NOTES
TO
CONSOLIDATED
FINANCIAL
STATEMENTS
NOTE
1
NATURE
OF
OPERATIONS
AND
SUMMARY
OF
ACCOUNTING
POLICIES
Nature
of
Operations
San
Lotus
Holding
Inc.(the
“Company”
or
“San
Lotus”),
was
incorporated
on
June
21,
2011
in
the State of
Nevada and changed our state of incorporation from the
State of Nevada to the State of California (the "Conversion") on July
21, 2015.
The Company is in the initial stages of opening a travel
agency in Taiwan through its wholly owned subsidiary, Green Forest Management
Consulting Inc., a Taiwan company. The Company has not conducted business
operations nor had revenues from operations since its inception. The Company’s
business plan is to desig and market global travel packages and affinity travel
excursions through out the world, and develop a global travel and leisure
agency business.
The Company, through its recent acquisition, is engaged
in the provision of travel services, including hotel reservation services,
airline ticketing, and travel package in the United States.
The Company’s year-end is December 31.
Basis of presentation
The accompanying consolidated financial statements of the
Company have been prepared in conformity with accounting principles generally
accepted in the United States of America (“U.S. GAAP”).
Consolidation Policy
The consolidated financial statements of the Company
include the accounts of San Lotus Holding, Inc. and its subsidiaries.
Intercompany accounts and transactions have been eliminated in consolidation.
Going
Concern
The accompanying consolidated financial statements were
prepared on a going concern basis, which assumes the realization of assets and
discharge of liabilities in the normal course of business. As shown in the
accompanying consolidated financial statements, the Company had an accumulated
deficit of ($1,202,200) as of September 30, 2016.
The Company faces all the risks common to companies at
the development stage, including capitalization and uncertainty of funding
sources, high initial expenditure levels, uncertain revenue streams and
difficulties in managing growth. The Company's losses raise substantial doubt
about its ability to continue as a going concern. The Company's consolidated
financial statements do not reflect any adjustments that might result from the
outcome of this uncertainty.
The Company is currently addressing its liquidity issue
by continually seeking investment capital through private placements of common
stock and debt. The Company believes its current and future plans enable it to
continue as a going concern. The Company's ability to achieve these objectives
cannot be determined at this time. These consolidated financial statements do
not give effect to any adjustments which would be necessary should the Company
be unable to continue as a going concern and therefore be required to realize
its assets and discharge its liabilities other than the normal course of
business and at amounts which may differ from those in the accompanying
consolidated financial statements.
Use
of
Estimates
The preparation of financial statements in conformity
with U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue recognition
The Company’s revenues are principally derived from
providing hotel reservation, air ticketing, other travel and non-travel
services. The Company recognizes revenues when all of the following have
occurred: persuasive evidence of arrangement with the customer, services have
been performed, fees are fixed or determinable and collectability of the fees
is reasonably assured, as prescribed by ASC 605-10,
Revenue
Recognition, Overall
. These criteria as related to revenues are considered
to have been met as follows:
Packaged-tour:
The Company receives referral fees from travel product providers for
packaged -tour products and services through its service platform and branch
offices. Referral fees are recognized as commissions on a net basis after the
packaged-tour service are rendered and collections are reasonably assured .
In case s where these entities undertake the majority of
the business risks and acts as principal related to the travel tour services
provided, revenues are recognized at gross amounts received from customers
after the services are rendered. Loss due to obligations from cancelled travel
services of such principal arrangement is minimal in the past.
Air ticketing services:
Commissions from air ticketing services rendered are
recognized upon the issuance of air tickets, net of estimated cancellations.
Customers purchase the air tickets, and the Company remits the net amount less
base commission to the airlines. Estimated cancellations were insignificant for
the years ended June 30, 2016. The Company presents revenues from such
transactions on a net basis in the consolidated statements of comprehensive
income (loss), as the Company acts as an agent, does not assume any inventory
risk, and has no obligations for cancelled airline ticket reservations. The
Company sometimes also receives additional discretionary commissions from
certain airlines when performance targets are met. Such discretionary
commissions are recognized on a cash basis because the Company cannot
reasonably estimate the amount, or timing of receipt, of such commissions in
advance.
