UNITEDSTATES SECURITIES AND EXCHANGE COMMISSION
Washington,D.C. 20549
FORM
Amendment Number 1
(Mark One)
For the quarterly period ended
For the transitionperiod from __________ to __________
Commissionfile number:
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) (Zip Code) |
| (Registrant’s telephone number, including area code) |
| None |
| (Former name, former address and former fiscal year, if changed since last report) |
Securities registered pursuant to Section12(b) of the Act:
| Title of Class | Trading Symbol | Name of Each Exchange on Which Registered | ||
| None | N/A | N/A |
Indicate by check mark whetherthe registrant (1) has filed reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.
Indicate by check mark whetherthe registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-Tduring the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whetherthe registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, Emerging Growth Company or a smaller reportingcompany. See the definitions of “large accelerated filer”, “accelerated filer” and “smallerreporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ¨ | .¨ | Accelerated filer ¨ |
| Smaller reporting company | ||
Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registranthas elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuantto Section 13(a) of the Exchange Act. ¨
Indicate by check mark whetherthe registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨
As of June 30, 2024, there were shares of common stock issued and outstanding.
| 1 |
Explanatory Note:
Value Exchange International, Inc. (the “Company”)is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment”) to its Quarterly Report on Form 10-Q for the fiscal quarterended March 31, 2024, which was originally filed with the Securities and Exchange Commission (the “SEC”) on July 16, 2024(the “Original Filing”). This Amendment is being filed to provide the iXBRL tagging not included in the Original Filing.
Other than as expressly set forth herein, this Amendmentdoes not, and does not purport to, amend, update or restate the information in Original Filing or reflect any events that have occurredafter the Original Filing was made. Information not affected by this Amendment remains unchanged and reflects the disclosures made atthe time as of which the Original Filing was made. No changes have been made to the financial statements of the Company as containedin the Original Filing. Accordingly, this Amendment should be read together with the Original Filing and the Company’s other filingswith the SEC.
FORM 10-Q
Value Exchange International, Inc.
INDEX
| Page | ||
| PART I - FINANCIAL INFORMATION | ||
| Item 1.Financial Statements | 3 | |
| Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operation | 42 | |
| Item 3.Quantitative and Qualitative Disclosures About Market Risk | 53 | |
| Item 4.Controls and Procedures | 53 | |
| PART II- OTHER INFORMATION | ||
| Item 1. Legal Proceedings | 54 | |
| Item 1A. Risk Factors | 54 | |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 54 | |
| Item 3. Defaults Upon Senior Securities | 54 | |
| Item 4. Mine Safety Disclosures | 54 | |
| Item 5. Other Information | 54 | |
| Item 6. Exhibits | 55 | |
| Signatures | 56 |
Please note that throughout this QuarterlyReport on Form 10-Q ("Form 10-Q" or "report"), except as otherwise indicated by the context,references in this report to "Company", "we", "us" and "our" are references to Value ExchangeInternational, Inc. and its wholly owned subsidiaries.
| 2 |
ITEM 1. FINANCIAL STATEMENTS
VALUE EXCHANGE INTERNATIONAL, INC.
Financial Statements
| Page | ||
| Consolidated Balance Sheets (unaudited) | 4 | |
| Consolidated Statements of Operations (unaudited) | 5 | |
| Consolidated Statements of Comprehensive Income (unaudited) | 6 | |
| Consolidated Statements of Cash Flows (unaudited) | 8 | |
| Notes to the Consolidated Financial Statements (unaudited) | 9 |
| 3 |
VALUE EXCHANGE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| ASSETS | (unaudited) | |||||||
| CURRENT ASSETS | ||||||||
| Cash | ||||||||
| Accounts receivable, less allowance for credit losses | ||||||||
| Amounts due from related parties | ||||||||
| Other receivables and prepayments | ||||||||
| Inventories | - | |||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Plant and equipment, net | ||||||||
| Goodwill | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | ||||||||
| Other payables and accrued liabilities | ||||||||
| Deferred income | ||||||||
| Amounts due to related parties | ||||||||
| Operating lease liabilities, current | ||||||||
| Loan from a related party | ||||||||
| Current portion of finance lease liability | ||||||||
| Short term bank loan from an affiliate | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Deferred tax liabilities | ||||||||
| Convertible loan from affiliates | ||||||||
| Long term finance lease liability | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| SHAREHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Common stock, shares authorized, $ par value; and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserves | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive losses | ( | ) | ( | ) | ||||
| Total shareholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Non-controlling interest | ||||||||
| Total equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and shareholders’ equity (deficit) | ||||||||
The accompanying notes are an integral part oftheseconsolidated financial statements.
| 4 |
VALUE EXCHANGE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
| Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | (unaudited) | |||||||
| NET REVENUES | ||||||||
| Service income | ||||||||
| COST OF SERVICES | ||||||||
| Cost of service income | ( | ) | ( | ) | ||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES: | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Foreign exchange loss | ( | ) | ( | ) | ||||
| TOTAL OPERATING EXPENSES | ( | ) | ( | ) | ||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSES): | ||||||||
| Interest income | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Change in fair value of embedded derivatives | ( | ) | ||||||
| Finance cost | ( | ) | ( | ) | ||||
| VAT refund | ||||||||
| Management fee income | - | |||||||
| Others | ||||||||
| Total other income (expenses), net | ( | ) | ||||||
| INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES | ( | ) | ||||||
| INCOME TAXES EXPENSES | ( | ) | ( | ) | ||||
| NET INCOME (LOSS) | ( | ) | ||||||
| Less: Net loss attributable to the non-controlling interests | ||||||||
| Net income (loss) attributable to the Company shareholders | ( | ) | ||||||
| Net income (loss) per share, basic and diluted, attributable to the Company shareholders | ) | |||||||
| Weighted average number of shares outstanding | ||||||||
The accompanying notes are an integral part oftheseconsolidated financial statements.
| 5 |
VALUE EXCHANGE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | |||||||
| US$ | US$ | |||||||
| NET INCOME (LOSS) | ( | ) | ||||||
| OTHER COMPREHENSIVE INCOME, NET OF TAX: | ||||||||
| Foreign currency translation adjustment | ||||||||
| TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX: | ||||||||
| Comprehensive income (loss) | ( | ) | ||||||
| Less: Comprehensive loss (income) attributable to the non- controlling interests | ( | ) | ||||||
| Comprehensive income (loss) attributable to the Company shareholders | ( | ) | ||||||
The accompanying notes are an integral part oftheseconsolidated financial statements.
| 6 |
VALUE EXCHANGE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
| The Company’s Shareholders | ||||||||||||||||||||||||||||||||
| Accumulated | ||||||||||||||||||||||||||||||||
| other | ||||||||||||||||||||||||||||||||
| Commonstock | Additional | Retainedearnings | comprehensive | Noncontrolling | ||||||||||||||||||||||||||||
| Share | Amount | paid-in capital | (accumulateddeficit) | Statutory reserves | income | Interest | Total | |||||||||||||||||||||||||
| January 1, 2023 | ( | ) | ||||||||||||||||||||||||||||||
| Net loss | - | - | - | ( | ) | - | - | ( | ) | ( | ) | |||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||
| December31, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| January 1, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | ( | ) | |||||||||||||||||||||||||
| March 31, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
The accompanying notes are an integral part oftheseconsolidated financial statements.
| 7 |
VALUE EXCHANGE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | (unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | ( | ) | ||||||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization | ||||||||
| Noncash operating lease expense | ||||||||
| Change in fair value of embedded derivatives | ( | ) | ||||||
| Deferred income taxes | ( | ) | ( | ) | ||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ||||||
| Other receivables and prepayments | ( | ) | ||||||
| Amounts due from related parties | ( | ) | ||||||
| Inventories | ( | ) | ||||||
| Operating lease right-of-use assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ( | ) | ||||
| Other payables and accrued liabilities | ||||||||
| Deferred income | ||||||||
| Amounts due to related parties | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of plant and equipment | ( | ) | ( | ) | ||||
| Acquisition of a subsidiary | - | |||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from convertible loan | - | |||||||
| Repayment of finance lease liability | ( | ) | ( | ) | ||||
| Repayment of bank loan from an affiliate | - | ( | ) | |||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| EFFECT OF EXCHANGE RATE ON CASH | ||||||||
| (DECREASE) INCREASE IN CASH | ( | ) | ||||||
| CASH, beginning of period | ||||||||
| CASH, end of period | ||||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| ROU asset acquired with operating lease liability | - | |||||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid for income taxes | ( | ) | ( | ) | ||||
| Cash paid for interest expenses | ( | ) | ( | ) | ||||
The accompanying notes are an integral part oftheseconsolidated financial statements.
| 8 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Nature of Operations and Continuance of Business |
Value Exchange International, Inc.("VEII", "Company", "we" or "us") was incorporatedin the State of
On January 1, 2014, VEII received 100%of the issued and outstanding shares of in Value Exchange Int’l (China) Limited ("VEI CHN") in exchangefor i) newly issued 12,000,000 shares of VEII’s common stock to the majority stockholder of VEI CHN; and ii) 166,667 sharesof our common stock held by VEI CHN to be transferred to the majority stockholder of VEI CHN ("Share Exchange").This transaction resulted in the owners of VEI CHN obtaining a majority voting interest in VEII. The merger of VEI CHN into VEII, whichhas nominal net assets, resulted in VEI CHN having control of the combined entities.
For financial reporting purposes, thetransaction represents a "reverse merger" rather than a business combination and VEII is deemed to be the accounting acquireein the transaction. The transaction is being accounted for as a reverse merger and recapitalization. VEII is the legal acquirer but accountingacquiree for financial reporting purposes and VEI CHN is the acquired company but accounting acquirer. Consequently, the assets and liabilitiesand the operations that will be reflected in the historical financial statements prior to the transaction will be those of VEI CHN andwill be recorded at the historical cost basis of VEI CHN, and no goodwill will be recognized in this transaction. The consolidated financialstatements after completion of the transaction will include the assets and liabilities of VEI CHN and VEII, and the historical operationsof VEII and the combined operations of VEI CHN from the initial closing date of the transaction.
The Company provides IT Business’services and solutions to the retail sector through three operating subsidiaries located in Hong Kong SAR and People’s Republicof China ("PRC").
On September 2, 2008 VEI CHN establishedits first operating subsidiary, Value Exchange Int’l (Shanghai) Limited ("VEI SHG") in Shanghai,PRC, under the laws of the PRC. VEI SHG engages in software development, trading and servicing of computer hardware and software activities.
On September 25, 2008, VEI CHN acquiredits second operating subsidiary, TAP Services (HK) Limited in Hong Kong which subsequently changed its name to Value Exchange Int’l(Hong Kong) Limited ("VEI HKG") on May 14, 2013. VEI HKG engages in software development, trading and servicingof computer hardware and software activities.
| 9 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On May 14, 2013, VEI CHN further establishedanother operating subsidiary, Ke Dao Solutions Limited in Hong Kong, which subsequently changed its name to Cumberbuy.com Limited ("CUMBERBUY")on May 26, 2017. CUMBERBUY conducts consultancy services for IT Services and Solutions activities. On May 21, 2018, VEI CHN disposed ofCUCUMBUY with consideration of HK$1.
In January 2017, VEI CHN acquired
In January 2019, VEI SHG establishedan operating subsidiary, Value Exchange Int’l (Hunan) Limited ("VEI HN") in Hunan, PRC, under thelaws of the PRC. VEI HN engages in IT service call-center activities.
In February 2020, VEI SHG establishedan operating subsidiary, Shanghai Zhaonan Hengan Information Technology Co., Limited ("SZH") in Shanghai, PRC,under the laws of the PRC. SZH engages in IT services.
In July 2021, VEI CHN established inan associate, Smart Reward Express Limited ("SRE") in Hong Kong. SRE is inactive since its establishment.
In January 2022, VEI HKG establishedan operating subsidiary, Haomeng Technology (Shenzhen) Co., Limited. ("HTS") in Shenzhen, PRC, under the laws ofthe PRC. HTS engages in IT services.
On January 2, 2024, VEI CHN acquired100% of the capital stock of Value E Consultant International (M) Sdn. Bhd, a company established in Malaysia (the "ValueE"). Value E engages in software development, trading and servicing of computer hardware and software activities in Malaysia.Value E is operated as a subsidiary of VEI CHN.
As of March 31, 2024, the Company heldsix wholly-owned subsidiaries, and two subsidiaries with 51% ownership. Company establishes operating subsidiaries when a perceived oractual opportunity for business is deemed to be most efficiently handled by a local operating subsidiary.
| 10 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 2. | Summary of Significant Accounting Policies |
| a) | Basis of Presentation |
The accompanying consolidated financialstatements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S.GAAP"), and include the financial statements of the Company and all its wholly-owned subsidiaries that require consolidation.All material intercompany transactions and balances have been eliminated in the consolidation. The Company’s fiscal yearend is December 31st. The following entities were consolidated as of March 31, 2024:
| Place of incorporation | Ownership percentage | |||
| Parent Company | ||||
| | | | ||
| | | | ||
| | | |
| b) | Going Concern |
These financial statements have beenprepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company willbe able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially differentfrom carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carryingvalues and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has an operatingloss of $
The Company has relied on debt fundingto pay for operating expenses and business development efforts in 2024 that were not covered by operating revenues. If the Company continuesto incur operating losses as incurred within twelve months of filing date and does not significantly increase its cash reserves, and ifthe Company does not also receive additional funding from existing lenders or from other sources to provide the working capital neededto cover those continuing operating losses, then the Company would be forced to reduce its operating expenses and business developmentefforts and the issue of the Company as a going concern may arise. While the existing lenders of the Company and Company's majority shareholderare affiliated, there can be no assurance of additional debt or equity funding for the Company from the existing lenders or the majorityshareholder. In considering our forecast for the next twelve months and the current cash and working capital as of the filing of thisForm 10-Q, such matters create a substantial doubt regarding the Company’s ability to meet their financial needs and continueas a going concern.
These financial statements do not includeany adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilitiesthat might result from this uncertainty.
| 11 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| c) | Use of Estimates |
Preparing consolidated financial statementsin conformity with U.S. GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. The more significant areas requiring using management’s estimates and assumptionsrelate to the collectability of its receivables, the fair value and accounting treatment of financial instruments, the valuation of long-livedassets and valuation of deferred tax liabilities. Management bases its estimates on historical experience and on various other assumptionsthat are believed to be reasonable under the circ*mstances. Accordingly, actual results may differ significantly from these estimates.In addition, different assumptions or circ*mstances could reasonably be expected to yield different results.
| d) | Cash and Cash Equivalents |
For purposes of the cash flow statements,the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cashequivalents. Cash includes cash on hand and demand deposits in accounts maintained with financial institutions or state-owned banks withinthe PRC and Hong Kong.
| e) | Interim Financial Statements |
These interim unaudited consolidatedfinancial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflectall adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidatedfinancial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarilyindicative of the results expected for a full year or for any future period.
| f) | Accounts receivable, other receivables, and current expected credit losses |
Receivables include trade accountsdue from customers and other receivables such as cash advances to employees, utility deposits paid and advances to suppliers. Managementreviews the composition of accounts receivable and analyzes historical bad debts, customer concentration, customer credit worthiness,current economic trends and changes in customer payment patterns to determine if the allowance for credit losses is adequate. An estimatefor credit losses is made when collection of the full amount is no longer probable. Delinquent account balances are written-off aftermanagement has determined that the likelihood of collection is not probable and known bad debts are written off against the allowancefor doubtful accounts when identified. As of March 31, 2024 and December 31, 2023, allowance for uncollectible accounts receivable amountsto $
The company evaluated the accountingstandards update related to the Current Expected Credit Losses ("CECL") and adequate allowance for uncollectibleaccounts receivable have been made during 2024.
| 12 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| g) | Inventories |
Inventories are valued at the lowerof cost and net realizable value. Cost for inventories is determined using the "first-in, first-out" method. Cost is defined as the cost to acquire products, cost of conversionand other related costs to bring inventory to present location and condition. Net realizable value is defined as estimated selling pricesin the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
Management reviews inventories forobsolescence or cost in excess of net realizable value periodically. The obsolescence, if any, is recorded as a provision against theinventory. The cost in excess of market value is written off and recorded as additional cost of sales.
| h) | Plant and equipment |
Plant and equipment is stated at costless accumulated depreciation and accumulated impairment losses, if any. Expenditures for maintenance and repairs are charged to earningsas incurred. Major additions are capitalized. When assets are retired or otherwise disposed of, the related cost and accumulated depreciationare removed from the respective accounts, and any gain or loss is included in operations. Depreciation of plant and equipment is providedusing the straight-line method for substantially all assets with estimated lives as follows:
| Estimated UsefulLife | ||
| Leasehold improvements | Lesser of lease term or the estimated useful lives of | |
| Computer equipment | ||
| Computer software | ||
| Office furniture and equipment | ||
| Motor Vehicle | ||
| Building |
| i) | Goodwill |
Goodwill represents the excess of the cost of acquisitionover the fair value of net assets acquired. Goodwill is not amortized, but is instead tested for impairment annually.
| 13 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| j) | Impairment of long-lived assets |
Property, Plant, and Equipment
The Company evaluates long-lived assets,including equipment, for impairment at least once per year and whenever events or changes in circ*mstances indicate that the carryingvalue may not be recoverable from its estimated future cash flows. Based on the existence of one or more indicators of impairment, theCompany measures any impairment of long-lived assets by comparing the asset's estimated fair value with its carrying value, based on cashflow methodology. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired andan impairment loss equal to an amount by which the carrying value exceeds the fair value of the asset is recognized.
Impairment of Goodwill
The carrying value of goodwill is evaluatedannually or more frequently if events or circ*mstances indicate that an impairment loss may have occurred. Such circ*mstances could include,but are not limited to, a significant adverse change in business climate, increased competition or other economic conditions. Under FASBAccounting Standard Codification (ASC) Topic 350 "Intangibles - Goodwill and Other", goodwill is tested at a reportingunit level. The impairment test involves a two-step process. The first step involves comparing the fair value of the reporting unit towhich the goodwill is assigned to its carrying amount. If this comparison indicates that a reporting unit’s estimated fairvalue is less than its carrying value, a second step is required. If applicable, the second step requires us to allocate the estimatedfair value of the reporting unit to the estimated fair value of the reporting unit’s net assets, with any fair value inexcess of amounts allocated to such net assets representing the implied fair value of goodwill for that reporting unit. If the carryingvalue of the goodwill exceeds its fair value, the carrying value is written down by an amount equal to such excess.
The goodwill impairment testing processinvolves the use of significant assumptions, estimates and judgments, and is subject to inherent uncertainties and subjectivity. Estimatinga reporting unit’s discounted cash flows involves the use of significant assumptions, estimates and judgments with respectto a variety of factors, including sales, gross margin and selling, general and administrative rates, capital expenditures, cash flowsand the selection of an appropriate discount rate. Projected sales, gross margin and selling, general and administrative expense rateassumptions and capital expenditures are based on our annual business plans and other forecasted results. Discount rates reflect market-basedestimates of the risks associated with the projected cash flows of the reporting unit directly resulting from the use of its assets inits operations. These estimates are based on the best information available to us as of the date of the impairment assessment.
| 14 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| k) | Fair value of financial instruments |
ASC Topic 820, Fair Value Measurementand Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exitprice) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants onthe measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservableinputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs)and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
| Level one — | Quoted market prices in active markets for identical assets or liabilities; |
| Level two — | Inputs other than level one inputs that are either directly or indirectly observable; and |
| Level three — | Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. |
Determining which category an assetor liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. Thefollowing table represents the fair value hierarchy for the Company’s financial assets and liabilities measured at fairvalue on a recurring basis as of:
| March 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Liabilities: | ||||||||||||||||
| Convertible loan and its fair value for the derivative portion (See Note 12) | - | - | ||||||||||||||
| December 31, 2023 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Liabilities: | ||||||||||||||||
| Convertible loan and its fair value for the derivative portion (See Note 12) | - | - | ||||||||||||||
As of March 31, 2024 and December31, 2023, the fair values of the Company’s cash and cash equivalents, accounts receivable, inventory, accounts payable, otherreceivables and prepayments, other payables and accrued liabilities, and balances with related parties approximated the carryingvalues of these instruments presented in the Company’s consolidated balance sheets due to the short maturities of theseinstruments.
| l) | Comprehensive income |
U.S. GAAP generally requires that recognizedrevenue, expenses, gains and losses be included in net income or loss. Although certain changes in assets and liabilities are reportedas separate components of the equity section of the consolidated balance sheet, such items, along with net income, are components of comprehensiveincome or loss. The components of other comprehensive income or loss consist of foreign currency translation adjustments.
| 15 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| m) | Earnings per share |
The Company reports earnings per sharein accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share ("EPS")on the face of the income statement. Basic EPS is computed by dividing net income available to common shareholders (numerator) by theweighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential commonshares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. Incomputing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased fromthe exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
| n) | Revenue recognition |
The Company’s revenueis derived from three primary sources: (i) professional services for systems development and integration, including procurement of relatedhardware and software licenses on behalf of customers, if required; (ii) professional services for system maintenance normally for a periodof one year; and (iii) sale of hardware and consumables during the service performed as stated above. We recognize revenue from contractswith customers using the five-step model prescribed in ASC 606.
The Company derives revenue from fixed-pricesale contracts with customers that may provide for the Company to procure hardware and software licenses with varied performance specificationsspecific to each customer and provide the technical services for systems development and integration of the hardware and software licenses.In instances where the contract price is inclusive of the technical services, the sale contracts include performance obligations.
Determining whether such products andservices within a customer contract are considered distinct performance obligations that should be accounted for separately requires significantjudgment. Accordingly, we review customer contracts to identify all separate promises to transfer goods and services that would be consideredperformance obligations. Judgment is also required in determining whether an option to acquire additional products and services withina customer contract represents a material right that the customer would not receive without entering into that contract.
The Company’s contractsoften contain multiple performance obligations, which generally include customer-acceptance provisions which provide for the Company tocarry out installation, test runs and performance tests at the Company’s cost until the systems as a whole can meet theperformance specifications stated in the contracts. The delivered equipment and software licenses have no standalone value to the customeruntil they are installed, integrated and tested at the customer’s site by the Company in accordance with the performancespecifications specific to each customer. In addition, under these multiple performance obligations contracts, the Company has not soldthe equipment and software licenses separately from the installation, integration and testing services, and hence there is no objectiveand reliable evidence of the fair value for each deliverable included in the arrangement. If a contract contains multiple performanceobligations, the Company accounts for each distinct performance obligation separately. The transaction price is allocated to the separateperformance obligations on a relative stand-alone selling price basis. Any discounts or expected potential future price concessions areconsidered when determining the total transaction price.
| 16 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In addition, the arrangement generallyincludes customer acceptance criteria that cannot be tested before installation and integration at the customer’s site.Accordingly, revenue recognition is deferred until customer acceptance, indicated by an acceptance certificate signed off by the customer.
We recognize revenue over time whenthere is a continuous transfer of control to our customer. When control is transferred over time, revenue is recognized based on the extentof progress towards completion of the performance obligation. Based on the nature of the products and services provided in the contract,we use our judgment to determine if an input measure or output measure best depicts the transfer of control over time. If a contract doesnot meet the criteria for recognizing revenue over time, we recognize revenue at a point in time.
Revenues of maintenance services arerecognized when the services are performed in accordance with the contract term. For maintenance service contracts, a time-elapsed outputmethod is used to measure progress, and revenue is recognized straight-line over the term of the contract.
For services contracts, we typicallysatisfy our performance obligations as services are rendered and use a contract cost-based input method to measure progress. Contractcosts include labor, material and allocable indirect expenses. Revenue is recognized proportionally as contract costs are incurred plusestimated fees.
Revenues of sale of software, if notbundled with other arrangements, are recognized when shipped and customer acceptance obtained at a point in time, if all other revenuerecognition criteria are met. Costs associated with revenues are recognized when incurred.
Revenues are recorded net of value-addedtaxes, sales discounts and returns. There were no sales returns during the three months period ended March 31, 2024 and 2023.
| Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | (unaudited) | |||||||
| NET REVENUES | ||||||||
| Service income | ||||||||
| -systems development and integration | ||||||||
| -systems maintenance | ||||||||
| -sales of hardware and consumables | ||||||||
Billings in excess of revenues recognized are recorded asdeferred revenue.
| 17 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| o) | Income taxes |
Deferred income taxes are recognizedfor the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences betweenthe financial statement carrying amounts and the tax bases of existing assets and liabilities. The charge for taxation is based on theresults for the reporting period as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that havebeen enacted or substantively enacted by the balance sheet date. The effect on deferred income taxes of a change in tax rates is recognizedin income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that someportion, or all of, a deferred tax asset will not be realized.
For uncertainty in income taxes, atax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustainedin a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit thatis greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not"test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expensein the year incurred.
| p) | Lease accounting |
The Company categorize leases at theirinception as either operating or finance leases. Lease agreements cover certain office space, warehouse space, and vehicles. Most of theseleases are operating leases; however, certain vehicles are leased under finance leases.
Operating leases are included in operatinglease right-of-use assets, current operating lease liabilities, and long-term operating lease liabilities in our consolidated balancesheets. Finance leases are included in net property, current installments of long-term debt, and long-term debt in our consolidated balancesheets.
