UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
or
For the transition period from _________ to _________
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(Exact name of registrant issuer as specified in its charter)
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| OTC Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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. ☒ NO ☐
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” or an “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
| 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
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by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of latest practicable date.
| Class | Outstanding at August 31, 2023 | |
| Common Stock, $.0001 par value |
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
Item 1. Financial statements
TRANS GLOBAL GROUP INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2023 AND DECEMBER 31, 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| As of | ||||||||
March 31, 2023 | December 31, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| $ | $ | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | ||||||||
| Amount due from the related parties | ||||||||
| Prepayments and other receivables | ||||||||
| TOTAL CURRENT ASSETS | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Property, plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Operating lease ROU assets | ||||||||
| TOTAL NON-CURRENT ASSETS | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | ||||||||
| Accrued liabilities and other payables | ||||||||
| Contract liabilities | ||||||||
| Amount due to a director | ||||||||
| Due to related party | ||||||||
| Operating lease liabilities | ||||||||
| TOTAL CURRENT LIABILITIES | ||||||||
| TOTAL LIABILITIES | $ | $ | ||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, $ par value, shares authorized, and shares issued and outstanding, March 31, 2023 and December 31, 2022, respectively | ||||||||
| Common stock, $ par value, shares authorized, shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated other comprehensive income | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
F-1
TRANS GLOBAL GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| Three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| OPERATING EXPENSES | ||||||||
| Sales & marketing expenses | ||||||||
| General & administrative expenses | ||||||||
| TOTAL OPERATING EXPENSES | ||||||||
| OPERATING LOSS | ( | ) | ( | ) | ||||
| OTHER INCOME | ||||||||
| Non-operating income | ||||||||
| TOTAL OTHER INCOME | ||||||||
| LOSS BEFORE INCOME TAX | ( | ) | ( | ) | ||||
| INCOME TAX EXPENSE | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive loss | ||||||||
| Foreign currency translation adjustment | ( | ) | ||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | ||
| Net loss per share- Basic and diluted | $ | ) | $ | ) | ||||
| Weighted Average Number of shares outstanding | ||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
F-2
TRANS GLOBAL GROUP INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(DEFICIT)
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
For the three months ended March 31, 2023
| Preferred stock | Common stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Total | |||||||||||||||||||||||||||
| Number of shares | Amount | Number of shares | Amount |
capital | loss | deficit | equity | |||||||||||||||||||||||||
| Balance as of December 31, 2022 (Audited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||
| Accumulated other comprehensive loss |
| |||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance as of March 31, 2023 (Unaudited) | $ | | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||
For the three months ended March 31, 2022
| Preferred stock | Common stock | Additional paid-in | Accumulated other comprehensive | Accumulated | Total equity | |||||||||||||||||||||||||||
| Number of shares | Amount | Number of shares | Amount |
capital | loss | deficit | (deficit) | |||||||||||||||||||||||||
| Balance as of December 31, 2021 (Audited) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance as of March 31, 2022 (Unaudited) | $ | | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
F-3
TRANS GLOBAL GROUP INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022
(Currency expressed in United States Dollars (“US$”), except for number of shares)
| Three
months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Depreciation and amortization expenses | ||||||||
| Amortization of ROU assets, net | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepayments and other receivables | ||||||||
| Accounts payable | ( | ) | ||||||
| Accrued liabilities and other payables | ( | ) | ||||||
| Contract liabilities | ||||||||
| Operating lease obligations | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant and equipment | ||||||||
| Net cash provided by investing activities | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Advanced from the related parties | ||||||||
| Advanced from a director | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| Net change in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOWS INFORMATION | ||||||||
| Cash paid for income taxes | $ | $ | ||||||
| Cash paid for interest paid | $ | $ | ||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Expenses paid by the related parties on behalf of the Company | $ | $ | ||||||
| Interest expense for lease liabilities | ||||||||
See accompanying notes to the unaudited condensed consolidated financial statements.
