See accompanying notes to condensed financial statements.
See accompanying notes to condensed financial statements.
See accompanying notes to condensed financial statements.
See accompanying notes to condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022
(Unaudited)
1. Basis of presentation
The accompanying unaudited condensed financial statements
have been prepared by management in accordance with both accounting principles generally accepted in the United States (“GAAP”),
and the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and note disclosures normally included in audited
financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those
rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading.
In the opinion of management, the balance sheet as
of December 31, 2021, which has been derived from audited financial statements, and these unaudited condensed financial statements reflect
all normal and recurring adjustments considered necessary to state fairly the results for the periods presented. The results for the period
ended September 30, 2022 are not necessarily indicative of the results to be expected for the entire fiscal year ending December 31, 2022
or for any future period.
These unaudited condensed financial statements and
notes thereto should be read in conjunction with the Management’s Discussion and the audited financial statements and notes thereto
included in the Annual Report on Form 10-K for the year ended December 31, 2021.
2. Organization and business background
X Metaverse Inc. (the “Company”), formerly
known as Mi1 Global Telco., Inc., was organized under the laws of the State of Nevada on January 23, 2006.
The Company was principally engaged in advertisements
on websites and applications. The Company’s original goal was to become a major network on travel, food, entertainment, activities
and city life. The Company launched the website www.drinkeat.com, which provides reviews of restaurants in Hong Kong. Due to the
drop in readership and advertising, the Company decided to terminate its website operation in May 2018. The Company is actively
looking for new investment opportunities and new source of revenue.
On May 1, 2017, the Company filed with the Nevada
Secretary of State a certificate of amendment (the “Amendment”) to the Company’s Articles of Incorporation. The Amendment,
previously approved by the Company’s board of directors on August 31, 2016 and stockholders on November 4, 2016, changed (a) the
name of the Company from “Domain Extremes Inc.” to “Mi1 Global Telco., Inc.” and (b) the authorized shares of
common stock, par value $0.001, from 200,000,000 shares to 1,200,000,000 shares. The Amendment became effective upon its filing. The name
change will become effective with FINRA on July 19, 2017.
On October 24, 2017, the Company effectuated a reverse
split of the Company’s issued and outstanding common stock on a 1 for 10,000 (1:10,000) basis, pursuant to which the authorized
shares of common stock remained 1,200,000,000 shares and the par value remained $0.001. All share and earnings per share information
have been retroactively adjusted to reflect the stock split in the financial statements.
On March 24, 2020, Mr. Kok Seng Yeap purchased 100%
of the shares of Mi1 Global Limited, which owns 9,156 shares of the common stock of the Company. As a result, Kok Seng Yeap became the
beneficial owner of 9,156 shares of the common stock of the Company. On March 24, 2020, Mr. Lim Kock Chiang resigned as the Chief Executive
Officer, Chief Financial Officer, Secretary and Director of the Company, and the Board of Directors of the Company appointed Mr. Kok Seng
Yeap to serve as its Director, Chief Executive Officer, Chief Financial Officer, and Secretary.
On June 3, 2020, the Company filed a Certificate of
Amendment to its Articles of Incorporation with the State of Nevada to reflect its corporate name change to “AFF Holding Group Inc.”.
The name change was effective as of the filing of the Certificate of Amendment with the State of Nevada.
On June 23, 2020, Mr. Kok Seng Yeap resigned as the
Chief Financial Officer of the Company, and the Board of Directors of the Company appointed Mr. Lau Chew Chye to serve as its Chief Financial
Officer and Director.
On December 21, 2021, the Company filed a Certificate
of Amendment to its Articles of Incorporation with the State of Nevada to reflect its corporate name change from "AFF Holding Group
Inc.” to “X Metaverse Inc.” The name change was effective as of the filing of the Certificate of Amendment with the
State of Nevada. The Company is awaiting the approval of FINRA for the market effectiveness of the name change.
3. Going
concern uncertainties
The accompanying condensed financial statements have
been prepared using the going concern basis of accounting, which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business.
As of September 30, 2022, the Company experienced
an accumulated deficit of $748,039 and net loss of $38,101 for the nine months ended September 30, 2022. The continuation of the Company
as a going concern through December 31, 2022 is dependent upon the continued financial support from its stockholders. Management believes
the Company is currently pursuing additional financing for its operations. However, there is no assurance that the Company will be successful
in securing sufficient funds to sustain the operations.
These and other factors raise substantial doubt about
the Company’s ability to continue as a going concern. These condensed financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets and liabilities that may result in the Company not being
able to continue as a going concern.