Leased assets represent our right touse an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments overthe lease term. Operating lease liabilities and corresponding right-of-use assets include options to extend lease terms that are reasonablycertain of being exercised. As the Company’s leases generally do not provide an implicit discount rate, the Company usesthe estimated collateralized incremental borrowing rate (i.e. 3%) based on information available at the lease commencement date in determiningthe present value of lease payments for use in the calculation of the operating lease liabilities and right-of-use assets. This rate isdetermined using a portfolio approach based on the risk-adjusted rate of interest and requires estimates and assumptions including creditrating, credit spread, and adjustments for the impact of collateral. The Company believes that this is the rate it would have to pay toborrow an amount equal to the lease payments on a collateralized basis over a similar lease term.
Leases that have a term of twelve monthsor less upon commencement date are considered short-term in nature. Accordingly, short-term leases are not included on the consolidatedbalance sheets and are expensed on a straight-line basis over the lease term, which commences on the date we have the right to controlthe property.
| 18 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| q) | Advertising costs |
The Company expenses the cost of advertisingas incurred in the period in which the advertisem*nts and marketing activities are first run or over the life of the endorsem*nt contract.No advertising and marketing expense for the three months ended March 31, 2024 and 2023.
| r) | Shipping and handling |
Shipping and handling cost incurredto ship computer products to customers are included in selling expenses. Shipping and handling expenses for the three months ended March31, 2024 and 2023 were $
| s) | Research and development costs |
Research and development costs areexpensed as incurred and are included in general and administrative expenses. No research and development costs for the three months endedMarch 31, 2024 and 2023.
| t) | Foreign currency translation |
The functional currency and reportingcurrency of the Company is the U.S. Dollar. ("US$" or "$"). The functional currency of theHong Kong subsidiaries is the Hong Kong Dollar. The functional currency of the Chinese subsidiaries is RMB. The functional currency ofthe Philippine subsidiary is Peso. Results of operations and cash flow are translated at average exchange rates during the period, andassets and liabilities are translated at the exchange rate as quoted by the Hong Kong Monetary Authority ("HKMA")at the end of the period. Capital accounts are translated at their historical exchange rates when the capital transaction occurred. Translationadjustments resulting from this process are included in accumulated other comprehensive income. Transaction gains and losses that arisefrom exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the resultsof operations as incurred.
| Quarter ended | March 31, 2024 | March 31, 2023 | ||
| RMB : USD exchange rate | ||||
| average period ended | ||||
| HKD : USD exchange rate | ||||
| average period ended | ||||
| PESO : USD exchange rate | ||||
| average period ended | ||||
| MYR : USD exchange rate | - | |||
| average period ended |
| Quarter ended | March 31, 2024 | December 31, 2023 | ||
| RMB : USD exchange rate | ||||
| HKD : USD exchange rate | ||||
| PESO : USD exchange rate | ||||
| MYR : USD exchange rate | - |
| 19 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| u) | Stock-based Compensation |
The Company records stock-based compensationin accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or servicesare the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration receivedor the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and thecost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
| v) | Commitments and contingencies |
The Company follows FASB ASC Subtopic450-20, “Loss Contingencies” in determining its accruals and disclosures with respect to loss contingencies. Accordingly,estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financialstatements indicates that it is probable that a liability could be incurred and the amount of the loss can be reasonably estimated. Legalexpenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosureof the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.
| w) | Segment Reporting |
The Company uses the “managementapproach” in determining reportable operating segments. The management approach considers the internal organization and reportingused by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source fordetermining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operating resultssolely by monthly revenue from software development and maintenance services (but not by sub-services/product type or geographic area)and operating results of the Company and, as such, the Company has determined that the Company has one operating segment as defined byASC Topic 280 “Segment Reporting”.
| 20 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| x) | Recent accounting pronouncements |
In November 2023, the Financial AccountingStandards Board (FASB) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07),which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance will be effectivefor the annual periods beginning the year ended December 31, 2024, and for beginning January 1, 2025. Early adoption is permitted. Uponadoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. We do not expectthe adoption of this guidance to have a material impact on our consolidated financial statements.
In December 2023, the FASB issued ASUNo. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of incometax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliationand income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of incometax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption ispermitted. Upon adoption, the guidance can be applied prospectively or retrospectively. We do not expect the adoption of this guidanceto have a material impact on our consolidated financial statements.
Other accounting standards that havebeen issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expectedto have a material impact on the Company’s consolidated financial statements upon adoption.
| 21 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 3. | Accounts receivable |
Accounts receivable consisted of the followingas of March 31, 2024 and December 31, 2023:
March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| Accounts receivable | ||||||||
| Allowance for credit losses | ( | ) | ( | ) | ||||
All of the Company’s customersare located in the PRC, Hong Kong and Manila, Philippines. The Company provides credit in the normal course of business. The Company performsongoing credit evaluations of its customers and maintains allowances for credit losses based on factors surrounding the credit risk ofspecific customers, historical trends, and other information. The change in accounts receivable for the period ended March 31, 2024 wasprimarily due to new billings of revenue recognition.
The following table presents changes in the balances ofthe company accounts receivable:
| December 31, 2023 | Additions | Deductions | March 31, 2024 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Accounts receivable | ( | ) | ||||||||||||||
| Allowance for credit losses | ( | ) | - | - | ( | ) | ||||||||||
| ( | ) | |||||||||||||||
| December 31, 2022 | Additions | Deductions | December 31, 2023 | |||||||||||||
| US$ | US$ | US$ | US$ | |||||||||||||
| Accounts receivable | ( | ) | ||||||||||||||
| Allowance for credit losses | - | ( | ) | - | ( | ) | ||||||||||
| ( | ) | |||||||||||||||
| 22 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 4. | Other receivables and prepayments |
Other receivables and prepayments consisted of the followingas of March 31, 2024 and December 31, 2023:
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Deposits and prepaid expense | ||||||||
| Others | ||||||||
| 5. | Inventories |
Inventories as of March 31, 2024 and December31, 2023 consisted of the following:
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Finished goods | - | |||||||
| 23 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 6. | Plant and equipment, net |
Plant and equipment consisted of the followingas of March 31, 2024 and December 31, 2023:
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Leasehold improvements | ||||||||
| Office furniture and equipment | ||||||||
| Computer equipment | ||||||||
| Computer software | ||||||||
| Motor Vehicle | ||||||||
| Building | ||||||||
| Total | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Plant and equipment, net | ||||||||
Depreciation expense for the threemonths period ended March 31, 2024 and 2023 amounted to $
As of March 31, 2024 and December 31,2023, the Company's motor vehicle was under finance lease arrangement with a net carrying amount $
| 7. | Goodwill |
Goodwill consisted of the following as of March31, 2024 and December 31, 2023:
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Goodwill arising from acquisition of TSI | ||||||||
| Goodwill arising from acquisition of Value E | - | |||||||
As of January 2, 2024, VEI CHN acquired100% of the capital stock of Value E from shareholders of VALUE E, Ms. TSANG Po Yee Bella with 95% shares of interest and Mr. CHAI LiChen with 5% shares of interest, for the consideration Malaysian ringgit (MYR) 100. Ms. TSANG Po Yee Bella is also a director of the Company.Upon completion of the acquisition, Value E is a wholly owned subsidiary of the Company. Value E engages in software development, tradingand servicing of computer hardware and software activities in Malaysia. The Company is undergoing purchase price allocation valuationfor the acquisition of Value E currently.
| 24 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 8. | Operating leases |
We have entered into various non-cancelableoperating lease agreements for certain of our offices. Our leases have original lease periods expiring between the remainder of 2024 and2027. Many leases include option to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemedto be reasonably assured. Our lease agreements generally do not contain any material residual value guarantees or material restrictivecovenants.
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Operating lease right-of-use assets, net | ||||||||
The components of lease liabilities are as follows:
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Lease liabilities, current | ||||||||
| Lease liabilities, non-current | ||||||||
| Present value of lease liabilities | ||||||||
Total noncash operating lease expensefor the three months period ended March 31, 2024 and 2023 amounted to $
The following is a schedule, by years,of maturities of lease liabilities as of December 31, 2023:
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Year one | ||||||||
| Year two | ||||||||
| Year three | ||||||||
| Total undiscounted cash flows | ||||||||
| Less: Imputed interest | ( | ) | ( | ) | ||||
| Present value of lease liabilities | ||||||||
| 25 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 9. | Finance lease liability |
Finance lease liability consisted of the followingas of March 31, 2024 and December 31, 2023:
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Long term finance lease liability | ||||||||
| Less: Current portion of finance lease liability | ( | ) | ( | ) | ||||
| Current portion of finance lease liability | ||||||||
As of March 31, 2024 and December 31,2023, the above finance lease liability secured by property and equipment with net carrying amount of $
| 10. | Bank loan from an affiliate |
Bank loan from an affiliate consisted of the followingas of March 31, 2024 and December 31, 2023:
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Short term bank loan from an affiliate | ||||||||
The Company and American Pacific Bancorp,Inc., a Texas corporation located in Houston, Texas, (“APB”) signed a Loan Agreement, Security Agreement and Revolving CreditPromissory Note (“Promissory Note”), each dated July 26, 2022 but fully executed and closed as of July 27, 2022, whereby APBwill provide a $
APB is affiliated with Chan Heng Fai,a director and principal shareholder of the Company, by virtue of Mr. Chan’s equity ownership of parent company of APB and his serviceas the Executive Chairman of the parent company of APB. APB is also affiliated with the Company directors Lum Kan Fai, Robert Trapp andMr. Lim Sheng Hon Danny since they are affiliated with Mr. Chan and certain of his affiliated companies by virtue of services as a director,officer or professional advisor to those affiliated companies. Further, Wong Shui Yeung, and Wong Tat Keung, who are deemed to be independentdirectors of the Company, are also independent directors of certain Mr. Chan's affiliated companies. (See Note 12 (iii))
| 26 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 11. | Loan from a related party |
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Loan from a related party | ||||||||
On September 28, 2023, the Companyentered into a Loan Agreement and Promissory Note (collectively, the “Loan Agreement”) with Alset International Limited, apublic Singapore corporation, (“AIL”) for an unsecured loan of Five Hundred Thousand U.S. Dollars and No Cents (USD$
(1) Principal will be paid in a singlelump sum payment on or by the six (6) month anniversary of the effective date of the Loan Agreement, being September 28,2023, (being the“Maturity Date”); and
(2) Interest accrued on Principal shallbe paid on the last business day on a calendar monthly basis with initial accrued Interest payments commencing on September 28, 2023.
Company has the right to prepay allor any portion of the Principal and Interest accrued on the Principal, without penalty, upon ten (10) days’ prior notice to AIL.The Principal was advanced in full by AIL on October 4, 2023.
Mr. Chan Heng Fai, a non-executivedirector of the Company, who is deemed the owner of of the issued shares of Company’s Common Stock by virtue of sharesof Common Stock held by Mr. Chan, and the following share ownership of Company’s Common Stock by entities that Mr. Chan is deemedto control: shares held by Hapi Metaverse Inc., shares held by BMI Capital Partners International Limited, 18,512 sharesheld by Liquid Value Development Pte Ltd. and shares held by Decentralized Sharing Systems, Inc.
AIL is a majority-owned subsidiaryof Alset Inc., a Texas corporation, (“Alset”). Mr. Chan owns approximately
Purpose of the Loan Agreement was toprovide short term working capital to the Company.
No repayment of the principal and interestaccrued made as of July 16, 2024.
| 27 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 12. | Convertible loan from affiliates |
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Convertible loan | ||||||||
The movement in the liability and derivativecomponents of the convertible loan as of March 31, 2024 and December 31, 2023 are set out below:
| Convertible Loan 1 (i) (iii) | Convertible Loan 2 (ii) (iii) | |||||||||||||||||||
| Liability component | Derivative component | Liability component | Derivative component | Total | ||||||||||||||||
| US$ | US$ | US$ | US$ | US$ | ||||||||||||||||
| December 31, 2023 | ||||||||||||||||||||
| Change in fair value of embedded Derivatives | ( | ) | ( | ) | ||||||||||||||||
| March 31, 2024 | ||||||||||||||||||||
(i) Movement of the components of theConvertible Loan 1:
| Liability component | Derivative component | Total | ||||||||||
| December 31, 2023 | ||||||||||||
| Change in fair value of embedded derivatives | ||||||||||||
| March 31, 2024 | ||||||||||||
VEII entered into a Convertible CreditAgreement, dated and effective as of January 27, 2023, (“2023 Credit Agreement 1”) with the following lenders: (1) Hapi Metaverse,Inc., a Delaware corporation, (“HMI”, and formerly named “GigWorld, Inc.”) and (2) New Energy CV Corporation (formerly,“American Wealth Mining Corp.”), a Nevada corporation, (“NECV”). HMI and NECV are also referred to individuallyas a “Lender” and collectively, as the “Lenders”.
| 28 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Maximum Credit Line; Interest; Advances; Payment.The 2023 Credit Agreement 1 provides for a maximum credit line of One Million Five Hundred Thousand Dollars and No Cents ($1,500,000.00)(“Maximum Credit Line”) with simple interest accrued on any advances of the money under the 2023 Credit Agreement 1 at EightPercent (
Use of Proceeds. Advances under the 2023Credit Agreement 1 may be used to fund general working capital needs of the Company, which includes: expansion of existing business operationsor business lines to new geographical markets in Asia or other geographical markets; for development of new business lines (whether inexisting or new geographical markets); acquisition of assets or companies (whether in existing or new geographical markets); and paymentof any sums due under the Credit Agreement.
Unsecured Debt Obligation. Any Advancewill be an unsecured general debt obligation of the Company. Further, there are no personal guarantees under the 2023 Credit Agreement1.
Events of Default. The following constitutean event of default under the 2023 Credit Agreement 1: (1) failure to make a payment of any Advance under the 2023 Credit Agreement 1when due and payable and Company fails to cure such default within ten (10) days after receipt of a written notice from the Lender; (2)failure in the observance or performance of any non-monetary material covenant or agreement and Company fails to cure such default withinthirty (30) days after written notice of default from the Lender; (3) failure of Company to comply with the obligations, terms, covenantsor conditions of 2023 Credit Agreement 1, or breach by Company of any obligations, covenant, representation or warranty that is not curedwithin thirty (30) days from the receipt of a written notice from a Lender; (4) filing of a petition in bankruptcy or the commencementof any proceedings under any bankruptcy laws by or against Company, which filing or proceeding is not dismissed within sixty (60) daysafter the filing or commencement thereof, or if Company becomes insolvent; (5) petition is filed with a court to place the Company inreceivership or similar status for benefit of creditors and appointment of a receiver is unvacated and unstayed for an aggregate of sixty(60) days; (6) for debts or judgments in excess of One Hundred Thousand Dollars and No Cents ($100,000.00) in face amount, a writ of executionor attachment or any similar process shall be issued or levied against all of the Company’s assets, or any judgment involving monetarydamages shall be entered against the Company which shall become a lien on all of the Company’s assets and such execution, attachmentor similar process or judgment is not released, bonded, satisfied, vacated or stayed within sixty (60) days after its entry or levy; or(7) Company ceases to carry on its primary business line for ninety (90) consecutive days. The remedy for any default that is not timelycured, if a cure period is allowed, is all sums due under the 2023 Credit Agreement 1 becoming immediately due and payable.
| 29 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Conversion Right. The 2023 Credit Agreement1 grants the following conversion rights to each Lender. Each Advance shall be convertible, in whole or in part, into shares of CompanyCommon Stock at the option of the Lender who made that Advance (being referred to as a “Conversion of Convertible Loan 1”),at any time and from time to time, at a price per share equal the “Conversion Price 1”. The Conversion Price 1 for a Conversionof Convertible Loan 1 shall be the average closing price of the Company Common Stock as quoted by the Bloomberg Financial Markets (ora comparable reporting service of national reputation selected by the Company and reasonably acceptable to the Lender effecting the Conversionof Convertible Loan 1 if Bloomberg Financial Markets is not then reporting prices of the Company Common Stock), for the three (3) consecutivetrading days prior to date of the Notice of Conversion. The Conversion Price 1 is not limited by a minimum price per share of CompanyCommon Stock applicable to the Conversion of Convertible Loan 1. As such, if a Lender or Lenders loan a significant sum of money underthe 2023 Credit Agreement 1 and then elect to convert all or most of the loaned amount into shares of Company Common Stock, the resultingissuance of shares of Common Stock could significantly dilute existing Company shareholders.
Conversion upon a Change in Control Transaction.In the event that prior to the time of repayment of any Advance under the 2023 Credit Agreement 1 that has not previously been convertedinto shares of Company Common Stock, the Company shall consummate a “Change in Control Transaction” (as defined below), thenthe total amount of Advances outstanding shall convert into shares of Company Common Stock at the Conversion Price 1. “Change inControl Transaction” will be deemed to exist if (1) there occurs any consolidation, merger or other business combination of theCompany with or into any third party and the Company is not the surviving entity, or any other corporate reorganization or transactionor series of related transactions in which the voting stockholders of the Company prior to such event cease to own 50% or more of thevoting power of the surviving entity after the transaction, or (2) in one or a series of related transactions, there is a sale or transferof all or substantially all of the operating assets of the Company or all of its wholly-owned subsidiaries, determined on a consolidatedbasis, to a third party.
Conversion upon Breach of 2023 Credit Agreement1. In the event that the Company breaches any provision of the 2023 Credit Agreement 1 and does not remedy that breach within thirty(30) days after receipt of a written demand from a Lender, then each of the Lenders may convert all or any portion of the unpaid amountof their respective Advance or Advances into shares of Company Common Stock at the Conversion Price 1.
Warrants. In the event that a Lender electsto convert any portion of an Advance under the 2023 Credit Agreement 1 into shares of Company Common Stock in lieu of cash payment insatisfaction of that Advance, then Company will issue to the Lender five (5) detachable warrants for each share of Company Common Stockissued in a Conversion of Convertible Loan 1 (“Warrants 1”). Each Warrant 1 will entitle the Lender to purchase one (1) shareof Common Stock at a per-share exercise price equal to the Conversion Price 1. The exercise period of each Warrant will be five (5) yearsfrom date of issuance of the Warrant.
Conversion of Loan. On September 6, 2023,the Company received a Notice of Conversion from HMI to convert One Million Three Hundred Thousand Dollars ($1,300,000.00) of the principalamount loaned to the Company under the 2023 Credit Agreement 1 (“Converted Principal”) into shares of Company’s CommonStock. Under the terms of the 2023 Credit Agreement 1 and Notice of Conversion, HMI has demand rights for the conversion of outstandingdebt into equity. On September 18, 2023, the Converted Principal resulted in issuance of shares of Common Stock to HMI alongwith issuance of Warrants 1 to purchase a maximum of
| 30 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of March 31, 2024, HMI has not stated whenor if it will exercise any of the Warrants 1. The issuance of Conversion Shares, Warrants 1 and Underlying Shares was made in relianceupon the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended, (“Securities Act”)and Rule 506(b) of Regulation D thereunder. The Conversion Shares and Warrants 1 are, and Underlying Shares will be if issued, “restrictedsecurities” under Rule 144 of the Securities Act.
(ii) Movement of the components of the Convertible Loan 2:
| Liability component | Derivative component | Total | ||||||||||
| December 31, 2023 | ||||||||||||
| Change in fair value of embedded derivatives | ( | ) | ( | ) | ||||||||
| March 31, 2024 | ||||||||||||
On December 14, 2023, VEII entered into a ConvertibleCredit Agreement (“2023 Credit Agreement 2”) with HMI for an unsecured credit line in the maximum amount of One Million U.S.Dollars and No Cents (USD$1,000,000.00) (“Credit Limit”). Advances of the principal under the 2023 Credit Agreement 2 accruesimple interest at Eight Percent (8%) per annum. Each Advance under the 2023 Credit Agreement 2 and all accrued interest thereon may,at the election of HMI, or the Company, be: (1) repaid in cash; (2) converted into shares of the Company Common Stock; or (3) be repaidin a combination of cash and shares of the Company Common Stock. The principal amount of each Advance under the 2023 Credit Agreement2 shall be due and payable on the third (3rd) annual anniversary of the date that the Advance is received by the Company alongwith any unpaid interest accrued on the principal (the “Advance Maturity Date 2”). Prior to the Advance Maturity Date 2, unpaidinterest accrued on any Advance shall be paid on the last business day of June and on the last business day of December of each year inwhich the Advance is outstanding and not converted into shares of Company Common Stock. Company may prepay any Advance under the 2023Credit Agreement 2 and interests accrued thereon prior to Advance Maturity Date 2 without penalty or charge.
Use of Proceeds. The Company needed fundingon an expedited basis and in place prior to 2024 in order to fund requirements for new and existing customer work and to pay for overallgeneral operational expenses. HMI was the only known and identified funding source willing to provide the necessary funding on an expeditedbasis. Credit Line may be used for general working capital, including possible expansion of existing business operations or business linesto new geographical markets in Asia or other geographical markets; for development of new business lines (whether in existing or new geographicalmarkets); acquisition of assets or companies (whether in existing or new geographical markets); and payment of any sums due under the2023 Credit Agreement 2 or other loans.
Fee on Advances. The 2023 Credit Agreement2 provided that each Advance incurs a 10% fee on the amount of the Advance (“Fee”), payable in cash or shares of Company’sCommon Stock at the election of Company. Under a December 19, 2023 Amendment to the Credit Agreement, the Fee was amended to provide fora one-time $100,000 payment instead of 10% on an Advance, which amended Fee is payable at option of Company in either cash or shares ofCompany Common Stock within 30 days of December 19, 2023.
| 31 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Events of Default. The following constitutean event of default under the 2023 Credit Agreement 2: (1) failure to timely pay of any Advance when due and payable and the Company failsto cure such default within ten (10) days after receipt of a written notice of default from HMI or its authorized agent; (2) a defaultof any non-monetary material covenant or agreement in the 2023 Credit Agreement 2 that the Company does not remedy within thirty (30)days after receipt by the Company of a written notice of default from HMI or its authorized agent (or within such other longer time periodas may be therein specifically provided in the written notice); (3) a breach of any other obligations, covenant, representation or warrantycontained in the 2023 Credit Agreement 2 that is not cured within thirty (30) days from the receipt by the Company of a written noticefrom HMI or its authorized agents; (4) the filing of a petition in bankruptcy or the commencement of any proceedings under any bankruptcylaws by or against the Company, which filing or proceeding, is not dismissed within sixty (60) days after the filing or commencement thereof,or (5) if the Company becomes insolvent, the filing of a petition to a court for the entry of an order, judgment or decree approving apetition in an insolvency, liquidation or similar procedure and the petition shall remain unvacated or not removed for an aggregate ofsixty (60) days (whether or not consecutive) from the first date of entry thereof or rejected by such court; (6) all or any part of theCompany’s assets, or of any or all of the royalties, revenues, rents, issues or profits thereof, shall be appointed without theconsent of the Company and such appointment shall remain unvacated and unstayed for an aggregate of sixty (60) days (whether or not consecutive);(7) entry of judgment or judgements in the aggregate in excess of One Hundred Thousand United States Dollars (US$100,000.00) in face amount,a writ of execution or attachment or any similar process shall be issued or levied against all of the Company’s assets, or any judgmentinvolving monetary damages shall be entered against the Company which shall becomes a lien on all of the Company’s assets and suchexecution, attachment or similar process or judgment is not released, bonded, satisfied, vacated or stayed within sixty (60) days afterits entry or levy; or (8) the Company ceases to conduct its primary business line for ninety (90) consecutive days.
Conversion to Shares of Common Stock. HMIor Company may convert monies owed under any Advance regarding the 2023 Credit Agreement 2 into shares of Company Common Stock (“Conversionof Convertible Loan 2”). The price for conversion of an Advance under the 2023 Credit Agreement 2 and unpaid interest accrued thereoninto shares of Common Stock shall be based on US$0.045 per share, which is an approximately twenty-five percent (25%) discount from themarket closing price as of December 12, 2023 (the “Conversion Price 2”). No fractional shares may be issued in any Conversionof Convertible Loan 2. If HMI elects to effect a Conversion of Convertible Loan 2, it must deliver a Notice of Conversion to the Companythat specifies the amount of the advance and accrued interest, if any, to be converted, and the date on which such conversion shall beeffected (the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shallbe the date that such Notice of Conversion is deemed received by the Company. Conversions shall reduce the amount advanced in an amountequal to the amount of the advance that is converted in a Conversion of Convertible Loan 2.
Conversion upon a Change in Control Transaction.In the event that the Company consummates a “Change in Control Transaction” (as defined below), then the total amount of Advancesoutstanding under the 2023 Credit Agreement 2, and not previously converted into shares of Company Common Stock, shall convert into sharesof Company Common Stock at the Conversion Price 2 upon receipt of written notice from HMI to the Company. “Change in Control Transaction”will exist if (1) there occurs any consolidation, merger or other business combination of the Company with or into any third party andthe Company is not the surviving entity, or any other corporate reorganization or transaction or series of related transactions in whichin any of such events the voting stockholders of the Company prior to such event cease to own 50% or more of the voting power, or correspondingvoting equity interests, of the surviving entity after the consummation of the transaction or transactions, or (2) in one or a seriesof related transactions, there is a sale or transfer of all or substantially all of the operating assets of the Company or substantiallyall of the Company’s operating and wholly-owned subsidiaries, determined on a consolidated basis, to a third party.
