See accompanying notes to financial statements.
See accompanying notes to financial statements.
See accompanying notes to financial statements.
See accompanying notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
(Stated in US Dollars)
1. |
Organization and nature of operations |
X Metaverse Inc. (“the Company”),
formerly known as AFF Holding Group, Inc., was organized under the laws of the State of Nevada on January 23, 2006.
The Company is principally engaged in advertisements
on websites and applications. The Company’s goal is become a major network on travel, food, entertainment, activities and city life.
The Company has launched the website www.drinkeat.com, which provides reviews of restaurants in Hong Kong.
On May 1, 2017, Domain Extremes Inc. (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.
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) bases, pursuant to which the authorized
shares of common stock remain 1,200,000,000 shares and the par value remains $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. The Company is awaiting
the approval of FINRA for the market effectiveness of the name change.
On June 23, 2020, Mr. Kok Seng Yeap resigned as
the Chief Financial Officer 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.
2. |
Going concern uncertainties |
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.
As of December 31, 2021, the Company experienced
an accumulated deficit of $709,938 and the total, stockholders’ deficit of $362,776. The continuation of the Company as a going
concern through December 31, 2021 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 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.
3. |
Summary of significant accounting policies |
The accompanying financial statements reflect
the application of certain significant accounting policies as described in this note and elsewhere in the accompanying financial statements
and notes.
Basis of Presentation
The 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.
For the years ended December 31, 2021 and 2020,
the Company did not have any interest and penalties associated with tax positions. As of December 31, 2021 and 2020, the Company did not
have any significant unrecognized uncertain tax positions.
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 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 November 2019, the FASB issued ASU No. 2019-08,
Compensation – Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606), Codification Improvements –
Share-Based Consideration Payable to a Customer. The amendments in this Update require that an entity measure and classify share-based
payment awards granted to a customer by applying the guidance in Topic 718. The amount recorded as a reduction of the transaction price
is required to be measured on the basis of the grant-date fair value of the share-based payment award in accordance with Topic 718. The
grant date is the date at which a grantor (supplier) and a grantee (customer) reach a mutual understanding of the key terms and conditions
of a share-based payment award. For entities that have not yet adopted the amendments in Update 2018-07, the amendments in this Update
are effective for (1) public business entities in fiscal years beginning after December 15, 2019, and interim periods within those fiscal
years, and (2) other than public business entities in fiscal years beginning after December 15, 2019, and interim periods within fiscal
years beginning after December 15, 2020. The Company is evaluating the impact of this on its consolidated financial statements.
In August 2018, the SEC issued Release No. 33-10532
that amends and clarifies certain financial reporting requirements. The principal change to our financial reporting will be the application
of the disclosure requirement of changes in stockholders’ equity in Rule 3-04 of Regulation S-X to interim periods. The Company
adopted this new rule for the interim financial reporting in 2020 and 2019. Upon the adoption of this rule, the Company has included the
Statements of Stockholders’ Deficit with each interim reporting. The Company, based on further understanding of SEC Release No.
33-10532, made some modification on the presentation of the changes in stockholders’ equity that is more in compliance with the
SEC rule.
In February 2016, the FASB issued ASU 2016-02,
Leases (Topic 842), which issued new guidance related to leases that outlines a comprehensive lease accounting model and supersedes the
current lease guidance. The new guidance requires lessees to recognize lease liabilities and corresponding right-of-use assets for all
leases with lease terms of more than 12 months. It also changes the definition of a lease and expands the disclosure requirements of lease
arrangements. The new guidance must be adopted using the modified retrospective approach and will be effective for the Company in the
fiscal year beginning after December 15, 2018. Adoption of this ASU does not have material impact on the Company’s financial statements.
In December 2019, the FASB issued ASU 2019-12,
Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC
740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application among reporting entities. The
guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with
early adoption permitted. Upon adoption, the Company must apply certain aspects of this standard retrospectively for all periods presented
while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the
beginning of the fiscal year of adoption. The Company is evaluating the impact of this on its consolidated financial statements.
Other accounting standards
that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not
expected to have a material impact on the Company’s consolidated financial statements upon adoption.
The Company accounts for income taxes under ASC
740, Income Taxes. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred
tax assets if it is more likely than not that the Company will not realize tax assets through future operations. Deferred tax assets
or liabilities were off-set by a 100% valuation allowance; therefore there has been no recognized benefit as of December 31, 2021 and
2020.
Schedule of deferred tax assets | |
| | | |
| | |
| |
For the year ended December 31, |
| |
2021 | |
2020 |
|
|
$ |
|
|
$ |
|
Deferred tax asset attributable to net operating loss carryover | |
| 149,087 | | |
| 140,690 | |
Valuation allowance | |
| (149,087 | ) | |
| (140,690 | ) |
Net deferred tax assets | |
| – | | |
| – | |
Income
Tax Provision in the Statements of Operations
A reconciliation of the consolidated
federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes for the years ended
December 31, 2021 and 2020 is as follows:
| |
| |
|
| |
2021 | |
2020 |
| |
| |
|
Federal statutory tax expense (benefit) rate | |
| (21%) | | |
| (21%) | |
State income tax (benefit) rate, net of effect (no operation) | |
| (0%) | | |
| (0%) | |
Valuation allowance | |
| 21% | | |
| 21% | |
Effective income tax rate | |
| – | | |
| – | |
There are no other changes in equity transactions
during the years ended December 31, 2021 and 2020 except retaining earnings and the issuance of 90,000 shares indicated below.
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 TengkuFaikahBintiTengku 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, SuhailaBintiMdArsid Arshad, Yu Ming Ngee, RithaTumiarSitumorang, NorizanBinti A Latif, Mohammad
Zamri Bin Wan Chik and AdicandraManurung (10 shares each) for a consideration of $700.
On June 30, 2017, the Company issued 60 shares
of common stock to MohdAfidi Bin Abdullah, Den Wijaya, Ching Yang Det and MohdZaki 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 will
be issued in connection with the Stock Split. Instead, any fractional shares will be 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 will, in lieu thereof, be 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 yet.
On December 18, 2019, the investor withdrew his
subscription and the Company paid $87 back to him.
In April 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 no stock option plan, warrants
or other dilutive securities.
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 December 31,
2021 and December 31, 2020 is 110,000.
6. |
Accrued expenses and other payables |
Accrued expenses and other payables as of December
31, 2021 and December 31, 2020 are summarized as follows:
| |
| | | |
| | |
| |
At December 31, | |
At December 31, |
| |
2021 | |
2020 |
|
|
$ |
|
|
$ |
|
Accrued professional fees | |
| 3,354 | | |
| 35,122 | |
7. |
Related Party Transactions |
For the normal business operations, the major shareholder pays for the operating expenses. The major shareholder paid $71,746 and $73,452 during the years ended December 31, 2021 and 2020, respectively. As of December 2021 and 2020, the balances due to related party were $359,422 and $287,676, respectively.
8. |
Commitments and contingencies |
There have been no legal proceedings in which
the Company is a party during the years ended December 31, 2021 and 2020.
As of December 31, 2021 and 2020, the Company
had no material capital commitments or contingencies involved.
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 after December 31, 2021,
up through the date the Company issued the audited financial statements. During the period, the Company did not have any material reportable
subsequent events.