Note 1.     Nature of Operations and Summary of Significant Accounting Policies

Background and nature of operations

Glory Connection Sdn. Bhd. (the “Company”) is a private limited company incorporated and domiciled in Malaysia. The Company and its subsidiaries are primarily engaged in the manufacturing and sale of electric vehicles and related components. Details of the Company’s subsidiaries are as follows:

Note

¹ At December 31, 2018, the Company had no subsidiaries.

² NTC Asia Sdn. Bhd. (“NTC”) was incorporated on May 15, 2019 and Glory has 55% interest in NTC since its incorporation.

The Company, which is in the planning and development phase, has incurred losses from operations since inception and has an accumulated deficit of $100,297 as of June 30, 2019. The Company will rely on proceeds from debt and equity issuances to pay for ongoing operating expenses in order to execute its business plan to ensure the Company will continue as a going concern through October 2020. The consolidated financial statements have been prepared assuming that the Company will continue as a going concern, accordingly, they do not include any adjustments that might result from the outcome of this uncertainty.

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries and have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Principles of Consolidation

All significant intercompany transactions and balances are eliminated in consolidation.

Revenue recognition

The Company recognizes revenue when (or as) it transfers control over a product or service to customer. A product or service is transferred when the customer obtains control of the product or service.  Revenue is measured based on the consideration specified in an invoice with a customer in exchange for transferring goods or services to a customer.   

Translation of foreign currencies

The functional currency of the Company and its subsidiaries is Malaysian Ringgit. Assets and liabilities recorded in the functional currency are translated to the reporting currency (“US Dollar”) at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments resulting from this process are recorded to other comprehensive income.

Cash and cash equivalents

Cash and cash equivalents comprise cash and bank balances. There are no withdrawal restrictions on cash and the balances are insured.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are recognized at invoiced amounts and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company reviews its allowance for doubtful accounts receivable on an ongoing basis. In establishing the required allowance, management considers any historical losses, the customer’s financial condition, the accounts receivable aging, and the customer’s payment patterns.

The Company does not have any allowance for doubtful accounts balances since inception.

Property and Equipment, Net

Property and equipment are stated at cost less accumulated depreciation. Expenditures for normal maintenance and repairs are expensed as incurred. Depreciation is based on the straight-line method over the estimated useful lives of the related assets. As of June 30, 2019, the Company’s property and equipment includes motor vehicles which have estimated useful life of 5 years.

Business Combination

The Company includes the results of operations of the businesses that were acquired and for which the control was obtained as of the acquisition date. The purchase price of the acquisitions is allocated to the assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over the fair values of identifiable assets and liabilities is recorded as goodwill. Acquisition-related expenses are recognized separately from the business combination and are expensed as incurred.

Goodwill

Goodwill arising on the acquisition of a subsidiary is measured as the excess of (1) the consideration transferred and the fair value of the non-controlling interest in the acquiree over (2) the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently when events or changes in circumstances indicate it is more likely than not that the fair value of a reporting entity has declined below its carrying value. 

Impairment of long-lived assets

The carrying values of long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Measurement of an impairment loss would be based on the excess of the carrying amount of the asset over its fair value.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the related disclosure of contingent assets and liabilities. Actual results could differ from those estimates.

The Company recorded depreciation expense of $3,791 and $0 for the six months ended June 30, 2019 and the period from July 24, 2018 (Inception) to December 31, 2018, respectively.

Note 4.    Acquisitions

On March 7, 2019, the Company completed the acquisition of 55% of Tree Manufacturing Sdn. Bhd. (“Tree Manufacturing”), a Malaysian company, for $0 consideration from Tree Movement Malaysia Sdn. Bhd. Tree Manufacturing is primarily engaged in the manufacturing and sale of electric vehicles and related components. As of June 30, 2019, Tree Manufacturing has 100% and 99% equity interest in Tree Motion Sdn. Bhd. (“Tree Motion”) and Mymotion Sdn. Bhd. (“Mymotion”), respectively. Tree Motion is a company that was acquired by Tree Manufacturing prior to Glory’s acquisition of Tree Manufacturing. Mymotion is a company incorporated on April 3, 2019 and Tree Manufacturing has 99% interest in Mymotion since its incorporation.

The following table summarizes the amounts of assets acquired and liabilities assumed recognized at the acquisition date, as well as the fair value at the acquisition date of the non-controlling interest in the company acquired:

Note 5.    Related Party Transactions 

The Company and its subsidiaries have transactions with related parties including Tree Movement Malaysia Sdn. Bhd. (“Tree Movement”), Treeletrik Sdn. Bhd. (“Treeletrik”) and members of their management and directors as of June 30, 2019. Tree Movement has control over Treeletrik and has significant influence over Tree Manufacturing Sdn. Bhd.. As a result, transactions among those parties are considered related party transactions. The amount due from/(to) Tree Movement, Treeletrik and members of their management and directors mainly includes advance to a related party and payments on behalf of the Company by related parties for expenses. These balances are unsecured and interest-free.

The following is a breakdown of amount due from/(to) related parties:

Rental expense from related parties¹

Note

¹ Included in Selling, general and administrative expense

Note 6. Commitments and Contingencies

The Company does not have any commitments and contingencies as of June 30, 2019 and December 31, 2018.

Note 7.     Subsequent Events

The Company has evaluated subsequent events through October 3, 2019, the date the financial statements were issued. Management has determined that no material subsequent events have occurred through that date since June 30, 2019 that would require recognition or disclosure in the consolidated financial statements.