NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
1.
DESCRIPTION OF BUSINESS AND ORGANIZATION
MU
Global Holding Limited is organized as a Nevada limited liability company, incorporated on June 4, 2018. For purposes of consolidated
financial statement presentation, MU Global Holding Limited and its subsidiary are herein referred to as “the Company” or
“we”. The Company business of which planned principal operations are to provide wellness and beauty services to customers
via Company owned outlets, franchised outlets or distribution of our product to third party wellness and beauty salon.
On
June 29, 2018, the Company acquired 100% interest in MU Worldwide Group Limited, a private limited liability company incorporated in
Seychelles and its subsidiary MU Global Holding Limited, a private limited liability company incorporated in Hong Kong. On August 16,
2018, MU Global Holding Limited incorporated a wholly owned subsidiary in Shanghai, People Republic of China under the name of MU Global
Health Management (Shanghai) Limited.
Details
of the Company’s subsidiary:
SCHEDULE
OF COMPANY’S SUBSIDIARY
| |
Company
name |
|
Place
and date of incorporation |
|
Particulars
of issued capital |
|
Principal
activities |
| |
|
|
|
|
|
|
|
| 1. |
MU Worldwide Group Limited |
|
Seychelles, June 7, 2018 |
|
100 shares of ordinary
share of US$1 each |
|
Investment holding |
| |
|
|
|
|
|
|
|
| 2. |
MU Global Holding Limited |
|
Hong Kong, January 30,
2018 |
|
1 ordinary share of HK$1 |
|
Providing SPA and Wellness service in Hong Kong |
| |
|
|
|
|
|
|
|
| 3. |
MU
Global Health Management (Shanghai) Limited |
|
Shanghai, August 16, 2018 |
|
RMB 7,400,300 |
|
Providing SPA and Wellness
service in China |
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
accompanying unaudited condensed consolidated financial statements as of and for the six months ended January 31, 2023, and 2022, have
been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) that permit reduced
disclosure for interim periods. Certain information and footnote disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the period ended January 31, 2023, are not necessarily indicative of the results that may be
expected for the year ending July 31, 2023. The Condensed Consolidated Balance Sheets information as of January 31, 2023, was derived
from the Company’s audited Consolidated Financial Statements as of and for the year ended July 31, 2022, included in the Company’s
Annual Report on Form 10-K filed with the SEC on October 31, 2022. These financial statements should be read in conjunction with that
report.
Basis
of consolidation
The
condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company accounts and
transactions have been eliminated upon consolidation.
Use
of estimates
Management
uses estimates and assumptions in preparing these financial statements in accordance with US GAAP. Those estimates and assumptions affect
the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities in the balance sheets, and the reported
revenue and expenses during the periods reported. Actual results may differ from these estimates.
Revenue
recognition
The
Company follows the guidance of Accounting Standards Codification (ASC) 606, Revenue from Contracts. ASC 606 creates a five-step model
that requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or
agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction
price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance
obligation is satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect
the consideration it is entitled to in exchange for the services it transfers to its clients.
Revenue
is measured at the fair value of the consideration received or receivable, net of discounts and taxes applicable to the revenue. The
Company derives its revenue from provision of wellness and beauty services to customers via Company owned outlets, franchised outlets
or distribution of our product to third party wellness and beauty salon.
Cost
of revenue
Cost
of revenue includes the cost of services and product incurred to provide wellness and beauty services and purchase of products.
Cash
and cash equivalents
Cash
and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions
and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.
Property,
plant and equipment
Property,
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:
SCHEDULE
OF PROPERTY, PLANT AND EQUIPMENT ESTIMATED LIFE
| Classification |
|
Estimated
useful life |
| Leasable equipment |
|
5 years |
| Computer hardware and software |
|
3 years |
| Outlet equipment |
|
3 years |
| Outlet design fee and equipment |
|
3 years |
| Application development fee |
|
3 years |
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 consolidated statements of operations
and comprehensive losses.
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
Impairment
of long-live assets
Long-lived
assets primarily include trademark of the Company. In accordance with the provision of ASC Topic 360, 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 fiscal year, or more frequently if indicators of impairment exist, such as significant sustained change in the business climate.
The recoverability of long-lived assets is measured at the lowest level group. 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.
Leases
The
Company recognizes lease payments for its short-term lease on a straight-line basis over the lease term in accordance with ASC 842.
The
right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments
made at or before the lease commencement date, plus any initial direct costs incurred less any lease incentives received. Costs associated
with operating lease assets are recognized on a straight-line basis within operating expenses over the term of the lease.