F-4
TRANS GLOBAL GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE 1 – ORGANIZATION AND BUSINESS BACKGROUND
Trans Global Group, Inc. (the “Company”) was formed in the State of Delaware on December 31, 1993 as Teletek, Inc. On October, 2007, the Company changed its name to Trans Global Group, Inc., its current name. The Company’s purpose is to seek, investigate and, if such investigation warrants, acquire an interest in business opportunities presented to it by persons or firms who or which desire to seek the perceived advantages of an issuer who has complied with the Exchange Act. The Company will not restrict its search to any specific business, industry, or geographical location and the Company may participate in a business venture of virtually any kind or nature and we have not established any particular criteria upon which we consider a business opportunity. This discussion of the proposed business herein is purposefully general and is not meant to be restrictive of the Company’s virtually unlimited discretion to search for and enter into potential business opportunities. Management anticipates that it may be able to participate in only one potential business venture because the Company has nominal assets and limited financial resources.
On
August 8, 2022, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) with ZXG Holdings Limited
(“ZXGBVI”), a BVI Business company. the sole shareholder of ZXGBVI, Southsea Global Limited. (“Southsea”), a
BVI Business Company, which is wholly
The Company’s accounting year-end is December 31.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with accounting principles generally accepted in 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. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented.
Principle of consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated. The results of subsidiaries acquired during the respective periods are included in the consolidated statements of operations from the effective date of acquisition or up to the effective date of disposal, as appropriate. The portion of the income or loss applicable to noncontrolling interests in subsidiaries is reflected in the consolidated statements of operations.
F-5
TRANS GLOBAL GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
As of March 31, 2023, details of the Company’s major subsidiaries were as follows:
| Entity Name | Date of Incorporation | Parent Entity | Nature of Operation | Place of Incorporation | ||||
| ZXG Holdings Limited (“ZXGBVI”) | ||||||||
| Hong Kong Zuixiangui International Holding Co., Ltd. (“ZXGHK”) | ||||||||
| Zui Xian Gui International Holding (Shenzhen) Ltd. (“ZXGWFOE”) | ||||||||
| Shenzhen Zui Xian Gui Brewery Technology Ltd. (“ZXGSZ”) |
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of 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. The most significant estimates relate to income taxes and contingencies. The Company bases its estimates on historical experience, known or expected trends, and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.
Foreign currency translation and re-measurement
The functional currency of the Company is the Chinese Renminbi (“RMB”).
The Company, whose translates their accounts into the U.S. dollar as follows:
| ● | Assets and liabilities at the rate of exchange in effect at the balance sheet date | |
| ● | Equities at the historical rate | |
| ● | Revenue and expense items at the average rate of exchange prevailing during the period |
Adjustments arising from such translations are included in accumulated other comprehensive income in stockholders’ equity.
| As of and for the three months ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Spot USD: RMB exchange rate | $ | $ | ||||||
| Average USD: RMB exchange rate | $ | $ | ||||||
The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US Dollars at the rates used in translation.
Cash and Cash Equivalents
Cash equivalents
consist of highly liquid investments with maturities of three months or less when purchased. Cash and cash equivalents are on deposit
with financial institutions without any restrictions. As of March 31, 2023 and December 31,
2022, cash equivalents amounted to $
F-6
TRANS GLOBAL GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Other receivables
Other receivables are stated at the customer obligations due under normal trade terms net of allowance for doubtful accounts.
Property, plant and equipment, net
Property, plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using the straight-line method. Estimated useful lives of the property and equipment are as follows:
| Office equipment |
The cost of maintenance and repairs is charged to expenses as incurred, whereas significant renewals and betterments are capitalized.
Intangible assets, net
Intangible assets with definite lives are stated at cost less accumulated amortization and consist mainly of distribution channel that was acquired in the acquisition of ZXGBVI.
Amortization is calculated on the straight-line basis over the following estimated useful lives:
| Categories | Estimated useful life |
| Distribution channel |
Operating leases
The Company recognizes its leases in accordance with ASC 842 - Leases. Under ASC 842, operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The lease term includes option renewal periods and early termination payments when it is reasonably certain that the Company will exercise those rights. The initial measurement of the ROU asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives. The Company elected the short-term lease exemption for contracts with lease terms of 12 months or less. The Company accounts for the lease and non-lease components of its leases as a single lease component. Lease expense is recognized on a straight-line basis over the lease term.