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VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Conversion upon Breach of 2023 Credit Agreement2. In addition to on-demand, non-breach Conversion and a Change of Control Conversion, HMI may convert amounts owed under outstandingAdvances if the Company breaches the 2023 Credit Agreement 2 and does not remedy that breach within thirty (30) days after receipt ofa written demand from HMI, which demand shall describe the conversion breach event. Upon occurrence of a conversion breach event thatis not timely remedied and receipt of a Notice of Conversion, the Company is required to convert the requested conversion amount of alloutstanding amount of Advances not previously converted into shares of Company Common Stock within ten (10) days after receipt of theNotice of Conversion.
Warrants. In the event that HMI electsto convert any portion of an advance under the 2023 Credit Agreement 2 into shares of Company Common Stock, the Company is obligated toissue to HMI five (5) detachable warrants for each share of Company Common Stock issued in a Conversion of Convertible Loan 2 (“Warrants2”) in addition to the shares of Company Common Stock issued in the Conversion of Convertible Loan 2. Each Warrant 2 will entitleHMI to purchase one (1) share of Company Common Stock at a per-share exercise price equal to the Conversion Price 2. The exercise periodfor each Warrant will be five (5) years from the date of issuance of the Warrant.
(iii) HMI owns 21,120,795 shares of Company CommonStock, which is approximately 48.55% of issued and outstanding shares of Company Common Stock (based on 43,500,762 shares issued and outstanding).On September 6, 2023, HMI converted $1,300,000 in debt owed by the Company into 7,344,632 shares of Company’s Common Stock at aprice equivalent to $0.177 pursuant to 2023 Credit Agreement 1. HMI’s ownership of shares of Company Common Stock above does notinclude a total of 36,723,160 shares of Company Common Stock that HMI may purchase under Warrants 1 issued under the 2023 Credit Agreement1. The terms of the Warrants 1 entitle the holder to purchase from the Company one (1) share of the Company Common Stock (as adjustedfrom time to time pursuant to the provisions of the Warrants 2) for each issued Warrant 1. The Warrants 1 are currently exercisable andexpire on September 6, 2028.
If HMI exercised the Warrants 1 issued under the2023 Credit Agreement 1 in full and purchased all 36,723,160 of the underlying shares of Company Common Stock, then HMI would own 57,843,955shares of Company Common Stock or approximately 72.10% of the then issued and outstanding shares of Company Common Stock (based on theassumption of 80,223,922 shares of Company Common Stock then being issued and outstanding). Mr. Chan Heng Fai Ambrose, a director of thecompany, would, based on his control of HMI, also be a “shared” or joint owner of those shares of Company Common Stock. Mr.Chan controls HMI by virtue of his majority ownership of shares of common stock of Alset, a Commission-reporting company, which is theparent company of the HMI. Alset owns 99.693% of the issued and outstanding shares of HMI’s common stock. Mr. Chan owns approximately53.5% of the issued shares of common stock of Alset. Mr. Chan is also the Chairman and Chief Executive Officer of Alset and ExecutiveChairman of the Board of Directors of HMI.
Mr. Chan is deemed to be the owner of 21,587,429shares of Common Stock, which represents approximately 49.63% of the issued shares of Company’s Common Stock (based on 43,500,762shares issued and outstanding), by virtue of: 95,000 shares of Company’s Common Stock held by Mr. Chan, and the following shareownership of Common Stock by entities that Mr. Chan is deemed to control: 21,120,795 shares held by HMI, 39,968 shares held by BMI CapitalPartners International Limited, 18,512 shares held by LiquidValue Development Pte Ltd. And 313,154 shares held by Decentralized SharingSystems, Inc. BMI Capital Partners International Limited is owned by AIL. AIL is a subsidiary of Alset. LiquidValue Development Pte Ltd.is a subsidiary of Alset. Decentralized Sharing Systems, Inc. is a subsidiary of DSS, Inc., a New York Stock Exchange listed company,(“DSS”). Mr. Chan is personally and through entities he controls, the largest shareholder of DSS. Mr. Chan is also the Chairmanof the Board of Directors of DSS.
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VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Mr. Chan, HMI, BMI Capital Partners InternationalLimited, LiquidValue Development Pte Ltd. And Decentralized Sharing Systems, Inc. are referred to collectively below as “AffiliatedShareholders”.
As stated above, Mr. Chan controls the HMI byvirtue of his control of Alset. Mr. Chan is also Executive Chairman of the Board of Directors of the HMI and a director of American PacificBancorp., another lender of the Company. Mr. Lum Kan Fai is Vice Chairman of the Board of Directors of HMI and has served in other managementcapacities with HMI. Lum Kan Fai is also President of Digital Group of DSS. Mr. Chan is Executive Chairman of the Board of Directors ofDSS and owns approximately 58.3% of the issued and outstanding shares of DSS. Wong Shui Keung is a independent director of DSS.
Robert Trapp was a non-executive director of HMIand was a non-executive director of Alset. He also serves or has served as a non-executive director of several subsidiaries of Alset.Mr. Trapp is a non-executive director of Sharing Services Global Corporation, a Nevada corporation and Commission-reporting company, (“SSGC”).Mr. Chan is Executive Chairman of the Board of Directors of SSGC as well as the owner of 49.2% of issued and outstanding shares of SSGCcommon stock, which ownership position includes shares of SSGC common stock owned by DSS and Alset. Further, Mr. Trapp is a non-executivedirector of NECV. Mr. Chan controls NECV by virtue of his ownership of approximately 95.6% of issued shares of NECV common stock.
Wong Shui Yeung and Wong Tat Keung are independentdirectors of Alset, and also serves or has served as an independent director of several entities controlled or affiliated with Mr. Chan.Wong Shui Yeung and Wong Tat Keung serve as independent directors of AIL, a subsidiary of Alset. Wong Shui Keung is an independent directorof DSS.
Wong Shui Yeung, Robert Trapp, and Wong Tat Keungalso serve as members of the Company’s Audit Committee of the Board of Directors.
Mr. Lim Sheng Hon Danny currently serves as SeniorVice President and Executive Director of AIL. He also serves as an Executive Director of Alset, the parent company of AIL. Mr. Lim alsoworks extensively with Mr. Chan on various business matters concerning AIL, Alset and DSS.
Potential Changes Control of Registrant.As of December 31, 2023, there is no agreement or arrangement between the Company and Mr. Chan or HMI concerning operational management,management decisions, business development or strategic plan of the Company and its subsidiaries; neither HMI nor Mr. Chan has directedor controlled the Company’s day-to-day operational management, management decisions, business development or strategic plan of theCompany and its subsidiaries; and Mr. Chan’s involvement in the Company’s operational management, management decisions, businessdevelopment and strategic planning of the Company and its subsidiaries has been limited to his performance of his duties as an outsidedirector of the Company. Nonetheless, due to the actual and potential ownership of shares of Company Common Stock and Mr. Chan and hisaffiliates holding three of the nine board seats of the Company’s Board of Directors, Mr. Chan has the ability to significant influencecorporate decisions and actions of the Company and its subsidiaries.
While Wong Shui Yeung and Wong Tat Keung are theindependent directors of the Company, and Chan Heng Fai, Lum Fai Kai, Robert Trapp, and Lim Sheng Hon Danny have not directed or controlleddaily operational management or decision making, or strategic and business development decisions of the Company, beyond input and guidanceas non-executive directors, and while the Company is not aware of any agreement among Chan Heng Fai, Lum Fai Kai, Lim Sheng Hon Danny,Wong Shui Yeung, Robert Trapp, and Wong Tat Keung, or among these directors and the Affiliated Shareholders or lenders of the Company,to direct the operational management and strategic planning of the Company or its operating subsidiaries, the Affiliated Shareholderscollectively control 49.6% of Company’s issued shares of Common Stock.
| 34 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Further, while the purpose of the Credit Agreementand January Credit Agreement are to provide necessary working capital to the Company, and the Credit Agreement and January Credit Agreementare not intended by the Company or Lenders to be a mechanism for effecting any change in control of the Company, HMI, as an AffiliatedShareholder, has the right to convert the Warrant 1 issued to HMI under the 2023 Credit Agreement 1 conversion into shares of CompanyCommon Stock that would, if the Warrants 1 are fully exercised, result in ownership of approximately 72.10% of the then issued and outstandingshares of Company Common Stock (based on the assumption of 80,223,922 shares of Company Common Stock then being issued and outstanding).With the 2023 Credit Agreement 2, HMI could, assuming a Conversion of any significant amount of Advances made to the Company, into anownership position of shares of Common Stock into more than 80% of the then issued and outstanding shares of Common Stock.
| 13. | Other payables and accrued liabilities |
Other payables and accruals consistedof the following as of March 31, 2024 and December 31, 2023:
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Accrual | ||||||||
| Income taxes payable | ||||||||
| Taxes penalty payable | ||||||||
Accrual mainly represents salary payablesand fringe and social security accruals. According to the prevailing laws and regulations of the PRC, all eligible employees of the Company’ssubsidiary are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefitsthrough a PRC government-mandated multi-employer defined contribution plan. The Company’s subsidiary is required to accrue for thesebenefits based on certain percentages of the qualified employees’ salaries. The Company’s subsidiary is required to make contributionsto the plans out of the amounts accrued.
The Company’s subsidiaries incorporatedin Hong Kong manage a defined contribution Mandatory Provident Fund (the “MPF Scheme”) under the Mandatory Provident FundSchemes Ordinance, for all of its employees in Hong Kong. The Company is required to contribute 5% of the monthly salaries for all HongKong based employees to the MPF Scheme up to a maximum statutory limit.
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VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 14. | Deferred income |
Deferred income consistedof the following as of March 31, 2024 and December 31, 2023:
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Service fees received in advance | ||||||||
Billings in excess of revenues recognized are recorded asdeferred revenue. The opening balance for the period ended March 31, 2024 and for the year ended December 31, 2023 amounted to $
| 15. | Statutory reserves |
Statutory reserves
The laws and regulations of the PRCrequire that before an enterprise distributes profits to its owners, it must first satisfy all tax liabilities, provide for losses inprevious years, and make allocations in proportions determined at the discretion of the Board of Directors after the statutory reserves.
As stipulated by the Company Law ofthe PRC, as applicable to Chinese companies with foreign ownership, net income after taxation can only be distributed as dividends afterappropriation has been made for the following:
| 1. | Making up cumulative prior years’ losses, if any; |
| 2. | Allocations to the “Statutory surplus reserve” of at least |
| 3. | Allocations to the discretionary surplus reserve, if approved in the shareholders’general meeting. |
The statutory reserve fund is non-distributableother than during liquidation and can be used to fund previous years’ losses, if any. It may be utilized for business expansionor converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing thepar value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than
| 36 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| 16. | Related party and shareholder transactions |
Other than disclosed elsewhere in these financial statements,the Company also had the following related party balances and transactions:
Related party balances
| March 31, 2024 | December 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | ||||||||
| Due from related parties | ||||||||
| Value Exchange International Limited (i) | ||||||||
| Cucumbuy.com Limited (ii) | - | |||||||
| SmartMyWays Co., Limited (iii) | ||||||||
| Retail Intelligent Unit Limited (iv) | - | |||||||
| TAP Technology (HK) Limited (v) | ||||||||
| Value Exchange International (Taiwan) Co, Ltd (vi) | ||||||||
| Value E Consultant International (M) Sdn. Bhd (vii) | - | |||||||
| Allowance for amounts due from related parties | ( | ) | ( | ) | ||||
| Due to a related party | ||||||||
| Cucumbuy.com Limited (ii) | - | |||||||
| Retail Intelligent Unit Limited (iv) | - | |||||||
| SA-Network Limited (viii) | ||||||||
| Value X International Pte. Ltd (ix) | ||||||||
| Smart Reward Express Limited (x) | ||||||||
| Hapi Retail Company Limited (xi) | - | |||||||
| 37 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Related party transactions:
| Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | (unaudited) | |||||||
| Service income received from | ||||||||
| Cucumbuy.com Limited (ii) | - | |||||||
| SmartMyWays Co., Limited (iii) | - | |||||||
| Retail Intelligent Unit Limited (iv) | - | |||||||
| TAP Technology (HK) Limited (v) | - | |||||||
| Value Exchange International (Taiwan) Co, Ltd (vi) | - | |||||||
| Subcontracting fees paid to | ||||||||
| Value Exchange International Limited (i) | ( | ) | ( | ) | ||||
| Cucumbuy.com Limited (ii) | ( | ) | ( | ) | ||||
| SmartMyWays Co., Limited (iii) | ( | ) | ( | ) | ||||
| Retail Intelligent Unit Limited (iv) | ( | ) | ( | ) | ||||
| TAP Technology (HK) Limited (v) | ( | ) | ( | ) | ||||
| Value Exchange International (Taiwan) Co, Ltd (vi) | ( | ) | ( | ) | ||||
| Value E Consultant International (M) Sdn. Bhd (vii) | - | ( | ) | |||||
| SA-Network Limited (viii) | ( | ) | ( | ) | ||||
| Value X International Pte. Ltd (ix) | ( | ) | - | |||||
| Management fees received from | ||||||||
| Value Exchange International Limited (i) | - | |||||||
| Cucumbuy.com Limited (ii) | - | |||||||
| SmartMyWays Co., Limited (iii) | - | |||||||
| Retail Intelligent Unit Limited (iv) | - | |||||||
| TAP Technology (HK) Limited (v) | - | |||||||
| (i) |
| (ii) |
| (iii) |
| (iv) |
| 38 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
| (v) |
| (vi) |
| (vii) |
| (viii) |
| (ix) |
| (x) |
| (xi) |
| 17. | Subsequent events |
On July 15, 2024, VEII entered intoa Convertible Credit Agreement (“2024 Credit Agreement”) with HMI for an unsecured credit line in the maximum amount of OneHundred and Ten Thousand U.S. Dollars and No Cents (USD$
Use of Proceeds. The Company neededfunding on an expedited basis in order to fund requirements for new and existing customer work and to pay for overall general operationalexpenses. HMI was the only known and identified funding source willing to provide the necessary funding on an expedited basis. CreditLine may be used for general working capital, including possible expansion of existing business operations or business lines to new geographicalmarkets in Asia or other geographical markets; for development of new business lines (whether in existing or new geographical markets);acquisition of assets or companies (whether in existing or new geographical markets); and payment of any sums due under the 2024 CreditAgreement or other loans.
| 39 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Events of Default. The following constitutean event of default under the 2024 Credit Agreement: (1) failure to timely pay of any Advance when due and payable and the Company failsto cure such default within ten (10) days after receipt of a written notice of default from HMI or its authorized agent; (2) a defaultof any non-monetary material covenant or agreement in the 2024 Credit Agreement that the Company does not remedy within thirty (30) daysafter receipt by the Company of a written notice of default from HMI or its authorized agent (or within such other longer time periodas may be therein specifically provided in the written notice); (3) a breach of any other obligations, covenant, representation or warrantycontained in the 2024 Credit Agreement that is not cured within thirty (30) days from the receipt by the Company of a written notice fromHMI or its authorized agents; (4) the filing of a petition in bankruptcy or the commencement of any proceedings under any bankruptcy lawsby or against the Company, which filing or proceeding, is not dismissed within sixty (60) days after the filing or commencement thereof,or (5) if the Company becomes insolvent, the filing of a petition to a court for the entry of an order, judgment or decree approving apetition in an insolvency, liquidation or similar procedure and the petition shall remain unvacated or not removed for an aggregate ofsixty (60) days (whether or not consecutive) from the first date of entry thereof or rejected by such court; (6) all or any part of theCompany’s assets, or of any or all of the royalties, revenues, rents, issues or profits thereof, shall be appointed without theconsent of the Company and such appointment shall remain unvacated and unstayed for an aggregate of sixty (60) days (whether or not consecutive);(7) entry of judgment or judgements in the aggregate in excess of One Hundred Thousand United States Dollars (US$
Conversion to Shares of Common Stock.HMI or Company may convert monies owed under any Advance regarding the 2024 Credit Agreement into shares of Company Common Stock (“Conversionof Convertible Loan 3”). The price for conversion of an Advance under the 2024 Credit Agreement and unpaid interest accrued thereoninto shares of Common Stock shall be based on US$0.06 per share, which is based on VEII’s Volume-Weighted Average Price as of 8July 2024 (the “Conversion Price 3”). No fractional shares may be issued in any Conversion of Convertible Loan 3. If HMI electsto effect a Conversion of Convertible Loan 3, it must deliver a Notice of Conversion to the Company that specifies the amount of the advanceand accrued interest, if any, to be converted, and the date on which such conversion shall be effected (the “Conversion Date 3”).If no Conversion Date 3 is specified in a Notice of Conversion, the Conversion Date 3 shall be the date that such Notice of Conversionis deemed received by the Company. Conversions shall reduce the amount advanced in an amount equal to the amount of the advance that isconverted in a Conversion of Convertible Loan 3.
Conversion upon a Change in ControlTransaction. In the event that the Company consummates a “Change in Control Transaction” (as defined below), then the totalamount of Advances outstanding under the 2024 Credit Agreement, and not previously converted into shares of Company Common Stock, shallconvert into shares of Company Common Stock at the Conversion Price 3 upon receipt of written notice from HMI to the Company. “Changein Control Transaction” will exist if (1) there occurs any consolidation, merger or other business combination of the Company withor into any third party and the Company is not the surviving entity, or any other corporate reorganization or transaction or series ofrelated transactions in which in any of such events the voting stockholders of the Company prior to such event cease to own 50% or moreof the voting power, or corresponding voting equity interests, of the surviving entity after the consummation of the transaction or transactions,or (2) in one or a series of related transactions, there is a sale or transfer of all or substantially all of the operating assets ofthe Company or substantially all of the Company’s operating and wholly-owned subsidiaries, determined on a consolidated basis, toa third party.
| 40 |
VALUE EXCHANGE INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Conversion upon Breach of 2024 CreditAgreement. In addition to on-demand, non-breach Conversion and a Change of Control Conversion, HMI may convert amounts owed under outstandingAdvances if the Company breaches the 2024 Credit Agreement and does not remedy that breach within thirty (30) days after receipt of awritten demand from HMI, which such demand shall describe the conversion breach event. Upon occurrence of a conversion breach event thatis not timely remedied and receipt of a Notice of Conversion, the Company is required to convert the requested conversion amount of alloutstanding amount of Advances not previously converted into shares of Company Common Stock within ten (10) days after receipt of theNotice of Conversion.
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Item 2. Management’s Discussion and Analysisof Financial Condition and Results of Operations.
This report on Form 10-Q contains “forward-lookingstatements” within the meaning of the Private Securities Litigation Reform Act, as amended. These forward-looking statements include,without limitation, statements containing the words “believes,” “anticipates,” “expects,” “intends,”“projects,” “will,” “should,” “may,” “hopes” and other words of similar importor the negative of those terms or expressions. Forward-looking statements in this report include, but are not limited to, expectationsof future levels of business development spending, general and administrative spending, levels of capital expenditures and operating results,sufficiency of our capital resources, our intention to pursue and consummate strategic opportunities available to us and effects as wellas our ability to fund, and integrate and grow acquired business lines. Business operations and financial condition may be materiallyand adversely affected by any slowdown in regional and national economic growth, weakened liquidity and financial condition of customersor other factors that Company cannot foresee. Forward-looking statements are subject to certain known and unknown risks, uncertaintiesand other factors that may cause our actual results, performance or achievements to be materially different from any future results, performanceor achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited tothose described in “Risk Factors” contained in the Company’s reports filed with the U.S. Securities and Exchange Commission,including the Annual Report on Form 10-K for the fiscal year ended December 31, 2023 and any amendments to that Form 10-K.
Certain Terms
Except as otherwiseindicated by the context, references in this report to:
| · | “Company,” “we,” “us”and “our” are to the combined business of Value Exchange International, Inc., a Nevada corporation, and its consolidated subsidiaries; |
| · | “China,” “Chinese” and“PRC,” refer to the People’s Republic of China; |
| · | “Renminbi” and “RMB”refer to the legal currency of China; |
| · | “U.S. dollars,” “dollars”and “$” refer to the legal currency of the United States; |
| · | “SEC” or “Commission”refers to the United States Securities and Exchange Commission; |
| · | “Securities Act” refers to the SecuritiesAct of 1933, as amended; and |
| · | “Exchange Act” refers to the SecuritiesExchange Act of 1934, as amended. |
CORPORATE OVERVIEW
History of Value Exchange International, Inc.
Organization.
We were incorporated in theState of Nevada on June 26, 2007. Our Common Stock’s trading symbol is “VEII.” Our common stock was quoted on the OTCQBVenture Market until July 1, 2024. Due to failure to file the Form 10-K and Form 10-Q by July 1, 2024, the OTC Markets Group downgradedthe Common Stock to Pink Sheets Limited Information as of July 2, 2024.
Current Business Focus.
We are a provider of customer-centrictechnology solutions for the retail industry in Hong Kong SAR and certain regions of China, Philippines and Malaysia.
By integrating market-leadingPoint-of-Sale/Point-of-Interaction (“POS/POI”), Merchandising, Customer Relations Management or “CRM” and relatedrewards, Locational Based (GPS & Indoor Positioning System (“IPS”)) Marketing, Customer Analytics, Business Intelligencesolutions, our products and services are intended to provide retailers with the capability to offer a consistent shopping experience acrossall channels, enabling them to easily and effectively manage the customer lifecycle on a one-to-one basis. We promote ourselves as a singleIT source for retailers who want to extend existing traditional transaction processing to multiple points of interaction, including theInternet, kiosks and wireless devices. Our products and services are focused on helping retailers realize the full benefits of CustomerChain Management with its suite of solutions that focus on the customer, on employees, and the infrastructure that supports the sellingchannel. Company is headquartered in Hong Kong and with offices in Shenzhen, Guangzhou, Shanghai, Beijing, China; Manila, Philippines;and Kuala Lumpur, Malaysia.
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We believe that the IT Businessoften presents opportunities to expand a provider’s market reach or customer base by acquisitions of existing businesses or operatingassets. The Company’s business strategy includes reviewing possible acquisitions of existing businesses or operating assets in existingor adjacent markets and to do so when and if such an acquisition appears to be compatible and an enhancement of our core business linesand can be consummated with available cash and other resources. Our ability to pursue and consummate acquisitions may be limited, andhas been limited, by available cash for mergers and acquisitions and other resources and the perceived cost and burdens of acquiring andintegrating the target business or new operating assets into our operations. The availability of funding and cash flow are the most significantlimitations on our ability to expand through acquisitions of businesses and assets – both in terms of money on hand and abilityto finance acquisitions, but the estimated business hurdles in successfully penetrating a new market is also a factor in deciding whetherto proceed with that expansion. The limited liquidity and bid price of our Common Stock in the public stock market also hampers our abilityto use shares of Common Stock as attractive consideration to target companies in a merger or acquisition. We have not expanded into anynew markets by acquisition or otherwise during the fiscal quarter ended March 31, 2024.
The Company, through its operatingsubsidiaries, is focusing and will focus on its IT Business, and continue to seek to expand its IT Business services to commercial customersin PRC and Asia Pacific Region. This strategy is based upon our subjective business judgment that the IT Business presents more opportunitiesfor potential customer order in our core markets of Hong Kong SAR and China than the “IP Business” (as defined below) andpresents an industry segment that better suits our current technical capabilities, marketing capabilities and financial resources.
Initial Business Focus.
Our initial intended, primarybusiness was to operate a credit card processing and merchant-acquiring services company that provide credit card clearing services tomerchants and financial institutions in PRC. From inception, we strove unsuccessfully to create and establish a proposed Global ProcessingPlatform concept to support the credit card processing services (“SinoPay GPP”). Specifically, the Company’s InternetProtocol business was to be a provider of Internet Protocol (“IP”) processing services in Asia to bank card-accepting merchants(“IP Business”). The Company efforts to establish a viable IP Business did not succeed.
The acquisition of VEI CHNin 2014 shifted the primary business focus to the IT Business. Company believes that the IT Business provided a more readily attainablerevenue generating business line and greater growth and profit potential than IP Business. VEI CHN was acquired in a stock-for-stock exchange(“VEI CHN Share Exchange”).
Industry Trends and Economic Conditions.
The IT Business in Hong Kongand China is large and fragmented, comprised of thousands of competitors as well as being a highly competitive industry. A general trendaffecting our IT Business is the trend of increasing competition for skilled labor. With a global economy and foreign competitors seekingto penetrate Hong Kong and China as markets as well as to tap into new pools of skilled workers in IT Business, we will undoubtedly faceincreasing competition for skilled workers in IT Business in the Hong Kong and China markets. We may be unable to afford or effectivelycompete for necessary skilled workers in Hong Kong, Philippines and China and, if we are unable to afford or effectively compete for necessaryskilled workers, our growth and ability to attain and sustain profit operations in the IT Business may fail. We have not experienced anysignificant problems in recruiting necessary skilled workers in fiscal years 2023 or 2024 to date.
Another common problem inthe IT Business is retaining skilled workers throughout the duration of a project. Due to the global nature of the IT Business and thegrowing demand for skilled IT Business workers, a skilled IT business worker can often readily find higher paying positions with competitors,whether local or foreign. Further, unlike some competitors, the Company has not offered the stock-based incentive compensation to employeesthat is attractive to prospective technology workers. While we have not experienced retention problems due primarily to our focus on smaller,shorter term IT business projects, we may experience retention of skilled worker problems if we grow our IT Business and undertake longerterm, more complex IT business projects for customers.