In
determining the present value of the unpaid lease payments, ASC 842 requires a lessee to discount its unpaid lease payments using the
interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As most of the Company
leases do not provide an implicit rate, the Company uses its incremental borrowing rate as the discount rate for the lease. The Company
incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments.
Inventories
Inventories
consisting of products available for sell, are stated at the lower of cost or market value. Cost of inventory is determined using the
first-in, first-out (FIFO) method. Inventory reserve is recorded to write down the cost of inventory to the estimated market value due
to slow-moving merchandise and damaged goods, which is dependent upon factors such as historical and forecasted consumer demand, and
promotional environment. The Company takes ownership, risks and rewards of the products purchased. Write downs are recorded in cost of
revenues in the Consolidated Statements of Operations and Comprehensive Loss.
Income
taxes
Income
taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 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 periods 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.
The
Company conducts major businesses in China and is subject to tax in this jurisdiction. As a result of its business activities, the Company
will file tax returns that are subject to examination by the foreign tax authority.
Going
concern
The
accompanying 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.
For
the period ended January 31, 2023, the Company has generated revenue of $128,241 and continuously incurred a net loss of $51,151. As
of January 31, 2023, the Company suffered an accumulated deficit of $2,440,332, capital deficiency of $584,780 and negative operating
cash flows of $28,629. The Company’s ability to continue as a going concern is dependent upon improving the profitability and the
continuing financial support from its shareholders and director. Management believes the existing shareholders, director or external
financing will provide the additional cash to meet the Company’s obligations as they become due.
These
and other factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result in the Company not being able to continue as a going concern.
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
Net
loss per share
The
Company calculates net loss per share in accordance with ASC Topic 260 “Earnings Per Share”. Basic loss per share
is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per
share is computed similar to basic loss 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.
Foreign
currencies translation
Transactions
denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing
at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated
into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded
in the Consolidated Statements of Operations and Comprehensive loss.
The
functional currency of the parent Company is United States dollar and the functional currency of the subsidiaries MU Worldwide Group
Limited (Seychelles) and MU Global Holding Limited (Hong Kong) is United States dollar. MU Global Health Management (Shanghai) Limited
is in Renminbi.
The
reporting currency of the Company and its subsidiary is United States Dollars (“US$”) and the accompanying financial statements
have been expressed in US$.
In
general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into
US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance
sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation
of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive loss within the
statements of stockholders’ equity.
Translation
of amounts from RMB and HK$ into US$1 has been made at the following exchange rates for the respective periods:
SCHEDULE
OF FOREIGN EXCHANGE RATES TRANSLATION
| | |
As of and for the six months
ended January 31 | |
| | |
2023 | | |
2022 | |
| Period-end RMB : US$1 exchange rate | |
| 6.75 | | |
| 6.36 | |
| Period-average RMB : US$1 exchange rate | |
| 6.99 | | |
| 6.41 | |
| Period-end HK$ : US$1 exchange rate | |
| 7.84 | | |
| 7.79 | |
| Period-average HK$ : US$1 exchange rate | |
| 7.83 | | |
| 7.78 | |
| Period-end TWD : US$1 exchange rate | |
| 30.04 | | |
| 27.82 | |
| Period-average TWD : US$1 exchange rate | |
| 30.96 | | |
| 27.78 | |
Related
parties
Parties,
which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control
the other party or exercise significant influence over the other party in making financial and operating decisions. Companies are also
considered to be related if they are subject to common control or common significant influence.
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
Fair
value of financial instruments:
The
carrying value of the Company’s financial instruments: cash and cash equivalents, account receivables, amount due to a director,
and accounts payable and approximate at their fair values because of the short-term nature of these financial instruments.
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: Observable inputs such as quoted prices in active markets;
Level
2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level
3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
Recent
accounting pronouncements
The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of
any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
In
May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic
326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement
of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments
in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification.
The amendments in this Update address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option
for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase
comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets.
Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13
while still providing financial statement users with decision-useful information. In November 2019, the FASB issued ASU No. 2019-10,
which to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting
companies applying for credit losses, leases, and hedging standard. The new effective date for these preparers is for fiscal years beginning
after December 15, 2022. ASU 2019-05 is effective for the Company for annual and interim reporting periods beginning January 1, 2023
as the Company is qualified as a smaller reporting company. The Company is currently evaluating the impact ASU 2019-05 may have on its
consolidated financial statements.
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
3.
