Note: There was a 1-for-10,000
reverse stock split of the Company’s common stock effective on October 24, 2017.
Note: There was a 1-for-10,000 reverse stock split of the Company’s
common stock effective on October 24, 2017.
Note: There was a 1-for-10,000 reverse
stock split of the Company’s common stock effective on October 24, 2017.
NOTES TO FINANCIAL STATEMENTS
(Stated in US Dollars)
|
1.
|
Organization and nature of operations
|
Mi1 Global Telco., 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 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 a certificate of amendment to its articles of incorporation with the Secretary of State
of the State of Nevada (the “Amendment”) changing the Company’s name from Domain Extremes Inc. to “Mi1
Global Telco., Inc.”. The name change will become effective with FINRA on July 19, 2017.
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.
|
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, 2017, the
Company experienced an accumulated deficit of $743,882 and net loss of $80,502 for the year ended December 31, 2017. The continuation
of the Company as a going concern through December 31, 2018 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,
2017 and 2016, the Company did not have any interest and penalties associated with tax positions. As of December 31, 2017 and 2016,
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
The Company recognized revenues
from advertising insertion revenue in the period in which the advertisement is displayed, provided that evidence of an arrangement
exists, the fees are fixed or determinable and collection of the resulting receivable is reasonably assured. If fixed-fee advertising
is displayed over a term greater than one month, revenues are recognized ratably over the period as described below. The majority
of insertion orders have terms that begin and end in a quarterly reporting period. In the cases where at the end of a quarterly
reporting period the term of an insertion order is not complete, the Company recognizes revenue for the period by pro-rating the
total arrangement fee to revenue and deferred revenue based on a measure of proportionate performance of its obligation under the
insertion order. The Company measures proportionate performance by the number of placements delivered and undelivered as of the
reporting date.
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 May 2014, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts
with Customers . The standard provides companies with a single model for accounting for revenue arising from contracts with customers
and supersedes current revenue recognition guidance, including industry-specific revenue guidance. The core principle of the model
is to recognize revenue when control of the goods or services transfers to the customer, as opposed to recognizing revenue when
the risks and rewards transfer to the customer under the existing revenue guidance. The guidance permits companies to either apply
the requirements retrospectively to all prior periods presented, or apply the requirements in the year of adoption, through a cumulative
adjustment. In August 2015, the FASB issued ASU 2015-14, Deferral of the Effective Date , which defers the required adoption date
of ASU 2014-09 by one year. As a result of the deferred effective date, ASU 2014-09 will be effective for the Company in its first
quarter of fiscal 2018. Early adoption is permitted but not before the original effective date of the new standard of the first
quarter of fiscal 2017. The following ASUs were subsequently issued by the FASB to clarify the implementation guidance in some
areas and add practical expedients: In March 2016, ASU 2016-08, Revenue from Contracts with Customers: Principal versus Agent Considerations;
in April 2016, ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing; in May 2016,
ASU 2016-12, Revenue from Contracts with Customers: Narrow Scope Improvements and Practical Expedients; and in December 2016, ASU
2016-20, Technical Corrections and Improvements to Revenue from Contracts with Customers . The Company’s is currently finalizing
its evaluation of standard product sales arrangements and has identified an adoption impact related to revenue from certain distributor
agreements which was deferred until the period in which the distributor sells through the inventory to the end customer. In connection
with the adoption of ASU 2014-09, the Company will change the recognition of sales to these distributors whereby revenue will be
estimated and recognized in the period in which the Company transfers control of the product to the distributor; the adoption impact
is not expected to be material. Other than this impact, the Company has not identified any expected impact on the timing and measurement
of revenue for standard product sales arrangements from the adoption of the standard and the Company is currently formalizing its
final conclusions.
In February
2016, the FASB issued ASU No. 2016-02, Leases . The standard requires that a lessee recognize the assets and liabilities that arise
from operating leases. A lessee should recognize in its balance sheet a liability to make lease payments (the lease liability)
and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months
or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets
and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the
earliest period presented using a modified retrospective approach. The guidance in ASU 2016-02 is effective for annual and interim
reporting periods beginning after December 15, 2018.
In March 2016, the FASB issued
ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, which changes the accounting for employee share-based
payments, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification
in the statement of cash flows. Under the new guidance, excess tax benefits associated with share-based payment awards will be
recognized in the income statement when the awards vest or settle, rather than in stockholders’ equity. In addition, it will
increase the number of shares an employer can withhold to cover income taxes on share-based payment awards and still qualify for
the exemption to liability classification. The guidance was effective for the Company in the first quarter of 2017.
In November 2016, the FASB issued
ASU No. 2016-18, Statement of Cash Flows - Restricted Cash , which requires entities to show the changes in the total of cash,
cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The guidance will be effective
for the Company in its first quarter of fiscal 2018. Early adoption is permitted, including adoption in an interim period, but
any adjustments must be reflected as of the beginning of the fiscal year that includes that interim period. The new standard must
be adopted retrospectively.
In January 2017, the FASB issued
ASU No. 2017-04, Intangibles - Goodwill and Other, which eliminates step two of the quantitative goodwill impairment test. Step
two required determination of the implied fair value of a reporting unit, and then a comparison of this implied fair value with
the carrying amount of goodwill for the reporting unit, in order to determine any goodwill impairment. Under the new guidance,
an entity is only required to complete a one-step quantitative test, by comparing the fair value of a reporting unit with its carrying
amount, and any goodwill impairment charge is determined by the amount by which the carrying amount exceeds the reporting unit’s
fair value. However, the loss should not exceed the total amount of goodwill allocated to the reporting unit. The standard is effective
for the Company in the first quarter of 2020, with early adoption permitted as of January 1, 2017, and is to be applied on a prospective
basis.