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IT Business is often affectedby general economic conditions in our markets and any decline in those conditions could adversely impact our business and financial performance.During periods of economic growth, customers generally spend more for IT Business products and services. During periods of economic contractionor uncertainty, such spending generally decreases or is deferred. As such, the prospective business for our IT Business is generally greaterduring periods of economic growth or stability in Hong Kong or China or Manila, Philippines, respectively, and decreases during periodsof economic decline or uncertainty in Hong Kong, China or Manila, Philippines. In our global economy, and with PRC being still a principalexport economy, adverse economic conditions globally or in other regions can adversely impact economic conditions in Hong Kong or China.China has experienced a less dynamic growth in gross national product in the past year and this may reduce the willingness of customersto spend on IT Business.
The IT Business is globaland, with the growth of cloud computing, there is a growing capability and infrastructure for companies in a foreign nation to provideIT Business to customers around the globe as a complement to cloud computing. We have not seen any significant impact of cloud computingon our IT Business in fiscal years 2023 or fiscal year 2024 to date, but we perceive that the expansion of cloud computing coupled withIT services and products could allow foreign companies to provide IT Business products and services to its cloud computing customers inour Hong Kong and China core markets as well as in the Philippines. We may find it more difficult to compete for IT Business in Hong Kongand China, and perhaps the Philippines, if customers of IT Business elect to have cloud computing companies manage, repair and enhanceIT Business products, software and systems. The growth of cloud computing coupled with IT Business products and services as an ancillarycomponent of the cloud computing menu of products and services could adversely impact our IT Business in Hong Kong and China markets aswell as the Philippines.
The nature of our IT Businessis such that our accounts receivable is significant current asset. Our most significant current liabilities are payroll related costs,which are generally paid either every two weeks or monthly. If the demand for our IT Business products and services increases, we maygenerally see an increase in our working capital needs, as we continue to pay our workers on a weekly or monthly basis while the relatedaccounts receivable are outstanding for much longer than normal payment cycle, which may result in a decline in operating cash flows.Conversely, as the demand for our IT Business products and services declines, we may generally see a decrease in our working capital needs,as the existing accounts receivable are collected and not replaced at the same level, resulting in a decline of our accounts receivablebalance, with less of an effect on current liabilities due to the shorter cycle time of the payroll related items. This may result inan increase in our operating cash flows; however, any such increase would not be sustainable in the event that a local or global economicdownturn continued for an extended period.
In order for us to attainsustained success in the near term, we must continue to maintain and grow our customer base, provide high-quality service and satisfyour existing clients, and take advantage of opportunities in the IT Business. In the current economic environment, we must provide ourcustomers with service offerings that are appropriately priced, satisfy their needs, and provide them with measurable business benefits.While we have recently experienced more demand for our IT Business products and services, we believe that it is too early to determineif developments will translate into sustainable improvements in our pricing or margins in fiscal year 2024 or over the longer term.
The increasing need for cybersecurityproducts and technologies may be a future weakness of our business plan. We do not have a current cybersecurity product and service businessline beyond consultants engaged to provide cybersecurity services to customers and we have not current plans to develop a cybersecuritybusiness line. Cybersecurity companies may have an advantage over our business model in the future in that cybersecurity companies couldleverage their cybersecurity offerings to also sell IT Business services and products that compete with our IT Business products and services.
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We face competition from competitorsin our primary markets, which competitors possess greater name recognition, assets, personnel, sales and financial resources. These entitiesmay be able to respond more quickly to changing market conditions by developing new products and services that meet customer requirementsor are otherwise superior to our products and services and may be able to more effectively market their products than we can because theyhave significantly greater financial, technical and marketing resources than we do. They may also be able to devote greater resourcesthan we can to the development, promotion and sale of their services and products. To the extent that we are unable to successfully competeagainst existing and future competitors, our business, operating results and financial condition would be materially adversely affected.
History of Value Exchange Int’l. (China)Limited
VEI CHN was first establishedon November 16, 2001 in Hong Kong as a limited liability company. VEI CHN is a holding company with two subsidiaries established in HongKong, namely TAP Services (HK) Limited which was incorporated on August 25, 2003 and acquired by VEI CHN on September 25, 2008, and subsequentlychanged to its current name as Value Exchange Int’l (Hong Kong) Limited (“VEI HKG”) on May 13, 2013, and Cucumbuy.comLimited (“CUCUMBUY”), which was incorporated on May 14, 2013 and disposed on May 21, 2018 with consideration of HK$1. VEICHN also set up a Wholly-owned Foreign Enterprise (WOFE) in Shanghai, PRC, in September 2, 2008 in the name of Value Exchange Int’l(Shanghai) Limited (“VEI SHG”). In January 2017, VEI CHN acquired TapServices, Inc., a corporation organized under the lawsof the Republic of the Philippines (the “TSI”). Prior to acquisition of TSI, the Company provided extensive consulting servicesto TSI and, from such relationship, the Company was familiar with TSI operations. In January 2019, VEI SHG completed the setup proceduresof a subsidiary with 51% ownership in Hunan, PRC, in the name of Value Exchange Int’l (Hunan) Limited (“VEI HN”). InFebruary 2020, VEI SHG completed the setup procedures of a subsidiary with 51% ownership in Shanghai, PRC, in the name of Shanghai ZhaonanHengan Information Technology Co., Limited (“SZH”). In January 2022, VEI HKG completed the setup procedures of a subsidiarywith 100% ownership in Shenzhen, PRC, in the name of Haomeng Technology (Shenzhen) Co., Limited. (“HTS”). ). On January 2,2024, VEI CHN acquired Value E Consultant International (M) Sdn. Bhd, a company established in Malaysia (the “Value E”). Priorto acquisition of Value E, the Company provided extensive services to Value E and, from such relationship, the Company was familiar withValue E operations.
Principal business
VEII is a holding companyfor its operating subsidiaries. VEI CHN operations are the primary operations of the Company. The principal business of VEI CHN for morethan 20 years is to provide the IT Business (consisting of select services and solutions in computer software programming and integration,and computer systems, Internet and information technology systems engineering, consulting, administration, installation and maintenance,including e-commerce and payment processing) to the Retail Sector, primarily to retailers in Hong Kong SAR, Macau SAR and PRC and as morefully described below. As is customary in the industry, such services and solutions are provided by both company employees, contractorsand consultants. The primary services and products of the IT Business are:
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| a) | Systems maintenance and related service |
VEI CHN Group provides developmentand customization of software and hardware, enhancements thereto and maintenance services for installed POS system. VEI CHN Group markets,sells and maintains its own brand POS software – edgePOS as well as third party brands (e.g. NCR / Retalix), which is one of theleading POS software programs in the Chinese-Hong Kong market. These software enhancements and programming can integrate with differentIP systems.
Systems maintenance servicesconsist of: i) software maintenance service, including software patches and software code revisions; ii) installing, testing and implementingsoftware; iii) training of customer personnel for the use of software; and iv) technical support for software systems.
Other services include systeminstallation and implementation, including i) project planning; ii) analysis of customer information and business needs from an IT perspective(“System Analysis”); iii) design of the entire system; iv) hardware and consumables selection advice and sales; and v) systemhardware maintenance. These services typically consist of customer projects for New Store Opening (“NSO”) and Install, Move,Add and Change (“IMAC”) for retail, and ad-hoc custom system projects for other business sectors. Our primary focus is theretail sector in Hong Kong, PRC, Philippines and Malaysia.
| b) | Systems development and integration |
VEI CHN Group provides value-addedsoftware, which integrates with customer owned or licensed software, and ad-hoc software development projects for other business sectors.Besides use of proprietary, custom software code, our services may from time to time license standard third party software programs.
Financial Performance Highlights
The following are some financial highlights forthe first quarter of 2024:
| · | Net revenue: Our net revenues were $3,370,009for the three months ended March 31, 2024, as compared to $2,884,549 for the same period in 2023, an increase of $485,460 or 16.8%. |
| · | Gross profit: Gross profit for the three monthsended March 31, 2024 was $1,142,317 or 33.9% of net revenues, as compared to $381,821 or 13.2% of net revenues for the same period in2023, an increase of $760,496 or 199.2%. |
| · | Loss from operations: Our loss from operations totaled $286,541for the threemonths ended March 31, 2024, as compared to $438,042 for the same period in 2023, a decrease of $151,501 or 34.6%. |
| · | Net income: We had a net income of $374,430 forthe three months ended March 31, 2024, as compared to net loss totaled $453,849 for the same period in 2023, a change of $828,279. |
| · | Basic Basic and diluted net income (loss) per share was $0.01 for the threemonths ended March 31, 2024, respectively. |
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RESULTS OF OPERATIONS
Comparison of Three Months Ended March 31, 2024 and 2023
The following tables set forth key components of our results of operationsfor the periods indicated, both in dollars and as a percentage of net revenues.
(All amounts, other than percentages, in U.S. dollars)
| Three months ended March 31, | Change | |||||||||||||||
| 2024 | 2023 | |||||||||||||||
| US$ | US$ | US$ | % | |||||||||||||
| NET REVENUES | ||||||||||||||||
| Service income | 3,370,009 | 2,884,549 | 485,460 | 16.8 | ||||||||||||
| COST OF SERVICES | ||||||||||||||||
| Cost of service income | (2,227,692 | ) | (2,502,728 | ) | 275,036 | 11.0 | ||||||||||
| GROSS PROFIT | 1,142,317 | 381,821 | 760,496 | 199.2 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| General and administrative expenses | (1,086,562 | ) | (731,977 | ) | (354,585 | ) | 48.4 | |||||||||
| Foreign exchange gain (loss) | (342,296 | ) | (87,886 | ) | (254,410 | ) | 289.5 | |||||||||
| LOSS FROM OPERATIONS | (286,541 | ) | (438,042 | ) | 151,501 | (34.6 | ) | |||||||||
| OTHER INCOME (EXPENSES) | 661,212 | (14,637 | ) | 675,849 | (4,617.4 | ) | ||||||||||
| INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES | 374,671 | (452,679 | ) | 827,350 | (182.8 | ) | ||||||||||
| INCOME TAXES EXPENSES | (241 | ) | (1,170 | ) | 929 | (79.4 | ) | |||||||||
| NET INCOME (LOSS) | 374,430 | (453,849 | ) | 828,279 | (182.5 | ) | ||||||||||
Net revenues. Net revenues were$3,370,009 for the three months ended March 31, 2024, as compared to $2,884,549 for the same period in 2023, an increase of $485,460 or16.8%. The increase was primarily attributable to the increase in our revenue from i) systems maintenance with revenue increasing from$2,490,154 for the three months ended March 31, 2023 to $2,616,667 for the three months ended March 31, 2024; ii) systems developmentand integration with revenue increasing from $14,359 for the three months ended March 31, 2023 to $54,115 for the three months ended March31, 2024; and iii) sales of hardware and consumables with revenue increasing from $380,036 for the three months ended March 31, 2023 to$699,227 for the three months ended March 31, 2024.
Cost of services. Our cost of servicesis primarily comprised of our costs of technical staff, contracting fees to suppliers and overhead. Our cost of services decreased to$2,227,692 or 66.1% of net revenues, for the three months ended March 31, 2024, as compared to $2,502,728 or 86.8% of net revenues, forthe same period in 2023, a decrease of $275,036 or 11.0%. The decrease in cost of services was mainly attributable to the decrease inour contracting fees to suppliers.
Gross profit. Gross profit for thethree months ended March 31, 2024 was $1,142,317 or 33.9% of net revenues, as compared to $381,821 or 13.2% of net revenues, for the sameperiod in 2023, an increase of $760,496 or 199.2%. The increase of gross profit was largely due to the increase in net revenues, and thedecrease in cost of services compared to the same period of 2023.
General and administrative expenses.General and administrative expenses include the costs associated with staff and support personnel who manage our business activities,office rental expenses, depreciation charge for fixed assets, and professional fees paid to third parties. General and administrativeexpenses increased to $1,086,562 or 32.2% of net revenues, for the three months ended March 31, 2024, as compared to $731,977 or 25.4%of net revenues, for the same period in 2023, an increase of $354,585 or 48.4%. The primary reason for the increase was attributable tothe increase in audit fee, staff costs and other administrative costs.
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Loss from operations. As a result of the above, our lossfrom operations totaled $286,541 for the three months ended March 31, 2024, as compared to $438,042 for the same period in 2023, a decreaseof $151,501 or 34.6%.
Income taxes expenses. Income taxesexpenses totaled $241 or 0.007% of net revenues for the three months ended March 31, 2024, as compared to $1,170 or 0.04% for the sameperiod in 2023, a decrease of $929 or 79.4%. The decrease was primarily attributable to the movement in profit tax paid for the threemonths ended March 31, 2024.
Net income (loss). As a result ofthe foregoing, we had a net income of $374,430 for the three months ended March 31, 2024, compared to a net loss totaled $453,849 forthe same period in 2023, a change of $828,279 or 182.5%, as a result of the factors described above.
Liquidity and Capital Resources
As of March 31, 2024, we had cash and cash equivalentsof $515,113. The following table provides detailed information about our net cash flow for all financial statement periods presented inthis report.
Cash Flows
(All amounts in U.S. dollars)
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2024 | 2023 | |||||||
| US$ | US$ | |||||||
| Net cash used in operating activities | (344,999 | ) | (460,311 | ) | ||||
| Net cash used in investing activities | (39,105 | ) | (71,256 | ) | ||||
| Net cash (used in) provided by financing activities | (7,130 | ) | 858,986 | |||||
| Effect of exchange rate changes on cash and cash equivalents | 19,880 | 99,877 | ||||||
| Net (decrease) increase in cash and cash equivalents | (371,354 | ) | 427,296 | |||||
| Cash and cash equivalents at the beginning of period | 886,467 | 208,776 | ||||||
| Cash and cash equivalents at the end of period | 515,113 | 636,072 | ||||||
Operating Activities
Net cash used in operating activities was $344,999for the three months ended March 31, 2024, which was a change of $115,312 from $460,311 for the same period of 2023. The change in netcash used in operating activities was mainly attributable to the following:
| 1) | A change of Accounts receivable, Amounts due from related parties, and Other payables and accrued liabilitiesincreased our operating cash balances by $577,146, $508,055 and $163,089 respectively; offset by |
| 2) | Net income of $374,430 for the three months ended March 31, 2024, compared to net loss of $453,849 forthe same period in 2023; and |
| 3) | A change of Accounts payable, Other receivables and prepayments, and Amounts due to related parties decreasedour operating cash balances by $926,575, $222,436 and $169,409. |
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Investing Activities
Net cash used in investing activities was $39,105for the three months ended March 31, 2024, which was an increase of $32,589 or 45.5% from $71,694 in the same period in 2023. The decreasein net cash used in investing activities was attributable to cash used in the purchase of plant and equipment by $99,460; offset by cashreceived during acquisition of a subsidiary by $60,355, during the three months ended March 31, 2024.
Financing Activities
Net cash used in financing activities was $7,130for the three months ended March 31, 2024, which was a change of $1,000,124 from net cash provided by financing activities $992,994 inthe same period in 2023. The change in net cash used in financing activities was attributable to the Repayment of finance lease liabilityby $7,130 during the three months ended March 31, 2024.
Future Financings
We believe that our cash on hand and cash flowfrom operations will meet our expected capital expenditure and working capital requirements for the next 12 months. However, we may inthe future require additional cash resources due to changes in business conditions, implementation of our strategy to expand our productioncapacity, sales, marketing and branding activities or other investments or acquisitions we may decide to pursue. If our own financialresources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain creditfacilities. The sale of additional equity securities could result in dilution to our stockholders. The incurrence of indebtedness wouldresult in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict ouroperations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional fundson terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements thathave or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenuesor expenses, results of operations, liquidity, capital expenditures or capital resources.
Critical Accounting Policies
Our consolidated financial statements and accompanyingnotes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. Thepreparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimatesand assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at thedate of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policiesand estimates that we use to prepare our financial statements. A complete summary of these policies is included in note 2 of the notesto our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals,and on various other assumptions that are believed to be reasonable under the facts and circ*mstances. Actual results could differ fromthose estimates made by management.
Basis of Presentation
The accompanying consolidated financial statementshave been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”),and include the financial statements of the Company and all its subsidiaries that require consolidation. All material intercompany transactionsand balances have been eliminated in the consolidation. The Company’s fiscal year end is December 31st.
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The following entities wereconsolidated as of March 31, 2024:
| Place of incorporation | Ownership percentage | |||
| Value Exchange International, Inc. | USA | Parent Company | ||
| Value Exchange Int’l (China) Limited | Hong Kong | 100% | ||
| Value Exchange Int’l (Shanghai) Limited | PRC | 100% | ||
| Value Exchange Int’l (Hong Kong) Limited | Hong Kong | 100% | ||
| TapServices, Inc. | Philippines | 100% | ||
| Value Exchange Int’l (Hunan) Limited | PRC | 51% | ||
| Shanghai Zhaonan Hengan Information Technology Co., Ltd. | PRC | 51% | ||
| Haomeng Technology (Shenzhen) Co., Limited | PRC | 100% | ||
| Value E Consultant International (M) Sdn. Bhd | Malaysia | 100% |
Use of Estimates
Preparing consolidated financial statements inconformity with U.S. GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expensesduring the reporting period. The more significant areas requiring using management’s estimates and assumptions relate to the collectabilityof its receivables, the fair value and accounting treatment of financial instruments, the valuation of long-lived assets and valuationof deferred tax liabilities. Management bases its estimates on historical experience and on various other assumptions that are believedto be reasonable under the circ*mstances. Accordingly, actual results may differ significantly from these estimates. In addition, differentassumptions or circ*mstances could reasonably be expected to yield different results.
Plant and equipment
Plant and equipment is stated at cost less accumulateddepreciation and accumulated impairment losses, if any. Expenditures for maintenance and repairs are charged to earnings as incurred.Major additions are capitalized. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removedfrom the respective accounts, and any gain or loss is included in operations. Depreciation of plant and equipment is provided using thestraight-line method for substantially all assets with estimated lives as follows:
| Estimated UsefulLife | ||
| Leasehold improvements | Lesser of lease term or the estimated useful lives of 5 years | |
| Computer equipment | 5 years | |
| Computer software | 5 years | |
| Office furniture and equipment | 5 years | |
| Motor Vehicle | 3 years | |
| Building | 5 years | |
Revenue recognition
The Company’s revenue is derived from threeprimary sources: (i) professional services for systems development and integration, including procurement of related hardware and softwarelicenses on behalf of customers, if required; (ii) professional services for system maintenance normally for a period of one year; and(iii) sale of hardware and consumables during the service performed as stated above. We recognize revenue from contracts with customersusing the five-step model prescribed in ASC 606.
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The Company derives revenue from fixed-price salecontracts with customers that may provide for the Company to procure hardware and software licenses with varied performance specificationsspecific to each customer and provide the technical services for systems development and integration of the hardware and software licenses.In instances where the contract price is inclusive of the technical services, the sale contracts include performance obligations.
Determining whether such products and serviceswithin a customer contract are considered distinct performance obligations that should be accounted for separately requires significantjudgment. Accordingly, we review customer contracts to identify all separate promises to transfer goods and services that would be consideredperformance obligations. Judgment is also required in determining whether an option to acquire additional products and services withina customer contract represents a material right that the customer would not receive without entering into that contract.
The Company’s contracts often contain multipleperformance obligations, which generally include customer-acceptance provisions which provide for the Company to carry out installation,test runs and performance tests at the Company’s cost until the systems as a whole can meet the performance specifications statedin the contracts. The delivered equipment and software licenses have no standalone value to the customer until they are installed, integratedand tested at the customer’s site by the Company in accordance with the performance specifications specific to each customer. Inaddition, under these multiple performance obligations contracts, the Company has not sold the equipment and software licenses separatelyfrom the installation, integration and testing services, and hence there is no objective and reliable evidence of the fair value for eachdeliverable included in the arrangement. If a contract contains multiple performance obligations, the Company accounts for each distinctperformance obligation separately. The transaction price is allocated to the separate performance obligations on a relative stand-aloneselling price basis. Any discounts or expected potential future price concessions are considered when determining the total transactionprice.
In addition, the arrangement generally includescustomer acceptance criteria that cannot be tested before installation and integration at the customer’s site. Accordingly, revenuerecognition is deferred until customer acceptance, indicated by an acceptance certificate signed off by the customer.
We recognize revenue over time when there is acontinuous transfer of control to our customer. When control is transferred over time, revenue is recognized based on the extent of progresstowards completion of the performance obligation. Based on the nature of the products and services provided in the contract, we use ourjudgment to determine if an input measure or output measure best depicts the transfer of control over time. If a contract does not meetthe criteria for recognizing revenue over time, we recognize revenue at a point in time.
Revenues of maintenance services are recognizedwhen the services are performed in accordance with the contract term. For maintenance service contracts, a time-elapsed output methodis used to measure progress, and revenue is recognized straight-line over the term of the contract.
For services contracts, we typically satisfy ourperformance obligations as services are rendered and use a contract cost-based input method to measure progress. Contract costs includelabor, material and allocable indirect expenses. Revenue is recognized proportionally as contract costs are incurred plus estimated fees.
Revenues of sale of software, if not bundled withother arrangements, are recognized when shipped and customer acceptance obtained at a point in time, if all other revenue recognitioncriteria are met. Costs associated with revenues are recognized when incurred.
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Revenues are recorded net of value-added taxes, sales discounts andreturns. There were no sales returns during the three months period ended March 31, 2024 and 2023.
| Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | |||||||
| US$ | US$ | |||||||
| (unaudited) | (unaudited) | |||||||
| NET REVENUES | ||||||||
| Service income | ||||||||
| - systems development and integration | 54,115 | 14,359 | ||||||
| - systems maintenance | 2,616,667 | 2,490,154 | ||||||
| - sales of hardware and consumables | 699,227 | 380,036 | ||||||
| 3,370,009 | 2,884,549 | |||||||
Billings in excess of revenues recognized are recorded as deferredrevenue.
Income taxes
Deferred income taxes are recognized for the taxconsequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the financialstatement carrying amounts and the tax bases of existing assets and liabilities. The charge for taxation is based on the results for thereporting period as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enactedor substantively enacted by the balance sheet date. The effect on deferred income taxes of a change in tax rates is recognized in incomein the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion, orall of, a deferred tax asset will not be realized.
For uncertainty in income taxes, a tax positionis recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination,with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likelyof being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the year incurred.
Stock-based Compensation
The Company records stock-based compensation inaccordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or servicesare the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration receivedor the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and thecost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
Company adopted a 2022 Equity Incentive Plan in2024, but has not granted or issued any stock based incentive compensation under this plan as of the date of filing this Form 10-Q report.
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Item 3. Quantitative and Qualitative Disclosures About MarketRisk
As a “smaller reportingcompany” as defined by Item 10(f)(1) of Regulation S-K, the Company is not required to provide the information required by thisItem.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure Controls and Procedures.
Based on an evaluation under the supervision andwith the participation of the Company’s management, the Company’s principal executive officer and principal financial officerhave concluded that the Company’s disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the SecuritiesExchange Act of 1934, as amended (the “Exchange Act”) were not effective as of March 31, 2024, to provide reasonable assurancethat information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i)recorded,processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii)accumulated and communicatedto the Company’s management, including its principal executive officer and principal financial officer, as appropriate to allowtimely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in the Company’s internalcontrol over financial reporting during the first quarter of 2024, which were identified in connection with management’s evaluationrequired by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely tomaterially affect, the Company’s internal control over financial reporting.
Because the Company is a smaller reporting company,this annual report does not include an attestation report of our independent registered public accounting firm regarding internal controlover financial reporting. Management's report was not subject to attestation by our independent registered public accounting firm.
| 53 |
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may become involved in variouslawsuits and legal proceedings that arise in the ordinary course of business. However, litigation is subject to inherent uncertainties,and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware ofany such legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operatingresults.
Item 1A. Risk Factors
As of the date of the filing of this Form 10-Q, the Company is no longera Commission Identified Issuer under the Holding Foreign Companies Accountable Act (“HFCAA”).
Risk factors for our company are set forth inour Annual Report on Form 10-K for the fiscal year end December 31, 2023 (“2023 Form 10-K) and other filings with the Commission.The risks described in Part I, Item1A, "Risk Factors" in our 2023 Form 10-K could materially and adversely affect ourbusiness, financial condition and results of operations, and the trading price of our common stock could decline. These risk factors donot identify all risks that we face; our operations could also be affected by factors that are not presently known to us or that we currentlyconsider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not bea reliable indicator of future performance, and historical trends should not be used to anticipate results or trends in future periods.The “Risk Factors” section of the 2023 Form 10-K, as amended, remains current in all material respects.