Revenue recognition
The Company follows the guidance of ASC 606, revenue from contracts with customers is recognized using the following five steps:
| 1. | Identify the contract(s) with a customer; | |
| 2. | Identify the performance obligations in the contract; | |
| 3. | Determine the transaction price; | |
| 4. | Allocate the transaction price to the performance obligations in the contract; and | |
| 5. | Recognize revenue when (or as) the entity satisfies a performance obligation. |
Under Topic 606, revenues are recognized when the promised products have been confirmed of delivery or services have been transferred to the consumers in amounts that reflect the consideration the customer expects to be entitled to in exchange for those services. The Company presents value added taxes (“VAT”) as reductions of revenues. The Company recognizes revenues net of value added taxes (“VAT”) and relevant charges.
We generate revenue primarily from the sales of beverages directly to agents, wholesalers and end users. We recognize product revenue at a point in time when the control of the products has been transferred to customers. The transfer of control is considered complete when products have been picked up by or delivered to our customers. We account for packaging, shipping and handling fees as a fulfillment cost.
F-7
TRANS GLOBAL GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
Contract liabilities
Contract
liabilities consist mainly of advances from customers. On certain occasions, the Company may receive prepayments from downstream
retailers or wholesales customers for wines prior to them taking possession of the Company’s products. The Company records these
receipts as customer advances until the control of the products has been transferred the customers. As of March 31, 2023 and December
31, 2022, the Company had customer advances of $
Value-added taxes
Revenue is recognized net of value-added taxes (“VAT”). The VAT is based on gross sales price and VAT rates applicable to the Company is 3% for the period from the beginning of July 2019 till the end of February 2020, then changed to 1% from the beginning of 2020 till the end of February 2022. The VAT rate applicable to companies from March 2022 to March 2023 is 13%. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded as VAT payable if output VAT is larger than input VAT and is recorded as VAT recoverable if input VAT is larger than output VAT. All of the VAT returns filed by the Company’s subsidiaries in the PRC, have been and remain subject to examination by the PRC tax authorities for five years from the date of filing. VAT payables are included in accrued liabilities.
Income Taxes
The Company follows FASB ASC Subtopic 740, Income Taxes, for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.
Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
Stock-based Compensation
The Company follows FASB ASC Subtopic 718, Stock Compensation, for accounting for stock-based compensation. The guidance requires that new, modified and unvested share-based payment transactions with employees, such as grants of stock options and restricted stock, be recognized in the consolidated financial statements based on their fair value at the grant date and recognized as compensation expense over their vesting periods. The Company also follows the guidance for equity instruments issued to consultants.
The Company computes earnings (loss) per share (“EPS”) in accordance with ASC Topic 260, “Earnings per share”. Basic EPS is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common shares that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
Related party transactions
Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.
Recent Accounting Pronouncements
In March 2021, the FASB issued ASU 2021-03, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” which simplifies how an entity is required to test goodwill for impairment by eliminating step two from the goodwill impairment test. Step two of the goodwill impairment test measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with its carrying amount. The new guidance is effective prospectively but not applicable for us for the period ending December 31, 2022. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance as of March 30, 2021. An entity should not retroactively adopt the amendments in this update for interim financial statements already issued in the year of adoption. We are evaluating the effects, if any, of the adoption of this guidance on our financial position, results of operations and cash flows.
In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement. The new guidance modifies disclosure requirements related to fair value measurement. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2023. Implementation on a prospective or retrospective basis varies by specific disclosure requirement. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance.
F-8
TRANS GLOBAL GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in the accompanying financial statements,
the Company had accumulated losses of $
The ability of the Company to continue as a going concern is dependent on the undertaking of its shareholders to provide continuing financial support to enable the Company to meet its liabilities as and when they fall due.
NOTE 4 – PREPAYMENTS AND OTHER RECEIVABLES
Prepayments and other receivables consisted of the following as of March 31, 2023 and December 31, 2022:
| As of | ||||||||
| March 31, 2023 | December 31, 2022 | |||||||
| Prepayments | $ | $ | ||||||
| Other receivables | ||||||||
| Less: Allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Other receivables, net | ||||||||
| Total prepayments and other receivables | $ | $ | ||||||
Balance of prepayments represented the advanced payments to suppliers. And the balance of other receivables included deposit of office rent and JD platform, and FA consulting fee.