PROPERTY, PLANT AND EQUIPMENT
Property,
plant and equipment as of January 31, 2023 are summarized below:
SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT
| | |
As of
January 31, 2023 | | |
As of
July 31, 2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| | |
| | |
| |
| Computer hardware and software | |
$ | 129,301 | | |
$ | 129,301 | |
| Outlet equipment | |
| 120,569 | | |
| 120,569 | |
| Leasable equipment | |
| 229,405 | | |
| 229,405 | |
| Outlet design fee and equipment | |
| 16,763 | | |
| 16,763 | |
| Application development fee | |
| 37,413 | | |
| 37,413 | |
| Total | |
| 533,451 | | |
| 533,451 | |
| Accumulated depreciation1 | |
$ | (401,797 | ) | |
$ | (401,797 | ) |
| Impairment | |
| (149,552 | ) | |
| (149,552 | ) |
| Foreign currency translation adjustment | |
| 17,898 | | |
| 17,898 | |
| Property, plant and equipment, net | |
$ | - | | |
$ | - | |
| 1 | For the period
ended January 31, 2023 and January 31, 2022, depreciation expense was $0 and $70,579 respectively. |
WRITE
OFF OF PROPERTY, PLANT AND EQUIPMENT
SCHEDULE OF WRITE OFF OF PROPERTY, PLANT AND EQUIPMENT
| | |
As of
January 31, 2023 | | |
As of
July 31, 2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| Write off of property, plant and equipment | |
$ | - | | |
$ | 1,686 | |
| Accumulated depreciation | |
| - | | |
| (1,624 | ) |
| Foreign currency translation adjustment | |
| - | | |
| 38 | |
| Total write off of property, plant and equipment | |
$ | - | | |
$ | 100 | |
DISPOSAL
OF PROPERTY, PLANT AND EQUIPMENT
SCHEDULE OF DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT
| | |
As of
January 31, 2023 | | |
As of
July 31, 2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| Proceed from disposal of property, plant and equipment | |
$ | 114 | | |
$ | 44,340 | |
| Disposal of equipment at cost | |
| - | | |
| (27,726 | ) |
| Disposal of equipment written off at net book value | |
| (6 | ) | |
| - | |
| Accumulated depreciation | |
| - | | |
| 10,965 | |
| Foreign currency translation adjustment | |
| - | | |
| (40 | ) |
| Total gain on disposal | |
$ | 108 | | |
$ | 27,539 | |
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
4.
LEASE
As
of November 1, 2020, the Company recognized approximately US$19,724 lease liability as well as right-of-use asset for all leases (with
the exception of short-term leases) at the commencement date. Lease liabilities are measured at present value of the sum of remaining
rental payments as of November 1, 2020, with discounted rate of 4.15% adopted from People’s Bank of China as a reference for discount
rate. As of November 5, 2021, the Company had terminated the leased asset which has been recognized on November 1, 2020. Thereafter as
of November 6, 2021, the Company recognized approximately US$11,581 lease liability as well as right-of-use asset for all leases at the
commencement date. Lease liabilities are measured at present value of the sum of remaining rental payments as of November 6, 2021, with
discounted rate of 4.35% adopted from “Zhao Shang bank” of China as a reference for discount rate.
A
single lease cost is recognized over the lease term on a generally straight-line basis. All cash payments of operating lease cost are
classified within operating activities in the statement of cash flows.
The
initial recognition of operating lease right and lease liability as follow:
SCHEDULE OF RECOGNITION OF OPERATING LEASE RIGHT AND LEASE LIABILITY
| | |
| | |
| Gross lease payable | |
$ | 12,048 | |
| Less: imputed interest | |
| (467 | ) |
| Initial recognition | |
$ | 11,581 | |
| Less: Remeasurement of existing lease | |
| (843 | ) |
| Balance | |
$ | 10,738 | |
As
of January 31, 2023 and July 31, 2022, the operating lease right of use asset as follow:
SCHEDULE OF OPERATING LEASE RIGHT OF USE ASSET
| | |
As of January 31, 2023 (Unaudited) | | |
As of July 31, 2022 (Audited) | |
| Balance | |
| 6,267 | | |
| 12,966 | |
| Less: Termination of lease | |
| - | | |
| (10,285 | ) |
| Add: New operating lease liability | |
| - | | |
| 10,738 | |
| Foreign exchange translation loss | |
| (94 | ) | |
| (407 | ) |
| Amortization | |
| (2,419 | ) | |
| (6,745 | ) |
| Balance end of the period/year | |
$ | 3,754 | | |
$ | 6,267 | |
As
of January 31, 2023 and July 31, 2022, the operating lease liability as follow:
SCHEDULE
OF OPERATING LEASE LIABILITY
| | |
As of January 31, 2023 (Unaudited) | | |
As of July 31, 2022 (Audited) | |
| As of August 1 | |
$ | 6,559 | | |
$ | 2,647 | |
| Less: Termination of lease | |
| - | | |
| (2,647 | ) |
| Add: New operating lease liability | |
| - | | |
| 11,581 | |
| Less: Remeasurement of existing lease | |
| - | | |
| (843 | ) |
| Less: Gross repayment | |
| (2,504 | ) | |
| (3,892 | ) |
| Add: Imputed interest | |
| 117 | | |
| 278 | |
| Foreign exchange translation loss | |
| (93 | ) | |
| (565 | ) |
| Balance end of the period/year | |
$ | 4,079 | | |
$ | 6,559 | |
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
For
the period ended January 31, 2023, the amortization of the operating lease right of use asset was $2,419 while for the period ended January
31, 2022, the amortization of the operating lease right of use asset was $4,281.
