The accompanying notes are an
integral part of these unaudited financial statements.
The accompanying notes are an
integral part of these unaudited financial statements.
The accompanying notes are an
integral part of these unaudited financial statements.
The accompanying notes are an
integral part of these unaudited financial statements.
NOTES TO CONDENSED FINANCIAL
STATEMENTS
FOR THE PERIOD ENDED JUNE
30, 2018
(Unaudited)
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, 2017 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 June 30, 2018 are not necessarily indicative of the results to be expected for the
entire fiscal year ending December 31, 2018 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, 2017.
2.
|
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 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 was 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) bases, 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.
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 June 30, 2018, the Company
experienced an accumulated deficit of $767,565 and net loss of $23,683 for the six months ended June 30, 2018. 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 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 principal 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
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.
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 FASB subsequently issued the following amendments to ASU No. 2014-09 that have the same effective date and transition
date: ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; ASU No. 2016-10,
Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; ASU No. 2016-12, Revenue
from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients; and ASU No. 2016-20, Technical Corrections
and Improvements to Topic 606, Revenue from Contracts with Customers. The Company adopted these amendments with ASU 2014-09 (collectively,
the new revenue standards).
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 there were no revenues for the
periods reported. As the Company did not identify any accounting changes that impacted the amount of reported revenues with respect
to its product revenues, no adjustment to retained earnings was required upon adoption.
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 was effective for the Company in its first
quarter of fiscal 2018.
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 has finalized 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 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.
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 will be effective for annual and
interim reporting periods beginning after December 15, 2018.
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
was effective for the Company in its first quarter of fiscal 2018.
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 will be 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 was effective for the Company
in the first quarter of 2018, with adoption to be applied on a retrospective basis.
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.
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.
During the six months
ended June 30, 2018, there were no share issuances.
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 June 30, 2018 and December 31, 2017 were 20,000 and 20,000 respectively.
Accrued expenses and other payables
as of June 30, 2018 and December 31, 2017 are summarized as follows:
|
|
At June 30,
|
|
|
At December 31,
|
|
|
|
2018
|
|
|
2017
|
|
|
|
(unaudited)
|
|
|
(audited)
|
|
|
|
$
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
Accrued audit fee
|
|
|
6,650
|
|
|
|
5,000
|
|
Other payables
|
|
|
25,400
|
|
|
|
21,400
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
32,050
|
|
|
|
26,400
|
|
7.
|
Due to Related Parties
|
The balances due to related parties
as of June 30, 2018 and December 31, 2017 were $175,953 and $156,493, respectively. They 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.
|
Related Party Transactions
|
During the six months ended June
30, 2018, Mr. Kok Seng Yeap advanced $19,460 to pay operating expenses on behalf of the Company.
As of June 30, 2018 and December
31, 2017, the Company owed to Mr. Kok Seng Yeap $175,953 and $156,493, respectively, which was unsecured, interest-free and had
no fixed terms of repayments. Imputed interest from related party loan is not significant.
Other payables represents
the balance of accumulated charges from Fintel (USA) Limited as of June 30, 2018 and December 31, 2017, the balances were
$217,815 and 219,565, respectively. Fintel (USA) Limited was formerly a related party, until April 2016 when the owner of the
company resigned as the director.
10.
|
Prior Period Reclassification Adjustment
|
As disclosed in Note
10, Fintel (USA) Limited was formerly a related party until April 2016. The Company did not make the reclassification after Fintel
(USA) Limited was no longer a related party. The following is the illustration for the prior period reclassification adjustments:
December 31, 2017
|
|
Before the adjustments
|
|
|
Reclassification
|
|
|
After adjustment
|
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
$
|
53,557
|
|
|
$
|
(27,157
|
)
|
|
$
|
26,400
|
|
Due to related parties
|
|
|
348,901
|
|
|
|
(192,408
|
)
|
|
|
156,493
|
|
Other payable
|
|
|
0
|
|
|
|
219,565
|
|
|
|
219,565
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
402,458
|
|
|
$
|
0
|
|
|
$
|
402,458
|
|
There are no other
effects because of these reclassifications.
11.
|
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.
On January 30, 2019, HKCM CPA
& Co (predecessor firm: HKCMCPA Company Limited) (“HKCMCPA”) resigned as the independent registered public accounting
firm of the Company. Effective upon the resignation of HKCMCPA, the Company, as authorized by the Board of Directors, engaged RH,
CPA as the new independent registered public accounting firm of the Company.