As filed with the Securities and Exchange Commission on August 21, 2024
Registration No. 333-261688
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For the quarter ended
For the transition period from to
(Exact name of Registrant as specified in its charter)
| Not applicable | ||
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Guangdong Province,
Tel: (
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)
Harneys Fiduciary (Cayman) Limited,
4th Floor, Harbour Place,
103 South Church Street, P.O. Box 10240,
Grand Cayman KY1-1002, Cayman Islands
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Securities registered pursuant to Section 12(g) of the Act: None
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☐ | Smaller reporting company | |||
| Emerging growth company | ||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
As of August 21, 2024, there were shares of the registrant’s common stock outstanding.
KB GLOBAL HOLDINGS LIMITED
INDEX TO FINANCIAL STATEMENTS
i
KB GLOBAL HOLDINGS LIMITED
Unaudited Condensed Consolidated Balance Sheets
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Property and equipment | $ | $ | ||||||
| Loan receivable | ||||||||
| Total non-current assets | ||||||||
| Current assets | ||||||||
| Account receivables | $ | $ | ||||||
| Other receivables | ||||||||
| Subscription receivables | ||||||||
| Amounts due from related parties | ||||||||
| Cash and cash equivalents | ||||||||
| Total current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current liabilities | ||||||||
| Accruals and other current payables | $ | $ | ||||||
| Advance from customer | ||||||||
| Tax payable | ||||||||
| Amount due to related parties | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders’ deficit | ||||||||
| Ordinary shares, $ par value; shares authorized; shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively. | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( |
) | ( |
) | ||||
| Accumulated other comprehensive income | ( |
) | ( |
) | ||||
| Total shareholders’ deficit | ( |
) | ( |
) | ||||
| Total liabilities and shareholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
F-1
KB GLOBAL HOLDINGS LIMITED
Unaudited Condensed Consolidated Statements of Operations and Comprehensive (Loss)
| For the Three Months Ended June 30 |
For the Six Months Ended June 30 |
|||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | ||||||||||||||||
| Cost of sales | ( |
) | ||||||||||||||
| Gross profit | ||||||||||||||||
| Other income | ||||||||||||||||
| Operating expenses | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Loss from operations | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Income tax expense | ||||||||||||||||
| Net loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Other comprehensive income loss | ||||||||||||||||
| Foreign currency translation adjustments | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Comprehensive loss | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||
| Basic and diluted earnings per ordinary share | ) | ) | ) | ) | ||||||||||||
| Basic and diluted weighted average ordinary share outstanding | ||||||||||||||||
The accompanying notes are an integral part of these financial statements.
F-2
KB GLOBAL HOLDINGS LIMITED
Unaudited Condensed Consolidated Statements of Shareholders’ Deficit
| Ordinary shares | Additional paid-in |
Accumulated | Accumulated other comprehensive income |
Shareholder’ | ||||||||||||||||||||
| Number | Amount | capital | deficit | (loss) | deficit | |||||||||||||||||||
| Balance as of January 1, 2024 | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
| Net profit | - | |||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance as of March 31, 2024 | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||
| Foreign currency translation adjustment | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance as of June 30, 2024 | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
| Balance as of January 1, 2023 | $ | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||||
| Issuance of shares | ||||||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||
| Foreign currency translation adjustment | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance as of March 31, 2023 | $ | $ | $ | ( |
) | $ | $ | ( |
) | |||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||
| Foreign currency translation adjustment | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | ( |
) | $ | ( |
) | $ | ( |
) | |||||||||||||
The accompanying notes are an integral part of these financial statements.