4. Summary of significant accounting
policies
The accompanying condensed financial statements reflect
the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed financial
statements and notes.
Basis of Presentation
The condensed financial statements of the Company
have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”)
and are presented in US dollars.
Fiscal Year-End
The Company’s fiscal year is December 31.
Use of estimates
The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and cash equivalents
The Company considers all short-term highly liquid
investments that are readily convertible to known amounts of cash and have original maturities of three months or less to be cash equivalents.
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.
Comprehensive income
ASC Topic 220, “Comprehensive Income”,
establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income
as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented
in the accompanying statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation.
This comprehensive income is not included in the computation of income tax expense or benefit.
Foreign currencies translation
The functional currency of the Company is Hong Kong
dollars (“HK$”). The Company maintains its financial statements in the functional currency. Monetary assets and liabilities
denominated in currencies other than the functional currency are translated into the functional currency at rates of exchange prevailing
at the balance sheet dates. Transactions denominated in currencies other than the functional currency are translated into the functional
currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions
are included in the determination of net income for the respective periods.
For financial reporting purposes, the financial statements
of the Company which are prepared using the functional currency have been translated into United States dollars. Assets and liabilities
are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates
and stockholders’ equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining
net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity.
Fair value of financial instruments
The carrying value of the Company’s financial
instruments (excluding short-term bank borrowing): cash and cash equivalents, accounts and retention receivable, prepayments and other
receivables, accounts payable, income tax payable, amount due to a related party, other payables and accrued liabilities approximate at
their fair values because of the short-term nature of these financial instruments.
Management believes, based on the current market prices
or interest rates for similar debt instruments, the fair value of its obligation under finance lease and short-term bank borrowing approximate
the carrying amount.
The Company also follows the guidance of the ASC Topic
820-10, “Fair Value Measurements and Disclosures” ("ASC 820-10"), with respect to financial assets and liabilities
that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring
fair value as follows:
• Level 1:
Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;
• Level 2:
Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets
that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are
observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable
inputs; and
• Level 3:
Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use
in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models
and discounted cash flow models.
Fair value estimates are made at a specific point
in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties
and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect
the estimates.
Revenue recognition
In May 2014,
the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all
existing revenue recognition requirements, including most industry specific guidance. This new standard requires a company to recognize
revenues when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive
for those goods or services.
The new revenue
standards became effective for the Company on January 1, 2018, and were adopted using the modified retrospective method. The adoption
of the new revenue standards as of January 1, 2018 did not change the Company’s revenue recognition as the Company did not have
any revenue to be recognized.
Under the new
revenue standards, the revenues are recognized when its customer obtains control of promised goods or services, in an amount that reflects
the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five step model
prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract;
(iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize
revenues when (or as) we satisfy the performance obligation.
Net loss per share
The Company calculates net loss per share in accordance
with ASC Topic 260, “Earnings per Share.” Basic income per share is computed by dividing the net income by the weighted-average
number of common shares outstanding during the period. Diluted income per share is computed similar to basic income per share except that
the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common
stock equivalents had been issued and if the additional common shares were dilutive.
Recently issued accounting pronouncements
In December 2019, the FASB issued ASU 2019-12, Simplifying
the Accounting for Income Taxes which amends ASC 740 Income Taxes (ASC 740). This update is intended to simplify accounting
for income taxes by removing certain exceptions to the general principles in ASC 740 and amending existing guidance to improve consistent
application of ASC 740. This update is effective for fiscal years beginning after December 15, 2021. The guidance in this update
has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted.
The Company is currently evaluating the effect of this ASU on the Company’s financial statements and related disclosures.
In August 2020, the FASB issued ASU 2020-06, Debt
- Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity
(Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”),
which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies
the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt:
Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features
in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in
ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified
in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings
Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method.
In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash
or shares. For SEC filers, excluding smaller reporting companies, ASU 2020-06 is effective for fiscal years beginning after December
15, 2021 including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning
after December 15, 2020. For all other entities, ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including
interim periods within those fiscal years. Entities should adopt the guidance as of the beginning of the fiscal year of adoption and cannot
adopt the guidance in an interim reporting period. The Company is currently evaluating the impact that ASU 2020-06 may have on its
financial statements and related disclosures when adopted.