Maturities
of operating lease obligation as follow:
SCHEDULE
OF MATURITIES OF OPERATING LEASE OBLIGATION
| Year ending | |
| |
| July 31, 2023 (6 months) | |
$ | 3,563 | |
| Oct 31, 2023 (3 months) | |
| 516 | |
| Total | |
$ | 4,079 | |
Other
information:
SCHEDULE
OF OTHER INFORMATION
| | |
Six months ended | | |
Six months ended | |
| | |
January 31, 2023 | | |
January 31, 2022 | |
| | |
(Unaudited) | | |
(Unaudited) | |
| Cash paid for amounts included in the measurement of lease liabilities: | |
| | | |
| | |
| Operating cash flow from operating lease | |
$ | 2,470 | | |
$ | 4,317 | |
| Right-of-use assets obtained in exchange for operating lease liabilities | |
$ | 3,754 | | |
$ | 4,881 | |
| Remaining lease term for operating lease (years) | |
| 0.75 | | |
| 0.75 | |
| Weighted average discount rate for operating lease | |
| 4.35 | % | |
| 4.35 | % |
Lease
expenses were $117 and $4,281 during the period ended January 31, 2023 and January 31, 2022 respectively.
5.
PATENT AND TRADEMARK
SCHEDULE
OF TRADEMARK
| | |
As of | | |
As of | |
| | |
January 31, 2023 | | |
July 31, 2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| Patent and trademark1 | |
$ | 35,988 | | |
$ | 32,404 | |
| Accumulated amortization | |
| (6,986 | ) | |
| (6,986 | ) |
| Impairment | |
| (28,976 | ) | |
| (25,392 | ) |
| Foreign currency translation adjustment | |
| (26 | ) | |
| (26 | ) |
| Patent and trademark, net | |
$ | - | | |
$ | - | |
| 1 | The patents and
trademarks are held under the Company’s subsidiaries in Hong Kong and Shanghai, China. |
Amortization
were $0 and $1,561 for the period ended January 31, 2023 and January 31, 2022 respectively.
6.
PREPAYMENTS AND DEPOSITS
SCHEDULE
OF PREPAYMENTS AND DEPOSITS
| | |
As of
January 31, 2023 | | |
As of
July 31, 2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| Prepayments | |
$ | 38,656 | | |
$ | 40,382 | |
| Deposits | |
| 4,336 | | |
| 4,712 | |
| Total prepayments and deposits | |
$ | 42,992 | | |
$ | 45,094 | |
7.
AMOUNT DUE FROM RELATED PARTY
SCHEDULE
OF DUE FROM RELATED PARTY
| | |
As of
January 31, 2023 | | |
As of
July 31, 2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| Tien Mu International Co., Ltd1 | |
$ | - | | |
$ | 11,295 | |
| Total amount due from related party | |
$ | - | | |
$ | 11,295 | |
| 1 |
Tien Mu International Co.,
Ltd is owned by Ms. Niu Yen-Yen, the Director and Chief Executive Officer of the Company. Tien Mu International Co., Ltd is an operating
agent of the Company’s operation in Taiwan, which collects deposits from franchisees on behalf of the Company. |
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
8.
INVENTORIES
SCHEDULE
OF INVENTORIES
9.
OTHER PAYABLES AND ACCRUED LIABILITIES
SCHEDULE
OF OTHER PAYABLES AND ACCRUED LIABILITIES
| | |
As of
January 31, 2023 | | |
As of
July 31, 2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| Other payables | |
$ | 43,198 | | |
$ | 45,865 | |
| Accrued audit fees | |
| - | | |
| 15,000 | |
| Accrued professional fees | |
| 6,000 | | |
| 5,000 | |
| Total payables and accrued liabilities | |
$ | 49,198 | | |
$ | 65,865 | |
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
10.