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.
| 54 |
Item 6. Exhibits
Copies of the following documents are includedas exhibits to this report pursuant to Item 601 of Regulation S-K.
| (1) | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Company with the Commission on April 13, 2021. |
| (2) | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by Company with SEC on Nov. 9, 2021. |
| (3) | Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by Company with SEC on Nov. 9, 2021. |
| (4) | Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K filed by Company with SEC on Nov. 9, 2021. |
| (5) | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed by the Company with the SEC on February 2, 2023. |
| (6) | Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed by the Company with the SEC on February 2, 2023. |
| (7) | Incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K/A filed by the Company with the SEC on July 29, 2022 |
| (8) | Incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K/A filed by the Company with the SEC on July 29, 2022 |
| (9) | Incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K/A filed by the Company with the SEC on July 29, 2022 |
| 55 |
SIGNATURES
In accordance with the Exchange Act, the registrant caused this reportto be signed on its behalf by the undersigned thereunto duly authorized.
| Value Exchange International, Inc. | ||||
| July 16, 2024 | /s/ | Kenneth Tan | ||
| By: | Kenneth Tan | |||
| Its: | President and Director (Principal Executive Officer) | |||
| July 16, 2024 | /s/ | Channing Au | ||
| By: | Channing Au | |||
| Its: | Chief Financial Officer (Principal Financial and Accounting Officer) | |||
55
Exhibit 31.1
CERTIFICATION
I, Kenneth Tan, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Value Exchange International, Inc. for the three months ended March 31, 2024. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessaryto make the statements made, in light of the circ*mstances under which such statements were made, not misleading with respect to the periodcovered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this interim report, fairly present inall material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presentedin this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this interim report is being prepared; |
| b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with generally accepted accounting principles; |
| c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures angd presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
| d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internalcontrol over financial reporting; |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
| a. | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s abilityto record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknessesin internal controls; and |
| b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal controls over financial reporting. |
Dated: July 16, 2024
/s/ Kenneth Tan
Kenneth Tan
President and Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION
I, Channing Au, certify that:
| 1. | I have reviewed this quarterly report on Form 10-Q of Value Exchange International, Inc. for the three months ended March 31, 2024. |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessaryto make the statements made, in light of the circ*mstances under which such statements were made, not misleading with respect to the periodcovered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this interim report, fairly present inall material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presentedin this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by otherswithin those entities, particularly during the period in which this interim report is being prepared; |
| b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statementsfor external purposes in accordance with generally accepted accounting principles; |
| c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusionsabout the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
| d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’smost recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internalcontrol over financial reporting; |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function): |
| a. | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s abilityto record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknessesin internal controls; and |
| b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’sinternal controls over financial reporting. |
Dated: July 16, 2024
/s/ Channing Au
Channing Au
Chief Financial Officer
(Principal financial and accounting officer)
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ValueExchange International, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024, as filed with the Securitiesand Exchange Commission on or about the date hereof (the “Report”), I, Kenneth Tan, President and Chief Executive Officerof the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operationsof the Company. |
Dated: July 16, 2024
/s/ Kenneth Tan
Kenneth Tan
President and Chief Executive Officer
(Principal Executive Officer)
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of ValueExchange International, Inc. (the “Company”) on Form 10-Q for the quarter ended March 31, 2024, as filed with the Securitiesand Exchange Commission on or about the date hereof (the “Report”), I, Channing Au, Chief Financial Officer of the Company,certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operationsof the Company. |
Dated: July 16, 2024
/s/ Channing Au
Channing Au
Chief Financial Officer
(Principal financial and accounting officer)
Cover - shares | 3 Months Ended | |
|---|---|---|
Mar. 31, 2024 | Jun. 30, 2024 | |
| Cover [Abstract] | ||
| Document Type | 10-Q/A | |
| Amendment Flag | true | |
| Amendment Description | Explanatory Note:Value Exchange International, Inc. (the “Company”)is filing this Amendment No. 1 on Form 10-Q/A (this “Amendment”) to its Quarterly Report on Form 10-Q for the fiscal quarterended March 31, 2024, which was originally filed with the Securities and Exchange Commission (the “SEC”) on July 16, 2024(the “Original Filing”). This Amendment is being filed to provide the iXBRL tagging not included in the Original Filing.Other than as expressly set forth herein, this Amendmentdoes not, and does not purport to, amend, update or restate the information in Original Filing or reflect any events that have occurredafter the Original Filing was made. Information not affected by this Amendment remains unchanged and reflects the disclosures made atthe time as of which the Original Filing was made. No changes have been made to the financial statements of the Company as containedin the Original Filing. Accordingly, this Amendment should be read together with the Original Filing and the Company’s other filingswith the SEC. | |
| Document Quarterly Report | true | |
| Document Transition Report | false | |
| Document Period End Date | Mar. 31, 2024 | |
| Document Fiscal Period Focus | Q1 | |
| Document Fiscal Year Focus | 2024 | |
| Current Fiscal Year End Date | --12-31 | |
| Entity File Number | 000-53537 | |
| Entity Registrant Name | Value Exchange International, Inc. | |
| Entity Central Index Key | 0001417664 | |
| Entity Tax Identification Number | 26-3767331 | |
| Entity Incorporation, State or Country Code | NV | |
| Entity Address, Address Line One | 10/F, FT Life Tower | |
| Entity Address, Address Line Two | 18 Sheung Yuet Road | |
| Entity Address, Address Line Three | Kowloon Bay | |
| Entity Address, City or Town | Kowloon | |
| Entity Address, Country | HK | |
| Entity Address, Postal Zip Code | 999077 | |
| City Area Code | (852) | |
| Local Phone Number | 29504288 | |
| Entity Current Reporting Status | Yes | |
| Entity Interactive Data Current | Yes | |
| Entity Filer Category | Non-accelerated Filer | |
| Entity Small Business | true | |
| Entity Emerging Growth Company | false | |
| Entity Shell Company | false | |
| Entity Common Stock, Shares Outstanding | 43,500,762 |
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| CURRENT ASSETS | ||
| Cash | $ 515,113 | $ 886,467 |
| Accounts receivable, less allowance for credit losses | 1,485,055 | 1,736,866 |
| Amounts due from related parties | 130,186 | 530,675 |
| Other receivables and prepayments | 768,803 | 623,408 |
| Inventories | 215,313 | |
| Total current assets | 3,114,470 | 3,777,416 |
| NON-CURRENT ASSETS | ||
| Plant and equipment, net | 344,499 | 308,135 |
| Goodwill | 342,079 | 206,812 |
| Operating lease right-of-use assets, net | 1,244,569 | 926,630 |
| Total non-current assets | 1,931,147 | 1,441,577 |
| Total assets | 5,045,617 | 5,218,993 |
| CURRENT LIABILITIES | ||
| Accounts payable | 1,109,781 | 1,615,653 |
| Other payables and accrued liabilities | 2,821,949 | 2,601,761 |
| Deferred income | 967,558 | 778,126 |
| Amounts due to related parties | 12,953 | 83,649 |
| Operating lease liabilities, current | 585,762 | 463,411 |
| Loan from a related party | 500,000 | 500,000 |
| Current portion of finance lease liability | 27,761 | 28,867 |
| Short term bank loan from an affiliate | 940,147 | 940,147 |
| Total current liabilities | 6,965,911 | 7,011,614 |
| NON-CURRENT LIABILITIES | ||
| Deferred tax liabilities | 4,855 | 4,889 |
| Convertible loan from affiliates | 352,389 | 1,061,282 |
| Long term finance lease liability | 6,795 | 13,056 |
| Operating lease liabilities, non-current | 653,816 | 457,982 |
| Total non-current liabilities | 1,017,855 | 1,537,209 |
| Total liabilities | 7,983,766 | 8,548,823 |
| SHAREHOLDERS’ EQUITY (DEFICIT) | ||
| Common stock, 100,000,000 shares authorized, $0.00001 par value; 43,500,762 and 43,500,762 shares issued and outstanding, respectively | 435 | 435 |
| Additional paid-in capital | 2,480,327 | 2,480,327 |
| Statutory reserves | 11,835 | 11,835 |
| Accumulated deficit | (5,469,928) | (5,859,193) |
| Accumulated other comprehensive losses | (44,310) | (63,063) |
| Total shareholders’ equity (deficit) | (3,021,641) | (3,429,659) |
| Non-controlling interest | 83,492 | 99,829 |
| Total equity (deficit) | (2,938,149) | (3,329,830) |
| Total liabilities and shareholders’ equity (deficit) | $ 5,045,617 | $ 5,218,993 |
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, shares authorized | 100,000,000 | 100,000,000 |
| Common stock, par value per share | $ 0.00001 | $ 0.00001 |
| Common stock, shares issued | 43,500,762 | 43,500,762 |
| Common stock, shares outstanding | 43,500,762 | 43,500,762 |
CONSOLIDATED STATEMENTS OF OPERATION (Unaudited) - USD ($) | 3 Months Ended | |
|---|---|---|
Mar. 31, 2024 | Mar. 31, 2023 | |
| NET REVENUES | ||
| Service income | $ 3,370,009 | $ 2,884,549 |
| COST OF SERVICES | ||
| Cost of service income | (2,227,692) | (2,502,728) |
| GROSS PROFIT | 1,142,317 | 381,821 |
| OPERATING EXPENSES: | ||
| General and administrative expenses | (1,086,562) | (731,977) |
| Foreign exchange loss | (342,296) | (87,886) |
| TOTAL OPERATING EXPENSES | (1,428,858) | (819,863) |
| LOSS FROM OPERATIONS | (286,541) | (438,042) |
| OTHER INCOME (EXPENSES): | ||
| Interest income | 531 | 438 |
| Interest expense | (51,246) | (29,632) |
| Change in fair value of embedded derivatives | 708,893 | (34,752) |
| Finance cost | (8,809) | (4,239) |
| VAT refund | 11,140 | 485 |
| Management fee income | 32,475 | |
| Others | 703 | 20,588 |
| Total other income (expenses), net | 661,212 | (14,637) |
| INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES | 374,671 | (452,679) |
| INCOME TAXES EXPENSES | (241) | (1,170) |
| NET INCOME (LOSS) | 374,430 | (453,849) |
| Less: Net loss attributable to the non-controlling interests | 14,835 | 41,163 |
| Net income (loss) attributable to the Company shareholders | $ 389,265 | $ (412,686) |
| Net loss per share, basic attributable to the Company shareholders | $ 0.01 | $ (0.01) |
| Net loss per share, diluted attributable to the Company shareholders | $ 0.01 | $ (0.01) |
| Weighted average number of shares outstanding, basic | 43,500,762 | 36,156,130 |
| Weighted average number of shares outstanding, diluted | 43,500,762 | 36,156,130 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) | 3 Months Ended | |
|---|---|---|
Mar. 31, 2024 | Mar. 31, 2023 | |
| Income Statement [Abstract] | ||
| NET INCOME (LOSS) | $ 374,430 | $ (453,849) |
| OTHER COMPREHENSIVE INCOME, NET OF TAX: | ||
| Foreign currency translation adjustment | 17,251 | 41,163 |
| TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX: | 17,251 | 41,163 |
| Comprehensive income (loss) | 391,681 | (412,686) |
| Less: Comprehensive loss (income) attributable to the non- controlling interests | 16,337 | (10,258) |
| Comprehensive income (loss) attributable to the Company shareholders | $ 408,018 | $ (422,944) |
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Statutory Reserves [Member] | AOCI Attributable to Parent [Member] | Noncontrolling Interest [Member] | Total |
|---|---|---|---|---|---|---|---|
| Beginning balance, value at Dec. 31, 2022 | $ 362 | $ 1,340,524 | $ 849,471 | $ 11,835 | $ (76,986) | $ 129,537 | $ 2,254,743 |
| Beginning balance, shares at Dec. 31, 2022 | 36,156,130 | ||||||
| Net income | (6,708,664) | (26,247) | (6,734,911) | ||||
| Conversion of debt to common shares | $ 73 | 1,139,803 | 1,139,876 | ||||
| Conversion of debt to common shares, shares | 7,344,632 | ||||||
| Foreign currency translation adjustment | 13,923 | (3,461) | 10,462 | ||||
| Ending balance, value at Dec. 31, 2023 | $ 435 | 2,480,327 | (5,859,193) | 11,835 | (63,063) | 99,829 | (3,329,830) |
| Ending balance, shares at Dec. 31, 2023 | 43,500,762 | ||||||
| Net income | 389,265 | (14,835) | 374,430 | ||||
| Foreign currency translation adjustment | 18,753 | (1,502) | 17,251 | ||||
| Ending balance, value at Mar. 31, 2024 | $ 435 | $ 2,480,327 | $ (5,469,928) | $ 11,835 | $ (44,310) | $ 83,492 | $ (2,938,149) |
| Ending balance, shares at Mar. 31, 2024 | 43,500,762 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
|---|---|---|
Mar. 31, 2024 | Mar. 31, 2023 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Net income (loss) | $ 374,430 | $ (453,849) |
| Adjustments to reconcile net loss to cash used in operating activities: | ||
| Depreciation | 60,861 | 61,347 |
| Amortization | 160,900 | 109,362 |
| Noncash operating lease expense | 8,809 | 4,239 |
| Change in fair value of embedded derivatives | (708,893) | 34,752 |
| Deferred income taxes | (34) | (702) |
| Changes in operating assets and liabilities | ||
| Accounts receivable | 491,023 | (86,123) |
| Other receivables and prepayments | (139,649) | 82,787 |
| Amounts due from related parties | 400,489 | (107,566) |
| Inventories | 64,954 | (4,026) |
| Operating lease right-of-use assets | (487,156) | (12,185) |
| Accounts payable | (1,088,051) | (161,476) |
| Other payables and accrued liabilities | 185,189 | 22,100 |
| Deferred income | 189,432 | 15,729 |
| Amounts due to related parties | (175,488) | (6,079) |
| Operating lease liabilities | 318,185 | (92,191) |
| Net cash used in operating activities | (344,999) | (593,881) |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchase of plant and equipment | (99,460) | (71,694) |
| Acquisition of a subsidiary | 60,355 | |
| Net cash used in investing activities | (39,105) | (71,694) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Proceeds from convertible loan | 1,500,000 | |
| Repayment of finance lease liability | (7,130) | (5,889) |
| Repayment of bank loan from an affiliate | (501,117) | |
| Net cash (used in) provided by financing activities | (7,130) | 992,994 |
| EFFECT OF EXCHANGE RATE ON CASH | 19,880 | 99,877 |
| (DECREASE) INCREASE IN CASH | (371,354) | 427,296 |
| CASH, beginning of period | 886,467 | 208,776 |
| CASH, end of period | 515,113 | 636,072 |
| NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
| ROU asset acquired with operating lease liability | 253,834 | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
| Cash paid for income taxes | (241) | (1,170) |
| Cash paid for interest expenses | $ (51,246) | $ (29,632) |
Nature of Operations and Continuance of Business | 3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2024 | ||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
| Nature of Operations and Continuance of Business |
Value Exchange International, Inc.("VEII", "Company", "we" or "us") was incorporatedin the State of Nevada on June 26, 2007. The Company’s principal business, conducted through its operating subsidiaries,is to provide customer-centric solutions for the retail industry in China, Hong Kong SAR and Manila, Philippines. By integrating market-leadingPoint-of-Sale/Point-of-Interaction ("POS/POI"), Merchandising, Customer Relations Management or "CRM"and related rewards, Locational Based (Global Positing System ("GPS") and Indoor Positioning System ("IPS"))Marketing, Customer Analytics and Business Intelligence solutions, VEII provides retailers with the capability to offer a consistent shoppingexperience across all marketing and sales channels, enabling them to easily and effectively manage the customer lifecycle on a one-to-onebasis. VEII promotes itself as a single information technology ("IT") source for retailers who want to extend existingtraditional transaction processing to multiple points of interaction, including the Internet, kiosks and wireless devices. VEII servicesare focused on helping retailers realize the full benefits of Customer Chain Management with its suite of solutions that focus on thecustomer, on employees, and the infrastructure that supports the selling channel. VEII’s retail solutions are installedin an estimated 30%-40% of POS/POI-suitable retailers in Hong Kong and Manila, Philippines, processing tens of millions of transactionsa year. Company is headquartered in Hong Kong and with offices in Shenzhen, Guangzhou, Shanghai, Beijing, China; Manila, Philippines;and Kuala Lumpur, Malaysia. On January 1, 2014, VEII received 100%of the issued and outstanding shares of in Value Exchange Int’l (China) Limited ("VEI CHN") in exchangefor i) newly issued 12,000,000 shares of VEII’s common stock to the majority stockholder of VEI CHN; and ii) 166,667 sharesof our common stock held by VEI CHN to be transferred to the majority stockholder of VEI CHN ("Share Exchange").This transaction resulted in the owners of VEI CHN obtaining a majority voting interest in VEII. The merger of VEI CHN into VEII, whichhas nominal net assets, resulted in VEI CHN having control of the combined entities. For financial reporting purposes, thetransaction represents a "reverse merger" rather than a business combination and VEII is deemed to be the accounting acquireein the transaction. The transaction is being accounted for as a reverse merger and recapitalization. VEII is the legal acquirer but accountingacquiree for financial reporting purposes and VEI CHN is the acquired company but accounting acquirer. Consequently, the assets and liabilitiesand the operations that will be reflected in the historical financial statements prior to the transaction will be those of VEI CHN andwill be recorded at the historical cost basis of VEI CHN, and no goodwill will be recognized in this transaction. The consolidated financialstatements after completion of the transaction will include the assets and liabilities of VEI CHN and VEII, and the historical operationsof VEII and the combined operations of VEI CHN from the initial closing date of the transaction. The Company provides IT Business’services and solutions to the retail sector through three operating subsidiaries located in Hong Kong SAR and People’s Republicof China ("PRC"). On September 2, 2008 VEI CHN establishedits first operating subsidiary, Value Exchange Int’l (Shanghai) Limited ("VEI SHG") in Shanghai,PRC, under the laws of the PRC. VEI SHG engages in software development, trading and servicing of computer hardware and software activities. On September 25, 2008, VEI CHN acquiredits second operating subsidiary, TAP Services (HK) Limited in Hong Kong which subsequently changed its name to Value Exchange Int’l(Hong Kong) Limited ("VEI HKG") on May 14, 2013. VEI HKG engages in software development, trading and servicingof computer hardware and software activities. On May 14, 2013, VEI CHN further establishedanother operating subsidiary, Ke Dao Solutions Limited in Hong Kong, which subsequently changed its name to Cumberbuy.com Limited ("CUMBERBUY")on May 26, 2017. CUMBERBUY conducts consultancy services for IT Services and Solutions activities. On May 21, 2018, VEI CHN disposed ofCUCUMBUY with consideration of HK$1. In January 2017, VEI CHN acquired 100%of the capital stock of TapServices, Inc., a corporation organized under the laws of the Republic of the Philippines (the "TSI").TSI engages in software development, trading and servicing of computer hardware and software activities in Philippines. TSI is operatedas a subsidiary of VEI CHN. Prior to and continuing after the acquisition, TSI relied on VEI CHN for provision of IT services. In January 2019, VEI SHG establishedan operating subsidiary, Value Exchange Int’l (Hunan) Limited ("VEI HN") in Hunan, PRC, under thelaws of the PRC. VEI HN engages in IT service call-center activities. In February 2020, VEI SHG establishedan operating subsidiary, Shanghai Zhaonan Hengan Information Technology Co., Limited ("SZH") in Shanghai, PRC,under the laws of the PRC. SZH engages in IT services. In July 2021, VEI CHN established inan associate, Smart Reward Express Limited ("SRE") in Hong Kong. SRE is inactive since its establishment. In January 2022, VEI HKG establishedan operating subsidiary, Haomeng Technology (Shenzhen) Co., Limited. ("HTS") in Shenzhen, PRC, under the laws ofthe PRC. HTS engages in IT services. On January 2, 2024, VEI CHN acquired100% of the capital stock of Value E Consultant International (M) Sdn. Bhd, a company established in Malaysia (the "ValueE"). Value E engages in software development, trading and servicing of computer hardware and software activities in Malaysia.Value E is operated as a subsidiary of VEI CHN. As of March 31, 2024, the Company heldsix wholly-owned subsidiaries, and two subsidiaries with 51% ownership. Company establishes operating subsidiaries when a perceived oractual opportunity for business is deemed to be most efficiently handled by a local operating subsidiary. |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies |
The accompanying consolidated financialstatements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S.GAAP"), and include the financial statements of the Company and all its wholly-owned subsidiaries that require consolidation.All material intercompany transactions and balances have been eliminated in the consolidation. The Company’s fiscal yearend is December 31st. The following entities were consolidated as of March 31, 2024:
These financial statements have beenprepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company willbe able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially differentfrom carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carryingvalues and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has an operatingloss of $286,541 for the three months period ended March 31, 2024, has an accumulated deficit of $5,469,928 and has only cash reservesof $515,113 as of March 31, 2024. Management has evaluated the significance of the conditions in relation to the Company’sability to meet its obligations and believes that its current cash balance along with its current operations will not provide sufficientcapital to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon achievingsales growth, management of operating expenses and ability of the Company to obtain the necessary financing to meet its obligations andpay its liabilities arising from normal business operations when they come due, and upon profitable operations. The Company has relied on debt fundingto pay for operating expenses and business development efforts in 2024 that were not covered by operating revenues. If the Company continuesto incur operating losses as incurred within twelve months of filing date and does not significantly increase its cash reserves, and ifthe Company does not also receive additional funding from existing lenders or from other sources to provide the working capital neededto cover those continuing operating losses, then the Company would be forced to reduce its operating expenses and business developmentefforts and the issue of the Company as a going concern may arise. While the existing lenders of the Company and Company's majority shareholderare affiliated, there can be no assurance of additional debt or equity funding for the Company from the existing lenders or the majorityshareholder. In considering our forecast for the next twelve months and the current cash and working capital as of the filing of thisForm 10-Q, such matters create a substantial doubt regarding the Company’s ability to meet their financial needs and continueas a going concern. These financial statements do not includeany adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilitiesthat might result from this uncertainty.
Preparing consolidated financial statementsin conformity with U.S. GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. The more significant areas requiring using management’s estimates and assumptionsrelate to the collectability of its receivables, the fair value and accounting treatment of financial instruments, the valuation of long-livedassets and valuation of deferred tax liabilities. Management bases its estimates on historical experience and on various other assumptionsthat are believed to be reasonable under the circ*mstances. Accordingly, actual results may differ significantly from these estimates.In addition, different assumptions or circ*mstances could reasonably be expected to yield different results.
For purposes of the cash flow statements,the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cashequivalents. Cash includes cash on hand and demand deposits in accounts maintained with financial institutions or state-owned banks withinthe PRC and Hong Kong.
These interim unaudited consolidatedfinancial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflectall adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidatedfinancial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarilyindicative of the results expected for a full year or for any future period.
Receivables include trade accountsdue from customers and other receivables such as cash advances to employees, utility deposits paid and advances to suppliers. Managementreviews the composition of accounts receivable and analyzes historical bad debts, customer concentration, customer credit worthiness,current economic trends and changes in customer payment patterns to determine if the allowance for credit losses is adequate. An estimatefor credit losses is made when collection of the full amount is no longer probable. Delinquent account balances are written-off aftermanagement has determined that the likelihood of collection is not probable and known bad debts are written off against the allowancefor doubtful accounts when identified. As of March 31, 2024 and December 31, 2023, allowance for uncollectible accounts receivable amountsto $155,301 and $155,301, respectively; and there was no allowance for uncollectible other receivables. Management believes that the remainingaccounts receivable and other receivables are collectable. The company evaluated the accountingstandards update related to the Current Expected Credit Losses ("CECL") and adequate allowance for uncollectibleaccounts receivable have been made during 2024.
Inventories are valued at the lowerof cost and net realizable value. Cost for inventories is determined using the "first-in, first-out" method. Cost is defined as the cost to acquire products, cost of conversionand other related costs to bring inventory to present location and condition. Net realizable value is defined as estimated selling pricesin the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Management reviews inventories forobsolescence or cost in excess of net realizable value periodically. The obsolescence, if any, is recorded as a provision against theinventory. The cost in excess of market value is written off and recorded as additional cost of sales.
Plant and equipment is stated at costless accumulated depreciation and accumulated impairment losses, if any. Expenditures for maintenance and repairs are charged to earningsas incurred. Major additions are capitalized. When assets are retired or otherwise disposed of, the related cost and accumulated depreciationare removed from the respective accounts, and any gain or loss is included in operations. Depreciation of plant and equipment is providedusing the straight-line method for substantially all assets with estimated lives as follows:
Goodwill represents the excess of the cost of acquisitionover the fair value of net assets acquired. Goodwill is not amortized, but is instead tested for impairment annually.
Property, Plant, and Equipment The Company evaluates long-lived assets,including equipment, for impairment at least once per year and whenever events or changes in circ*mstances indicate that the carryingvalue may not be recoverable from its estimated future cash flows. Based on the existence of one or more indicators of impairment, theCompany measures any impairment of long-lived assets by comparing the asset's estimated fair value with its carrying value, based on cashflow methodology. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired andan impairment loss equal to an amount by which the carrying value exceeds the fair value of the asset is recognized. Impairment of Goodwill The carrying value of goodwill is evaluatedannually or more frequently if events or circ*mstances indicate that an impairment loss may have occurred. Such circ*mstances could include,but are not limited to, a significant adverse change in business climate, increased competition or other economic conditions. Under FASBAccounting Standard Codification (ASC) Topic 350 "Intangibles - Goodwill and Other", goodwill is tested at a reportingunit level. The impairment test involves a two-step process. The first step involves comparing the fair value of the reporting unit towhich the goodwill is assigned to its carrying amount. If this comparison indicates that a reporting unit’s estimated fairvalue is less than its carrying value, a second step is required. If applicable, the second step requires us to allocate the estimatedfair value of the reporting unit to the estimated fair value of the reporting unit’s net assets, with any fair value inexcess of amounts allocated to such net assets representing the implied fair value of goodwill for that reporting unit. If the carryingvalue of the goodwill exceeds its fair value, the carrying value is written down by an amount equal to such excess. The goodwill impairment testing processinvolves the use of significant assumptions, estimates and judgments, and is subject to inherent uncertainties and subjectivity. Estimatinga reporting unit’s discounted cash flows involves the use of significant assumptions, estimates and judgments with respectto a variety of factors, including sales, gross margin and selling, general and administrative rates, capital expenditures, cash flowsand the selection of an appropriate discount rate. Projected sales, gross margin and selling, general and administrative expense rateassumptions and capital expenditures are based on our annual business plans and other forecasted results. Discount rates reflect market-basedestimates of the risks associated with the projected cash flows of the reporting unit directly resulting from the use of its assets inits operations. These estimates are based on the best information available to us as of the date of the impairment assessment.