NOTE 5 – AMOUNT DUE FROM THE RELATED PARTIES
| As of | ||||||||||
| March 31, 2023 |
December 31, 2022 |
|||||||||
| Guizhou Zui Xian Gui Liquor Co., Ltd. | Ren Chen is the legal representative and shareholder of the Guizhou Zui Xian Gui Liquor Co., Ltd. | $ | $ | |
||||||
| Shenzhen Zui Xian Gui Supply Chain Co., Ltd. | Ren Chen is the legal representative and shareholder of the Shenzhen Zui Xian Gui Supply Chain Co., Ltd. | |||||||||
| Zhiyu Lv | Manager of the ZXGSZ | |||||||||
| Total amount due from the related party | $ | $ | ||||||||
The amount due from the related parties are unsecured with non-interest bearing, that are expected to be collect at the year ended 2023.
F-9
TRANS GLOBAL GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE 6 – PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following as of March 31, 2023 and December 31, 2022:
| As of | ||||||||
| March 31, 2023 |
December 31, 2022 |
|||||||
| Office equipment | $ | $ | ||||||
| Less: Accumulated depreciations | ( |
) | ( |
) | ||||
| Total property, plant and equipment, net | $ | $ | ||||||
Depreciation
expense, which was included in general and administrative expenses, for the three months ended March 31, 2023 and 2022 was $
NOTE 7 – INTANGIBLE ASSETS
Intangible assets and related accumulated amortization were as follows:
| As of | ||||||||
| March 31, 2023 |
December 31, 2022 |
|||||||
| Distributor channel | $ | $ | ||||||
| Less: Accumulated amortization | ( |
) | ( |
) | ||||
| Less: Effect on exchange rate | ( |
) | ( |
) | ||||
| Total | $ | $ | ||||||
Amortization expense
for the three months ended March 31, 2023 and December 31, 2022 was $
As of March 31, 2023, the future estimated amortization costs for distribution channel are as follows:
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| Effect on exchange rate | ||||
| Total | $ |
F-10
TRANS GLOBAL GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE 8 – ACCRUED LIABILITIES AND OTHER PAYABLES
Accrued liabilities and other payables consisted of the following as of March 31, 2023 and December 31, 2022:
| As of | ||||||||
| March 31, 2023 |
December 31, 2022 |
|||||||
| Accrued liabilities | $ | $ | ||||||
| Other payables | ||||||||
| Total Accrued liabilities and other payables | $ | $ | ||||||
Balance of accrued liabilities included the audit & related expenses. And the balance of other payables included the accrual staff’s salaries & individual tax, VAT surcharge taxes, and payables to marketing fees.
NOTE 9 – CONTRACT LIABILITIES
Contract liabilities consisted of the following as of March 31, 2023 and December 31, 2022:
| As of | ||||||||
| March 31, 2023 |
December 31, 2022 |
|||||||
| Contract liabilities | $ | $ | |
|||||
Balance of contract liabilities are the prepayment from the customers which are expected to be recognized as revenue during the year of 2023.
NOTE 10 – AMOUNT DUE TO A DIRECTOR
As of March 31, 2023 and
December 31, 2022, the amount due to a director are $
F-11
TRANS GLOBAL GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE 11 – INCOME TAXES
The Company’s primary operations are in the PRC, and in accordance with the relevant tax laws and regulations. The corporate income tax rate for each country is as follows:
United States of America
The Company is registered in the State of Delaware and is subject to United States of America tax law. The U.S. federal income tax rate is 21%.
The British Virgin Islands
Under the current laws of the British Virgin Islands, ZXG Holding Ltd. is registered as a BVI business company which governs by the International Business Companies Act of British Islands and there is no income tax charged in British Virgin Islands.
