| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 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 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 AND NINE MONTHS ENDED SEPTEMBER 30,
2023 (Currency expressed in United States Dollars (“US$”),
except for number of shares) (Unaudited) As of September
30, 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”) May 16, 2022 Trans Global Group, Inc. Investment holding The British Virgin Islands (“BVI”)
Hong Kong Zuixiangui International Holding Co., Ltd. (“ZXGHK”) March 22, 2021 ZXG Holdings Limited Investment holding Hong Kong, PRC
Zui Xian Gui International Holding (Shenzhen) Ltd. (“ZXGWFOE”) September 15, 2021 Hong Kong Zuixiangui International Holding Co., Ltd. Investment holding PRC
Shenzhen Zui Xian Gui Brewery Technology Ltd. (“ZXGSZ”) July 24, 2019 Zui Xian Gui International Holding (Shenzhen) Ltd. Trading of beverages PRC 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 nine months ended September 30,
2023 2022
Spot USD: RMB exchange rate $ 7.27553 $ 7.11599
Average USD: RMB exchange rate $ 7.02717 $ 6.59807 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 and December
31, 2022, cash equivalents amounted to $ 2,795 7,136 F-6 TRANS GLOBAL
GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,
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 5 years The cost of maintenance and repairs is charged to
expenses as incurred, whereas significant renewals and betterments are capitalized. I ntangible
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 5 years 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 AND NINE MONTHS ENDED SEPTEMBER 30,
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 September 30, 2023 and December
31, 2022, the Company had customer advances of $ 460,681 470,281 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 September 2022. 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. For entities that are VAT small taxpayers, VAT rate
applicable is 3% for the period from the beginning of July 2019, then during the COVID-19, the small taxpayers are allowed to enjoy
the preferred tax policy, tax rate from 3% to 1% for the period from March 1, 2020 to September 30, 2021. 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. Earnings (loss) per Share 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 October 2021 ， “ ” In March 2022.the FASB issued ASU No.2022-02,Financial(Topic
326): Troubled Debt Instruments-Credit Losses Restructurings and Vintage Disclosures. which eliminates the troubled debt restructurings
(TDRs) accounting model for creditors that have already adopted Topic 326, which is commonly referred to as the current expected credit
loss (CECL) model. For entities that have adopted Topic 326, the amendments in this Update are effective for fiscal years beginning after
December 15, 2022, including interim periods within those fiscal years. The FASB's decision to eliminate the TDR accounting model is in
response to feedback that the allowance under CECL already incorporates credit losses from loans modified as TDRs and, consequently, the
related accounting and disclosures - which preparers often find onerous to apply - no longer provide the same level of benefit to users.
The Company is currently evaluating the impact of the new guidance on our consolidated financial statements. In June 2022, the FASB issued ASU No.2022-03, Fair
Value Measurement (Topic 820) - Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which stipulates
that a contractual restriction on the sale of an equity security should not be considered part of the equity security's unit of account
and, therefore, should not be considered in measuring its fair value. For public business entities. the amendments in this Update are
effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently
evaluating the impact of the new guidance on our consolidated financial statements. 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 . F-8 TRANS GLOBAL
GROUP INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,
2023 (Currency expressed in United States Dollars (“US$”),
except for number of shares) (Unaudited) |