ASC Topic 820, Fair Value Measurementand Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exitprice) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants onthe measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservableinputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs)and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
Determining which category an assetor liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. Thefollowing table represents the fair value hierarchy for the Company’s financial assets and liabilities measured at fairvalue on a recurring basis as of:
As of March 31, 2024 and December31, 2023, the fair values of the Company’s cash and cash equivalents, accounts receivable, inventory, accounts payable, otherreceivables and prepayments, other payables and accrued liabilities, and balances with related parties approximated the carryingvalues of these instruments presented in the Company’s consolidated balance sheets due to the short maturities of theseinstruments.
U.S. GAAP generally requires that recognizedrevenue, expenses, gains and losses be included in net income or loss. Although certain changes in assets and liabilities are reportedas separate components of the equity section of the consolidated balance sheet, such items, along with net income, are components of comprehensiveincome or loss. The components of other comprehensive income or loss consist of foreign currency translation adjustments.
The Company reports earnings per sharein accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share ("EPS")on the face of the income statement. Basic EPS is computed by dividing net income available to common shareholders (numerator) by theweighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential commonshares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. Incomputing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased fromthe exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
The Company’s revenueis derived from three primary sources: (i) professional services for systems development and integration, including procurement of relatedhardware and software licenses on behalf of customers, if required; (ii) professional services for system maintenance normally for a periodof one year; and (iii) sale of hardware and consumables during the service performed as stated above. We recognize revenue from contractswith customers using the five-step model prescribed in ASC 606. The Company derives revenue from fixed-pricesale contracts with customers that may provide for the Company to procure hardware and software licenses with varied performance specificationsspecific to each customer and provide the technical services for systems development and integration of the hardware and software licenses.In instances where the contract price is inclusive of the technical services, the sale contracts include performance obligations. Determining whether such products andservices within a customer contract are considered distinct performance obligations that should be accounted for separately requires significantjudgment. Accordingly, we review customer contracts to identify all separate promises to transfer goods and services that would be consideredperformance obligations. Judgment is also required in determining whether an option to acquire additional products and services withina customer contract represents a material right that the customer would not receive without entering into that contract. The Company’s contractsoften contain multiple performance obligations, which generally include customer-acceptance provisions which provide for the Company tocarry out installation, test runs and performance tests at the Company’s cost until the systems as a whole can meet theperformance specifications stated in the contracts. The delivered equipment and software licenses have no standalone value to the customeruntil they are installed, integrated and tested at the customer’s site by the Company in accordance with the performancespecifications specific to each customer. In addition, under these multiple performance obligations contracts, the Company has not soldthe equipment and software licenses separately from the installation, integration and testing services, and hence there is no objectiveand reliable evidence of the fair value for each deliverable included in the arrangement. If a contract contains multiple performanceobligations, the Company accounts for each distinct performance obligation separately. The transaction price is allocated to the separateperformance obligations on a relative stand-alone selling price basis. Any discounts or expected potential future price concessions areconsidered when determining the total transaction price. In addition, the arrangement generallyincludes customer acceptance criteria that cannot be tested before installation and integration at the customer’s site.Accordingly, revenue recognition is deferred until customer acceptance, indicated by an acceptance certificate signed off by the customer. We recognize revenue over time whenthere is a continuous transfer of control to our customer. When control is transferred over time, revenue is recognized based on the extentof progress towards completion of the performance obligation. Based on the nature of the products and services provided in the contract,we use our judgment to determine if an input measure or output measure best depicts the transfer of control over time. If a contract doesnot meet the criteria for recognizing revenue over time, we recognize revenue at a point in time. Revenues of maintenance services arerecognized when the services are performed in accordance with the contract term. For maintenance service contracts, a time-elapsed outputmethod is used to measure progress, and revenue is recognized straight-line over the term of the contract. For services contracts, we typicallysatisfy our performance obligations as services are rendered and use a contract cost-based input method to measure progress. Contractcosts include labor, material and allocable indirect expenses. Revenue is recognized proportionally as contract costs are incurred plusestimated fees. Revenues of sale of software, if notbundled with other arrangements, are recognized when shipped and customer acceptance obtained at a point in time, if all other revenuerecognition criteria are met. Costs associated with revenues are recognized when incurred. Revenues are recorded net of value-addedtaxes, sales discounts and returns. There were no sales returns during the three months period ended March 31, 2024 and 2023.
Billings in excess of revenues recognized are recorded asdeferred revenue.
Deferred income taxes are recognizedfor the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences betweenthe financial statement carrying amounts and the tax bases of existing assets and liabilities. The charge for taxation is based on theresults for the reporting period as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that havebeen enacted or substantively enacted by the balance sheet date. The effect on deferred income taxes of a change in tax rates is recognizedin income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that someportion, or all of, a deferred tax asset will not be realized. For uncertainty in income taxes, atax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustainedin a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit thatis greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not"test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expensein the year incurred.
The Company categorize leases at theirinception as either operating or finance leases. Lease agreements cover certain office space, warehouse space, and vehicles. Most of theseleases are operating leases; however, certain vehicles are leased under finance leases. Operating leases are included in operatinglease right-of-use assets, current operating lease liabilities, and long-term operating lease liabilities in our consolidated balancesheets. Finance leases are included in net property, current installments of long-term debt, and long-term debt in our consolidated balancesheets. Leased assets represent our right touse an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments overthe lease term. Operating lease liabilities and corresponding right-of-use assets include options to extend lease terms that are reasonablycertain of being exercised. As the Company’s leases generally do not provide an implicit discount rate, the Company usesthe estimated collateralized incremental borrowing rate (i.e. 3%) based on information available at the lease commencement date in determiningthe present value of lease payments for use in the calculation of the operating lease liabilities and right-of-use assets. This rate isdetermined using a portfolio approach based on the risk-adjusted rate of interest and requires estimates and assumptions including creditrating, credit spread, and adjustments for the impact of collateral. The Company believes that this is the rate it would have to pay toborrow an amount equal to the lease payments on a collateralized basis over a similar lease term. Leases that have a term of twelve monthsor less upon commencement date are considered short-term in nature. Accordingly, short-term leases are not included on the consolidatedbalance sheets and are expensed on a straight-line basis over the lease term, which commences on the date we have the right to controlthe property.
The Company expenses the cost of advertisingas incurred in the period in which the advertisem*nts and marketing activities are first run or over the life of the endorsem*nt contract.No advertising and marketing expense for the three months ended March 31, 2024 and 2023.
Shipping and handling cost incurredto ship computer products to customers are included in selling expenses. Shipping and handling expenses for the three months ended March31, 2024 and 2023 were $11,942 and $18,746 respectively.
Research and development costs areexpensed as incurred and are included in general and administrative expenses. No research and development costs for the three months endedMarch 31, 2024 and 2023.
The functional currency and reportingcurrency of the Company is the U.S. Dollar. ("US$" or "$"). The functional currency of theHong Kong subsidiaries is the Hong Kong Dollar. The functional currency of the Chinese subsidiaries is RMB. The functional currency ofthe Philippine subsidiary is Peso. Results of operations and cash flow are translated at average exchange rates during the period, andassets and liabilities are translated at the exchange rate as quoted by the Hong Kong Monetary Authority ("HKMA")at the end of the period. Capital accounts are translated at their historical exchange rates when the capital transaction occurred. Translationadjustments resulting from this process are included in accumulated other comprehensive income. Transaction gains and losses that arisefrom exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the resultsof operations as incurred.
The Company records stock-based compensationin accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or servicesare the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration receivedor the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and thecost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
The Company follows FASB ASC Subtopic450-20, “Loss Contingencies” in determining its accruals and disclosures with respect to loss contingencies. Accordingly,estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financialstatements indicates that it is probable that a liability could be incurred and the amount of the loss can be reasonably estimated. Legalexpenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosureof the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred.
The Company uses the “managementapproach” in determining reportable operating segments. The management approach considers the internal organization and reportingused by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source fordetermining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operating resultssolely by monthly revenue from software development and maintenance services (but not by sub-services/product type or geographic area)and operating results of the Company and, as such, the Company has determined that the Company has one operating segment as defined byASC Topic 280 “Segment Reporting”.
In November 2023, the Financial AccountingStandards Board (FASB) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07),which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance will be effectivefor the annual periods beginning the year ended December 31, 2024, and for beginning January 1, 2025. Early adoption is permitted. Uponadoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. We do not expectthe adoption of this guidance to have a material impact on our consolidated financial statements. In December 2023, the FASB issued ASUNo. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of incometax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliationand income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of incometax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption ispermitted. Upon adoption, the guidance can be applied prospectively or retrospectively. We do not expect the adoption of this guidanceto have a material impact on our consolidated financial statements. Other accounting standards that havebeen issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expectedto have a material impact on the Company’s consolidated financial statements upon adoption. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts receivable |
Accounts receivable consisted of the followingas of March 31, 2024 and December 31, 2023:
All of the Company’s customersare located in the PRC, Hong Kong and Manila, Philippines. The Company provides credit in the normal course of business. The Company performsongoing credit evaluations of its customers and maintains allowances for credit losses based on factors surrounding the credit risk ofspecific customers, historical trends, and other information. The change in accounts receivable for the period ended March 31, 2024 wasprimarily due to new billings of revenue recognition. The following table presents changes in the balances ofthe company accounts receivable:
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Other receivables and prepayments | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other receivables and prepayments |
Other receivables and prepayments consisted of the followingas of March 31, 2024 and December 31, 2023:
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Inventories | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories |
Inventories as of March 31, 2024 and December31, 2023 consisted of the following:
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Plant and equipment, net | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plant and equipment, net |
Plant and equipment consisted of the followingas of March 31, 2024 and December 31, 2023:
Depreciation expense for the threemonths period ended March 31, 2024 and 2023 amounted to $60,861 and $61,347, respectively. For the three months period ended March 31,2024 and 2023, no interest expense was capitalized into plant and equipment. As of March 31, 2024 and December 31,2023, the Company's motor vehicle was under finance lease arrangement with a net carrying amount $89,833 and $101,646 respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill |
Goodwill consisted of the following as of March31, 2024 and December 31, 2023:
As of January 2, 2024, VEI CHN acquired100% of the capital stock of Value E from shareholders of VALUE E, Ms. TSANG Po Yee Bella with 95% shares of interest and Mr. CHAI LiChen with 5% shares of interest, for the consideration Malaysian ringgit (MYR) 100. Ms. TSANG Po Yee Bella is also a director of the Company.Upon completion of the acquisition, Value E is a wholly owned subsidiary of the Company. Value E engages in software development, tradingand servicing of computer hardware and software activities in Malaysia. The Company is undergoing purchase price allocation valuationfor the acquisition of Value E currently. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating leases | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Leases | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating leases |
We have entered into various non-cancelableoperating lease agreements for certain of our offices. Our leases have original lease periods expiring between the remainder of 2024 and2027. Many leases include option to renew. We do not assume renewals in our determination of the lease term unless the renewals are deemedto be reasonably assured. Our lease agreements generally do not contain any material residual value guarantees or material restrictivecovenants.
The components of lease liabilities are as follows:
Total noncash operating lease expensefor the three months period ended March 31, 2024 and 2023 amounted to $8,809 and $4,239 respectively. Principal payments on operatingleases liability for the three months period ended March 31, 2024 and 2023 amounted to $164,059 and $112,651 respectively. Weighted-averageremaining lease term is 1.72 years, and weighted-average discount rate is 3%. The following is a schedule, by years,of maturities of lease liabilities as of December 31, 2023:
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Finance lease liability | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Finance Lease Liability | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Finance lease liability |
Finance lease liability consisted of the followingas of March 31, 2024 and December 31, 2023:
As of March 31, 2024 and December 31,2023, the above finance lease liability secured by property and equipment with net carrying amount of $89,833 and $101,646 respectively.Total finance lease cost for the three months period ended March 31, 2024 and 2023 amounted to $552 and $1,221 respectively. Principalpayments on finance leases liability for the three months period ended March 31, 2024 and 2023 amounted to $7,130 and $5,889 respectively. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bank loan from an affiliate | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
| Bank loan from an affiliate |
Bank loan from an affiliate consisted of the followingas of March 31, 2024 and December 31, 2023:
The Company and American Pacific Bancorp,Inc., a Texas corporation located in Houston, Texas, (“APB”) signed a Loan Agreement, Security Agreement and Revolving CreditPromissory Note (“Promissory Note”), each dated July 26, 2022 but fully executed and closed as of July 27, 2022, whereby APBwill provide a $1 million secured revolving credit line to the Company (“APB Credit Line”). Loan Agreement, Security Agreementand Promissory Note may be referred to collectively as “Credit Line Documents”. The Credit Line Documents provide for a fixed8% annual interest on sums advanced, two year maturity date for unpaid sums loaned and unpaid interest accrued thereon, and calendar quarterlypayments of accrued interest on any sums advanced under Credit Line (interest payments commencing on September 30, 2022). The Credit Lineis secured by a first, senior lien on all of the Company’s assets, with net carrying amount of $5,045,617. Credit Line advancesmay be used for general working capital. APB is affiliated with Chan Heng Fai,a director and principal shareholder of the Company, by virtue of Mr. Chan’s equity ownership of parent company of APB and his serviceas the Executive Chairman of the parent company of APB. APB is also affiliated with the Company directors Lum Kan Fai, Robert Trapp andMr. Lim Sheng Hon Danny since they are affiliated with Mr. Chan and certain of his affiliated companies by virtue of services as a director,officer or professional advisor to those affiliated companies. Further, Wong Shui Yeung, and Wong Tat Keung, who are deemed to be independentdirectors of the Company, are also independent directors of certain Mr. Chan's affiliated companies. (See Note 12 (iii)) | ||||||||||||||||||||||||||||||||||||||||||||||||
Loan from a related party | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Loan From Related Party | |||||||||||||||||||||||||||||||||||||||||||||||||
| Loan from a related party |
On September 28, 2023, the Companyentered into a Loan Agreement and Promissory Note (collectively, the “Loan Agreement”) with Alset International Limited, apublic Singapore corporation, (“AIL”) for an unsecured loan of Five Hundred Thousand U.S. Dollars and No Cents (USD$500,000.00)principal amount (“Principal”) to the Company. Principal accrues simple interest at Eight Percent (8%) per annum. Repaymentof Principal and accrued interest thereon is to be made as follows: (1) Principal will be paid in a singlelump sum payment on or by the six (6) month anniversary of the effective date of the Loan Agreement, being September 28,2023, (being the“Maturity Date”); and (2) Interest accrued on Principal shallbe paid on the last business day on a calendar monthly basis with initial accrued Interest payments commencing on September 28, 2023. Company has the right to prepay allor any portion of the Principal and Interest accrued on the Principal, without penalty, upon ten (10) days’ prior notice to AIL.The Principal was advanced in full by AIL on October 4, 2023. Mr. Chan Heng Fai, a non-executivedirector of the Company, who is deemed the owner of of the issued shares of Company’s Common Stock by virtue of sharesof Common Stock held by Mr. Chan, and the following share ownership of Company’s Common Stock by entities that Mr. Chan is deemedto control: shares held by Hapi Metaverse Inc., shares held by BMI Capital Partners International Limited, 18,512 sharesheld by Liquid Value Development Pte Ltd. and shares held by Decentralized Sharing Systems, Inc. AIL is a majority-owned subsidiaryof Alset Inc., a Texas corporation, (“Alset”). Mr. Chan owns approximately 53.5% of the issued shares of common stock of Alsetand Mr. Chan is the Chairman and Chief Executive Officer of Alset and AIL. Further, Wong Shui Yeung and Wong Tat Keung, who are independentdirectors of the Company, are also independent directors of Alset Inc. Purpose of the Loan Agreement was toprovide short term working capital to the Company. No repayment of the principal and interestaccrued made as of July 16, 2024. | ||||||||||||||||||||||||||||||||||||||||||||||||
Convertible loan from affiliates | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Convertible Loan From Affiliates | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible loan from affiliates |
The movement in the liability and derivativecomponents of the convertible loan as of March 31, 2024 and December 31, 2023 are set out below:
(i) Movement of the components of theConvertible Loan 1:
VEII entered into a Convertible CreditAgreement, dated and effective as of January 27, 2023, (“2023 Credit Agreement 1”) with the following lenders: (1) Hapi Metaverse,Inc., a Delaware corporation, (“HMI”, and formerly named “GigWorld, Inc.”) and (2) New Energy CV Corporation (formerly,“American Wealth Mining Corp.”), a Nevada corporation, (“NECV”). HMI and NECV are also referred to individuallyas a “Lender” and collectively, as the “Lenders”. Maximum Credit Line; Interest; Advances; Payment.The 2023 Credit Agreement 1 provides for a maximum credit line of One Million Five Hundred Thousand Dollars and No Cents ($1,500,000.00)(“Maximum Credit Line”) with simple interest accrued on any advances of the money under the 2023 Credit Agreement 1 at EightPercent (8%) per annum. The principal amount of any advance of money (each being referred to as an “Advance”) under the 2023Credit Agreement 1 is due in a lump sum, balloon payment on the third annual anniversary of the date of the Advance under the 2023 CreditAgreement 1 (“Advance Maturity Date 1”). Accrued and unpaid interest on any Advance is due and payable on a semi-annual basiswith interest payments due on the last business day of June and last business day of December of each year. A Lender may demand that anyportion or all of the unpaid principal amount of any Advance as well as accrued and unpaid interest thereon may be paid by shares of CompanyCommon Stock in lieu of cash payment. Company must request Advances from the Lenders. Either Lender may elect to separately, fully fundthe Advance, or both Lenders may jointly elect to fund the Advance based on Lenders’ agreement on the portion of the Advance tobe funded by each Lender. Lenders may severally or jointly reject any request for an Advance and neither Lender has an obligation to fundany Advance under the 2023 Credit Agreement 1. Use of Proceeds. Advances under the 2023Credit Agreement 1 may be used to fund general working capital needs of the Company, which includes: expansion of existing business operationsor business lines to new geographical markets in Asia or other geographical markets; for development of new business lines (whether inexisting or new geographical markets); acquisition of assets or companies (whether in existing or new geographical markets); and paymentof any sums due under the Credit Agreement. Unsecured Debt Obligation. Any Advancewill be an unsecured general debt obligation of the Company. Further, there are no personal guarantees under the 2023 Credit Agreement1. Events of Default. The following constitutean event of default under the 2023 Credit Agreement 1: (1) failure to make a payment of any Advance under the 2023 Credit Agreement 1when due and payable and Company fails to cure such default within ten (10) days after receipt of a written notice from the Lender; (2)failure in the observance or performance of any non-monetary material covenant or agreement and Company fails to cure such default withinthirty (30) days after written notice of default from the Lender; (3) failure of Company to comply with the obligations, terms, covenantsor conditions of 2023 Credit Agreement 1, or breach by Company of any obligations, covenant, representation or warranty that is not curedwithin thirty (30) days from the receipt of a written notice from a Lender; (4) filing of a petition in bankruptcy or the commencementof any proceedings under any bankruptcy laws by or against Company, which filing or proceeding is not dismissed within sixty (60) daysafter the filing or commencement thereof, or if Company becomes insolvent; (5) petition is filed with a court to place the Company inreceivership or similar status for benefit of creditors and appointment of a receiver is unvacated and unstayed for an aggregate of sixty(60) days; (6) for debts or judgments in excess of One Hundred Thousand Dollars and No Cents ($100,000.00) in face amount, a writ of executionor attachment or any similar process shall be issued or levied against all of the Company’s assets, or any judgment involving monetarydamages shall be entered against the Company which shall become a lien on all of the Company’s assets and such execution, attachmentor similar process or judgment is not released, bonded, satisfied, vacated or stayed within sixty (60) days after its entry or levy; or(7) Company ceases to carry on its primary business line for ninety (90) consecutive days. The remedy for any default that is not timelycured, if a cure period is allowed, is all sums due under the 2023 Credit Agreement 1 becoming immediately due and payable. Conversion Right. The 2023 Credit Agreement1 grants the following conversion rights to each Lender. Each Advance shall be convertible, in whole or in part, into shares of CompanyCommon Stock at the option of the Lender who made that Advance (being referred to as a “Conversion of Convertible Loan 1”),at any time and from time to time, at a price per share equal the “Conversion Price 1”. The Conversion Price 1 for a Conversionof Convertible Loan 1 shall be the average closing price of the Company Common Stock as quoted by the Bloomberg Financial Markets (ora comparable reporting service of national reputation selected by the Company and reasonably acceptable to the Lender effecting the Conversionof Convertible Loan 1 if Bloomberg Financial Markets is not then reporting prices of the Company Common Stock), for the three (3) consecutivetrading days prior to date of the Notice of Conversion. The Conversion Price 1 is not limited by a minimum price per share of CompanyCommon Stock applicable to the Conversion of Convertible Loan 1. As such, if a Lender or Lenders loan a significant sum of money underthe 2023 Credit Agreement 1 and then elect to convert all or most of the loaned amount into shares of Company Common Stock, the resultingissuance of shares of Common Stock could significantly dilute existing Company shareholders. Conversion upon a Change in Control Transaction.In the event that prior to the time of repayment of any Advance under the 2023 Credit Agreement 1 that has not previously been convertedinto shares of Company Common Stock, the Company shall consummate a “Change in Control Transaction” (as defined below), thenthe total amount of Advances outstanding shall convert into shares of Company Common Stock at the Conversion Price 1. “Change inControl Transaction” will be deemed to exist if (1) there occurs any consolidation, merger or other business combination of theCompany with or into any third party and the Company is not the surviving entity, or any other corporate reorganization or transactionor series of related transactions in which the voting stockholders of the Company prior to such event cease to own 50% or more of thevoting power of the surviving entity after the transaction, or (2) in one or a series of related transactions, there is a sale or transferof all or substantially all of the operating assets of the Company or all of its wholly-owned subsidiaries, determined on a consolidatedbasis, to a third party. Conversion upon Breach of 2023 Credit Agreement1. In the event that the Company breaches any provision of the 2023 Credit Agreement 1 and does not remedy that breach within thirty(30) days after receipt of a written demand from a Lender, then each of the Lenders may convert all or any portion of the unpaid amountof their respective Advance or Advances into shares of Company Common Stock at the Conversion Price 1. Warrants. In the event that a Lender electsto convert any portion of an Advance under the 2023 Credit Agreement 1 into shares of Company Common Stock in lieu of cash payment insatisfaction of that Advance, then Company will issue to the Lender five (5) detachable warrants for each share of Company Common Stockissued in a Conversion of Convertible Loan 1 (“Warrants 1”). Each Warrant 1 will entitle the Lender to purchase one (1) shareof Common Stock at a per-share exercise price equal to the Conversion Price 1. The exercise period of each Warrant will be five (5) yearsfrom date of issuance of the Warrant. Conversion of Loan. On September 6, 2023,the Company received a Notice of Conversion from HMI to convert One Million Three Hundred Thousand Dollars ($1,300,000.00) of the principalamount loaned to the Company under the 2023 Credit Agreement 1 (“Converted Principal”) into shares of Company’s CommonStock. Under the terms of the 2023 Credit Agreement 1 and Notice of Conversion, HMI has demand rights for the conversion of outstandingdebt into equity. On September 18, 2023, the Converted Principal resulted in issuance of shares of Common Stock to HMI alongwith issuance of Warrants 1 to purchase a maximum of 36,723,160 shares of Common Stock (“Underlying Shares”) to HMI. Underthe 2023 Credit Agreement, the conversion rate for the Conversion Shares is $0.1770 per share, and the Warrants 1 have an exercise priceof $0.1770 per share and an exercise period of five (5) years from date of issuance of warrants. The Company was in favor of the conversionin order to end interest payments under the 2023 Credit Agreement 1 and thereby free up capital for operational expenses. As of March 31, 2024, HMI has not stated whenor if it will exercise any of the Warrants 1. The issuance of Conversion Shares, Warrants 1 and Underlying Shares was made in relianceupon the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended, (“Securities Act”)and Rule 506(b) of Regulation D thereunder. The Conversion Shares and Warrants 1 are, and Underlying Shares will be if issued, “restrictedsecurities” under Rule 144 of the Securities Act. (ii) Movement of the components of the Convertible Loan 2:
On December 14, 2023, VEII entered into a ConvertibleCredit Agreement (“2023 Credit Agreement 2”) with HMI for an unsecured credit line in the maximum amount of One Million U.S.Dollars and No Cents (USD$1,000,000.00) (“Credit Limit”). Advances of the principal under the 2023 Credit Agreement 2 accruesimple interest at Eight Percent (8%) per annum. Each Advance under the 2023 Credit Agreement 2 and all accrued interest thereon may,at the election of HMI, or the Company, be: (1) repaid in cash; (2) converted into shares of the Company Common Stock; or (3) be repaidin a combination of cash and shares of the Company Common Stock. The principal amount of each Advance under the 2023 Credit Agreement2 shall be due and payable on the third (3rd) annual anniversary of the date that the Advance is received by the Company alongwith any unpaid interest accrued on the principal (the “Advance Maturity Date 2”). Prior to the Advance Maturity Date 2, unpaidinterest accrued on any Advance shall be paid on the last business day of June and on the last business day of December of each year inwhich the Advance is outstanding and not converted into shares of Company Common Stock. Company may prepay any Advance under the 2023Credit Agreement 2 and interests accrued thereon prior to Advance Maturity Date 2 without penalty or charge. Use of Proceeds. The Company needed fundingon an expedited basis and in place prior to 2024 in order to fund requirements for new and existing customer work and to pay for overallgeneral operational expenses. HMI was the only known and identified funding source willing to provide the necessary funding on an expeditedbasis. Credit Line may be used for general working capital, including possible expansion of existing business operations or business linesto new geographical markets in Asia or other geographical markets; for development of new business lines (whether in existing or new geographicalmarkets); acquisition of assets or companies (whether in existing or new geographical markets); and payment of any sums due under the2023 Credit Agreement 2 or other loans. Fee on Advances. The 2023 Credit Agreement2 provided that each Advance incurs a 10% fee on the amount of the Advance (“Fee”), payable in cash or shares of Company’sCommon Stock at the election of Company. Under a December 19, 2023 Amendment to the Credit Agreement, the Fee was amended to provide fora one-time $100,000 payment instead of 10% on an Advance, which amended Fee is payable at option of Company in either cash or shares ofCompany Common Stock within 30 days of December 19, 2023. Events of Default. The following constitutean event of default under the 2023 Credit Agreement 2: (1) failure to timely pay of any Advance when due and payable and the Company failsto cure such default within ten (10) days after receipt of a written notice of default from HMI or its authorized agent; (2) a defaultof any non-monetary material covenant or agreement in the 2023 Credit Agreement 2 that the Company does not remedy within thirty (30)days after receipt by the Company of a written notice of default from HMI or its authorized agent (or within such other longer time periodas may be therein specifically provided in the written notice); (3) a breach of any other obligations, covenant, representation or warrantycontained in the 2023 Credit Agreement 2 that is not cured within thirty (30) days from the receipt by the Company of a written noticefrom HMI or its authorized agents; (4) the filing of a petition in bankruptcy or the commencement of any proceedings under any bankruptcylaws by or against the Company, which filing or proceeding, is not dismissed within sixty (60) days after the filing or commencement thereof,or (5) if the Company becomes insolvent, the filing of a petition to a court for the entry of an order, judgment or decree approving apetition in an insolvency, liquidation or similar procedure and the petition shall remain unvacated or not removed for an aggregate ofsixty (60) days (whether or not consecutive) from the first date of entry thereof or rejected by such court; (6) all or any part of theCompany’s assets, or of any or all of the royalties, revenues, rents, issues or profits thereof, shall be appointed without theconsent of the Company and such appointment shall remain unvacated and unstayed for an aggregate of sixty (60) days (whether or not consecutive);(7) entry of judgment or judgements in the aggregate in excess of One Hundred Thousand United States Dollars (US$100,000.00) in face amount,a writ of execution or attachment or any similar process shall be issued or levied against all of the Company’s assets, or any judgmentinvolving monetary damages shall be entered against the Company which shall becomes a lien on all of the Company’s assets and suchexecution, attachment or similar process or judgment is not released, bonded, satisfied, vacated or stayed within sixty (60) days afterits entry or levy; or (8) the Company ceases to conduct its primary business line for ninety (90) consecutive days. Conversion to Shares of Common Stock. HMIor Company may convert monies owed under any Advance regarding the 2023 Credit Agreement 2 into shares of Company Common Stock (“Conversionof Convertible Loan 2”). The price for conversion of an Advance under the 2023 Credit Agreement 2 and unpaid interest accrued thereoninto shares of Common Stock shall be based on US$0.045 per share, which is an approximately twenty-five percent (25%) discount from themarket closing price as of December 12, 2023 (the “Conversion Price 2”). No fractional shares may be issued in any Conversionof Convertible Loan 2. If HMI elects to effect a Conversion of Convertible Loan 2, it must deliver a Notice of Conversion to the Companythat specifies the amount of the advance and accrued interest, if any, to be converted, and the date on which such conversion shall beeffected (the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shallbe the date that such Notice of Conversion is deemed received by the Company. Conversions shall reduce the amount advanced in an amountequal to the amount of the advance that is converted in a Conversion of Convertible Loan 2. Conversion upon a Change in Control Transaction.In the event that the Company consummates a “Change in Control Transaction” (as defined below), then the total amount of Advancesoutstanding under the 2023 Credit Agreement 2, and not previously converted into shares of Company Common Stock, shall convert into sharesof Company Common Stock at the Conversion Price 2 upon receipt of written notice from HMI to the Company. “Change in Control Transaction”will exist if (1) there occurs any consolidation, merger or other business combination of the Company with or into any third party andthe Company is not the surviving entity, or any other corporate reorganization or transaction or series of related transactions in whichin any of such events the voting stockholders of the Company prior to such event cease to own 50% or more of the voting power, or correspondingvoting equity interests, of the surviving entity after the consummation of the transaction or transactions, or (2) in one or a seriesof related transactions, there is a sale or transfer of all or substantially all of the operating assets of the Company or substantiallyall of the Company’s operating and wholly-owned subsidiaries, determined on a consolidated basis, to a third party. Conversion upon Breach of 2023 Credit Agreement2. In addition to on-demand, non-breach Conversion and a Change of Control Conversion, HMI may convert amounts owed under outstandingAdvances if the Company breaches the 2023 Credit Agreement 2 and does not remedy that breach within thirty (30) days after receipt ofa written demand from HMI, which demand shall describe the conversion breach event. Upon occurrence of a conversion breach event thatis not timely remedied and receipt of a Notice of Conversion, the Company is required to convert the requested conversion amount of alloutstanding amount of Advances not previously converted into shares of Company Common Stock within ten (10) days after receipt of theNotice of Conversion. Warrants. In the event that HMI electsto convert any portion of an advance under the 2023 Credit Agreement 2 into shares of Company Common Stock, the Company is obligated toissue to HMI five (5) detachable warrants for each share of Company Common Stock issued in a Conversion of Convertible Loan 2 (“Warrants2”) in addition to the shares of Company Common Stock issued in the Conversion of Convertible Loan 2. Each Warrant 2 will entitleHMI to purchase one (1) share of Company Common Stock at a per-share exercise price equal to the Conversion Price 2. The exercise periodfor each Warrant will be five (5) years from the date of issuance of the Warrant. (iii) HMI owns 21,120,795 shares of Company CommonStock, which is approximately 48.55% of issued and outstanding shares of Company Common Stock (based on 43,500,762 shares issued and outstanding).On September 6, 2023, HMI converted $1,300,000 in debt owed by the Company into 7,344,632 shares of Company’s Common Stock at aprice equivalent to $0.177 pursuant to 2023 Credit Agreement 1. HMI’s ownership of shares of Company Common Stock above does notinclude a total of 36,723,160 shares of Company Common Stock that HMI may purchase under Warrants 1 issued under the 2023 Credit Agreement1. The terms of the Warrants 1 entitle the holder to purchase from the Company one (1) share of the Company Common Stock (as adjustedfrom time to time pursuant to the provisions of the Warrants 2) for each issued Warrant 1. The Warrants 1 are currently exercisable andexpire on September 6, 2028. If HMI exercised the Warrants 1 issued under the2023 Credit Agreement 1 in full and purchased all 36,723,160 of the underlying shares of Company Common Stock, then HMI would own 57,843,955shares of Company Common Stock or approximately 72.10% of the then issued and outstanding shares of Company Common Stock (based on theassumption of 80,223,922 shares of Company Common Stock then being issued and outstanding). Mr. Chan Heng Fai Ambrose, a director of thecompany, would, based on his control of HMI, also be a “shared” or joint owner of those shares of Company Common Stock. Mr.Chan controls HMI by virtue of his majority ownership of shares of common stock of Alset, a Commission-reporting company, which is theparent company of the HMI. Alset owns 99.693% of the issued and outstanding shares of HMI’s common stock. Mr. Chan owns approximately53.5% of the issued shares of common stock of Alset. Mr. Chan is also the Chairman and Chief Executive Officer of Alset and ExecutiveChairman of the Board of Directors of HMI. Mr. Chan is deemed to be the owner of 21,587,429shares of Common Stock, which represents approximately 49.63% of the issued shares of Company’s Common Stock (based on 43,500,762shares issued and outstanding), by virtue of: 95,000 shares of Company’s Common Stock held by Mr. Chan, and the following shareownership of Common Stock by entities that Mr. Chan is deemed to control: 21,120,795 shares held by HMI, 39,968 shares held by BMI CapitalPartners International Limited, 18,512 shares held by LiquidValue Development Pte Ltd. And 313,154 shares held by Decentralized SharingSystems, Inc. BMI Capital Partners International Limited is owned by AIL. AIL is a subsidiary of Alset. LiquidValue Development Pte Ltd.is a subsidiary of Alset. Decentralized Sharing Systems, Inc. is a subsidiary of DSS, Inc., a New York Stock Exchange listed company,(“DSS”). Mr. Chan is personally and through entities he controls, the largest shareholder of DSS. Mr. Chan is also the Chairmanof the Board of Directors of DSS. Mr. Chan, HMI, BMI Capital Partners InternationalLimited, LiquidValue Development Pte Ltd. And Decentralized Sharing Systems, Inc. are referred to collectively below as “AffiliatedShareholders”. As stated above, Mr. Chan controls the HMI byvirtue of his control of Alset. Mr. Chan is also Executive Chairman of the Board of Directors of the HMI and a director of American PacificBancorp., another lender of the Company. Mr. Lum Kan Fai is Vice Chairman of the Board of Directors of HMI and has served in other managementcapacities with HMI. Lum Kan Fai is also President of Digital Group of DSS. Mr. Chan is Executive Chairman of the Board of Directors ofDSS and owns approximately 58.3% of the issued and outstanding shares of DSS. Wong Shui Keung is a independent director of DSS. Robert Trapp was a non-executive director of HMIand was a non-executive director of Alset. He also serves or has served as a non-executive director of several subsidiaries of Alset.Mr. Trapp is a non-executive director of Sharing Services Global Corporation, a Nevada corporation and Commission-reporting company, (“SSGC”).Mr. Chan is Executive Chairman of the Board of Directors of SSGC as well as the owner of 49.2% of issued and outstanding shares of SSGCcommon stock, which ownership position includes shares of SSGC common stock owned by DSS and Alset. Further, Mr. Trapp is a non-executivedirector of NECV. Mr. Chan controls NECV by virtue of his ownership of approximately 95.6% of issued shares of NECV common stock. Wong Shui Yeung and Wong Tat Keung are independentdirectors of Alset, and also serves or has served as an independent director of several entities controlled or affiliated with Mr. Chan.Wong Shui Yeung and Wong Tat Keung serve as independent directors of AIL, a subsidiary of Alset. Wong Shui Keung is an independent directorof DSS. Wong Shui Yeung, Robert Trapp, and Wong Tat Keungalso serve as members of the Company’s Audit Committee of the Board of Directors. Mr. Lim Sheng Hon Danny currently serves as SeniorVice President and Executive Director of AIL. He also serves as an Executive Director of Alset, the parent company of AIL. Mr. Lim alsoworks extensively with Mr. Chan on various business matters concerning AIL, Alset and DSS. Potential Changes Control of Registrant.As of December 31, 2023, there is no agreement or arrangement between the Company and Mr. Chan or HMI concerning operational management,management decisions, business development or strategic plan of the Company and its subsidiaries; neither HMI nor Mr. Chan has directedor controlled the Company’s day-to-day operational management, management decisions, business development or strategic plan of theCompany and its subsidiaries; and Mr. Chan’s involvement in the Company’s operational management, management decisions, businessdevelopment and strategic planning of the Company and its subsidiaries has been limited to his performance of his duties as an outsidedirector of the Company. Nonetheless, due to the actual and potential ownership of shares of Company Common Stock and Mr. Chan and hisaffiliates holding three of the nine board seats of the Company’s Board of Directors, Mr. Chan has the ability to significant influencecorporate decisions and actions of the Company and its subsidiaries. While Wong Shui Yeung and Wong Tat Keung are theindependent directors of the Company, and Chan Heng Fai, Lum Fai Kai, Robert Trapp, and Lim Sheng Hon Danny have not directed or controlleddaily operational management or decision making, or strategic and business development decisions of the Company, beyond input and guidanceas non-executive directors, and while the Company is not aware of any agreement among Chan Heng Fai, Lum Fai Kai, Lim Sheng Hon Danny,Wong Shui Yeung, Robert Trapp, and Wong Tat Keung, or among these directors and the Affiliated Shareholders or lenders of the Company,to direct the operational management and strategic planning of the Company or its operating subsidiaries, the Affiliated Shareholderscollectively control 49.6% of Company’s issued shares of Common Stock. Further, while the purpose of the Credit Agreementand January Credit Agreement are to provide necessary working capital to the Company, and the Credit Agreement and January Credit Agreementare not intended by the Company or Lenders to be a mechanism for effecting any change in control of the Company, HMI, as an AffiliatedShareholder, has the right to convert the Warrant 1 issued to HMI under the 2023 Credit Agreement 1 conversion into shares of CompanyCommon Stock that would, if the Warrants 1 are fully exercised, result in ownership of approximately 72.10% of the then issued and outstandingshares of Company Common Stock (based on the assumption of 80,223,922 shares of Company Common Stock then being issued and outstanding).With the 2023 Credit Agreement 2, HMI could, assuming a Conversion of any significant amount of Advances made to the Company, into anownership position of shares of Common Stock into more than 80% of the then issued and outstanding shares of Common Stock. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other payables and accrued liabilities | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other payables and accrued liabilities |
Other payables and accruals consistedof the following as of March 31, 2024 and December 31, 2023:
Accrual mainly represents salary payablesand fringe and social security accruals. According to the prevailing laws and regulations of the PRC, all eligible employees of the Company’ssubsidiary are entitled to staff welfare benefits including medical care, welfare subsidies, unemployment insurance and pension benefitsthrough a PRC government-mandated multi-employer defined contribution plan. The Company’s subsidiary is required to accrue for thesebenefits based on certain percentages of the qualified employees’ salaries. The Company’s subsidiary is required to make contributionsto the plans out of the amounts accrued. The Company’s subsidiaries incorporatedin Hong Kong manage a defined contribution Mandatory Provident Fund (the “MPF Scheme”) under the Mandatory Provident FundSchemes Ordinance, for all of its employees in Hong Kong. The Company is required to contribute 5% of the monthly salaries for all HongKong based employees to the MPF Scheme up to a maximum statutory limit. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred income | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Income | |||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred income |
Deferred income consistedof the following as of March 31, 2024 and December 31, 2023:
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Statutory reserves | 3 Months Ended | ||||||||||||
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Mar. 31, 2024 | |||||||||||||
| Extractive Industries [Abstract] | |||||||||||||
| Statutory reserves | Billings in excess of revenues recognized are recorded asdeferred revenue. The opening balance for the period ended March 31, 2024 and for the year ended December 31, 2023 amounted to $778,126and $291,171 respectively.
Statutory reserves The laws and regulations of the PRCrequire that before an enterprise distributes profits to its owners, it must first satisfy all tax liabilities, provide for losses inprevious years, and make allocations in proportions determined at the discretion of the Board of Directors after the statutory reserves. As stipulated by the Company Law ofthe PRC, as applicable to Chinese companies with foreign ownership, net income after taxation can only be distributed as dividends afterappropriation has been made for the following:
The statutory reserve fund is non-distributableother than during liquidation and can be used to fund previous years’ losses, if any. It may be utilized for business expansionor converted into share capital by issuing new shares to existing shareholders in proportion to their shareholding or by increasing thepar value of the shares currently held by them, provided that the remaining reserve balance after such issue is not less than 25% of theregistered capital. |
Related party and shareholder transactions | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related party and shareholder transactions |
Other than disclosed elsewhere in these financial statements,the Company also had the following related party balances and transactions: Related party balances
Related party transactions:
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Subsequent events | 3 Months Ended | |||
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Mar. 31, 2024 | ||||
| Subsequent Events [Abstract] | ||||
| Subsequent events |
On July 15, 2024, VEII entered intoa Convertible Credit Agreement (“2024 Credit Agreement”) with HMI for an unsecured credit line in the maximum amount of OneHundred and Ten Thousand U.S. Dollars and No Cents (USD$110,000.00) (“2024 Credit Line”). Advances of the principal underthe 2024 Credit Agreement accrue simple interest at Eight Percent (8%) per annum. Each Advance under the 2024 Credit Agreement and allaccrued interest thereon may, at the election of HMI, or the Company, be: (1) repaid in cash; (2) converted into shares of the CompanyCommon Stock; or (3) be repaid in a combination of cash and shares of the Company Common Stock. The principal amount of each Advance underthe 2024 Credit Agreement shall be due and payable on the third (3rd) annual anniversary of the date that the Advance is received by theCompany along with any unpaid interest accrued on the principal (the “Advance Maturity Date 3”). Prior to the Advance MaturityDate 3, unpaid interest accrued on any Advance shall be paid on the last business day of June and on the last business day of Decemberof each year in which the Advance is outstanding and not converted into shares of Company Common Stock. Company may prepay any Advanceunder the 2024 Credit Agreement and interests accrued thereon prior to Advance Maturity Date 3 without penalty or charge. Use of Proceeds. The Company neededfunding on an expedited basis in order to fund requirements for new and existing customer work and to pay for overall general operationalexpenses. HMI was the only known and identified funding source willing to provide the necessary funding on an expedited basis. CreditLine may be used for general working capital, including possible expansion of existing business operations or business lines to new geographicalmarkets in Asia or other geographical markets; for development of new business lines (whether in existing or new geographical markets);acquisition of assets or companies (whether in existing or new geographical markets); and payment of any sums due under the 2024 CreditAgreement or other loans. Events of Default. The following constitutean event of default under the 2024 Credit Agreement: (1) failure to timely pay of any Advance when due and payable and the Company failsto cure such default within ten (10) days after receipt of a written notice of default from HMI or its authorized agent; (2) a defaultof any non-monetary material covenant or agreement in the 2024 Credit Agreement that the Company does not remedy within thirty (30) daysafter receipt by the Company of a written notice of default from HMI or its authorized agent (or within such other longer time periodas may be therein specifically provided in the written notice); (3) a breach of any other obligations, covenant, representation or warrantycontained in the 2024 Credit Agreement that is not cured within thirty (30) days from the receipt by the Company of a written notice fromHMI or its authorized agents; (4) the filing of a petition in bankruptcy or the commencement of any proceedings under any bankruptcy lawsby or against the Company, which filing or proceeding, is not dismissed within sixty (60) days after the filing or commencement thereof,or (5) if the Company becomes insolvent, the filing of a petition to a court for the entry of an order, judgment or decree approving apetition in an insolvency, liquidation or similar procedure and the petition shall remain unvacated or not removed for an aggregate ofsixty (60) days (whether or not consecutive) from the first date of entry thereof or rejected by such court; (6) all or any part of theCompany’s assets, or of any or all of the royalties, revenues, rents, issues or profits thereof, shall be appointed without theconsent of the Company and such appointment shall remain unvacated and unstayed for an aggregate of sixty (60) days (whether or not consecutive);(7) entry of judgment or judgements in the aggregate in excess of One Hundred Thousand United States Dollars (US$100,000.00) in face amount,a writ of execution or attachment or any similar process shall be issued or levied against all of the Company’s assets, or any judgmentinvolving monetary damages shall be entered against the Company which shall becomes a lien on all of the Company’s assets and suchexecution, attachment or similar process or judgment is not released, bonded, satisfied, vacated or stayed within sixty (60) days afterits entry or levy; or (8) the Company ceases to conduct its primary business line for ninety (90) consecutive days. Conversion to Shares of Common Stock.HMI or Company may convert monies owed under any Advance regarding the 2024 Credit Agreement into shares of Company Common Stock (“Conversionof Convertible Loan 3”). The price for conversion of an Advance under the 2024 Credit Agreement and unpaid interest accrued thereoninto shares of Common Stock shall be based on US$0.06 per share, which is based on VEII’s Volume-Weighted Average Price as of 8July 2024 (the “Conversion Price 3”). No fractional shares may be issued in any Conversion of Convertible Loan 3. If HMI electsto effect a Conversion of Convertible Loan 3, it must deliver a Notice of Conversion to the Company that specifies the amount of the advanceand accrued interest, if any, to be converted, and the date on which such conversion shall be effected (the “Conversion Date 3”).If no Conversion Date 3 is specified in a Notice of Conversion, the Conversion Date 3 shall be the date that such Notice of Conversionis deemed received by the Company. Conversions shall reduce the amount advanced in an amount equal to the amount of the advance that isconverted in a Conversion of Convertible Loan 3. Conversion upon a Change in ControlTransaction. In the event that the Company consummates a “Change in Control Transaction” (as defined below), then the totalamount of Advances outstanding under the 2024 Credit Agreement, and not previously converted into shares of Company Common Stock, shallconvert into shares of Company Common Stock at the Conversion Price 3 upon receipt of written notice from HMI to the Company. “Changein Control Transaction” will exist if (1) there occurs any consolidation, merger or other business combination of the Company withor into any third party and the Company is not the surviving entity, or any other corporate reorganization or transaction or series ofrelated transactions in which in any of such events the voting stockholders of the Company prior to such event cease to own 50% or moreof the voting power, or corresponding voting equity interests, of the surviving entity after the consummation of the transaction or transactions,or (2) in one or a series of related transactions, there is a sale or transfer of all or substantially all of the operating assets ofthe Company or substantially all of the Company’s operating and wholly-owned subsidiaries, determined on a consolidated basis, toa third party. Conversion upon Breach of 2024 CreditAgreement. In addition to on-demand, non-breach Conversion and a Change of Control Conversion, HMI may convert amounts owed under outstandingAdvances if the Company breaches the 2024 Credit Agreement and does not remedy that breach within thirty (30) days after receipt of awritten demand from HMI, which such demand shall describe the conversion breach event. Upon occurrence of a conversion breach event thatis not timely remedied and receipt of a Notice of Conversion, the Company is required to convert the requested conversion amount of alloutstanding amount of Advances not previously converted into shares of Company Common Stock within ten (10) days after receipt of theNotice of Conversion. |
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation |
The accompanying consolidated financialstatements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S.GAAP"), and include the financial statements of the Company and all its wholly-owned subsidiaries that require consolidation.All material intercompany transactions and balances have been eliminated in the consolidation. The Company’s fiscal yearend is December 31st. The following entities were consolidated as of March 31, 2024:
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| Going Concern |
These financial statements have beenprepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company willbe able to meet its obligations and continue its operations for its next fiscal year. Realization values may be substantially differentfrom carrying values as shown and these financial statements do not give effect to adjustments that would be necessary to the carryingvalues and classification of assets and liabilities should the Company be unable to continue as a going concern. The Company has an operatingloss of $286,541 for the three months period ended March 31, 2024, has an accumulated deficit of $5,469,928 and has only cash reservesof $515,113 as of March 31, 2024. Management has evaluated the significance of the conditions in relation to the Company’sability to meet its obligations and believes that its current cash balance along with its current operations will not provide sufficientcapital to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon achievingsales growth, management of operating expenses and ability of the Company to obtain the necessary financing to meet its obligations andpay its liabilities arising from normal business operations when they come due, and upon profitable operations. The Company has relied on debt fundingto pay for operating expenses and business development efforts in 2024 that were not covered by operating revenues. If the Company continuesto incur operating losses as incurred within twelve months of filing date and does not significantly increase its cash reserves, and ifthe Company does not also receive additional funding from existing lenders or from other sources to provide the working capital neededto cover those continuing operating losses, then the Company would be forced to reduce its operating expenses and business developmentefforts and the issue of the Company as a going concern may arise. While the existing lenders of the Company and Company's majority shareholderare affiliated, there can be no assurance of additional debt or equity funding for the Company from the existing lenders or the majorityshareholder. In considering our forecast for the next twelve months and the current cash and working capital as of the filing of thisForm 10-Q, such matters create a substantial doubt regarding the Company’s ability to meet their financial needs and continueas a going concern. These financial statements do not includeany adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilitiesthat might result from this uncertainty. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Use of Estimates |
Preparing consolidated financial statementsin conformity with U.S. GAAP requires management to make estimates and assumptions affecting the reported amounts of assets and liabilitiesand disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues andexpenses during the reporting period. The more significant areas requiring using management’s estimates and assumptionsrelate to the collectability of its receivables, the fair value and accounting treatment of financial instruments, the valuation of long-livedassets and valuation of deferred tax liabilities. Management bases its estimates on historical experience and on various other assumptionsthat are believed to be reasonable under the circ*mstances. Accordingly, actual results may differ significantly from these estimates.In addition, different assumptions or circ*mstances could reasonably be expected to yield different results. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and Cash Equivalents |
For purposes of the cash flow statements,the Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cashequivalents. Cash includes cash on hand and demand deposits in accounts maintained with financial institutions or state-owned banks withinthe PRC and Hong Kong. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interim Financial Statements |
These interim unaudited consolidatedfinancial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflectall adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidatedfinancial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarilyindicative of the results expected for a full year or for any future period. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounts receivable, other receivables, and current expected credit losses |
Receivables include trade accountsdue from customers and other receivables such as cash advances to employees, utility deposits paid and advances to suppliers. Managementreviews the composition of accounts receivable and analyzes historical bad debts, customer concentration, customer credit worthiness,current economic trends and changes in customer payment patterns to determine if the allowance for credit losses is adequate. An estimatefor credit losses is made when collection of the full amount is no longer probable. Delinquent account balances are written-off aftermanagement has determined that the likelihood of collection is not probable and known bad debts are written off against the allowancefor doubtful accounts when identified. As of March 31, 2024 and December 31, 2023, allowance for uncollectible accounts receivable amountsto $155,301 and $155,301, respectively; and there was no allowance for uncollectible other receivables. Management believes that the remainingaccounts receivable and other receivables are collectable. The company evaluated the accountingstandards update related to the Current Expected Credit Losses ("CECL") and adequate allowance for uncollectibleaccounts receivable have been made during 2024. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Inventories |
