to young, emerging growth and potential high growth companies at critical junctures of their development. For example, our incubators will offer office space at a below market rental rate. We will also provide our expertise, business contacts, introductions and other resources to assist their development and growth. Depending on each individual circumstance, we may also take an active advisory role in our venture capital companies including board representation, strategic marketing, corporate governance, and capital structuring. We believe that there will be potential investment opportunities for us in these start-up companies.

 

In addition to our business incubator, we have also taken an equity position in the following companies that we believe have high growth potential.

 

Name   Equity Ownership   Business Line
Rito Group Corp.(Nevada, USA)   29.5 %   Providing an online platform for merchants and customers to facilitate transactions
Forward Win International Limited(Hong Kong)   60 %   Holding Hong Kong real estate for investment purpose
DSwiss, Inc. (Nevada, USA)   29.5 %   Retailer in slimming and beauty products
Chief Billion Limited (Hong Kong)   100 %   Holding Hong Kong real estate for investment purpose
Greenpro Venture cap (Qianhai) Limited (Formerly known as Greenpro Venture Cap (CGN) Limited) (Anguilla)   100 %   Holding company
NPQ Holdings Limited (Nevada, USA)   19.28 %   Providing mobile Apps, restaurant management system and cloud ERP
Seeder Media Corporation (Nevada, USA)   5%   Providing services in connect with public relations, investor relations and event management
Ecco Auto World Corporation (Nevada, USA)   5%   Providing mobile Apps to connect the car owners with nationwide car workshops.
Dongjia, Inc. (Nevada, USA)   5%  

Engaged in aquaculture and marine biotechnology business such as

marine cage culture and marine hatchery and nursery

Aquarius Protection Fund SPC – ACP Link Segregated Portfolio (Cayman Islands)   N/A   Investing in a portfolio of funds, listed and unlisted equities, preferred stocks, convertible securities, equity-related instruments and debt securities
Agape ATP Corporation   5%   Providing health and wellness products and health solution advisory services

 

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Our business processes for our investment strategy in select start-up and high growth companies is as follows:

 

  Step 1. Generating Deal Flow: We expect to actively search for entrepreneurial firms and to generate deal flow through our business incubator and the personal contacts of our executive team. We also anticipate that entrepreneurs will approach us for financing.
     
  Step 2. Investment Decision: We will evaluate, examine and engage in due diligence of a prospective portfolio company, including but not limited to product/services viability, market potential and integrity as well as capability of the management. After that both parties arrive at an agreed value for the deal. Following that is a process of negotiation, which if successful, ends with capital transformation and restructuring.
     
  Step 3. Business Development and Value Adding: In addition to capital contribution, we expect to provide expertise, knowledge and relevant business contacts to the company.
     
  Step 4. Exit: There are several ways to exit an investment in a company. Common exits are:
     
     IPO (Initial Public Offering): The company’s shares are offered in a public sale on an established securities market.
       
    Trade sale (Acquisition): The entire company is sold to another company.
       
    Secondary sale: The company’s firm sells only part of its shares..
       
    Buyback or MBO: Either the entrepreneur or the management of the company buys back the company’s shares of the firm.
       
    Reconstruction, liquidation or bankruptcy: If the project fails the company will restructure or close down the operations.

 

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Our objective is to achieve a superior rate of return through the eventual and timely disposal of investments. We intend to invest in businesses that meet the following criteria:

 

  high growth prospects;
     
  ambitious teams;
     
  viability of product or service;
     
  experienced management;
     
  ability to convert plans into reality; and
     
  justification of venture capital investment and investment criteria.

 

Our Venture Capital Related Education and Support Services.

 

In addition to providing venture capital services through GPVC, we also provide educational and support services that we believe will be synergistic with our venture capital business. We have arranged few seminars called the CEO & Business Owners Strategic Session (“CBOSS”) in Malaysia and Singapore for business owners who are interested in the following:

 

  Developing their business globally;
     
  Expanding business with increased capital funding;
     
  Creating a sustainable SME business model;
     
  Accelerating the growth of the business; or
     
  Significantly increasing company cash flows.