Hong Kong
Hong Kong Zuixiangui
International Holding Co., Ltd. is subject to Hong Kong Profits Tax, which is charged at the statutory income rate of
People’s Republic of China
Zui Xian Gui International
Holding (Shenzhen) Ltd. and Shenzhen Zui Xian Gui Brewery Technology Ltd. are operating in the People’s Republic of China (“PRC”)
subject to the Corporate Income Tax governed by the Income Tax Law of the People’s Republic of China with a unified statutory income
tax rate of 25%. During the period ended March 31, 2023, the operations in People’s Republic of China incurred the net loss
of $
The following tables provide the reconciliation of the differences between the statutory and effective tax expenses for the three months ended March 31, 2023, and 2022:
| Three months ended March 31, |
||||||||
| 2023 | 2022 | |||||||
| Loss attributed to PRC operations | $ | ( |
) | $ | ||||
| PRC Statutory tax at 25% rate | ||||||||
| Effect of PRC deductions and other reconciling items | ||||||||
| Income tax | $ | $ | ||||||
The difference between the U.S. federal statutory income tax rate and the Company’s effective tax rate was as follows for the period ended March 31, 2023, and 2022:
| Three months ended March 31, |
||||||||
| 2023 | 2022 | |||||||
| U.S. federal statutory income tax rate | % | % | ||||||
| Higher rate in PRC, net | % | % | ||||||
| Reconciling items, net operating losses in PRC, election to not recognize tax asset | - |
% | - |
% | ||||
| The Company’s effective tax rate | % | % | ||||||
F-12
TRANS GLOBAL GROUP INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2023
(Currency expressed in United States Dollars (“US$”), except for number of shares)
(Unaudited)
NOTE 12 – RELATED PARTIES’ TRANSACTIONS
As of March 31, 2023 and December 31,2022, the
amount due to a director are $
Basic net loss per share is computed using the weighted average number of common shares outstanding during the periods. The dilutive effect of potential common shares outstanding is included in diluted net loss per share. Due to the Company’s net loss from its continuing operations, all potential common share issuances had anti-dilutive effect on net loss per share. The following table sets forth the computation of basic and diluted net loss per share for the three months ended March 31, 2023, and 2022:
| Three months ended March 31, |
||||||||
| 2023 | 2022 | |||||||
| Total net loss attributable to common shareholders | $ | $ | ||||||
| Weighted average common shares outstanding – Basic and diluted | ||||||||
| Loss per shares – basic and diluted: | ||||||||
| Loss per shares – basic and diluted: | $ | ) | $ | ) | ||||
NOTE 14 - STOCKHOLDERS’ EQUITY
Authorized Capital Stock
Common Stock
The Company is authorized to issue shares of common stock with a par value of $ per share. As of March 31, 2023, shares were issued and outstanding.
Preferred Stock
The Company is authorized to issue shares of preferred stock with a par value of $ per share. As of March 31, 2023, shares of series B preferred stock were issued and outstanding.
Capital Stock Issued
NOTE 15 – SUBSEQUENT EVENTS
In accordance with FASB ASC 855-10 Subsequent Events, the Company has analyzed its operations subsequent to March 31, 2023, to the date these unaudited condensed consolidated financial statements were issued and has determined that it does not have any material subsequent events to disclose in these consolidated financial statements.
F-13
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward- looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Report. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.
Results of Operation
For the three months ended March 31, 2023 and 2022
| Three months ended March 31, |
||||||||||||
| 2023 | 2022 | 2023 vs 2022 | ||||||||||
| Revenues | $ | - | $ | - | $ | - | ||||||
| Cost of revenues | - | - | - | |||||||||
| Gross loss | - | - | - | |||||||||
| Gross loss margin | - | % | - | % | - | % | ||||||
| Operating expenses | (630,368 | ) | (4,234 | ) | (626,134 | ) | ||||||
| Other income, net | 37 | - | 37 | |||||||||
| Income tax expense | - | - | - | |||||||||
| Net loss | $ | (630,331 | ) | $ | (4,234 | ) | $ | (606,097 | ) | |||
Operating Expenses
Operating expense was $630,368 for the three months ended March 31, 2023, reflecting an increase of $626,134, from $4,234 for the three months ended March 31, 2022. The increase was mainly the amortization cost of intangible assets.
Net loss
For the three months ended March 31 2023, net loss was $630,331, compared to net loss of $4,234 for the three months ended March 31, 2022. The increase was mainly the amortization cost of intangible assets.