Other travel services:
Other travel services are mainly commissions from
insurance companies for the sale of travel insurance. Customers purchase the
travel insurance, and the Company remits the net amount less commission to the
insurance companies. The Company recognizes revenue when the travel insurance
is issued to the customer, net of estimated cancellations.
Cash
and
Cash
Equivalents
Cash
and
cash
equivalents
include
cash
and
all
highly
liquid
instruments
with
original
maturities
of
three
months
or
less.
Property
and
Equipment
Property and equipment are stated at cost. Expenditures
for maintenance and repairs are charged to earnings as incurred; additions, renewals and betterments are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives as
follows:
Estimated useful life
Property plant
equipment
|
Estimated
Useful Life
|
Building
|
40 years
|
Vehicles
|
5 years
|
Equipments
|
3~5 years
|
Depreciation
|
As of September 30, 2016 (USD)
|
As of December 31, 2015 (USD)
|
|
Land
|
6,074,002.00
|
5,761,724.00
|
|
Vehicles
|
69,939.00
|
164,984.00
|
|
Equipment
|
56,671.00
|
91,561.00
|
|
Property and
equipment - gross
|
6,200,612.00
|
6,018,269.00
|
|
Accumulated
depreciation
|
(67,049.00)
|
(126,765.00)
|
|
Property and
equipment - net
|
6,133,563.00
|
5,891,504.00
|
|
|
As of September 30, 2016 (USD)
|
As of December 31, 2015 (USD)
|
Depreciation
Expense
|
39,697
|
27,098
|
In June 2016, The Company has sold vehicles, details of
which are listed below.
|
As of June 30, 2016 (USD)
|
vehicle sale
proceeds
|
44,000
|
vehicle
accumulated depreciation
|
34,214
|
vehicle gain on
sale
|
9,786
|
Net Income (Loss)
Per
Share
The
Company
has
adopted
Accounting
Standards
Codification
subtopic
260-10,
Earnings
Per
Share
(
“ASC
260-10
”),
which
specifies
the
computation,
presentation
and
disclosure
requirements
of
earnings
per
share
information.
Basic
earnings
per
share
have
been
calculated
based
upon
the
weighted
average
number
of
common
shares
outstanding.
Common
equivalent
shares
are
excluded
from
the
computation
of
the
diluted
loss
per
share
if
their
effect
would
be
anti-dilutive.
For
the
year
ended
September
30, 2016
,
the
Company
did
not
have
any
common
equivalent
shares.
Impairment
of
Long-Lived
Assets
The
Company
has
adopted
Accounting
Standards
Codification
subtopic
360-10,
Property,
Plant
and
Equipment
(“ASC
360-10”).
ASC
360-10
requires
that
long-lived
assets
and
certain
identifiable
intangibles
held
and
used
by
the
Company
be
reviewed
for
impairment
whenever
events
or
changes
in
circumstances
indicate
that
the
carrying
amount
of
an
asset
may
not
be
recoverable.
The
Company
evaluates
its
long
lived
assets
for
impairment
annually
or
more
often
if
events
and
circumstances
warrant.
Events
relating
to
recoverability
may
include
significant
unfavorable
changes
in
business
conditions,
recurring
losses,
or
a
forecasted
inability
to
achieve
break-even
operating
results
over
an
extended
period.
The
Company
evaluates
the
recoverability
of
long-lived
assets
based
upon
forecasted
undiscounted
cash
flows.
Should
impairment
in
value
be
indicated,
the
carrying
value
of
intangible
assets
will
be
adjusted,
based
on
estimates
of
future
discounted
cash
flows
resulting
from
the
use
and
ultimate
disposition
of
the
asset.
ASC
360-10
also
requires
assets
to
be
disposed
of
be
reported
at
the
lower
of
the
carrying
amount
or
the
fair
value
less
costs
to
sell.
Management
has
determined
that
no
impairments
of
long-lived
assets
currently
exist.
Goodwill
and intangible assets
Goodwill
represents the excess of costs over fair value of the net assets of businesses
acquired. The Company follows ASC subtopic 350-20,
Intangibles-Goodwill
and Other: Goodwill
. Goodwill and intangible assets acquired in a business
combination and determined to have an indefinite useful life are not amortized,
but instead tested for impairment at least annually, or more frequently if
certain circumstances indicate a possible impairment may exist. The Company
performs its annual impairment assessment for goodwill and indefinite-lived
intangible assets in December of each year.