F-3
KB GLOBAL HOLDINGS LIMITED
Unaudited Condensed Consolidated Statements of Cash Flows
| For the six months ended June 30 |
||||||||
| 2024 | 2023 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Cash flows from operations: | ||||||||
| Loss from operations | $ | ( |
) | $ | ( |
) | ||
| Interest income | ( |
) | ( |
) | ||||
| Depreciation of property and equipment | ||||||||
| Share based compensation expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Account receivables | ( |
) | ||||||
| Other receivables | ( |
) | ( |
) | ||||
| Accrual | ( |
) | ||||||
| Other payables | ( |
) | ||||||
| Advance from customer | ( |
) | ||||||
| Net cash used in operations | ( |
) | ( |
) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Interest received | ||||||||
| Loan to a third party | ( |
) | ||||||
| Net cash (used in) provided by investing activities | ( |
) | ||||||
| Net cash provided by investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Issuance of shares | ||||||||
| Advances from related parties | ||||||||
| Repayment to related parties | ( |
) | ||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate change on cash and cash equivalents | ( |
) | ( |
) | ||||
| Net (decreased) increase in cash and cash equivalents | ( |
) | ( |
) | ||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental cash flow disclosure: | ||||||||
| Cash paid for interest expense | $ | $ | ||||||
| Cash paid for income taxes | $ | $ | ||||||
The accompanying notes are an integral part of these financial statements.
F-4
KB GLOBAL HOLDINGS LIMITED
FOR THE SIX MONTHS ENDED JUNE 30, 2024
NOTES TO THE UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND BUSINESS DESCRIPTION
KB Global Holdings Limited (the “Company”) was incorporated in the Cayman Islands on 17 November 2017 with authorized capital of 5 billion ordinary shares, par value of $0.00001 per share.
On November 20, 2017, Kesheng Global (HK) Limited, or Kesheng HK, was incorporated in Hong Kong as a wholly-owned subsidiary of KB Global Holdings Limited.
On January 18, 2018, Suzhou Keju Enterprise Management Consulting Limited, or Suzhou Keju, our Wholly Foreign-Owned Enterprise (the “WFOE”), was incorporated in Suzhou, PRC, with registered capital of $10 million, as a wholly-owned subsidiary of Kesheng HK.
Beijing Kezhao Technology Co., Ltd. (the “BJKZ”) was incorporated in PRC on August 13, 2018. BJKZ is an information technology company which engaged in information technology development and consulting services.
On November 30, 2018, WFOE entered into an exclusive business cooperation agreement with the shareholders of BJKZ, through which WFOE has gained full control over the management and the right to receive the economic benefits of BJKZ.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) and reflect the activities of the following subsidiaries and variable interest entity (“VIE”): Kesheng HK, Suzhou Keju, and BJKZ. All inter-company transactions and balances have been eliminated in the consolidation.
In accordance with U.S. GAAP, VIEs are generally entities that lack sufficient equity to finance their activities without financial support from other parties or whose equity holders lack adequate decision-making ability. All VIEs with which the Company is involved must be evaluated to determine the primary beneficiary of the risks and rewards of the VIE. The primary beneficiary is required to consolidate the VIEs for financial reporting purposes.
Accounting Standards Codification (“ASC”) 810-10 “Consolidation” addresses whether certain types of entities. referred to as VIEs, should be consolidated in a company’s consolidated financial statements. Pursuant to the exclusive business cooperation agreement, WFOE has the exclusive right to provide to BJKZ technical development, technical support, management consultation and other related services on an exclusive basis. In accordance with the provisions of ASC 810, the Company has determined that BJKZ is a VIE of the WFOE and that the Company is the primary beneficiary. Accordingly, the financial statements of BJKZ are consolidated with the results of the Company.
F-5
The following assets and liabilities of the VIE are included in the accompanying consolidated financial statements of the Company as of June 30, 2024 and December 31, 2023:
| June 30, 2024 |
December 31, 2023 |
|||||||
| (Unaudited) | ||||||||
| Non-current assets | $ | $ | ||||||
| Current assets | ||||||||
| Total assets | $ | $ | ||||||
| Current liabilities | $ | $ | ||||||
| Total liabilities | $ | $ | ||||||
USE OF ESTIMATES
The preparation of the Company’s financial statements in conformity with generally accepted accounting principles of the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management makes its best estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Actual results could differ from those estimates.