AMOUNT DUE TO RELATED PARTIES
SCHEDULE
OF DUE TO RELATED PARTIES
| | |
As of January 31, 2023 | | |
As of July 31, 2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| Hsieh, Chang-Chung1 | |
$ | 93,176 | | |
$ | 85,076 | |
| Tien Mu International Co., Ltd2 | |
| 93 | | |
| - | |
| | |
$ | 93,269 | | |
$ | 85,076 | |
| 1 |
|
Hsieh, Chang-Chung resigned as Chief Financial Officer of the Company with effective from November 1, 2022. |
| |
|
|
| 2 |
|
Tien Mu International
Co., Ltd is owned by Ms. Niu Yen-Yen, the Director and Chief Executive Officer of the Company. Tien Mu International Co., Ltd is
an operating agent of the Company’s operation in Taiwan, which collects deposits from franchisees on behalf of the Company. |
The
amount due to related party is unsecured, interest-free with no fixed repayment term, for working capital purpose.
11.
LOAN FROM RELATED PARTY
SCHEDULE
OF LOAN FROM RELATED PARTY
| | |
As of January 31, 2023 | | |
As of July 31, 2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| Hong Ting Network Technology (Xiamen) Limited1 | |
$ | 40,968 | | |
$ | 43,175 | |
| Total loan from related party | |
$ | 40,968 | | |
$ | 43,175 | |
| 1 |
|
Hong Ting Network Technology
(Xiamen) Limited is wholly-owned by Ms. Niu Yen-Yen, who is also the Director and Chief Executive Officer of the Company. The loan
is unsecured, interest-free and repayable on May 31, 2021 and further extended to May 31, 2023 with a loan agreement entered on September
2, 2021. |
12.
LOAN FROM THIRD PARTY
SCHEDULE OF LOAN FROM THIRD PARTY
| | |
As of January 31, 2023 | | |
As of July 31, 2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| Shang Hai Shi Ba Enterprise Management Centre | |
$ | 95,913 | | |
$ | 77,064 | |
| Total loan from third party | |
$ | 95,913 | | |
$ | 77,064 | |
The
loan is unsecured, interest-free and repayable in year 2024 and year 2025.
13.
LOAN FROM DIRECTOR
SCHEDULE OF LOAN FROM DIRECTOR
| | |
As of January 31, 2023 | | |
As of July 31, 2022 | |
| | |
(Unaudited) | | |
(Audited) | |
| Current | |
$ | 169,839 | | |
$ | 146,439 | |
| Non-current | |
| 125,144 | | |
| 122,652 | |
| Total loan from Director | |
$ | 294,983 | | |
$ | 269,091 | |
Current
portion of the loan provided by director Ms. Niu Yen-Yen, is repayable upon demand. Non-current portion of the loan provided by director
is unsecured, interest-free and repayable in year 2024, for working capital purpose.
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
14.
INCOME TAXES
For
the six months ended January 31, 2023 and January 31, 2022, the local (United States) and foreign components of income/(loss) before
income taxes were comprised of the following:
SCHEDULE OF LOSS BEFORE INCOME TAX
| | |
Six months ended January 31 | |
| | |
2023 | | |
2022 | |
| Tax jurisdictions from: | |
| | | |
| | |
| Local | |
$ | (20,945 | ) | |
$ | (21,440 | ) |
| Foreign, representing | |
| | | |
| | |
| - Seychelles | |
| (1,600 | ) | |
| - | |
| - Hong Kong | |
| (6,462 | ) | |
| (26,406 | ) |
| - Shanghai | |
| (22,144 | ) | |
| (72,969 | ) |
| Loss before income tax | |
$ | ) | |
$ | ) |
The
provision for income taxes consisted of the following:
SCHEDULE OF PROVISION FOR INCOME TAXES
| | |
For the period ended January 31, 2023 | | |
For the period ended January 31, 2022 | |
| Current: | |
| | | |
| | |
| - Local | |
$ | - | | |
$ | - | |
| - Foreign | |
| - | | |
| - | |
| Deferred: | |
| | | |
| | |
| - Local | |
| - | | |
| - | |
| - Foreign | |
| - | | |
| - | |
| | |
| | | |
| | |
| Income tax expense | |
$ | - | | |
$ | - | |
The
effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad
range of income tax rates. The Company has subsidiaries that operate in various countries: United States Seychelles, Hong Kong and Shanghai,
PRC that are subject to taxes in the jurisdictions in which they operate, as follows:
United
States of America
The
Company is registered in the State of Nevada and is subject to the tax laws of the United States of America. As of January 31, 2023,
the operations in the United States of America incurred $460,529 of cumulative net operating losses which can be carried forward indefinitely
to offset a maximum of 80% future taxable income. The Company has provided for a full valuation allowance of $368,423 against the deferred
tax assets on the expected future tax benefits from the net operating loss carryforwards as the management believes it is more likely
than not that these assets will not be realized in the future.