The
Company adopted ASU 2012-02,
Testing Indefinite-Lived Intangible Assets
for Impairment
, which amends the guidance in ASC subtopic 350-30 on testing
indefinite-lived intangible assets, other than goodwill, for impairment. ASU
2012-02 provides an entity testing an indefinite-lived intangible asset for
impairment the option of performing a qualitative assessment before calculating
the fair value of the asset. Although ASU 2012-02 revises the examples of
events and circumstances that an entity should consider in interim periods, it
does not revise the requirements to test indefinite-lived intangible assets (1)
annually for impairment and (2) between annual tests if there is a change in
events or circumstances. If the Company determines, on the basis of qualitative
factors, that the fair value of indefinite-lived intangible assets is more
likely than not less than the carrying amount, further testing is required.
Under the further testing, the impairment test on indefinite-lived intangible
assets that are not subject to amortization consists of a comparison of the
fair value of each intangible asset with its carrying amount. If the carrying
amount of an intangible asset exceeds its fair value, an impairment loss is
recognized in an amount equal to that excess. Assets with definite lives are
carried at cost less accumulated amortization. Intangible assets with definite
lives are amortized using the straight-line method over the estimated economic
life.
Income
Taxes
The
company
accounts
for
income
taxes
in
accordance
with
ASC
740,
Income
Taxes,
which
requires
that
the
Company
recognize
deferred
tax
liabilities
and
assets
based
on
the
differences
between
the
financial
statement
carrying
amounts
and
the
tax
basis
of
assets
and
liabilities,
using
enacted
tax
rates
in
effect
in
the
years
the
differences
are
expected
to
reverse.Deferred
income
tax
benefit
(expense)
results
from
the
change
in
net
deferred
tax
assets
or
deferred
tax
liabilities.
A
valuation
allowance
is
recorded
when,
in
the
opinion
of
management,
it
is
more
likely
than
not
that
some
or
all
of
any
deferred
tax
assets
will
not
be
realized.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit
risk are cash and cash equivalents, accounts receivables, prepaid expenses,
accounts payable and accruals, due to/from related party and shareholder
accounts arising from its normal business activities.
The
Company maintains cash and cash equivalents with major financial institutions.
In addition, the due to/from affiliated companies is under common control.
Management considers the risk of non-performance of these instruments to be
remote.
The
Company has a diversified customer-base. The Company controls credit risk
related to accounts receivables through merchant credit card approvals, credit
limits and monitoring procedures. The Company routinely assesses the financial
strength of its customers and, based upon factors surrounding the credit risk,
establishes an allowance, if required, for uncollectible accounts and, believes
that its accounts receivable related credit risk exposure beyond such allowance
is limited. Based on the historical experience, Management considers the that
it is low risk of non-performance of this instruments.
The Company’s
business is subject to certain risks and concentrations including risks
relating to the condition of the economy, outbreak of disease or the occurrence
of natural or man-made disasters, dependence on relationships with travel
suppliers, primarily hotels and airlines, dependence on third-party technology,
internet service, utility services and telecommunications providers, exposure
to risks associated with online commerce security, data privacy, online payment
and credit card fraud.
4
Foreign Currency Translation Adjustment
The Company’s financial statements are presented in the U.S.
dollar ($), which is the Company’s reporting currency, while its functional
currency is New Taiwan Dollar (NTD). Transactions in foreign currencies are
initially recorded at the functional currency rate prevailing at the date of
transaction. Any differences between the initially recorded amount and the
settlement amount are recorded as a gain or loss on foreign currency
transaction in the statements of operations. Monetary assets and liabilities
denominated in foreign currency are translated at the functional currency rate
of exchange prevailing at the balance sheet date. Any differences are taken to
profit or loss as a gain or loss on foreign currency translation in the
statements of operations.
In accordance with ASC 830, Foreign Currency Matters, the Company
translates the assets and liabilities into U.S. dollars using the rate of
exchange prevailing at the balance sheet date and the statements of operations
and cash flows are translated at an average rate during the reporting period.