FOREIGN CURRENCY TRANSLATION
The Company’s financial statements are presented in the U.S. dollar ($), which is the Company’s reporting currency. The Company use Renminbi (“RMB”) as its functional currencies. Transactions in foreign currencies are initially recorded at the functional currency rate at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the statements of income. Monetary assets and liabilities denominated in foreign currency are translated at the functional currency rate of exchange ruling at the balance sheet date. Any differences are taken to profit or loss as a gain or loss on foreign currency translation in the statements of income.
In accordance with ASC 830, Foreign Currency Matters, the Company translated the assets and liabilities into U.S. dollars using the rate of exchange prevailing at the applicable balance sheet date, and the statements of income and cash flows are translated at an average rate during the reporting period. Adjustments resulting from the translation are recorded in shareholders’ equity as part of accumulated other comprehensive income.
FAIR VALUE MEASUREMENTS
ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. Certain current assets and current liabilities are financial instruments. Management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and, if applicable, their current interest rates are equivalent to interest rates currently available. The three levels of valuation hierarchy are defined as follows:
F-6
| ● | Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
| ● | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. | |
| ● | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. |
The carrying amounts of financial assets and liabilities, such as balance with related parties approximate their fair values because of the short maturity of these instruments or the rate of interest of these instruments approximate the market rate of interest.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent cash on hand, demand deposits, and other short-term highly liquid investments placed with banks, which have original maturities of three months or less and are readily convertible to known amounts of cash.
INVENTORIES
Inventories are carried at the lower of cost and net realizable value, as determined using the weighted average cost method. Management compares the cost of inventories with the net realizable value and if applicable, an allowance is made for writing down the inventory to its net realizable value, if lower than cost. On an ongoing basis, inventories are reviewed for potential write-down for estimated obsolescence or unmarketable inventories which equals the difference between the costs of inventories and the estimated net realizable value based upon forecasts for future demand and market conditions. When inventories are written-down to the lower of cost or net realizable value, it is not marked up subsequently based on changes in underlying facts and circumstances.
REVENUE RECOGNITION
The Company recognizes revenue when: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed or determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related revenue is recorded.
INCOME TAXES
The Company uses the asset and liability method of accounting for income taxes in accordance with Accounting Standards Codification (“ASC”) 740, “Income Taxes” (“ASC 740”). Under this method, income tax expense is recognized as the amount of: (i) taxes payable or refundable for the current year and (ii) future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
F-7
RECENT ACCOUNTING PRONOUNCEMENTS
In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, as if it had originated the contracts. Prior to this ASU, an acquirer generally recognized contract assets acquired and contract liabilities assumed that arose from contracts with customers at fair value on the acquisition date. The ASU is effective for fiscal years beginning after December 15, 2022, with early adoption permitted. The ASU is applied prospectively to business combinations occurring on or after the effective date of the amendment (or if adopted early as of an interim period, as of the beginning of the fiscal year that includes the interim period of early application). The Company has adopted this accounting pronouncement from January 1, 2023, and there was no material impact on its consolidated financial statements from the adoption.
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in the ASU require that a public entity discloses, on an annual and interim basis, significant segment expenses that are regularly provided to an entity’s chief operating decision maker (“CODM”), a description of other segment items by reportable segment, and any additional measures of a segment’s profit or loss used by the CODM when deciding how to allocate resources. The amendments in this ASU are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Retrospective application is required for all prior periods presented, and early adoption is permitted. The Company does not expect the adoption of ASU No. 2023-07 to have a material impact on the Company’s consolidated financial statements or disclosures.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes: Improvements to Income Tax Disclosures. This guidance requires consistent categories and greater disaggregation of information in the rate reconciliation and disclosures of income taxes paid by jurisdiction. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.
