NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2020
(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, 2019, 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, 2020 are not necessarily indicative of the results to be expected for the entire fiscal
year ending December 31, 2020 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, 2019.
2. Organization and business
background
AFF Holding Group Inc. (the “Company”),
formerly known as Mi1 Global Telco., 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 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.
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, 2020, the Company experienced
an accumulated deficit of $609,259 and net loss of $44,963 for the six months ended June 30, 2020. The continuation of the Company
as a going concern through December 31, 2020 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 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 on 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 beginning its financial reporting for the quarter ended March 31, 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 December 2019, the FASB issued ASU 2019-12, Simplifying
the Accounting for Income Taxes which amends ASC 740 Income Taxes (ASC 740). This update is intended to simplify
accounting for income taxes by removing certain exceptions to the general principles in ASC 740 and amending existing guidance
to improve consistent application of ASC 740. This update is effective for fiscal years beginning after December 15, 2021. The
guidance in this update has various elements, some of which are applied on a prospective basis and others on a retrospective basis
with earlier application permitted. The Company is currently evaluating the effect of this ASU on the Company’s financial
statements and related disclosures.
In January 2020,
the FASB issued ASU 2020-01 to clarify the interaction of the accounting for equity securities under ASC 321 and investments accounted
for under the equity method of accounting in ASC 323 and the accounting for certain forward contracts and purchased options accounted
for under ASC 815. With respect to the interactions between ASC 321 and ASC 323, the amendments clarify that an entity should consider
observable transactions that require it to either apply or discontinue the equity method of accounting when applying the measurement
alternative in ASC 321, immediately before applying or upon discontinuing the equity method of accounting. With respect to forward
contracts or purchased options to purchase securities, the amendments clarify that when applying the guidance in ASC 815-10-15-141(a),
an entity should not consider whether upon the settlement of the forward contract or exercise of the purchased option, individually
or with existing investments, the underlying securities would be accounted for under the equity method in ASC 323 or the fair value
option in accordance with ASC 825. The ASU is effective for interim and annual reporting periods beginning after December 15, 2020.
Early adoption is permitted, including adoption in any interim period. The Company does not expect the adoption of this standard
to have a material impact on its financial statements.
Management
believes that other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American
Institute of Certified Public Accountants, and the Securities and Exchange Commission do not have a material impact on the Company’s
present or near future 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.
The Company has no stock option plan, warrants
or other dilutive securities.
April 10, 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 the authority to issue
1,200,000,000 shares of common stock, $0.001 par value. The total number of shares of the Company’s common stock outstanding
as of June 30, 2020 and December 31, 2019 is 110,000 and 20,000, respectively.
6. Accrued
expenses and other payables
Accrued expenses and other
payables as of June 30, 2020 and December 31, 2019 are summarized as follows:
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At June 30,
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At December 31,
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2020
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2019
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$
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$
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Accrued professional fees
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19,742
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3,000
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7. Related
party transactions
During the six and three months ended June
30, 2020 the major shareholder, advanced $28,041 and $775 to pay operating expenses for the Company, respectively. During the six
and three months ended June 30, 2019 the major shareholder, advanced $10,784 and $3,853.
As of June 30, 2020 and December 31, 2019,
the balances were $242,355 and $214,224, respectively.
The amounts due to related parties as
of June 30, 2020 and December 31, 2019 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 from
July 1, 2020, up through the date the Company issued the interim financial statements and identified no reportable events.