| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES The accompanying condensed consolidated financial statements reflect
the application of certain significant accounting policies as described in this note and elsewhere in the accompanying condensed consolidated
financial statements and notes.
l Basis of presentation The accompanying unaudited condensed consolidated
financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States
(“GAAP”) for interim financial reporting, and in accordance with instructions for Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the unaudited consolidated financial statements contained in this report reflect all
adjustments that are normal and recurring in nature and considered necessary for a fair presentation of the financial position and the
results of operations for the interim periods presented. The comparative figures in the balance sheet data was derived from audited financial
statements but does not include all disclosures required by GAAP. The results of operations for the interim period are not necessarily
indicative of the results expected for the full year. These unaudited consolidated financial statements, footnote disclosures and other
information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report
on Form 10-K for the year ended December 31, 2020. These accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US
GAAP”).
l Use of estimates and assumptions In preparing these condensed consolidated financial
statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet
and revenues and expenses during the years reported. Actual results may differ from these estimates.
l Basis of consolidation The condensed consolidated financial statements
include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the
Company have been eliminated upon consolidation.
l Cash and cash equivalents Cash and cash equivalents are carried at cost
and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an
original maturity of three months or less as of the purchase date of such investments.
l Accounts receivable Accounts receivable are recorded at the invoiced
amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from completion of service. Credit
is extended based on evaluation of a customer's financial condition, the customer credit-worthiness and their payment history. Accounts
receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified
amount are reviewed individually for collectibility. At the end of fiscal year, the Company specifically evaluates individual customer’s
financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables.
The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to
make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are
taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against
the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does
not have any off-balance-sheet credit exposure related to its customers. As of June 30, 2021 and December 31, 2020, there were no
l Plant and equipment Plant and equipment are stated at cost less accumulated
depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected
useful lives from the date on which they become fully operational and after taking into account their estimated residual values:
Schedule of useful lives of plant and equipment
Expected useful lives
Computer equipment 5 years
Furniture and fixtures 5 years
Leasehold improvements 5 years or over the shorter of the remaining term of the lease Expenditures for repairs and maintenance are expensed
as incurred. When assets have been retired or sold, the cost and related accumulated depreciation are removed from the accounts and any
resulting gain or loss is recognized in the results of operations.
l Software costs In accordance with the relevant FASB accounting
guidance regarding the development of software to be sold, leased, or marketed, the Company expenses such costs as they are incurred until
technological feasibility has been established, at and after which time these costs are capitalized until the product is available for
general release to customers. Once the technological feasibility is established per ASC 985-20, the Company capitalizes costs associated
with the acquisition or development of major software for internal and external use in the balance sheet. Costs incurred to enhance the
Company’s software products, after general market release of the services using the products, is expensed in the period they are
incurred. The Company only capitalizes subsequent additions, modifications or upgrades to internally developed software to the extent
that such changes allow the software to perform a task it previously did not perform. The Company also expenses website costs as incurred. Research and development expenditures in the development
of its own software are charged to operations as incurred. Based on the software development process, technological feasibility is established
upon completion of a working model, which also requires certification and extensive testing. Costs incurred by the Company between completion
of the working model and the point at which the product is ready for general release are immaterial.
l Impairment of long-lived assets In accordance with the provisions of ASC Topic
360, “ Impairment or Disposal of Long-Lived Assets no
l Revenue recognition The Company adopted Accounting Standards Codification
(“ASC ”) 606 – Revenue from Contracts with Customers
· identify the contract with a customer;
· identify the performance obligations in the contract;
· determine the transaction price;
· allocate the transaction price to performance obligations in the contract; and
· recognize revenue as the performance obligation is satisfied. Revenue of the Company is derived from the organization
of competitions using video games. Most commonly, esports takes the form of organized, single player and multiplayer video game competitions.
Revenues are recognized when the competition is completed, and prize money is awarded. Revenues are earned through sponsorship fees on
a per tournament basis.
l Income taxes The Company adopted the ASC 740 Income tax The estimated future tax effects of temporary
differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs
and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides
valuation allowances as management deems necessary.
l Foreign currencies translation Transactions denominated in currencies other than
the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction.
Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency
using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the condensed consolidated
statement of operations. The reporting currency of the Company is United
States Dollar ("US$") and the accompanying condensed consolidated financial statements have been expressed in US$. In addition,
the Company’s subsidiaries are operating in Hong Kong and Malaysia and maintain their books and record in their local currencies,
Hong Kong Dollars (“HKD”) and Malaysian Ringgit (“MYR”), which are their functional currencies, being the primary
currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities
of the subsidiaries whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation
of Financial Statement Translation of amounts from HKD into US$ and MYR
into US$ have been made at the following exchange rates for the period ended June 30, 2021 and 2020:
Schedule of foreign currencies translation
June 30, 2021 June 30, 2020
Period-end HKD:US$ exchange rate 0.12878 0.12903
Period average HKD:US$ exchange rate 0.12885 0.12885
Period-end MYR:US$ exchange rate 0.24098 0.23359
Period average MYR:US$ exchange rate 0.24423 0.23540
l Comprehensive income ASC Topic 220, “ Comprehensive Income
l Leases The Company adopted Topic 842, Leases ROU assets represent the right to use an underlying
asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease
ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most
of the Company’s leases do not provide an implicit rate, the Company generally use the incremental borrowing rate based on the estimated
rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU
asset also includes any lease payments made and excludes lease incentives. The lease terms may include options to extend or terminate
the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line
basis over the lease term. In accordance with the guidance in ASC 842, components
of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area
maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Subsequently, the fixed and in-substance fixed
contract consideration (including any related to non-components) must be allocated based on the respective relative fair values to the
lease components and non-lease components.
l Net loss per share The Company calculates net income per share in
accordance with ASC Topic 260, “Earnings per Share.”
l Related parties The Company follows the ASC 850-10, Related
Party Pursuant to section 850-10-20 the related parties
include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the
election of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the
equity method by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed
by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which
the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent
that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that
can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one
of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be
prevented from fully pursuing its own separate interests. The condensed consolidated financial statements
shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other
similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation of consolidated
or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s)
involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each
of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects
of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements
are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount
due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of
settlement.
l Commitments and contingencies The Company follows the ASC 450-20, Commitments If the assessment of a contingency indicates that
it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would
be accrued in the Company’s condensed consolidated financial statements. If the assessment indicates that a potentially material
loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent
liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed. Loss contingencies considered remote are generally
not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon
information available at this time that these matters will have a material adverse effect on the Company’s financial position, results
of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s
business, financial position, and results of operations or cash flows.
l Fair value of financial instruments The Company follows paragraph 825-10-50-10 of
the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and has adopted paragraph 820-10-35-37
of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments.
Paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a framework for measuring fair value in generally accepted
accounting principles (GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair
value measurements and related disclosures, paragraph 820-10-35-37 of the FASB Accounting Standards Codification establishes a fair value
hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value
hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest
priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by paragraph 820-10-35-37 of the FASB Accounting
Standards Codification are described below:
Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when their
fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant
model assumption or input is unobservable. The fair value hierarchy gives the highest priority
to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If
the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is
based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amounts of the Company’s financial
assets and liabilities, such as cash and cash equivalents, accounts receivable, deposits, and other receivables, payables and accrued
liabilities and amounts due to related parties, approximate their fair values because of the short maturity of these instruments.
l Recent accounting pronouncements From time to time, new accounting pronouncements
are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies and adopted by the Company
as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that
are not yet effective will not have a material impact on its financial position or results of operations upon adoption. Accounting Standards Adopted In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments In December 2020, the FASB issued ASU No. 2019-12,
Income Taxes: Simplifying the Accounting for Income Taxes Accounting Standards Issued, Not Adopted In March 2020, the FASB issued ASU 2020-04, Reference
Rate Reform – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848), which provides temporary
optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting
burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates such as the Secured
Overnight Financing Rate (SOFR). This guidance is effective upon issuance and generally can be applied through the end of calendar year
2022. The Company is currently evaluating the impact and applicability of this new standard. |