Seychelles
Under
the current laws of the Seychelles, MU Worldwide Group Limited is registered as an international business company which governs by the
International Business Companies Act of Seychelles and there is no income tax charged in Seychelles.
Hong
Kong
MU
Global Holding Limited is subject to Hong Kong Profits Tax, which is charged at the statutory income tax rate of 16.5% on its assessable
income.
Shanghai
MU
Global Health Management (Shanghai) Limited are operating in the People’s Republic of China (PRC) subject to the Corporate Income
Tax governed by the Income Tax Law of the PRC with a unified statutory income tax rate of 25%.
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
15.
COMMON STOCK
On
June 4, 2018, our Chief Executive Officer, Ms. Niu Yen-Yen subscribed 100,000 shares of restricted common stock of the Company at par
value of $0.0001 per share. The monies from this transaction, which totalled $10, went to the Company to be used as initial working capital.
On
July 6, 2018, Ms. Niu Yen-Yen and Server Int’l Co., Ltd. subscribed 25,000,000 and 11,000,000 restricted shares of common stock,
respectively, of the Company, at par value of $0.0001 per share. The monies from these transactions, which totalled $3,600, went to the
Company to be used as initial working capital. Server Int’l Co., Ltd. is controlled entirely by Ms. Niu Yen-Yen.
On
July 7, 2018, Chang Chun-Ying and Chang Su-Fen subscribed 4,300,000 and 5,000,000 restricted shares of common stock, respectively, of
the Company, at par value of $0.0001 per share. The monies from these transactions, which totalled $930, went to the Company to be used
as initial working capital.
On
July 9, 2018, GreenPro Asia Strategic SPC and GreenPro Venture Capital Limited, subscribed 2,835,000 and 2,165,000 restricted shares
of common stock of the Company, respectively, at par value of $0.0001 per share. The monies from these transactions, which totalled $500,
went to the Company to be used as initial working capital.
From
July 9, 2018 to July 10, 2018 the Company issued a total of 2,150,000 shares of restricted common stock to three non-US residents. Shares
were sold at par value, $0.0001 per share. Total proceeds from these shares totalled $215 and went to the Company to be used as initial
working capital.
On
July 11, 2018 the Company issued a total of 710,000 shares of restricted common stock to two non-US residents at a price of $0.03 per
share. Total proceeds from these sales of shares totalled $21,300 and went to the Company to be used as initial working capital.
On
July 25, 2018 the Company issued a total of 995,000 shares of restricted common stock to ten non-US residents at a price of $0.03 per
share. Total proceeds from these sales of shares totalled $29,850 and went to the Company to be used as initial working capital.
On
July 26, 2018 the Company issued 250,000 shares of restricted common stock to one non-US resident at a price of $0.20 per share. Total
proceeds from these sales of shares totalled $50,000 and went to the Company to be used as initial working capital.
On
July 31, 2018 Dezign Format Pte Ltd and Cheng Young-Chien each subscribed 2,000,000 restricted shares of common stock of the Company,
at $0.20 per share, for total consideration of $800,000. Proceeds went to the Company to be used as initial working capital.
On
July 10, 2018, Server Int’l Co., Ltd, a Company solely controlled and owned by the CEO has transferred 1,500,000 shares of common
stock to 8 non-US residents.
From
August 1, 2018 to December 13, 2018, Ms. Niu Yen-Yen, the CEO of the Company has transferred 1,557,800 shares of common stock to 16 non-US
residents.
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
On
May 7, 2019, the convertible promissory note issued by the Company amounted $779,125 to 45 accredited investors who reside in Taiwan
with the conversion price of $1 per share have been converted to 779,125 common stock of the company after the S-1 registration statement
was declared effective on May 6, 2019.
From
May 14, 2019 to July 31, 2019, the company issued 150,317 shares of common stock at a price of $1.00 per share through the Initial Public
Offering (IPO) to 36 non-US residents.
As
of January 31, 2023, MU Global Holding Limited has an issued and outstanding common share of 59,434,838.
16.