 

The objective the CBOSS seminar is to educate the chief executive officers or business owners on how to acquire “smart capital” and the considerations involved. The seminar includes an introduction to the basic concepts of “smart capital,” “wealth and value creation,” recommendation and planning and similar topics. We believe that this seminar will synergistically support our venture capital business segment.

 

Sales and Marketing

 

We plan to deploy three strategies to market the Greenpro brand: leadership, market segmentation and sales management process development.

 

  Building Brand Image: Greenpro’s marketing efforts will focus on building the image of our extensive expertise and knowledge of our professionals. We intend to conduct a marketing campaign through media visibility, seminars, webinars, and the creation of a wide variety of white papers, newsletters, books, and other information.
     
  Market segmentation: We plan to devote marketing resources to the highly measurable and high return on investment tactics that specifically target those industries and areas where Greenpro has particularly deep experience and capabilities. These efforts typically involve local, regional or national trade show and event sponsorships, targeted direct mail, email, and telemarketing campaigns, and practice and industry specific micro-sites and newsletters in the Asia region.
     
  Social Media: We plan to begin a social media campaign utilizing blogs, Twitter, Facebook and LinkedIn after we secure sufficient financing. A targeted campaign will be made to the following groups of clients: law firms, auditing firms, consulting firms and small to medium-size enterprises in different industries, including biotechnology, intellectual property, information technologies and real estate.

 

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Market Opportunities

 

We believe the main drivers for the growth of our business are the products and services together with the resources such as an office network, professional staff members and operational tools to make the advisory and consulting business more competitive.

 

We intend to assist our clients in the cost-effective preparation of their financial statements and provide security based on such financial information since the data will be stored in the cloud system. We anticipate a market with growing needs in East Asia and South-East Asia. We believe that there is currently an increasing need for enterprises in different industries to maximize their performance with cost-effective methods. We believe our services will create numerous competitive advantages for our clients. We believe that with us handling the administrative and logistic support, our clients can focus on developing their businesses and expanding their own client portfolio.

 

Customers

 

Our revenues are generated from clients located globally, including those from Hong Kong, China, Malaysia, Singapore, Indonesia, Thailand, Australia, Japan, Taiwan, Russia and the United States. Our venture capital business segment will initially focus on Hong Kong and South-East Asia start-ups and high growth companies. We hope to generate deal flow through personal contacts of our management team as well as through our business incubator.

 

We generated net revenues of $2,776,435 during the fiscal year ended December 31, 2016 and $775,323 for the three-month period ended March 31, 2017. Our venture capital business accounted for approximately two percent of our net revenue. We are not a party to any long-term agreements with our customers.

 

Competition

 

We operate in a mature, competitive industry. We consider our focus to be on a niche market of small and medium-sized businesses. Competition in the general field of business advisory services is quite intense, particularly in Hong Kong. We face competition principally from established law firms and consulting service providers in the corporate finance industry, such as Marbury, King & Wood Mallesons, QMIS Financial Group, First Asia Finance Group Limited and their respective affiliates, as well as from certain accounting firms, including those that specialize in a tax planning and corporate restructuring. The competition in China and Malaysia is not as fierce as in Hong Kong. Our major competitors in China are JP Investment Group and QMIS Financial Group while our major competitors in Malaysia are Global Bridge Management Sdn Bhd and QMIS Financial Group. These competitors generate significant traffic and have established brand recognition and financial resources. New or existing competition that uses a business model that is different from our business model may apply pressure on us to change so that we can remain competitive.

 

We believe that the principal competitive factors in our market include quality of analysis; applicability and efficacy of recommendations; strength and depth of relationships with clients; ability to meet the changing needs of current and prospective clients; and service scope. By utilizing our competitive strengths, we believe that we have a competitive edge over other competitors due to the breadth of our service offerings, one stop convenience, pricing, marketing expertise, coverage network, service levels, track record, brand and reputation. We are confident we can retain and enlarge our market share.