Adjustments resulting from the translation from RMB into U.S. dollar are
recorded in stockholders’ equity as part of accumulated other comprehensive
income. The exchange rates used for financial statements in accordance with ASC
830, Foreign Currency Matters, are as follows:
Foreign currency exchange rates
|
Sep. 30, 2016
|
Dec. 31, 2015
|
Average
Exchange Rate, TWD
|
32.482
|
31.927
|
Instant
Exchange Rate, TWD
|
31.366
|
33.066
|
Average
Exchange Rate, USD
|
1.000
|
1.000
|
Instant
Exchange Rate, USD
|
1.000
|
1.000
|
Statement
of
Cash
Flows
Cash
flows
from
the
Company's
operations
are
based
upon
the
local
currencies.
As
a
result,
amounts
related
to
assets
and
liabilities
reported
on
the
statement
of
cash
flows
will
not
necessarily
agree
with
changes
in
the
corresponding
balances
on
the
balance
sheet.
Advertising
expense
The
Company incurs advertising expenses to promote the Company’s products and
services. The Company expenses the production costs associated with
advertisements in the period in which the advertisement first takes place. The
Group expenses the advertising costs as incurred each time the advertisement is
displayed or broadcasted. For the years ended September 30, 2016, advertising
expenses were $56,550 and were recorded as operating expenses.
Recently
Issued
Accounting
Pronouncements
In
September 2015, the Financial Accounting Standards Board ("FASB")
issued Accounting Standards Update ("ASU") No. 2015-16, “Business
Combinations (Topic 805): Simplifying the Accounting for Measurement-Period
Adjustments” (“ASU 2015-16”), which requires that an acquirer recognize
adjustments to provisional amounts that are identified during the measurement
period in the reporting period in which the adjustment amounts are determined.
ASU 2015-16 is effective for fiscal years, and interim reporting periods within
those fiscal years, beginning after December 15, 2015. The Company is currently
evaluating the impact of the adoption of this guidance on the Consolidated
Financial Statements.
In
May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers.
The standard provides companies with a single model for use in accounting for
revenue arising from contracts with customers and supersedes current revenue
recognition guidance, including industry-specific revenue guidance. The core
principle of the model is to recognize revenue when control of the goods or
services transfers to the customer, as opposed to recognizing revenue when the
risks and rewards transfer to the customer under the existing revenue guidance.
On July 9, 2015, FASB voted to defer the effective date of ASU 2014-09 by one
year. The guidance would be effective for annual and interim reporting periods
beginning after December 15, 2018 and early adoption is permitted. We are
currently assessing the impact that adoption of ASU 2014-09 will have on our
financial position, results of operations or cash flows.
5
NOTE
2
INCOME
TAXES
The Company and its subsidiaries file separate income tax returns.
The
subsidiaries were incorporated in Taiwan and are subject to Taiwan’s Income Tax
Law. For the years ended September 30, 2016, the Company recorded income tax
expense as below.
|
As of
September
30, 2016 (USD)
|
income tax
expense
|
0
|
San
Lotus has not yet realized income as of the date of this report, and no
provision for income taxes has been made.
As
of September 30
, 2016
, there were no deferred tax assets or liabilities.
NOTE
3
RELATED
PARTY
TRANSACTIONS
The
principal related party transactions for the years ended December 31,
2015, and 2014 were as follows:
Xinpi
Land
In
December 2014, our wholly-owned subsidiary, Green Forest, a Taiwanese
corporation, entered into a land sale agreement with Yu Chien-Yang, our vice
president to sell him 29,332.7000 square meters of land located in the Xinhua
Section of Xinpi Township, Pingtun County, Taiwan. Green Forest sold the Land
for NTD$53,238,851 (US$1,815,414.60) and Mr. Yu transferred his 1,815,415
shares of common stock in San Lotus Holding Inc. to the Company. The shares
were retired as treasury stock.
Miaoli
Land
As
the
titles to Land in Miaoli County, Taiwan have not been transferred to Green
Forest by the end of 2014 as stipulated in sales agreement, Green Forest
cancelled the December
2013, March 2014 and August 2014 land purchase transactions in accordance
with terms of the sales agreement whereby the Company is not obligated to pay
any termination costs. The shares issued in connection with these cancelled
deals were retired as treasury stock.