NOTE 3 – REVENUE
We recorded $
| Six months ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Software development service | $ | $ | ||||||
F-8
The following table sets forth the computation of basic and diluted net loss per ordinary share for the period indicated:
| Six months
ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| Net profit/(loss) attributable to the Company, basic and diluted shares | $ | ( |
) | $ | ( |
) | ||
| Weighted average ordinary shares used in computing basic and dilutive net loss per share | ||||||||
| Net income (loss) per ordinary share, basic | $ | ) | $ | ) | ||||
There were
NOTE 5 – INCOME TAXES
BJKZ is incorporated in the PRC. It is governed by the income tax law of the PRC and is subject to PRC enterprise income tax (“EIT”). The EIT rate for companies operating in the PRC is
The Company’s effective income tax rates were
| Six months ended June 30, |
||||||||
| 2024 | 2023 | |||||||
| U.S. statutory rate | % | % | ||||||
| Foreign income not registered in the U.S. | ( |
)% | ( |
)% | ||||
| PRC statutory rate | % | % | ||||||
| Changes in valuation allowance and others | ( |
)% | ( |
)% | ||||
| Effective tax rate | % | % | ||||||
Income tax payable represented enterprise income tax at a rate of 25% of taxable income that the Company accrued but did not pay. Income tax payable as of June 30, 2024 and December 31, 2023 comprises:
|
June 30, |
December 31, |
|||||||
|
(Unaudited) |
||||||||
| Current income tax expense | $ | $ | ||||||
| Deferred tax expense (benefit) | ||||||||
| Current income tax expense | $ | $ | ||||||
F-9
The Company has not recognized an income tax benefit for its operating losses generated based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from the net operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not. A valuation allowance will be maintained until sufficient positive evidence exists to support the reversal of any portion or all of the valuation allowance.
| June 30, 2024 |
December 31, 2023 |
|||||||
| (Unaudited) | ||||||||
| Deferred tax asset from operating losses carry-forwards | $ | $ | ||||||
| Valuation allowance | ( |
) | ( |
) | ||||
| Deferred tax asset, net | $ | $ | ||||||
NOTE 6 – LOAN RECEIVABLE
In March 28, 2023, the Company provided
$
NOTE 7 – PROPERTY AND EQUIPMENT
The property and equipment consisted of the following:
| June 30, 2024 |
December 31, 2023 |
|||||||
| (Unaudited) | ||||||||
| Equipment | $ | $ | ||||||
| Less: accumulated depreciation | ( |
) | ( |
) | ||||
| $ | $ | |||||||
No significant residual value is estimated for
the equipment. Depreciation expense for the six months ended June 30 2024 and 2023 totaled $
NOTE 8 – ACCRUALS AND OTHER PAYABLES
Accruals and other payables consisted of the following:
| June 30, 2024 |
December 31, 2023 |
|||||||
| (Unaudited) | ||||||||
| Accrued audit fee | $ | $ | ||||||
| Executive compensation | ||||||||
| Other | ||||||||
| $ | $ | |||||||
F-10
NOTE 9 – ADVANCE FROM CUSTOMER
For our operation, the proceeds received from
sales are initially recorded as advance from customer, which are usually related to unsatisfied performance obligations at the end
of an applicable reporting period. As of June 30, 2024 and December 31, 2023, the outstanding balance of the advance from customer
was nil and $
NOTE 10 – RELATED PARTY TRANSACTIONS AND BALANCES
| a. | Related party |
| Name of related party | Relationship with the Company | |
| b. | Related party balances |
The Company had the following related party balances at June 30, 2024 and December 31, 2023:
| June 30, 2024 |
December 31, 2023 |
|||||||
| (Unaudited) | ||||||||
| Due from (to) related parties: | ||||||||
| Suzhou Kesheng Investment Management Co., Ltd. | ||||||||
| Guo Li | ( |
) | ( |
) | ||||
The amounts due from (to) related parties are without interest and due on demand.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Operating lease
In July 2023, the Company entered a one-year lease for office space of approximately 8 square meter in China, expiring July 3, 2024, with monthly payments of approximately $
Legal proceedings
There has been no legal proceeding in which the Company is a party as of June 30, 2024.
In January and February 2023, the Company sold ordinary shares at a purchase price of $ per share.
NOTE 13 – SUBSEQUENT EVENT
There were no subsequent events or transactions that would require recognition or disclosure in the financial statements for the six months ended June 30, 2024.
F-11
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our unaudited consolidated financial statements and the related notes included elsewhere in this quarterly report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this filing.