 

Intellectual Property

 

We intend to protect our investment in the research and development of our products and technologies. We intend to seek the widest possible protection for significant product and process developments in our major markets through a combination of trade secrets, trademarks, copyrights and patents, if applicable. We anticipate that the form of protection will vary depending upon the level of protection afforded by a particular jurisdiction. Currently, our revenue is derived principally from our operations in Hong Kong, China and Malaysia, where intellectual property protection may be limited and difficult to enforce. In such instances, we may seek protection of our intellectual property through measures taken to increase the confidentiality of intellectual property.

 

We have registered trademarks as a means of protecting the brand names of our companies and products. We intend to protect our trademarks against infringement and also seek to register design protection where appropriate. Currently, there are six trademarks registered under the name of Greenpro Resources (HK) Limited.

 

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Trademark Owner Country / Territory Registration Date Brief Description

Greenpro Resources (HK)

Limited

Hong Kong August 11, 2010 and June 25, 2013 Advertising, business management, business administration, office functions, research services, education, training
The U.S. February 2, 2016 Business administration services, Business assistance, management and information services, Business knowledge management and consulting services
China December 28, 2014 Advertising, business management, business administration, office functions and research services
Singapore July 22, 2013 Advisory services related to business management and administration, computer software and security

 

We rely on trade secrets and un-patentable know-how that we seek to protect, in part, by confidentiality agreements. Our policy is to require all employees to execute confidentiality agreements upon the commencement of employment with us. These agreements provide that all confidential information developed or made known to the individual during the course of the individual’s relationship with us is to be kept confidential and not disclosed to third parties except in specific limited circumstances. The agreements also provide that all inventions conceived by the individual while rendering services to us shall be assigned to us as the exclusive property of our company. There can be no assurance, however, that all persons who we desire to sign such agreements will sign, or if they do, that these agreements will not be breached, that we would have adequate remedies for any breach, or that our trade secrets or unpatentable know-how will not otherwise become known or be independently developed by competitors.

 

Government Regulation

 

We provide our Package Solution initially in Hong Kong, China and Malaysia, which we believe are locations that would need outsourcing support services. Further, we believe these markets are the central and regional markets for many customers doing cross border business in Asia. We target those customers from East Asia and South-East Asia doing international business and plan to provide our Package Solution to meet their needs. Our planned Packaged Solution will be structured in Hong Kong but services may be outsourced to lower cost jurisdictions such as Malaysia and China, which encourage and welcome outsourcing services.

 

The following regulations are the laws and regulations that may be applicable to us:

 

Hong Kong

 

Our businesses located in Hong Kong are subject to the general laws in Hong Kong governing businesses, including labor, occupational safety and health, general corporations, intellectual property and other similar laws. Because our website is maintained through the server in Hong Kong, we expect that we will be required to comply with the rules of regulations of Hong Kong governing the data usage and regular terms of service applicable to our potential customers. As the information of our potential customers is preserved in Hong Kong, we will need to comply with the Hong Kong Personal Data (Privacy) Ordinance (Cap 486).

 

The Employment Ordinance is the main piece of legislation governing conditions of employment in Hong Kong. It covers a comprehensive range of employment protection and benefits for employees, including Wage Protection, Rest Days, Holidays with Pay, Paid Annual Leave, Sickness Allowance, Maternity Protection, Statutory Paternity Leave, Severance Payment, Long Service Payment, Employment Protection, Termination of Employment Contract, Protection Against Anti-Union Discrimination.

 

An employer must also comply with all legal obligations under the Mandatory Provident Fund Schemes Ordinance, (Cap 485). These include enrolling all qualifying employees in Mandatory Provident Fund (“MPF”) schemes and making MPF contributions for them. Except for exempt persons, employer should enroll both full-time and part-time employees who are at least 18 but under 65 years of age in an MPF scheme within the first 60 days of employment. The 60-day employment rule does not apply to casual employees in the construction and catering industries.

 

We are required to make MPF contributions for our Hong Kong employees once every contribution period (generally the wage period). Employers and employees are each required to make regular mandatory contributions of 5% of the employee’s relevant income to an MPF scheme, subject to the minimum and maximum relevant income levels. For a monthly-paid employee, the minimum and maximum relevant income levels are $7,100 and $30,000 respectively.

 

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We are in compliance with the above applicable ordinances and regulations in Hong Kong and have not involved any lawsuit or prosecuted by the local authority resulting from any breach of the ordinances and regulations.

