| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE－2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES These
accompanying consolidated financial statements reflect the application of certain significant accounting policies as described in this
note and elsewhere in the accompanying consolidated financial statements and notes.
● Basis
of Presentation The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”).
● Use
of Estimates and Assumptions The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the financial years presented. Significant accounting estimates
in the year include the allowance for doubtful accounts on accounts and other receivables, impairment loss on inventories, assumptions
used in assessing right-of-use assets and impairment of long-lived assets, and deferred tax valuation allowance. The
Inputs Into the management’s judgments and estimates consider the economic Implications of COVID-19 on the Company’s critical
and significant accounting estimates. Actual results could differ from these estimates.
● Basis
of Consolidation The
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.
● Foreign
Currency Translation and Transaction 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 statement of operations. The
reporting currency of the Company is United States Dollar (“US$”) and the accompanying consolidated financial statements
have been expressed in US$. In addition, the Company and subsidiaries are operating in Singapore, maintain their books and record in
their local currency, Singapore Dollars (“S$”), which is a functional currency as being the primary currency of the economic
environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries
whose functional currency is not US$ are translated into US$, in accordance with ASC Topic 830-30, Translation of Financial Statement Translation
of amounts from S$ into US$ has been made at the following exchange rates for the financial years ended May 31, 2024 and 2023: SCHEDULE
OF EXCHANGE RATES
May 31, 2024 May 31, 2023
May 31, 2024 May 31, 2023
Year-end US$:S$ exchange rate 1.3509 1.3520
Average US$:S$ exchange rate 1.3465 1.3690 Translation
gains and losses that arise from exchange rate fluctuations from transactions denominated in a currency other than the functional currency
are translated, as the case may be, at the rate on the date of the transaction and included in the results of operations as incurred.
● Cash
and Cash Equivalents Cash
and cash equivalents consist primarily of cash in readily available checking and saving accounts. Cash equivalents consist of highly
liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying
amounts approximate fair value due to the short maturities of these instruments. The Company maintains most of its bank accounts in Singapore.
● Accounts
Receivable, net Accounts
receivable include trade accounts due from customers in the sale of products. Accounts
receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms. The normal settlement
terms of accounts receivable from insurance companies in the provision of brokerage agency services are within 30 days upon the execution
of the insurance policies. The Company seeks to maintain strict control over its outstanding receivables to minimize credit risk. Overdue
balances are reviewed regularly by senior management. Management reviews its receivables on a regular basis to determine if the bad debt
allowance is adequate and provides allowance when necessary. The allowance is based on management’s best estimates of specific
losses on individual customer exposures, as well as the historical trends of collections. Account balances are charged off against the
allowance after all means of collection have been exhausted and the likelihood of collection is not probable. The Company’s management
continues to evaluate the reasonableness of the valuation allowance policy and update it if necessary. The
Company does not hold any collateral or other credit enhancements overs its accounts receivable balances.
● Inventories Inventories
are valued at the lower of cost or net realizable value. Cost is determined by the average cost method. The Company records adjustments
to its inventory for estimated obsolescence or diminution in net realizable value equal to the difference between the cost of the inventory
and the estimated net realizable value. At the point of loss recognition, a new cost basis for that inventory is established, and subsequent
changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.
● Property
and Equipment, net Property
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 PROPERTY AND EQUIPMENT USEFUL LIFE
Expected
useful life
Factory
and office equipment 5
Factory
improvement 5
Leasehold
factory premises 30
Furniture
and fittings 10
Machinery
and equipment 10
Motor
vehicles and forklifts 5
Renovation 5
Leasehold
land 20 Expenditure
for repairs and maintenance is expensed as incurred. When assets have 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.
● Impairment
of Long-Lived Assets In
accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets
● Revenue
Recognition The
Company receives certain portion of its non-interest income from contracts with customers, which are accounted for in accordance with
Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) ASC
606-10 provided the following overview of how revenue is recognized from the Company’s contracts with customers: The Company recognizes
revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company
expects to be entitled in exchange for those goods or services.
Step
1: Identify
the contract(s) with a customer.
Step
2: Identify
the performance obligations in the contract.
Step
3: Determine
the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be
entitled in exchange for transferring promised goods or services to a customer.
Step
4: Allocate
the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price
to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in
the contract.
Step
5: Recognize
revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies
a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of
that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance
obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for
promises to transfer service to a customer). Majority
of the Company’s income is derived from contracts with customers in the sale of products, and as such, the revenue recognized depicts
the transfer of promised goods or services to its customers in an amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances
when applying this guidance. The Company’s revenue recognition policies are in compliance with ASC 606, as follows: Product
sales consist of a single performance obligation that the Company satisfies at a point in time. The Company recognizes product revenue
when the following events have occurred: (a) the Company has transferred physical possession of the products, depending upon the method
of distribution and shipping terms set forth in the customer contract, (b) the Company has a present right to payment, (c) the customer
has legal title to the products, and (d) the customer bears significant risks and rewards of ownership of the products. Based on the
Company’s historical practices and shipping terms specified in the sales agreements and invoices, these criteria are generally
met when the products are:
● Invoiced.
● Shipped
from the Company’s facilities or warehouse (“Ex-works”, which is the Company’s standard shipping term). For
these sales, the Company determines that the customer is able to direct the use of, and obtain substantially all of the benefits from,
the products at the time the products are shipped. The
Company records its revenues on product sales, net of good & service taxes (“GST”) upon the services are rendered and
the title and risk of loss of products are fully transferred to the customers. The Company is subject to GST which is levied on the majority
of the products at the rate of 9 Amounts
received as prepayment on future products are recorded as customer deposit and recognized as income when the product is shipped.