In March 2017, the FASB issued
ASU No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost , which changes
how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost
in the statement of operations. The new guidance requires entities to report the service cost component in the same line item or
items as other compensation costs. The other components of net benefit cost are required to be presented in the statement of operations
separately from the service cost component and outside the subtotal of loss from operations. ASU 2017-07 also provides that only
the service cost component is eligible for capitalization. The standard is effective for the Company in the first quarter of 2018,
with adoption to be applied on a retrospective basis.
In May 2017, the FASB issued
ASU No. 2017-09, Compensation-Stock Compensation: Scope of Modification Accounting , which provides clarification on when modification
accounting should be used for changes to the terms or conditions of a share-based payment award. This ASU does not change the
accounting for modifications but clarifies that modification accounting guidance should only be applied if there is a change to
the value, vesting conditions or award classification and would not be required if the changes are considered non-substantive.
The amendments of this ASU are effective for the Company in the first quarter of 2018, with early adoption permitted.
In August 2017, the FASB issued
ASU No. 2017-12, Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities , which modifies the presentation
and disclosure of hedging results. Further, it provides partial relief on the timing of certain aspects of hedge documentation
and eliminates the requirement to recognize hedge ineffectiveness separately in income. The amendments in this ASU are effective
for the Company in the first quarter of 2019.
In November 2017, the FASB has
issued ASU No. 2017-14, Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and
Revenue from Contracts with Customers (Topic 606). ASU 2017-14 includes amendments to certain SEC paragraphs within the FASB Accounting
Standards Codification (Codification). ASU 2017-14 amends the Codification to incorporate the following previously issued guidance
from the SEC. ‘The amendments in ASU No. 2017-14 amends the Codification to incorporate SEC Staff Accounting Bulletin (SAB)
No. 116 and SEC Interpretive Release on Vaccines for Federal Government Stockpiles (SEC Release No. 33-10403) that bring existing
SEC staff guidance into conformity with the FASB’s adoption of and amendments to ASC Topic 606, Revenue from Contracts with
Customers.
In September 2017, the FASB
has issued ASU No. 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840),
and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission
of Prior SEC Staff Announcements and Observer Comments.” The amendments in ASU No. 2017-13 amends the early adoption date
option for certain companies related to the adoption of ASU No. 2014-09 and ASU No. 2016-02. Both of the below entities may still
adopt using the public company adoption guidance in the related ASUs, as amended. The effective date is the same as the effective
date and transition requirements for the amendments for ASU 2014-09 and ASU 2016-02.
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 is incorporated
in the United States, and is subject to United States federal and state income taxes. The Company did not generate taxable income
in the United States for the year ended December 31, 2017.
The Company’s operation
is carried out in Hong Kong and is subject to Hong Kong Profits Tax at 16.5% in 2017 (2016: 16.5%). No provision for Hong Kong
Profits Tax has been made as the Company has no assessable profit for the period. The cumulative tax losses will represent a deferred
tax asset. The Company will provide a valuation allowance in full amount of the deferred tax asset since there is no assurance
of future taxable income.
The cumulative net operating
loss carry forward is approximately $743,882 and $663,380 as at December, 31, 2017 and 2016, respectively, and will be expired
beginning in the year 2027. Annual use of the net operating loss may be limited by Internal Revenue Code section 382 due to an
ownership change.
On December 22, 2017, the United
States enacted the Tax Cuts and Jobs Act (the “Act”) resulting in significant modifications to existing law. The Company
has completed the accounting for the effects of the Act during the quarter ended December 31, 2017. The Company’s financial
statements for the year ended December 31, 2017 reflect certain effects of the Act which includes a reduction in the corporate
tax rate from 34% to 21% as well as other changes. The cumulative tax effect at the expected rate of 21% of significant items comprising
our net deferred tax amount is as follows:
|
|
For the year ended
December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
$
|
|
|
$
|
|
Deferred tax asset attributable to net operating loss carryover
|
|
|
252,920
|
|
|
|
225,549
|
|
Effect of change in statutory rate
|
|
|
(96,705
|
)
|
|
|
–
|
|
|
|
|
156,215
|
|
|
|
225,549
|
|
Valuation allowance
|
|
|
(156,215
|
)
|
|
|
(225,549
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets
|
|
|
–
|
|
|
|
–
|
|
There are no changes in equity
transactions during the year ended December 31, 2016.
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 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.
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, 2017 and December 31, 2016 are 20,000 and 17,952 respectively.
|
6.
|
Accrued expenses and other payables
|
Accrued expenses and other
payables as of December 31, 2017 and December 31, 2016 are summarized as follows:
|
|
At December 31,
|
|
|
At December 31,
|
|
|
|
2017
|
|
|
2016
|
|
|
|
$
|
|
|
$
|
|
Accrued audit fee
|
|
|
5,000
|
|
|
|
2,308
|
|
Other payables
|
|
|
48,557
|
|
|
|
29,152
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
53,557
|
|
|
|
31,460
|
|
|
7.
|
Amounts due to related parties
|
The amounts due to related
parties as of December 31, 2017 and 2016 represent temporary advances from the Company’s directors. The amounts are interest
free, unsecured and no fixed repayment term. Imputed interest from related party loan is not significant.
|
8.
|
Commitments and contingencies
|
There have been no legal proceedings
in which the Company is a party during the years ended December 31, 2017 and 2016.
As of December 31, 2017 and
2016, 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, 2017, up through the date the Company issued the audited financial statements. During the period,
the Company did not have any material recognizable subsequent events.