 

Malaysia

 

Our businesses located in Malaysia are subject to the general laws in Malaysia governing businesses including labor, occupational safety and health, general corporations, intellectual property and other similar laws including the Computer Crime Act 1997 and The Copyright (Amendment) Act 1997. We believe that the focus of these laws is censorship in Malaysia, however we believe this does not impact our businesses because the censorship focus is on media controls and does not relate to cloud based technology we plan to use.

 

Our real estate investments are subject to extensive local, city, county and state rules and regulations regarding permitting, zoning, subdivision, utilities and water quality as well as federal rules and regulations regarding air and water quality and protection of endangered species and their habitats. Such regulation may result in higher than anticipated administrative and operational costs.

 

We are in compliance with the above applicable ordinances and regulations in Malaysia and have not involved any lawsuit or prosecuted by the local authority resulting from any breach of the ordinances and regulations.

 

China

 

A portion of our acquired businesses is located in China and subject to the general laws in China governing businesses including labor, occupational safety and health, general corporations, intellectual property and other similar laws.

 

Employment Contracts

 

The Employment Contract Law was promulgated by the National People’s Congress’ Standing Committee on June 29, 2007 and took effect on January 1, 2008. The Employment Contract Law governs labor relations and employment contracts (including the entry into, performance, amendment, termination and determination of employment contracts) between domestic enterprises (including foreign-invested companies), individual economic organizations and private non-enterprise units (collectively referred to as the “employers”) and their employees.

 

a. Execution of employment contracts

 

Under the Employment Contract Law, an employer is required to execute written employment contracts with its employees within one month from the commencement of employment. In the event of contravention, an employee is entitled to receive double salary for the period during which the employer fails to execute an employment contract. If an employer fails to execute an employment contract for more than 12 months from the commencement of the employee’s employment, an employment contract would be deemed to have been entered into between the employer and employee for a non-fixed term.

 

b. Right to non-fixed term contracts

 

Under the Employment Contract Law, an employee may request for a non-fixed term contract without an employer’s consent to renew. In addition, an employee is also entitled to a non-fixed term contract with an employer if he has completed two fixed term employment contracts with such employer; however, such employee must not have committed any breach or have been subject to any disciplinary actions during his employment. Unless the employee requests to enter into a fixed term contract, an employer who fails to enter into a non-fixed term contract pursuant to the Employment Contract Law is liable to pay the employee double salary from the date the employment contract is renewed.

 

c. Compensation for termination or expiry of employment contracts

 

Under the Employment Contract Law, employees are entitled to compensation upon the termination or expiry of an employment contract. Employees are entitled to compensation even in the event the employer (i) has been declared bankrupt; (ii) has its business license revoked; (iii) has been ordered to cease or withdraw its business; or (iv) has been voluntarily liquidated. Where an employee has been employed for more than one year, the employee will be entitled to such compensation equivalent to one month’s salary for every completed year of service. Where an employee has employed for less than one year, such employee will be deemed to have completed one full year of service.

 

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d. Trade union and collective employment contracts

 

Under the Employment Contract Law, a trade union may seek arbitration and litigation to resolve any dispute arising from a collective employment contract; provided that such dispute failed to be settled through negotiations. The Employment Contract Law also permits a trade union to enter into a collective employee contract with an employer on behalf of all the employees.

 

Where a trade union has not been formed, a representative appointed under the recommendation of a high-level trade union may execute the collective employment contract. Within districts below county level, collective employment contracts for industries such as those engaged in construction, mining, food and beverage and those from the service sector, etc., may be executed on behalf of employees by the representatives from the trade union of each respective industry. Alternatively, a district-based collective employment contract may be entered into.

 

As a result of the Employment Contract Law, all of our employees have executed standard written employment agreements with us. We have not experienced any significant labor disputes or any difficulties in recruiting staff for our operations.