● Shipping
and Handling Costs Shipping and handling costs are approximately $ 0.1 0.1 0.2
● Sales
and Marketing Sales
and marketing expenses include payroll, employee benefits and other headcount-related expenses associated with sales and marketing personnel,
and the costs of advertising, promotions, seminars, and other programs. Advertising costs are expensed as incurred. Advertising expense
was approximately $ 0.003 0.003 0.003
● Government
Grant A
government grant or subsidy is not recognized until there is reasonable assurance that: (a) the enterprise will comply with the
conditions attached to the grant; and (b) the grant will be received. When the Company receives government grant or subsidies but
the conditions attached to the grants have not been fulfilled, such government subsidies are deferred and recorded under other
payables and accrued expenses, and other long-term liability. The classification of short-term or long-term liabilities is dependent
on the management’s expectation of when the conditions attached to the grant can be fulfilled. For the financial years ended
May 31, 2024, 2023 and 2022, the Company received government subsidies of approximately $ 0.1 0.2 0.08
● Comprehensive
Income (Loss) ASC
Topic 220, Comprehensive Income
● Income
Taxes Income
taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes ASC
740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the
financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax
positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts. For
the financial years ended May 31, 2024, 2023 and 2022, the Company did not have any interest and penalties associated with tax positions. As
of May 31, 2024 and 2023, the Company did not have any significant unrecognized uncertain tax positions. The
Company is subject to tax in local and foreign jurisdiction. As a result of its business activities, the Company files tax returns that
are subject to examination by the relevant tax authorities.
● Leases Effective
from January 1, 2020, the Company adopted the guidance of ASC 842, Leases The
accounting update also requires that for finance leases, a lessee recognize Interest expense on the lease liability, separately from
the amortization of the right-of-use asset in the statements of earnings, while for operating leases, such amounts should be recognized
as a combined expense. In addition, this accounting update requires expanded disclosures about the nature and terms of lease agreements.
● Retirement
Plan Costs Contributions
to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying statements
of operation as the related employee service are provided. The Company is required to make contribution to their employees under a government-mandated
multi-employer defined contribution pension scheme for its eligible full-times employees in Singapore. The Company is required to contribute
a specified percentage of the participants’ relevant income based on their ages and wages level. During the financial years ended
May 31, 2024, 2023 and 2022, approximately $ 0.2 0.2 0.2
● Segment
Reporting FASB
ASC 280, “ Segment Reporting”
● 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
financial statements shall include disclosure 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.
● Commitments
and Contingencies The
Company follows the ASC 450-20, Commitments to report accounting for contingencies 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 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.
● Concentration
of Credit Risk Financial
instruments that potentially subject the Company to credit risk consist of cash equivalents, restricted cash, accounts receivable. Cash
equivalents are maintained with high credit quality institutions, the composition and maturities of which are regularly monitored by
management. The Singapore Deposit Protection Board pays compensation up to a limit of S$ 100,000 74,360 0.2 0.1 For
accounts receivable, the Company determines, on a continuing basis, the allowance for doubtful accounts are based on the estimated realizable
value. The Company identifies credit risk on a customer by customer basis. The information is monitored regularly by management. Concentration
of credit risk arises when a group of customers having similar characteristics such that their ability to meet their obligations is expected
to be affected similarly by changes in economic conditions.
● Exchange
Rate Risk The
reporting currency of the Company is US$, to date the majority of the revenues and costs are denominated in S$ and a significant portion
of the assets and liabilities are denominated in S$. As a result, the Company is exposed to foreign exchange risk as its revenues and
results of operations may be affected by fluctuations in the exchange rate between US$ and S$. If S$ depreciates against US$, the value
of S$ revenues and assets as expressed in US$ financial statements will decline. The Company does not hold any derivative or other financial
instruments that expose to substantial market risk.
● Liquidity
Risk Liquidity
risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company’s policy is
to ensure that it has sufficient cash to meet its liabilities when they become due, under both normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Company’s reputation. A key risk in managing liquidity is the degree of
uncertainty in the cash flow projections. If future cash flows are fairly uncertain, the liquidity risk increases.
●
Fair
Value Measurement The
Company follows the guidance of the ASC Topic 820-10, Fair Value Measurement and Disclosure
● Level
1
● Level
2 :
● Level
3 The
carrying value of the Company’s financial instruments: cash and cash equivalents, restricted cash, accounts receivable, loans receivable,
amount due to a related party, accounts payable, escrow liabilities, income tax payable, amount due to a related party, other payables
and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments. Management
believes, based on the current market prices or interest rates for similar debt instruments, the fair value of note payable approximate
the carrying amount. The Company accounts for loans receivable at cost, subject to impairment testing. The Company obtains a third-party
valuation based upon loan level data including note rate, type and term of the underlying loans. The
Company’s non-marketable equity securities are investments in privately held companies, which are without readily determinable
market values and are classified as Level 3, due to the absence of quoted market prices, the inherent lack of liquidity and the fact
that inputs used to measure fair value are unobservable and require management’s judgment. Fair
value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates
are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.
● Recently
Issued Accounting Pronouncements In
June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject
to Contractual Sale Restrictions”, which clarifies that contractual sale restrictions are not considered in measuring fair value
of equity securities and requires additional disclosures for equity securities subject to contractual sale restrictions. The standard
is effective for public companies for fiscal years beginning after December 15, 2023. Early adoption is permitted. This accounting standard
update is not expected to have a material impact on our consolidated financial statements as the amendments align with our existing policy. |