CONCENTRATIONS OF RISK
(a)
Major customers
For the three months period ended January 31, 2023
and 2022, the customers who accounted for 10% or more of the Company’s revenues and its trade receivable balance at period-end are
presented as follows:
SCHEDULES OF CONCENTRATION OF RISK
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
Revenue | | |
Percentage of
revenue | | |
Trade receivable | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Customer A | |
$ | - | | |
$ | 37,425 | | |
| - | % | |
| 98 | % | |
$ | - | | |
$ | - | |
| Customer B | |
| 7,155 | | |
| - | | |
| 99 | % | |
| - | % | |
| - | | |
| - | |
| | |
$ | 7,155 | | |
$ | 37,425 | | |
| 99 | % | |
| 98 | % | |
$ | - | | |
$ | - | |
For
the six months period ended January 31, 2023 and 2022, the customers who accounted for 10% or more of the Company’s revenues and
its trade receivable balance at period-end are presented as follows:
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
Revenue | | |
Percentage of
revenue | | |
Trade receivable | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Customer A | |
$ | - | | |
$ | 37,425 | | |
| - | % | |
| 96 | % | |
$ | - | | |
$ | - | |
| Customer B | |
| 120,938 | | |
| - | | |
| 94 | % | |
| - | % | |
| - | | |
| - | |
| | |
$ | 120,938 | | |
$ | 37,425 | | |
| 94 | % | |
| 96 | % | |
$ | - | | |
$ | - | |
(b)
Major vendors
For the three months period ended January 31, 2023
and 2022, there is no vendor who accounted for 10% or more of the Company’s purchases and its trade payable balance at period-end.
For
the six months period ended January 31, 2023 and 2022, the vendors who accounted for 10% or more of the Company’s purchases and
its trade payable balance at period-end are presented as follows:
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
Purchases | | |
Percentage of
purchases | | |
Trade payable | |
| | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Vendor A | |
$ | 108,844 | | |
$ | - | | |
| 100 | % | |
| - | % | |
$ | - | | |
$ | - | |
| | |
$ | 108,844 | | |
$ | - | | |
| 100 | % | |
| - | % | |
$ | - | | |
$ | - | |
(c)
Exchange rate risk
The
operation of the Company’s subsidiaries in international markets results in exposure to movements in currency exchange rates. We
have experienced foreign currency gains and losses due to the strengthening and weakening of the U.S. dollar. The potential of volatile
foreign exchange rate fluctuations in the future could have a significant effect on our results of operations. The Company has not historically
used financial instruments to hedge its foreign currency exchange rate risks.
The
currencies that create a majority of the Company’s exchange rate exposure are RMB, HK$, and TWD. The Company translates all assets
and liabilities at the rate of exchange in effect at the balance sheet date and income and expense activity at the approximate rate of
exchange at the transaction date.
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
17.
COMMITMENTS AND CONTINGENCIES
On
November 6, 2021, the Company entered into a contract rental agreement to rent the office in Shanghai for a period of one year commencing
on November 6, 2021 with tri-monthly payments in the amount of RMB 3,500 per month over the course of the lease and an entitlement of
1 month rent free period as relief upon rented the premise for full 11 months. The Company has an option to renew after the end of the
agreement. On October 18, 2022, the Company has renewed the tenancy agreement for 12 months with tri-monthly payments in the amount of
RMB 3,500 per month over the course of the lease from November 6, 2022 to November 5, 2023 and is entitled for 1 month rent free period
as relief upon rented the premise for full 11 months.
As
of January 31, 2023, the Company has the aggregate minimal rent payments due in the next two years as follows:
SCHEDULE OF AGGREGATE MINIMAL RENT PAYMENTS
| Year ending July 31 | |
| |
| | |
| |
| 2023 | |
$ | 3,109 | |
| 2024 | |
| 1,036 | |
| Total | |
$ | 4,145 | |
18.
RELATED PARTY TRANSACTIONS
For
the period ended January 31, 2023 the Company has following transactions with related parties:
SCHEDULE OF OUTSTANDING PAYABLE TO RELATED PARTY
| | |
For the period
ended January 31, 2023 (Unaudited) | | |
For the year
ended July 31, 2022 (Audited) | |
| Professional fee: | |
| | | |
| | |
| - Related party A | |
$ | 8,748 | | |
$ | 16,580 | |
| | |
| | | |
| | |
| Consultation fee: | |
| | | |
| | |
| - Related party B | |
$ | 8,100 | | |
$ | 32,400 | |
| | |
| | | |
| | |
| Cost of revenue: | |
| | | |
| | |
| - Related party C | |
$ | 108,844 | | |
$ | - | |
| | |
| | | |
| | |
| | |
| | | |
| | |
| Total | |
$ | 125,692 | | |
$ | 48,980 | |
Related
party A is the fellow subsidiaries of a corporate shareholder of the Company. Related party B is a shareholder of the Company. Related party C represents a Company which has common director and shareholder with the Company.