 

On October 28, 2010, the National People’s Congress of China promulgated the PRC Social Insurance Law, which became effective on July 1, 2011. In accordance with the PRC Social Insurance Law, the Interim Regulations on the Collection and Payment of Social Security Fund and other relevant laws and regulations, China establishes a social insurance system including basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance and maternity insurance. An employer shall pay the social insurance for its employees in accordance with the rates provided under relevant regulations and shall withhold the social insurance that should be assumed by the employees. The authorities in charge of social insurance may request an employer’s compliance and impose sanctions if such employer fails to pay and withhold social insurance in a timely manner. Under the Regulations on the Administration of Housing Fund effective in 1999, as amended in 2002, PRC companies must register with applicable housing fund management centers and establish a special housing fund account in an entrusted bank. Both PRC companies and their employees are required to contribute to the housing funds.

 

The Ministry of Human Resources and Social Security promulgated the Interim Provisions on Labor Dispatch on January 24, 2014. The Interim Provisions on Labor Dispatch, which became effective on March 1, 2014, sets forth that labor dispatch should only be applicable to temporary, auxiliary or substitute positions. Temporary positions shall mean positions subsisting for no more than six months, auxiliary positions shall mean positions of non-major business that serve positions of major businesses, and substitute positions shall mean positions that can be held by substitute employees for a certain period of time during which the employees who originally hold such positions are unable to work as a result of full-time study, being on leave or other reasons. The Interim Provisions further provides that, the number of the dispatched workers of an employer shall not exceed 10% of its total workforce, and the total workforce of an employer shall refer to the sum of the number of the workers who have executed labor contracts with the employer and the number of workers who are dispatched to the employer.

 

Foreign Exchange Control and Administration

 

Foreign exchange in China is primarily regulated by:

 

  The Foreign Currency Administration Rules (1996), as amended; and
     
  The Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules.

 

Under the Foreign Currency Administration Rules, if documents certifying the purposes of the conversion of RMB into foreign currency are submitted to the relevant foreign exchange conversion bank, the RMB will be convertible for current account items, including the distribution of dividends, interest and royalties payments, and trade and service-related foreign exchange transactions. Conversion of RMB for capital account items, such as direct investment, loans, securities investment and repatriation of investment, however, is subject to the approval of SAFE or its local counterpart.

 

Under the Administration Rules for the Settlement, Sale and Payment of Foreign Exchange, foreign-invested enterprises may only buy, sell and/or remit foreign currencies at banks authorized to conduct foreign exchange business after providing valid commercial documents and, in the case of capital account item transactions, obtaining approval from SAFE or its local counterpart.

 

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As an offshore holding company with a PRC subsidiary, we may (i) make additional capital contributions to our PRC subsidiaries, (ii) establish new PRC subsidiaries and make capital contributions to these new PRC subsidiaries, (iii) make loans to our PRC subsidiaries or consolidated affiliated entities, or (iv) acquire offshore entities with business operations in China in offshore transactions. However, most of these uses are subject to PRC regulations and approvals. For example:

 

  Capital contributions to our PRC subsidiaries, whether existing or newly established ones, must be approved by the Ministry of Commerce or its local counterparts;
     
  Loans by us to our PRC subsidiaries, each of which is a foreign-invested enterprise, to finance their activities cannot exceed statutory limits and must be registered with SAFE or its local branches; and
     
  Loans by us to our consolidated affiliated entities, which are domestic PRC entities, must be approved by the National Development and Reform Commission and must also be registered with SAFE or its local branches.

 

