Greenpro Capital Corp. — Form 10-Q Summary
Reporting period: Three and six months ended June 30, 2017; financial statements are unaudited and reported in U.S. dollars. Greenpro provides business and cross-border advisory, accounting and corporate services, and operates real-estate and venture-capital activities, primarily in Asia.
Financial results
| Metric | Q2 2017 | Q2 2016 | Six months 2017 | Six months 2016 |
|---|---|---|---|---|
| Revenue | $1.054 million | $753,247 | $1.829 million | $1.205 million |
| Gross profit / margin | $912,329 / 87% | $460,375 / 61% | $1.531 million / 84% | $675,981 / 56% |
| Operating income (loss) | $228,862 | $19,424 | $136,873 | ($181,786) |
| Net income (loss) attributed to Greenpro common stockholders, as reported | $234,391 | ($7,390) | $125,904 | ($242,653) |
| Operating cash flow | Not separately presented | Not separately presented | ($851,436) | ($483,975) |
Service income drove most revenue: six-month service revenue was $1.744 million, including $1.653 million from unrelated parties. Management attributed revenue growth to a wider service offering, a larger client base and acquired businesses. Lower service costs and more profitable contracts supported the improved gross margin. Six-month G&A rose to $1.394 million from $857,767; interest expense declined to $14,748 from $45,686. Reported basic and diluted earnings per share rounded to $0.00 for the 2017 periods.
Financial position and liquidity
- At June 30, cash and cash equivalents were $1.303 million, current assets $6.391 million, and current liabilities $1.961 million. Working capital was $4.430 million, versus $3.541 million at December 31, 2016.
- Finished-property inventory was $3.748 million, unchanged from year-end; management reported no impairment and no units under contract but not closed. Accounts receivable increased to $706,973 from $439,217, and prepayments and other receivables to $601,912 from $84,965.
- Total liabilities were $2.547 million. Bank loans totaled $584,894, including $14,157 current and $570,737 long-term; the loans are secured by Malaysian properties and extend to 2038 and 2043. The company also reported $1.443 million due to related parties and $220,654 due to directors. The $1.442 million advance from a non-controlling-interest party is unsecured, interest-free, payable on demand and, according to MD&A, convertible into common stock at the holder’s discretion.
- Operating cash use was partly offset by $1.114 million of financing cash flow, including $984,864 of share-issuance proceeds. Cash increased by $281,276 to $1.303 million, with a reported $115,206 favorable exchange-rate effect. Investing activities used $96,340.
Changes, outlook and risks
- In April 2017, Greenpro acquired 60% of Billion Sino Holdings Limited for 340,645 restricted shares valued at $1.192 million, adding an insurance intermediary business. It also acquired assets of Gushen Credit Limited for $105,000; the company was renamed Greenpro Credit Limited. These transactions increased goodwill, which was $2.687 million at June 30, up from $1.473 million at year-end. Management’s pro forma six-month 2017 revenue including BSHL was $2.117 million; this is not the reported consolidated revenue.
- Management expects business-services revenue to grow as the company expands into new territories and considers rental income likely to remain stable. It expects G&A to increase as it integrates acquisitions and expands. There is no quantified earnings or revenue guidance. Management said cash should support basic operations and current obligations for approximately 12 months, while acknowledging sales targets may not be achieved; it also cited expected improvement in receivables and payables turnover.
- Cash used in operations increased year over year, mainly due to higher receivables and prepayments. The company reported operating losses and operating cash use in recent years. Customer concentration is notable: one customer represented 28% of Q2 2017 service income and had $290,000 in receivables. The company has foreign-exchange exposure, particularly to MYR and RMB, and cites political, economic and regulatory risks in its operating markets.
- Office lease expense for the six months was $198,478; future minimum rent due within 12 months was $421,743. No material pending legal proceedings or significant off-balance-sheet arrangements were reported.
- Management concluded disclosure controls were not effective, citing material weaknesses in period-end financial reporting controls and the lack of a sufficiently developed internal-audit function. It said these weaknesses did not affect reported financial results. No material changes in internal control were reported during the quarter.
- Subsequent events: Greenpro acquired 51% of Greenpro Family Office Limited on July 21, 2017; a Shenzhen subsidiary was incorporated on July 28.
Key investor verification points
- Reconcile the income attribution presentation: the statement reports six-month consolidated net income before non-controlling interest of $108,136 and parent-attributed income of $125,904; the non-controlling-interest line and “Less” label do not clearly reconcile arithmetically. The same presentation issue appears in Q2.
- Assess collection and cash-conversion risk behind the increase in receivables and prepayments, including collection of the $290,000 customer balance and the filing’s customer-concentration disclosure.
- Confirm the terms, conversion mechanics and repayment implications of the $1.442 million demand advance, and review related-party balances and governance around them.
- Evaluate BSHL’s contribution to reported results and the assumptions supporting acquisition-related goodwill and intangible assets.
- Track remediation of the disclosed material weaknesses, alongside operating cash use and management’s stated 12-month liquidity expectation.