Dataoping
Land
On
March 31, 2015, our wholly-owned subsidiary, Green Forest, a Taiwanese
corporation, entered into a land purchase agreement with Yu, Chien-Yang , our
vice president to acquire 35,251 square meters of land in Dataoping Section of
Zaoqiao Township, Miaoli County, and 41,184 square meters of land in Laotianliao
Section of Touwu Township, Miaoli County, Taiwan, all of which is 76,435 square
meters for NTD$192,060,000 (US$6,195,484). The Purchase Price was paid for
through Green Forest's issuance of a promissory note payable to the Seller. On
the same date, the Company entered into a stock purchase agreement for the
issuance of 6,195,484 shares of its common stock, par value $1 per share, at a
purchase price of $1 per share, to the seller and their designees pursuant to
stock purchase agreement.
Glendale
Condominium
In
July 2015, the Company sold the condominium unit in Glendale, California to its
CEO, Chih-Ying ChenTseng for a total selling price of $487,355.
XO
Experience
On
August 14, 2015, the Company entered into and closed on a stock purchase agreement
(the “Stock Purchase Agreement”) with Chih-Ying Chen Tseng, our CEO and
director for the acquisition of XO EXPERIENCE INC. (“XO”) to acquire all of the
issued and outstanding common stock of XO in exchange for US$1.
The
following table summarizes the estimated fair values of the assets acquired and
liabilities assumed at the acquisition date of the acquisition:
Fair
value of XO Experience acquisition
XO
EXPERIENCE
|
Aug. 14,
2015
|
USD ($)
|
Cash
|
216,402
|
Accounts receivable
|
40,822
|
Prepaid expenses and other
current assets
|
226,973
|
Goodwill
|
249,987
|
Accounts payable
|
(220,048)
|
Other current liabilities
|
(13,293)
|
Unearned revenue
|
(500,842)
|
Net assets acquired
|
1
|
6
NOTE
4
COMMON
STOCK
On March 9, 2015, The Company ‘s wholly-owned
subsidiary, Green Forest, a Taiwanese corporation, has terminated the land purchase agreement dated December 27, 2013,
March 13, 2014 and August 11, 2014 because the Land Seller has not conveyed to
Green Forest the entire titles to the Land. Concurrently with the termination
of the land purchase agreement, we have discharged all our obligations we
assumed from the promissory note, and the Shares issued under the stock
purchase agreements shall be cancelled from the record in our transfer agent,
Computershare Inc. and Computershare Trust Company, N.A.
Common stock shares issued
COMMON STOCK
- USD ($)
|
Jul. 02,
2015
|
Aug. 11,
2014
|
Aug. 11,
2014
|
Mar. 13,
2014
|
Dec. 27,
2013
|
Oct. 29,
2013
|
Sep. 17,
2013
|
Stock Issued During Period,
in Shares
|
29,464,575
|
202,660,931
|
397,935,544
|
139,364,582
|
33,426,757
|
18,154,146
|
30,706,452
|
Stock Issued During Period,
Value
|
$29,464,575
|
$40,957,774
|
$111,581,127
|
$28,165,582
|
$6,755,547
|
$1,815,415
|
$3,070,645
|
Price Per Share (in dollars
per share)
|
$1.0000
|
$0.2021
|
$0.2804
|
$0.2021
|
$0.2021
|
$0.1000
|
$0.1000
|
Counterparty
|
Noteholders
|
Noteholders
|
Noteholders
|
Noteholders
|
Noteholders
|
Noteholders
|
Noteholders
|
NOTE 5 ACQUISITIONS
On March 31, 2015
(the acquisition date), Green Forest Management Consulting Inc. ("Green
Forest"), our wholly-owned subsidiary, entered into and closed on a stock
purchase agreement (the "Stock Purchase Agreement") with Chiu,
Pao-Chi, Chiun Jing Inc., Haug Inc., Jiu Bang Inc., and Wan Fu Inc., (together,
the "Mao Ren Sellers") for the acquisition of Mao Ren International
Inc., a Taiwan (R.O.C.) company ("Mao Ren"). Green Forest acquired
all of the issued and outstanding common stock of Mao Ren from the Mao Ren
Sellers in exchange for $1.