On August 29, 2008, SAFE promulgated the Circular on the Relevant Operating Issues concerning the Improvement of the Administration of Payment and Settlement of Foreign Currency Capital of Foreign-invested Enterprises, or “Circular 142”. On March 30, 2015, SAFE issued the Circular of the State Administration of Foreign Exchange Concerning Reform of the Administrative Approaches to Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or “Circular 19”, which became effective on June 1, 2015, to regulate the conversion by foreign invested enterprises, or FIEs, of foreign currency into RMB by restricting how the converted RMB may be used. Circular 19 requires that RMB converted from the foreign currency-dominated capital of a FIE shall be managed under the Accounts for FX settlement and pending payment. The expenditure scope of such Account includes: expenditure within the business scope, payment of funds for domestic equity investment and RMB deposits, repayment of the RMB loans after completed utilization and so forth. A FIE shall truthfully use its capital by itself within the business scope and shall not, directly or indirectly, use its capital or RMB converted from the foreign currency-dominated capital for (i) expenditure beyond its business scope or expenditure prohibited by laws or regulations, (ii) disbursing RMB entrusted loans (unless permitted under its business scope), repaying inter-corporate borrowings (including third-party advance) and repaying RMB bank loans already refinanced to any third party. Where a FIE, other than a foreign-invested investment company, foreign-invested venture capital enterprise or foreign-invested equity investment enterprise, makes domestic equity investment by transferring its capital in the original currency, it shall obey the current provisions on domestic re-investment. Where such a FIE makes domestic equity investment by its RMB conversion, the invested enterprise shall first go through domestic re-investment registration and open a corresponding Accounts for FX settlement and pending payment, and the FIE shall thereafter transfer the conversion to the aforesaid Account according to the actual amount of investment. In addition, according to the Regulations of the People’s Republic of China on Foreign Exchange Administration, which became effective on August 5, 2008, the use of foreign exchange or RMB conversion may not be changed without authorization.

 

Violations of the applicable circulars and rules may result in severe penalties, including substantial fines as set forth in the Foreign Exchange Administration Regulations.

 

In light of the various requirements imposed by PRC regulations on loans to and direct investment in PRC entities by offshore holding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessary government approvals on a timely basis, if at all, with respect to future loans to our PRC subsidiary or future capital contributions by us to our PRC subsidiary. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we expect to receive from this offering and the concurrent private placement and to capitalize or otherwise fund our PRC operations may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business.

 

We are in compliance with the above applicable ordinances and regulations in China and have not involved any lawsuit or prosecuted by the local authority resulting from any breach of the ordinances and regulations.

 

Insurance

 

We do not current maintain property, business interruption and casualty insurance. As our business matures, we expect to obtain such insurance in accordance with customary industry practices in Malaysia, Hong Kong and China, as applicable.

 

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Employees

 

As of August 2, 2017, we have 67 employees, located in the following territories:

 

Country/Territory   Number of Employees
Malaysia   17
China   28
Hong Kong   22

 

As a result of the Employment Contract Law, all of our employees in China have executed standard written employment agreements with us.

 

We are required to contribute to the Employees Provident Fund under a defined contribution pension plan for all eligible employees in Malaysia between the ages of eighteen and fifty-five. We are required to contribute a specified percentage of the participant’s income based on their ages and wage level. The participants are entitled to all of our contributions together with accrued returns regardless of their length of service with the company. For the years ended December 31, 2016 and 2015, the contributions are $19,151 and $3,378, respectively. For the three-month periods ended March 31, 2017 and 2016, the contributions are $8,326 and $3,404, respectively.

 

We are required to contribute to the MPF for all eligible employees in Hong Kong between the ages of eighteen and sixty five. We are required to contribute a specified percentage of the participant’s income based on their ages and wage level. For the years ended December 31, 2016 and 2015, the MPF contributions by the Company were $14,529 and $11,627, respectively, while for the three-month periods ended March 31, 2017 and 2016 the contributions are $6,152 and $4,248, respectively. We have not experienced any significant labor disputes or any difficulties in recruiting staff for our operations.

 

We are required to contribute to the Social Insurance Schemes and Housing Fund Schemes for all eligible employees in PRC. For the years ended December 31, 2016 and 2015, the contributions were $9,262 and $1,772, respectively. For the three-month periods ended March 31, 2017 and 2016, the contributions are $3,600 and $3,565, respectively.

 

Executive Office

 

Our principal executive office is located at Room 1701-1703, 17/F The Metropolis Tower, 10 Metropolis Drive, Hung Hom, Kowloon, Hong Kong. Our principal telephone number is +852 3111 7718. Our website is at: http://www.greenprocapital.com . The information contained on our website is not, and should not be interpreted to be, a part of this prospectus.

 

Properties

 

Our principal executive office is located at Room 1701-1703, 17/F The Metropolis Tower, 10 Metropolis Drive, Hung Hom, Kowloon, Hong Kong. We are subject to a two year operating lease expiring on April 30, 2018 that provides for monthly payments of approximately $25,834.