Liquidity and Capital Resources
Working Capital as of March 31, 2023 and December 31, 2022
| As of | ||||||||||||
| March 31, 2023 |
December 31, 2022 |
2023 vs 2022 | ||||||||||
| Total current assets | $ | 231,219 | $ | 268,495 | $ | (37,276 | ) | |||||
| Total current liabilities | (1,171,633 | ) | (1,196,026 | ) | 58,445 | |||||||
| Working capital | $ | (940,414 | ) | $ | (927,531 | ) | $ | 21,169 | ||||
As of March 31, 2023, we had cash and cash equivalents of $2,647, and we had working capital deficit of $940,414 as compared to working capital deficit of $927,531 as of December 31, 2022. The increasing in working capital deficit was mainly reflected in the customer advances that were recognized as revenue during the period. As a result, we depend substantially on our previous financing activities to provide us with the liquidity and capital resources we need to meet our working capital requirements and to make capital investments in connection with ongoing operations. The Company expects its current capital resources to meet our basic operating requirements for approximately twelve months.
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Cash Flows for the three months ended March 31, 2023 and 2022
| Three months ended March 31, |
||||||||||||
| 2023 | 2022 | 2023 vs 2022 | ||||||||||
| Cash flows used in operating activities | $ | (33,552 | ) | $ | (4,234 | ) | $ | (29,318 | ) | |||
| Cash flows provided by investing activities | 89 | - | 89 | |||||||||
| Cash flows provided by financing activities | 29,373 | 4,234 | 25,139 | |||||||||
| Effect of exchange rate changes in cash during the year | (399 | ) | - | (399 | ) | |||||||
| Net changes in cash during the period | $ | (4,489 | ) | $ | - | $ | (4,489 | ) | ||||
Cash Flow from Operating Activities
For the three months periods ended March 31, 2023 and 2022, net cash used in operating activities was $33,552 and $4,234, respectively. The increase in net cash provided by operating activities was mainly due to the increase of customers advanced and prepayment.
Cash Flow from Investing Activities
For the three months periods ended March 31, 2023 and 2022, net cash provided by investing activities was $89 and nil, respectively. Such increase was primarily due to the increase in purchase of equipment.
Cash Flow from Financing Activities
Net cash used in financing activities was $29,373 and $4,234 for three months ended March 31, 2023 and 2022, respectively. Such increase was primarily due to the increase in funds advances from a director.
Off-balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.
Recent accounting pronouncements
The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and do not believe the future adoption of any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide information required by this Item.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, 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 in our reports filed or submitted under the Exchange Act is accumulated and communicated to our Certifying Officer or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
We conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of March 31, 2023. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and our Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2023, our disclosure controls and procedures were not effective due to the presence of material weaknesses in internal control over financial reporting.
Material Weakness in Internal Control Over Financial Reporting
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses which have caused management to conclude that, as of March 31, 2023, our disclosure controls and procedures were not effective: (i) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (ii) inadequate segregation of duties consistent with control objectives; and (iii) ineffective controls over period end financial disclosure and reporting processes. Because a material weakness in the Company’s internal controls over financial reporting existed as of March 31, 2023 and has not been remediated, the Company’s disclosure controls and procedures were not effective as of March 31, 2023.
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we plan to initiate, the following series of measures in connection with identifying an operating business to acquire and when funds are available to us:
| 1. | We plan to appoint one or more outside directors to our board of directors who would be appointed to an audit committee resulting in a fully functioning audit committee who will undertake oversight in the establishment and monitoring of required internal controls and procedures. |
| 2. | We plan to create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function. |
| 3. | We plan to prepare written policies and procedures for accounting and financial reporting to establish a formal process to close our books monthly on an accrual basis and account for all transactions, including equity and debt transactions. |
We anticipate that we will, at least partially, begin to implement these initiatives in the current fiscal year.
This Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting and none is required.
Changes in Internal Control over Financial Reporting
As of the end of the period covered by this report, there were no changes in the internal controls over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
We know of no materials, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any beneficial shareholder are an adverse party or has a material interest adverse to us.
Item 1A. Risk Factors.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
ITEM 6. Exhibits
| Exhibit No. | Description | |
| 31.1 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
| * | Filed herewith. |
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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.
| TRANS GLOBAL GROUP INC. | ||
| (Name of Registrant) | ||
| Date: September 1, 2023 | By: | /s/ Chen Ren |
| Title: | Chief Executive Officer Chief Financial Officer Director | |
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