Overview
KB Global Holdings Limited (“Company”) is a high-tech driven management company in China We aspire to become one of the most trusted brands among the Chinese business community. To achieve this goal, we intend to leverage on our existing strengths and pursue the following strategies:
| ● | Achieve greater synergy between investment and industry; |
| ● | Continue product innovation to enhance our value proposition for our clients; |
| ● | Further grow our client base and increase our market penetration nationwide; |
| ● | Broaden our individual and corporate client base; and |
| ● | Enhance our IT infrastructure and proprietary database. |
Basis of Accounting
The accompanying consolidated financial statements (referred to hereafter as the “financial statements”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
All intercompany transactions and balances have been eliminated.
1
Results of Operations
The following table sets forth a summary of our consolidated results of operations for the Three Months and Six Months Ended June 30, 2024 and 2023. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The results of operations in any period are not necessarily indicative of our future trends.
| For the Three Months Ended June 30 |
For the Six Months Ended June 30 |
|||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | 3,464 | - | 180,028 | - | ||||||||||||
| Cost of sales | 89 | - | (149,601 | ) | - | |||||||||||
| Gross profit | 3,553 | - | 30,427 | - | ||||||||||||
| Other income | 7,518 | 6 | 16,252 | 7 | ||||||||||||
| Operating expenses | (46,089 | ) | (4,236 | ) | (51,444 | ) | (28,080 | ) | ||||||||
| Loss from operations | (35,018 | ) | (4,230 | ) | (4,765 | ) | (28,073 | ) | ||||||||
| Income tax expense | - | - | - | - | ||||||||||||
| Net loss | (35,018 | ) | (4,230 | ) | (4,765 | ) | (28,073 | ) | ||||||||
| Other comprehensive income loss | ||||||||||||||||
| Foreign currency translation adjustments | (272 | ) | (2,592 | ) | (1,170 | ) | (2,601 | ) | ||||||||
| Comprehensive loss | (35,290 | ) | (6,822 | ) | (5,935 | ) | (30,674 | ) | ||||||||
| Basic and diluted earnings per ordinary share | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | ||||||||
| Basic and diluted weighted average ordinary share outstanding | 130,097,000 | 130,097,000 | 130,097,000 | 130,087,549 | ||||||||||||
The accompanying notes are an integral part of these financial statements.
Revenue
For the six months ended June 30, 2024, the Company’s revenue was $180,028. This was paid by a single customer, Beijing Cabelongteng Investment Center, for whom the Company developed an enterprise software package.
General and administrative expenses
General and administrative expenses consisted primarily of fees paid to employees and an audit fee.
Net loss
Our net loss fell from $28,073 in the the six months ended June 30, 2023 to $4,765 in the six months ended June 30, 2024. The reasons for the modest loss in 2024 are set forth above. In the first half of 2023 we incurred a larger net loss because we had no revenue.
Taxation
Our company, our subsidiaries, and our consolidated VIE file tax returns separately.
2
| 1) | Value added tax (“VAT”) |
Pursuant to the Provisional Regulation of the PRC on VAT and the related implementing rules, all entities and individuals (“taxpayers”) that are engaged in the modern service industry in the PRC are generally required to pay VAT at a rate of 6% of the gross sales proceeds received, less any deductible VAT already paid or borne by the taxpayers. Our PRC subsidiary and our consolidated VIE are subject to VAT at 6% of their revenues.
| 2) | Income tax |
Cayman Islands
The Cayman Islands currently levies no taxes on the Company based upon profits, income, gains or appreciation. In addition, payments of dividends that we make to our shareholders are not subject to withholding tax in the Cayman Islands.
Hong Kong
Kesheng HK, which was incorporated in Hong Kong, is subject to a corporate income tax rate of 16.5%.
PRC
Our subsidiary and the consolidated VIE established in the PRC are subject to the PRC statutory income tax rate of 25%, according to the PRC Enterprise Income Tax (“EIT”) law.
The current PRC Enterprise Income Tax Law imposes a 10% withholding income tax for dividends distributed by foreign invested enterprises to their immediate holding companies outside the PRC. A lower withholding tax rate will be applied if there is a tax treaty arrangement between the PRC and the jurisdiction of the foreign holding company. Distributions to holding companies in Hong Kong that satisfy certain requirements specified by PRC tax authorities, for example, will be subject to a 5% withholding tax rate.