 

The Company owns the following properties which are currently used for investment purposes:

 

Location   Owner   Use
         
B-7-5, North Point Office, Mid Valley City, No. 1, Medan Syed Putra Utara~59200 Kuala Lumpur, Malaysia   Greenpro Resources Sdn. Bhd.   Office Building
         
D-07-06 and D-07-07~Skypark @ One City Jalan USJ 25.1~47650 Subang Jaya, Selangor, Malaysia   Greenpro Resources Sdn. Bhd.   Investment for rental and capital gains
         
14/F, Wang Cheung Industrial Building, 6 Tsing Yeung Circle- Tuen Mun, N.T., Hong Kong   Forward Win International Limited   Investment for rental and capital gains
         
6/F, Block A, Wah Tat Industrial Centre . No. 8 Wah Sing Street, Kwai Chung, Kowloon, Hong Kong   Chief Billion Limited   Investment for capital gains

 

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In May 2013, the Company obtained a loan in the principal amount of MYR1,629,744 (approximately $495,170) from Standard Chartered Saadiq Berhad, a financial institution in Malaysia to finance the acquisition of leasehold office units at Skypark One City, Selangor in Kuala Lumpur, Malaysia. The loan bears interest at the base lending rate less 2.1% per annum, is payable in 300 monthly installments of MYR9,287 (approximately $2,840) each and matures in May 2038. The mortgage loan is secured by (i) the first legal charge over the property, (ii) a personal guarantee by Mr. Lee Chong Kuang and Ms. Yap Pei Ling, the director and spouse of director of the Company, respectively, and (iii) a corporate guarantee by Weld Asia International Sdn Bhd, a related company which controlled by the directors of the Company previously.

 

In August 2013, the Company, through Mr. Lee Chong Kuang, a director of the Company, obtained a loan in the principal amount of MYR1,074,696 (approximately $326,530) from United Overseas Bank (Malaysia) Berhad, a financial institution in Malaysia, to finance the acquisition of a leasehold office unit at Northpoint, Mid Valley City in Kuala Lumpur, Malaysia. The loan bears interest at the base lending rate less 2.2% per annum, is payable in 360 monthly installments of MYR5,382 (approximately $1,645) each and matures in August 2043. The mortgage loan is secured by the first legal charge over the property.

 

The Company leases an office in Shenzhen, China, located at Room 2206-2207, Di Wang Building (Shun Hing Square), No. 5002 East Shennan Road, Luohu District, Shenzhen, China, with 2,900 square feet. The monthly leasing payment is approximately $9,800 and the lease expires on December 31, 2017.

 

We believe that the current facilities are adequate for our current needs. We intend to secure new facilities or expand existing facilities as necessary to support future growth. We believe that suitable additional space will be available on commercially reasonable terms as needed to accommodate our operations.

 

Legal Proceedings

 

As of the date hereof, we know of no material pending legal proceedings against to which we or any of our subsidiaries is a party or of which any of our property is the subject. There are no proceedings in which any of our directors, executive officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. From time to time, we may be subject to various claims, legal actions and regulatory proceedings arising in the ordinary course of business.

 

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OUR CORPORATE STRUCTURE AND ACQUISITION HISTORY

 

We were incorporated on July 19, 2013 in the state of Nevada under the name Greenpro, Inc. On May 6, 2015, we changed our name to Greenpro Capital Corp. Our corporate structure is set forth below:

 

 

A list of our subsidiaries and affiliates together with a brief description of their business is set forth below:

 

Name   Business
     
Greenpro Capital Corp. (Nevada, USA)   Provides financial consulting services and corporate services
     
Greenpro Resources Limited (British Virgin Islands)   Holding company
     
Greenpro Holding Limited (Hong Kong)   Holds life insurance products
     
Greenpro Resources (HK) Limited (Hong Kong)   Holds Greenpro intellectual property and currently holds six trademarks and applications thereof
     
Greenpro Resources Sdn. Bhd. (Malaysia)   Holds real property usable as offices in Malaysia
     
Greenpro Management Consultancy (Shenzhen) Limited (China)   Provides corporate advisory services such as tax planning, cross-border listing solution and advisory, transaction services in China
     
Shenzhen Falcon Finance Consulting Limited (China)   Provides Hong Kong company formation advisory services & company secretarial services and financial services. It focuses on China clients.
     