The following table
summarizes the estimated fair values of the assets acquired and liabilities
assumed at the acquisition date of the acquisition:
Fair value of Mao Ren acquisition
Mao Ren
|
March 31, 2015
|
USD ($)
|
Cash
|
36,806
|
Prepaid
expenses and other current assets
|
12,214
|
Long term
receivable
|
27,658,502
|
Investments
|
446,500
|
Total
identifiable assets acquired
|
28,154,022
|
Current
liabilities
|
15
|
Long term
payable
|
29,102,634
|
Total
liabilities assumed
|
29,102,649
|
Goodwill
|
948,628
|
Total
consideration
|
1
|
Note 6 LONG-TERM
RECEIVABLES
The Company entered into several collateral
transfer agreements with the creditors in February 2010 to assign the right of
debt, which was collateralized by the land. In 2011, Taiwan Taichung District
Court has ordered the pay warrants to request debtor pay the Company in the
amount of NT$5,851,967,413. Pursuant to the agreement, the creditors agreed
with the Company to enforce and execute the auction by the court or itself
against the debtor’s remaining assets. In the return, the Company is being
compensated by the creditors to use the proceeds from the sale of
collateralized land to reinvest or develop the collateralized land to construct
the real estate and then sell. There is no timeline to pay off the long-term
payable and it’s probable to pay off the debt in exchange of investments of San
Lotus Holding Inc.
The Company has hired the
independent appraiser to evaluate the fair value of collateralized land and
recorded the long-term receivable based on the net realized value of the
collaterals.
As of September 30,2016 and December 31, 2015, the Company
has the other receivable in the amounts shown below.
|
As of
September
30, 2016 (USD)
|
As of December 31, 2015 (USD)
|
other
receivable
|
26,760,348
|
26,300,509
|
Fair value of land
|
As of December 31, 2015
|
Fair Value
(NT$)
|
868,504,495
|
Land Area
(square meter)
|
451,839
|
7
NOTE 7 COMMITMENTS
The Company has several operating leases, primarily for
offices and employee dormitories. Payments under operating leases, including
periodic rent escalation and rent holidays, are expensed on a straight-line
basis over the lease term.
Future minimum lease payments under non-cancellable
operating leases as of December 31, 2015 are as follows:
Minimum lease payments
|
As of December 31, 2015
|
|
2016
|
2017
|
2018
|
Total
|
Minimum lease
payments (USD)
|
88,815
|
90,015
|
59,846
|
238,676
|
Rental expenses
|
Sep. 30, 2016
|
Rental expenses
(USD)
|
35,926
|
NOTE 8 SUBSEQUENT EVENTS
On November 27, 2015, the
court has enforced and executed the land located in
Yilan with the auction price of NTD$ 540,256,000. The court has
not decided how to distribute the proceeds to the Company. The Company is
unable to require further information to determine the amount at this point.
On July 28, 2016, the court has enforced and executed
the land located in Pingdon and dsitribute the proceeds to Company with the
amount of NTD$ 29,139,420. On December 31, 2016, the Company will hire the
independent appraiser to evaluate the fair value of undisposed collateralized
land and recorded the long-term receivable based on the net realized value of
the collaterals.
On August 31, 2016, we entered into an agreement to purchase stock
& creditor’s right with Chang, Hsin-Yu (the “Seller”), the sole shareholder of AHI
Film Inc., to purchase the outstanding 10,000 shares of AHI Film Inc. (the “AHI Film
Shares”) in exchange for US$1, and the closing of transaction under Agreement I
shall be held on January 1, 2017.
On August 31, 2016, we entered into an agreement to purchase stock
& creditor’s right with Chang, Hsin-Yu (the “Seller”), the sole shareholder
of AHI Records Inc., to purchase 10,000 shares of AHI Records Inc. (the “AHI
Records Shares”) in exchange for US$1, and the closing of transaction under
Agreement II shall be held on January 1, 2017.
On August 31,
2016, we entered into a stock purchase agreement with Chang, Hsin-Yu (the
“Seller”), the sole shareholder of San Lotus Holding Inc. registered in British Virgin Islands (the “BVI
Company”), to purchase the outstanding 50,000 shares of BVI Company (the “BVI
Shares”) in exchange for US$1, and
the closing of transaction under Agreement III shall be held on January 1,
2017.