Liquidity and Capital Resources
To date we have realized revenue from one sale only: an enterprise software package that we sold in the first quarter of 2024 to a single customer. We will not be able to generate significant additional sales until we obtain sufficient working capital to enable us to market our services broadly. At June 30, 2024 we had a working capital deficit of ($581,465), as we had only $39,448 in current assets and accrued payables totaling $247,239. We also had an additional debt of $369,422 owed to our CEO; however, we do not expect her to require payment in the near term.
Our principal asset is a loan receivable of $348,848. The loan does not mature until the end of March, 2026. Therefore, in order to fund our growth, we will have to secure capital investment. At present, however, we have no commitments from any investor to provide funds for our operations.
During the first six months of 2024 we used $101,001 in operations. The primary reason for this use was that the funds obtained by closing the sale of our enterprise software had been credited to cash flow when received in the 4th quarter of 2023. Our operations during the first six months of 2024, therefore, were funded by a loan of $80,305 from our CEO.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
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Internal Control over Financial Reporting
Evaluation of Disclosure Controls and Procedures
Our management maintains disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to provide reasonable assurance that the material information required to be disclosed by us in our periodic reports filed or submitted under the Exchange Act are processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management team, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of June 30, 2024. Based on this evaluation, we concluded that our disclosure controls and procedures have the following material weaknesses:
| ● | The relatively small number of employees who are responsible for accounting functions prevents us from segregating duties within our internal control system. |
| ● | Our internal financial staff lack expertise in identifying and addressing complex accounting issues under U.S. Generally Accepted Accounting Principles. |
| ● | Our Chief Financial Officer is not familiar with the accounting and reporting requirements of a U.S. public company. |
| ● | We have not developed sufficient documentation concerning our existing financial processes, risk assessment and internal controls. |
Based on their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s system of disclosure controls and procedures were not effective as of June 30, 2024 for the purposes described in this paragraph.
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Changes in Internal Control over Financial Reporting
No changes in the Company’s internal control over financial reporting came to management’s attention during the quarter ended June 30, 2024 that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.
Changes in Internal Controls
There were no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended June 30, 2024, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Quantitative and Qualitative Disclosure about Market Risk
Not applicable.
Critical Accounting Policies
The preparation of our consolidated financial statements in accordance with GAAP requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, and reported amounts of fees, expenses and investment income. Our management bases these estimates and judgments on available information, historical experience and other assumptions that we believe are reasonable under the circumstances. However, these estimates, judgments and assumptions are often subjective and may be impacted negatively based on changing circumstances or changes in our analyses. If actual amounts are ultimately different from those estimated, judged or assumed, revisions are included in the consolidated financial statements in the period in which the actual amounts become known. We believe our critical accounting policies could potentially produce materially different results if we were to change underlying estimates, judgments or assumptions.
In connection with the preparation of our financial statements for the six months ended June 30, 2024, there was no accounting estimate we made that were subject to a high degree of uncertainty and was critical to our results.
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PART II: OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS
None.
ITEM 1A – RISK FACTORS
There have been no material changes in our risk factors from those previously disclosed in our annual report on Form 10-K for the year ended December 31, 2023.
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There were no unregistered sales of equity securities during the second quarter of 2024 that have not been previously reported.
The Company did not repurchase any of its equity securities that were registered under Section 12 of the Securities Exchange Act during the second quarter of fiscal year 2024.
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 – MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 – OTHER INFORMATION
During the quarter ended June 30, 2024, no director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.
ITEM 6 – EXHIBITS
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: August 21, 2024 | KB Global Holdings Limited | |
| By: | /s/ Li Guo | |
| Name: | Li Guo | |
| Title: |
Chief Executive Officer (Principal Executive Officer) | |
| By: | /s/ Ziyong Hu | |
| Name: | Ziyong Hu | |
| Title: |
Chief Financial Officer (Principal Financial and Accounting Officer) | |
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