Greenpro Capital Village Sdn Bhd (Formerly known as Greenpro Global Advisory Sdn. Bhd.) (Malaysia)   Provides educational and support services through seminars and courses to new start-up companies or SMEs.
     
Greenpro Wealthon Sdn Bhd (Malaysia)   Provides corporate advisory services such as company review, bank loan advisory and bank products analysis services.

 

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Greenpro Financial Consulting Limited (Belize)   Provides corporate advisory services such as tax planning, cross-border listing solution and advisory, transaction services
     
Asia UBS Global Limited (Belize)   Provides business advisory services with main focus on offshore company formation advisory and company secretarial service, such as tax planning, bookkeeping and financial review. It focuses on South-East Asia and China clients.
     
Asia UBS Global Limited (Hong Kong)   Provides business advisory services with main focus on Hong Kong company formation advisory and company secretarial service, such as tax planning, bookkeeping and financial review. It focuses on Hong Kong clients.
     
Falcon Corporate Services Limited (Formerly known as Ace Corporate Services Limited) (Hong Kong)   Provides offshore company formation advisory services & company secretarial services. Client based in Hong Kong & China
     
Falcon Secretaries Limited (Hong Kong)   Provides Hong Kong company formation advisory services & company secretarial services. Client based in Hong Kong & China
     
Yabez (Hong Kong) Company Limited (Hong Kong)   Provides Hong Kong company formation advisory services, corporate secretarial services and IT related services to Hong Kong based clients.
     
Yabez Business Service (SZ) Company Limited (China)   Provides Shenzhen company formation advisory services, corporate secretarial services and IT related services to China based clients.
     
Billion Sino Holdings Limited (Seychelles)   Holding company
     
Parich Wealth Management Limited (Hong Kong)   Provides insurance intermediary business in Hong Kong. Services scope includes long term and general insurance. A qualified member of Professional Insurance Brokers Association (“PIBA”)
     
Greenpro Credit Limited (Hong Kong) (Formerly known as Gushen Credit Limited)   Provide loan and credit services in Hong Kong. Holder of Money Lenders License.
     
Greenpro Family Office Limited (Hong Kong)   Provides professional multi-family office offers services such as wealth planning, administration, asset protection & management, asset consolidation, asset performance monitoring, charity services, tax and legal services, trusteeship and risk management, investment planning & management, and business support services.
     
Greenpro Venture Capital Limited (Anguilla)   Holding company
     
Forward Win International Limited (Hong Kong)   Holding Hong Kong real estate for investment purpose
     
Chief Billion Limited (Hong Kong)   Holding Hong Kong real estate for investment purpose
     
Greenpro Venturecap (Qianhai) Limited (Formerly known as Greenpro Venture Cap (CGN) Limited) (Anguilla)   Holding company

 

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Acquisition and Reorganization History

 

Acquisition of Greenpro Resources Limited, a British Virgin Islands company

 

On July 31, 2015, we acquired 100% of the issued and outstanding securities of Greenpro Resources Limited, a British Virgin Islands corporation that was our affiliate at the time of the acquisition (“GRBV”). As consideration thereof, we issued to the shareholders of GRBV 9,070,000 restricted shares of our common stock (valued at $3,174,500 based on the average closing price of the six trading days preceding July 28, 2015, which was $0.35 per share) and paid US$25,500 in cash, representing an aggregate purchase price of US$3,200,000. The purchase price was determined based on the existing business value of GRBV, carrying value of GRBV properties, brand names of GRBV and settlement of GRBV founder initial investment.

 

GRBV provides corporate advisory services such as tax planning, cross-border listing solutions and advisory and transaction services to start-up and high –growth companies. It also owns real estate in Selangor Darul Ehsan, Malaysia and Kuala Lumpur, Malaysia that are investment properties, which are currently generating rental income. Through our acquisition of GRBV, we hope to expand our customer and revenue base as well as broaden the range of services we offer.