For
the period ended January 31, 2023, the Company incurred professional fees of $8,748
due to related party A, consultation fees of $8,100 due to related party B and cost of revenue of $108,844
due to related party C.
19.
SEGMENT INFORMATION
ASC
280, “Segment Reporting” establishes standards for reporting information about operating segments on a basis consistent with
the Company’s internal organization structure as well as information about services categories, business segments and major customers
in financial statements. In accordance with the “Segment Reporting” Topic of the ASC, the Company’s chief operating
decision maker has been identified as the Chief Executive Officer and President, who reviews operating results to make decisions about
allocating resources and assessing performance for the entire Company. Existing guidance, which is based on a management approach to
segment reporting, establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures
about products and services, major customers, and the countries in which the entity holds material assets and reports revenue. All material
operating units qualify for aggregation under “Segment Reporting” due to their similar customer base and similarities in
economic characteristics; nature of products and services; and procurement, manufacturing and distribution processes.
MU
GLOBAL HOLDING LIMITED
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR
THE SIX MONTHS ENDED JANUARY 31, 2023
(Currency
expressed in United States Dollars (“US$”), except for number of shares)
(UNAUDITED)
The
Company had no inter-segment sales for the years presented. Summarized financial information concerning the Company’s reportable
segments is shown as below:
SCHEDULE OF SEGMENT REPORTING INFORMATION
By
Geography:
| | |
Nevada | | |
Seychelles | | |
Hong Kong | | |
China | | |
Total | |
| | |
For the period ended January 31, 2023 | |
| | |
Nevada | | |
Seychelles | | |
Hong Kong | | |
China | | |
Total | |
| | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
$ | - | | |
$ | - | | |
$ | 120,938 | | |
$ | 7,303 | | |
$ | 128,241 | |
| Cost of revenue | |
| - | | |
| - | | |
| (108,844 | ) | |
| - | | |
| (108,844 | ) |
| Other income | |
| - | | |
| - | | |
| 2 | | |
| 2,356 | | |
| 2,358 | |
| Selling and marketing expenses | |
| - | | |
| - | | |
| (200 | ) | |
| (78 | ) | |
| (278 | ) |
| General and administrative expenses | |
| (20,945 | ) | |
| (1,600 | ) | |
| (18,358 | ) | |
| (31,725 | ) | |
| (72,628 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total assets | |
$ | 875 | | |
$ | 1 | | |
$ | 3,936 | | |
$ | 66,176 | | |
$ | 70,988 | |
| | |
Nevada | | |
Seychelles | | |
Hong Kong | | |
China | | |
Total | |
| | |
For the period ended January 31, 2022 | |
| | |
Nevada | | |
Seychelles | | |
Hong Kong | | |
China | | |
Total | |
| | |
| | |
| | |
| | |
| | |
| |
| Revenue | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 38,787 | | |
$ | 38,787 | |
| Cost of revenue | |
| - | | |
| - | | |
| - | | |
| (17,396 | ) | |
| (17,396 | ) |
| Other income | |
| - | | |
| - | | |
| 24,198 | | |
| 2,735 | | |
| 26,933 | |
| Selling and marketing expenses | |
| - | | |
| - | | |
| - | | |
| (579 | ) | |
| (579 | ) |
| General and administrative expenses | |
| (21,440 | ) | |
| - | | |
| (50,604 | ) | |
| (96,516 | ) | |
| (168,560 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | |
| Total assets | |
$ | 1,350 | | |
$ | 1 | | |
$ | 97,807 | | |
$ | 203,361 | | |
$ | 302,519 | |
20.
SIGNIFICANT EVENTS
On
January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus
originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally
beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure
globally. Given the rapidly expanding nature of the COVID-19 pandemic and because the Company conducts major businesses in China, the
Company’s business and results of operations have been affected for the previous periods.
Since
the late 2022, the Chinese governments took comprehensive steps to relax many of their COVID-19 control measures, which enabled us to
resume more normal operations in China. Any future impact of COVID-19 on the financial performance
of the Company will depend on future developments, including the duration and spread of the outbreak and related restrictions and the
impact of COVID-19 on the overall economy, all of which are highly uncertain and cannot be predicted. If the overall economy is impacted
for an extended period, the Company’s future operating results may be materially adversely affected.
21.
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 subsequent
events through the filing date of this Form 10-K with the SEC, to ensure that this filing includes appropriate disclosure of events both
recognized in the financial statements as of January 31, 2023, and events which occurred subsequently but were not recognized in the
financial statements. During the period, there was no subsequent event that required recognition or disclosure.