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 PERIOD ENDED MARCH 31, 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 March 31, 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 Domain Extremes 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 September 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.
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 March 31, 2022, the Company experienced
an accumulated deficit of $729,239 and net loss of $19,302 for the three months ended March 31, 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 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 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 June 2018, the FASB issued Accounting Standards
Update (“ASU”) ASU 2018-07, Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting,
which simplifies the accounting for share-based payments granted to nonemployees for goods and services, and aligns most of the guidance
on such payments to nonemployees with the requirements for share-based payments granted to employees. ASU 2018-07 is effective on January
1, 2019. Early adoption is permitted. The Company adopted this ASU since January 1, 2019 with no material impact on the Company’s
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 starting from January 1, 2019, and this disclosure is also reflected on the financial statements for the quarter
ended March 31, 2022. 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 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 this update will have on its
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.
In
April 2020, the Company, requested by 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 March 31, 2022
and December 31, 2021 was 110,000.
6. Accrued expenses and other payables
Accrued expenses and other payables
as of March 31, 2022 and December 31, 2021 are summarized as follows:
| |
At March 31, | | |
At December 31, | |
| |
2022 | | |
2021 | |
| |
$ | | |
$ | |
Accrued professional fees | |
| 16,656 | | |
| 3,354 | |
7. Related
party transactions
During the three months ended March 31, 2022 and
2021, the major shareholder, advanced $6,000 and $37,122 to pay operating expenses for the Company, respectively.
As of March 31, 2022 and December 31, 2021, the
balances were $365,421 and $359,421, respectively.
The amounts due to related parties as of March
31, 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 after March 31, 2022, up
through the date the Company issued the audited financial statements. During the period, the Company did not have any material reportable
subsequent events.