In December 2019, the FASB issued ASU 2019-12, Simplifying
the Accounting for Income Taxes which amends ASC 740 Income Taxes (ASC 740). This update is intended to simplify
accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and amending existing guidance to improve
consistent application of ASC 740. This update is effective for fiscal years beginning after December 15, 2021. The guidance in this update
has various elements, some of which are applied on a prospective basis and others on a retrospective basis with earlier application permitted.
The Company is currently evaluating the effect of this ASU on the Company’s consolidated financial statements and related disclosures.
Management believes
that other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified
Public Accountants, and the Securities and Exchange Commission do not have a material impact on the Company’s present or near future
financial statements.
5. Stockholders’
deficit
On March 7, 2017, the Company issued 40 shares of
common stock to Azari Bin A Ghani, Mazlan Bin Muhammad, Syed Mokhtar Bin Syed Agil and Tengku Faikah Binti Tengku Ismail (10 shares each)
for a consideration of $400.
On April 13, 2017, the Company issued 70 shares of
common stock to Romli Bin Che Noh, Suhaila Binti Md Arsid Arshad, Yu Ming Ngee, Ritha Tumiar Situmorang, Norizan Binti A Latif, Mohammad
Zamri Bin Wan Chik and Adicandra Manurung (10 shares each) for a consideration of $700.
On June 30, 2017, the Company issued 60 shares of
common stock to Mohd Afidi Bin Abdullah, Den Wijaya, Ching Yang Det and Mohd Zaki Bin Ahmadl (10 shares each) and Johanes Abednego (20
shares) for a consideration of $600.
On August 7, 2017, the Company filed a
certificate of change with the Secretary of State of Nevada to effectuate a reverse stock split (the “Stock Split”) of
its issued and outstanding shares of common stock on a 1-for-10,000 basis. The number of its authorized shares of common stock will
remain at 1,200,000,000 shares, par value $0.001. The Stock Split became effective with FINRA on October 24, 2017 (the
“Effective Date”). As of that date, every 10,000 shares of issued and outstanding common stock were converted into one
share of common stock. No fractional shares were issued in connection with the Stock Split. Instead, any fractional shares were
rounded up to the next whole share and a holder of record of old common stock on the Effective Date who would otherwise be entitled
to a fraction of a share were, in lieu thereof, issued one whole share. All share and earnings per share information have been
retroactively adjusted to reflect the Stock Split in the financial statements.
During the year ended December 31, 2017, the Company
has received the proceeds of $87 for subscription of common stock and no common stock was issued.
On December 18, 2019, the investor withdrew his subscription
and the Company paid $87 back to him.
The Company has no stock option plan, warrants or
other dilutive securities.
April 10, 2020, Mi1 Global Limited, the major shareholder,
converted certain debt of the Company in the amount of $90 at a price per share of $0.001 into shares of common stock of the Company.
As consideration for the conversion, the Company issued 90,000 shares of common stock of the Company to Mi1 Global Limited. As a result
of the conversion, Mi1 Global Limited increased its ownership to 90% of the issued and outstanding shares of common stock of the Company.
The Company has the authority to issue 1,200,000,000
shares of common stock, $0.001 par value. The total number of shares of the Company’s common stock outstanding as of September 30,
2022 and December 31, 2021 was 110,000, respectively.
6. Accrued
expenses and other payables
Accrued expenses and other payables as of September
30, 2022 and December 31, 2021 are summarized as follows:
Schedule of accrued expenses |
|
At September 30, |
|
|
At December 31, |
|
|
|
2022 |
|
|
2021 |
|
|
|
$ |
|
|
$ |
|
Accrued professional fees |
|
|
21,673 |
|
|
|
3,354 |
|
7. Related party
transactions
During the nine and three months ended September
30, 2022 the major shareholder, advanced $19,782 and $6,482 to pay operating expenses for the Company, respectively. During the nine and
three months ended September 30, 2021, the major shareholder advanced $64,052 and $10,663, respectively.
As of September 30, 2022 and December 31, 2021,
the balances were $379,204 and $359,421, respectively.
The amounts due to related parties as of September
30, 2022 and December 31, 2021 represent temporary advances from the Company’s major shareholder. The amounts are interest free,
unsecured and no fixed repayment term.
8. Commitments and contingencies
From time to time the Company may become a party to
litigation matters involving claims against the Company. Management believes that it is adequately insured for its operations and there
are no current matters that would have a material effect on the Company's financial position or results of operations.
9. Subsequent Events
In accordance with ASC Topic 855, “Subsequent
Events”, which establishes general standards of accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued, the Company has evaluated all events or transactions that occurred from October 1, 2022, up
through the date the Company issued the interim financial statements and identified no reportable events.