Inventories are valued at the lowerof cost and net realizable value. Cost for inventories is determined using the "first-in, first-out" method. Cost is defined as the cost to acquire products, cost of conversionand other related costs to bring inventory to present location and condition. Net realizable value is defined as estimated selling pricesin the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Management reviews inventories forobsolescence or cost in excess of net realizable value periodically. The obsolescence, if any, is recorded as a provision against theinventory. The cost in excess of market value is written off and recorded as additional cost of sales. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Plant and equipment |
Plant and equipment is stated at costless accumulated depreciation and accumulated impairment losses, if any. Expenditures for maintenance and repairs are charged to earningsas incurred. Major additions are capitalized. When assets are retired or otherwise disposed of, the related cost and accumulated depreciationare removed from the respective accounts, and any gain or loss is included in operations. Depreciation of plant and equipment is providedusing the straight-line method for substantially all assets with estimated lives as follows:
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| Goodwill |
Goodwill represents the excess of the cost of acquisitionover the fair value of net assets acquired. Goodwill is not amortized, but is instead tested for impairment annually. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Impairment of long-lived assets |
Property, Plant, and Equipment The Company evaluates long-lived assets,including equipment, for impairment at least once per year and whenever events or changes in circ*mstances indicate that the carryingvalue may not be recoverable from its estimated future cash flows. Based on the existence of one or more indicators of impairment, theCompany measures any impairment of long-lived assets by comparing the asset's estimated fair value with its carrying value, based on cashflow methodology. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired andan impairment loss equal to an amount by which the carrying value exceeds the fair value of the asset is recognized. Impairment of Goodwill The carrying value of goodwill is evaluatedannually or more frequently if events or circ*mstances indicate that an impairment loss may have occurred. Such circ*mstances could include,but are not limited to, a significant adverse change in business climate, increased competition or other economic conditions. Under FASBAccounting Standard Codification (ASC) Topic 350 "Intangibles - Goodwill and Other", goodwill is tested at a reportingunit level. The impairment test involves a two-step process. The first step involves comparing the fair value of the reporting unit towhich the goodwill is assigned to its carrying amount. If this comparison indicates that a reporting unit’s estimated fairvalue is less than its carrying value, a second step is required. If applicable, the second step requires us to allocate the estimatedfair value of the reporting unit to the estimated fair value of the reporting unit’s net assets, with any fair value inexcess of amounts allocated to such net assets representing the implied fair value of goodwill for that reporting unit. If the carryingvalue of the goodwill exceeds its fair value, the carrying value is written down by an amount equal to such excess. The goodwill impairment testing processinvolves the use of significant assumptions, estimates and judgments, and is subject to inherent uncertainties and subjectivity. Estimatinga reporting unit’s discounted cash flows involves the use of significant assumptions, estimates and judgments with respectto a variety of factors, including sales, gross margin and selling, general and administrative rates, capital expenditures, cash flowsand the selection of an appropriate discount rate. Projected sales, gross margin and selling, general and administrative expense rateassumptions and capital expenditures are based on our annual business plans and other forecasted results. Discount rates reflect market-basedestimates of the risks associated with the projected cash flows of the reporting unit directly resulting from the use of its assets inits operations. These estimates are based on the best information available to us as of the date of the impairment assessment. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair value of financial instruments |
ASC Topic 820, Fair Value Measurementand Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exitprice) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants onthe measurement date. This topic also establishes a fair value hierarchy which requires classification based on observable and unobservableinputs when measuring fair value. The fair value hierarchy distinguishes between assumptions based on market data (observable inputs)and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
Determining which category an assetor liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. Thefollowing table represents the fair value hierarchy for the Company’s financial assets and liabilities measured at fairvalue on a recurring basis as of:
As of March 31, 2024 and December31, 2023, the fair values of the Company’s cash and cash equivalents, accounts receivable, inventory, accounts payable, otherreceivables and prepayments, other payables and accrued liabilities, and balances with related parties approximated the carryingvalues of these instruments presented in the Company’s consolidated balance sheets due to the short maturities of theseinstruments. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Comprehensive income |
U.S. GAAP generally requires that recognizedrevenue, expenses, gains and losses be included in net income or loss. Although certain changes in assets and liabilities are reportedas separate components of the equity section of the consolidated balance sheet, such items, along with net income, are components of comprehensiveincome or loss. The components of other comprehensive income or loss consist of foreign currency translation adjustments. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings per share |
The Company reports earnings per sharein accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share ("EPS")on the face of the income statement. Basic EPS is computed by dividing net income available to common shareholders (numerator) by theweighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential commonshares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. Incomputing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased fromthe exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue recognition |
The Company’s revenueis derived from three primary sources: (i) professional services for systems development and integration, including procurement of relatedhardware and software licenses on behalf of customers, if required; (ii) professional services for system maintenance normally for a periodof one year; and (iii) sale of hardware and consumables during the service performed as stated above. We recognize revenue from contractswith customers using the five-step model prescribed in ASC 606. The Company derives revenue from fixed-pricesale contracts with customers that may provide for the Company to procure hardware and software licenses with varied performance specificationsspecific to each customer and provide the technical services for systems development and integration of the hardware and software licenses.In instances where the contract price is inclusive of the technical services, the sale contracts include performance obligations. Determining whether such products andservices within a customer contract are considered distinct performance obligations that should be accounted for separately requires significantjudgment. Accordingly, we review customer contracts to identify all separate promises to transfer goods and services that would be consideredperformance obligations. Judgment is also required in determining whether an option to acquire additional products and services withina customer contract represents a material right that the customer would not receive without entering into that contract. The Company’s contractsoften contain multiple performance obligations, which generally include customer-acceptance provisions which provide for the Company tocarry out installation, test runs and performance tests at the Company’s cost until the systems as a whole can meet theperformance specifications stated in the contracts. The delivered equipment and software licenses have no standalone value to the customeruntil they are installed, integrated and tested at the customer’s site by the Company in accordance with the performancespecifications specific to each customer. In addition, under these multiple performance obligations contracts, the Company has not soldthe equipment and software licenses separately from the installation, integration and testing services, and hence there is no objectiveand reliable evidence of the fair value for each deliverable included in the arrangement. If a contract contains multiple performanceobligations, the Company accounts for each distinct performance obligation separately. The transaction price is allocated to the separateperformance obligations on a relative stand-alone selling price basis. Any discounts or expected potential future price concessions areconsidered when determining the total transaction price. In addition, the arrangement generallyincludes customer acceptance criteria that cannot be tested before installation and integration at the customer’s site.Accordingly, revenue recognition is deferred until customer acceptance, indicated by an acceptance certificate signed off by the customer. We recognize revenue over time whenthere is a continuous transfer of control to our customer. When control is transferred over time, revenue is recognized based on the extentof progress towards completion of the performance obligation. Based on the nature of the products and services provided in the contract,we use our judgment to determine if an input measure or output measure best depicts the transfer of control over time. If a contract doesnot meet the criteria for recognizing revenue over time, we recognize revenue at a point in time. Revenues of maintenance services arerecognized when the services are performed in accordance with the contract term. For maintenance service contracts, a time-elapsed outputmethod is used to measure progress, and revenue is recognized straight-line over the term of the contract. For services contracts, we typicallysatisfy our performance obligations as services are rendered and use a contract cost-based input method to measure progress. Contractcosts include labor, material and allocable indirect expenses. Revenue is recognized proportionally as contract costs are incurred plusestimated fees. Revenues of sale of software, if notbundled with other arrangements, are recognized when shipped and customer acceptance obtained at a point in time, if all other revenuerecognition criteria are met. Costs associated with revenues are recognized when incurred. Revenues are recorded net of value-addedtaxes, sales discounts and returns. There were no sales returns during the three months period ended March 31, 2024 and 2023.
Billings in excess of revenues recognized are recorded asdeferred revenue. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income taxes |
Deferred income taxes are recognizedfor the tax consequences of temporary differences by applying enacted statutory tax rates applicable to future years to differences betweenthe financial statement carrying amounts and the tax bases of existing assets and liabilities. The charge for taxation is based on theresults for the reporting period as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that havebeen enacted or substantively enacted by the balance sheet date. The effect on deferred income taxes of a change in tax rates is recognizedin income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that someportion, or all of, a deferred tax asset will not be realized. For uncertainty in income taxes, atax position is recognized as a benefit only if it is "more likely than not" that the tax position would be sustainedin a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit thatis greater than 50% likely of being realized on examination. For tax positions not meeting the "more likely than not"test, no tax benefit is recorded. Penalties and interest incurred related to underpayment of income tax are classified as income tax expensein the year incurred. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease accounting |
The Company categorize leases at theirinception as either operating or finance leases. Lease agreements cover certain office space, warehouse space, and vehicles. Most of theseleases are operating leases; however, certain vehicles are leased under finance leases. Operating leases are included in operatinglease right-of-use assets, current operating lease liabilities, and long-term operating lease liabilities in our consolidated balancesheets. Finance leases are included in net property, current installments of long-term debt, and long-term debt in our consolidated balancesheets. Leased assets represent our right touse an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments overthe lease term. Operating lease liabilities and corresponding right-of-use assets include options to extend lease terms that are reasonablycertain of being exercised. As the Company’s leases generally do not provide an implicit discount rate, the Company usesthe estimated collateralized incremental borrowing rate (i.e. 3%) based on information available at the lease commencement date in determiningthe present value of lease payments for use in the calculation of the operating lease liabilities and right-of-use assets. This rate isdetermined using a portfolio approach based on the risk-adjusted rate of interest and requires estimates and assumptions including creditrating, credit spread, and adjustments for the impact of collateral. The Company believes that this is the rate it would have to pay toborrow an amount equal to the lease payments on a collateralized basis over a similar lease term. Leases that have a term of twelve monthsor less upon commencement date are considered short-term in nature. Accordingly, short-term leases are not included on the consolidatedbalance sheets and are expensed on a straight-line basis over the lease term, which commences on the date we have the right to controlthe property. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Advertising costs |
The Company expenses the cost of advertisingas incurred in the period in which the advertisem*nts and marketing activities are first run or over the life of the endorsem*nt contract.No advertising and marketing expense for the three months ended March 31, 2024 and 2023. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shipping and handling |
Shipping and handling cost incurredto ship computer products to customers are included in selling expenses. Shipping and handling expenses for the three months ended March31, 2024 and 2023 were $11,942 and $18,746 respectively. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Research and development costs |
Research and development costs areexpensed as incurred and are included in general and administrative expenses. No research and development costs for the three months endedMarch 31, 2024 and 2023. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation |
The functional currency and reportingcurrency of the Company is the U.S. Dollar. ("US$" or "$"). The functional currency of theHong Kong subsidiaries is the Hong Kong Dollar. The functional currency of the Chinese subsidiaries is RMB. The functional currency ofthe Philippine subsidiary is Peso. Results of operations and cash flow are translated at average exchange rates during the period, andassets and liabilities are translated at the exchange rate as quoted by the Hong Kong Monetary Authority ("HKMA")at the end of the period. Capital accounts are translated at their historical exchange rates when the capital transaction occurred. Translationadjustments resulting from this process are included in accumulated other comprehensive income. Transaction gains and losses that arisefrom exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the resultsof operations as incurred.
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| Stock-based Compensation |
The Company records stock-based compensationin accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or servicesare the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration receivedor the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and thecost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and contingencies |
The Company follows FASB ASC Subtopic450-20, “Loss Contingencies” in determining its accruals and disclosures with respect to loss contingencies. Accordingly,estimated losses from loss contingencies are accrued by a charge to income when information available prior to issuance of the financialstatements indicates that it is probable that a liability could be incurred and the amount of the loss can be reasonably estimated. Legalexpenses associated with the contingency are expensed as incurred. If a loss contingency is not probable or reasonably estimable, disclosureof the loss contingency is made in the financial statements when it is at least reasonably possible that a material loss could be incurred. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting |
The Company uses the “managementapproach” in determining reportable operating segments. The management approach considers the internal organization and reportingused by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source fordetermining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operating resultssolely by monthly revenue from software development and maintenance services (but not by sub-services/product type or geographic area)and operating results of the Company and, as such, the Company has determined that the Company has one operating segment as defined byASC Topic 280 “Segment Reporting”. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Recent accounting pronouncements |
In November 2023, the Financial AccountingStandards Board (FASB) issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (ASU 2023-07),which requires an enhanced disclosure of significant segment expenses on an annual and interim basis. This guidance will be effectivefor the annual periods beginning the year ended December 31, 2024, and for beginning January 1, 2025. Early adoption is permitted. Uponadoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. We do not expectthe adoption of this guidance to have a material impact on our consolidated financial statements. In December 2023, the FASB issued ASUNo. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (ASU 2023-09), which improves the transparency of incometax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliationand income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of incometax disclosures. This guidance will be effective for the annual periods beginning the year ended December 31, 2025. Early adoption ispermitted. Upon adoption, the guidance can be applied prospectively or retrospectively. We do not expect the adoption of this guidanceto have a material impact on our consolidated financial statements. Other accounting standards that havebeen issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expectedto have a material impact on the Company’s consolidated financial statements upon adoption. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of consolidated entities |
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| Schedule of estimated use full life of plant and equipment |
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| Schedule of measured at fair value on a recurring basis |
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| Schedule of revenue record |
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| Schedule of foreign currency translation |
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Accounts receivable (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit Loss [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accounts receivable |
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| Schedule of changes in accounts receivable |
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Other receivables and prepayments (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other receivables and prepayments |
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Inventories (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of inventories |
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Plant and equipment, net (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of plant and equipment |
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Goodwill (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of goodwill |
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Operating leases (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of operating lease agreements |
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| Schedule of components of lease liabilities |
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| Schedule of maturities of lease liabilities |
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Finance lease liability (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Finance Lease Liability | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of finance lease liability |
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Bank loan from an affiliate (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of bank loan |
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Loan from a related party (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Loan From Related Party | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of loan from a related party |
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Convertible loan from affiliates (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Loan From Affiliates | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of convertible debt |
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| Schedule of liability and derivative components |
(i) Movement of the components of theConvertible Loan 1:
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| Schedule of components convertible loan |
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Other payables and accrued liabilities (Tables) | 3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other payables and accrued liabilities |
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Deferred income (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Deferred Income | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of deferred income |
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Related party and shareholder transactions (Tables) | 3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of related party balances |
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| Schedule of related party transaction |
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Nature of Operations and Continuance of Business (Details Narrative) | 3 Months Ended | |
|---|---|---|
Mar. 31, 2024 | Jan. 31, 2017 | |
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
| Entity incorporation, state or country code | NV | |
| Entity incorporation, date of incorporation | Jun. 26, 2007 | |
| TapServices, Inc. [Member] | ||
| Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
| Ownership percentage | 100.00% |
Summary of Significant Accounting Policies (Details) | 3 Months Ended | |
|---|---|---|
Mar. 31, 2024 | Jan. 31, 2017 | |
| Value Exchange International, Inc. [Member] | ||
| Business acquisition, name of acquired entity | Value Exchange International, Inc. | |
| Place of incorporation | USA | |
| Value Exchange Int'l (China) Limited [Member] | ||
| Place of incorporation | Hong Kong | |
| Value Exchange Int'l (China) Limited [Member] | HONG KONG | ||
| Business acquisition, name of acquired entity | Value Exchange Int’l (China) Limited | |
| Noncontrolling interest, ownership percentage by parent | 100.00% | |
| Value Exchange Int'l (Shanghai) Limited [Member] | ||
| Place of incorporation | PRC | |
| Value Exchange Int'l (Shanghai) Limited [Member] | CHINA | ||
| Business acquisition, name of acquired entity | Value Exchange Int’l (Shanghai) Limited | |
| Noncontrolling interest, ownership percentage by parent | 100.00% | |
| Value Exchange Int'l (Hong Kong) Limited [Member] | ||
| Place of incorporation | Hong Kong | |
| Value Exchange Int'l (Hong Kong) Limited [Member] | HONG KONG | ||
| Business acquisition, name of acquired entity | Value Exchange Int’l (Hong Kong) Limited | |
| Noncontrolling interest, ownership percentage by parent | 100.00% | |
| TapServices, Inc. [Member] | ||
| Place of incorporation | Philippines | |
| Noncontrolling interest, ownership percentage by parent | 100.00% | |
| TapServices, Inc. [Member] | PHILIPPINES | ||
| Business acquisition, name of acquired entity | TapServices, Inc. | |
| Noncontrolling interest, ownership percentage by parent | 100.00% | |
| Value Exchange Int'l (Hunan) Limited [Member] | ||
| Place of incorporation | PRC | |
| Value Exchange Int'l (Hunan) Limited [Member] | CHINA | ||
| Business acquisition, name of acquired entity | Value Exchange Int’l (Hunan) Limited | |
| Noncontrolling interest, ownership percentage by parent | 51.00% | |
| Shanghai Zhaonan Hengan Information Technology Co., Ltd. [Member] | ||
| Place of incorporation | PRC | |
| Shanghai Zhaonan Hengan Information Technology Co., Ltd. [Member] | CHINA | ||
| Business acquisition, name of acquired entity | Shanghai Zhaonan Hengan Information Technology Co., Ltd. | |
| Noncontrolling interest, ownership percentage by parent | 51.00% | |
| Haomeng Technology (Shenzhen) Co., Limited [Member] | ||
| Place of incorporation | PRC | |
| Haomeng Technology (Shenzhen) Co., Limited [Member] | CHINA | ||
| Business acquisition, name of acquired entity | Haomeng Technology (Shenzhen) Co., Limited | |
| Noncontrolling interest, ownership percentage by parent | 100.00% | |
| Value E Consultant International (M) Sdn. Bhd [Member] | ||
| Place of incorporation | Malaysia | |
| Value E Consultant International (M) Sdn. Bhd [Member] | CHINA | ||
| Business acquisition, name of acquired entity | Value E Consultant International (M) Sdn. Bhd | |
| Value E Consultant International (M) Sdn. Bhd [Member] | Malaysia, Ringgits | ||
| Noncontrolling interest, ownership percentage by parent | 100.00% |
Summary of Significant Accounting Policies (Details 1) | Mar. 31, 2024 |
|---|---|
| Leasehold Improvements [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated Useful Life | 5 years |
| Computer Equipment [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated Useful Life | 5 years |
| Software and Software Development Costs [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated Useful Life | 5 years |
| Furniture and Fixtures [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated Useful Life | 5 years |
| Vehicles [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated Useful Life | 3 years |
| Building [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Estimated Useful Life | 5 years |
Summary of Significant Accounting Policies (Details 2) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Platform Operator, Crypto-Asset [Line Items] | ||
| Convertible loan and its fair value for the derivative portion (See Note 12) | $ 352,389 | $ 1,061,282 |
| Fair Value, Inputs, Level 1 [Member] | ||
| Platform Operator, Crypto-Asset [Line Items] | ||
| Convertible loan and its fair value for the derivative portion (See Note 12) | ||
| Fair Value, Inputs, Level 2 [Member] | ||
| Platform Operator, Crypto-Asset [Line Items] | ||
| Convertible loan and its fair value for the derivative portion (See Note 12) | ||
| Fair Value, Inputs, Level 3 [Member] | ||
| Platform Operator, Crypto-Asset [Line Items] | ||
| Convertible loan and its fair value for the derivative portion (See Note 12) | $ 352,389 | $ 1,061,282 |
Summary of Significant Accounting Policies (Details 3) - USD ($) | 3 Months Ended | |
|---|---|---|
Mar. 31, 2024 | Mar. 31, 2023 | |
| Product Information [Line Items] | ||
| Revenues | $ 3,370,009 | $ 2,884,549 |
| Systems development and integration [Member] | ||
| Product Information [Line Items] | ||
| Revenues | 54,115 | 14,359 |
| Systems maintenance [Member] | ||
| Product Information [Line Items] | ||
| Revenues | 2,616,667 | 2,490,154 |
| Sales of hardware and consumables [Member] | ||
| Product Information [Line Items] | ||
| Revenues | $ 699,227 | $ 380,036 |
Summary of Significant Accounting Policies (Details 4) | 3 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
| China, Yuan Renminbi | |||
| Exchange rate average period | 7.1822 | 6.8133 | |
| USD exchange rate | 7.2316 | 7.1155 | |
| Hong Kong, Dollars | |||
| Exchange rate average period | 7.800 | 7.800 | |
| USD exchange rate | 7.800 | 7.800 | |
| Philippines, Pesos | |||
| Exchange rate average period | 54.2137 | 53.5881 | |
| USD exchange rate | 54.3554 | 53.9792 | |
| Malaysia, Ringgits | |||
| Exchange rate average period | 4.7088 | ||
| USD exchange rate | 4.7187 | ||
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |||
|---|---|---|---|---|
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | |
| Product Information [Line Items] | ||||
| Operating loss | $ 286,541 | $ 438,042 | ||
| Accumulated deficit | 5,469,928 | $ 5,859,193 | ||
| Cash reserves | 515,113 | 886,467 | ||
| Allowance for uncollectible accounts receivable | 155,301 | 155,301 | ||
| Allowance for uncollectible other receivables | 0 | $ 0 | ||
| Shipping and Handling [Member] | ||||
| Product Information [Line Items] | ||||
| Shipping and handling expenses | $ 11,942 | $ 18,746 | ||
Accounts receivable (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Dec. 31, 2022 |
|---|---|---|---|
| Credit Loss [Abstract] | |||
| Accounts receivable, gross | $ 1,640,356 | $ 1,892,167 | |
| Allowance for credit losses | (155,301) | (155,301) | |
| Accounts Receivable | $ 1,485,055 | $ 1,736,866 |
Accounts receivable (Details 1) - USD ($) | 3 Months Ended | 12 Months Ended |
|---|---|---|
Mar. 31, 2024 | Dec. 31, 2023 | |
| Credit Loss [Abstract] | ||
| Accounts receivable | $ 1,892,167 | $ 1,133,058 |
| Accounts receivable, Additions | 3,376,571 | 11,967,888 |
| Accounts receivable, Deductions | (3,628,382) | (11,208,779) |
| Accounts receivable | 1,640,356 | 1,892,167 |
| Allowance for credit losses | (155,301) | |
| Allowance for credit losses, Additions | (155,301) | |
| Allowance for credit losses, Deductions | ||
| Allowance for credit losses | (155,301) | (155,301) |
| Accounts receivable, net | 1,736,866 | 1,133,058 |
| Accounts receivable net, Additions | 3,376,571 | 11,812,587 |
| Accounts receivable net, Deductions | (3,628,382) | (11,208,779) |
| Accounts receivable, net | $ 1,485,055 | $ 1,736,866 |
Other receivables and prepayments (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Receivables [Abstract] | ||
| Deposits and prepaid expense | $ 689,481 | $ 448,249 |
| Others | 79,322 | 175,159 |
| Other receivables and prepayments | $ 768,803 | $ 623,408 |
Inventories (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Inventory Disclosure [Abstract] | ||
| Finished goods | $ 215,313 |
Plant and equipment, net (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | $ 1,411,870 | $ 1,322,069 |
| Less: accumulated depreciation | (1,067,371) | (1,013,934) |
| Plant and equipment, net | 344,499 | 308,135 |
| Leasehold Improvements [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | 90,169 | 91,427 |
| Furniture and Fixtures [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | 278,783 | 278,612 |
| Computer Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | 425,064 | 423,666 |
| Computer Software [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | 341,458 | 250,649 |
| Vehicles [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | 215,184 | 216,119 |
| Building [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property, Plant and Equipment, Gross | $ 61,212 | $ 61,596 |
Plant and equipment, net (Details Narrative) - USD ($) | 3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
| Property, Plant and Equipment [Abstract] | |||
| Depreciation expense | $ 60,861 | $ 61,347 | |
| Interest expense | 0 | $ 0 | |
| Finance lease arrangement | $ 89,833 | $ 101,646 | |
Goodwill (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Defined Benefit Plan Disclosure [Line Items] | ||
| Goodwill | $ 342,079 | $ 206,812 |
| Goodwill arising from acquisition of TSI [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Goodwill | 206,812 | 206,812 |
| Goodwill arising from acquisition of Value E [Member] | ||
| Defined Benefit Plan Disclosure [Line Items] | ||
| Goodwill | $ 135,267 |
Operating leases (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Operating Leases | ||
| Operating lease right-of-use assets, net | $ 1,244,569 | $ 926,630 |
Operating leases (Details 1) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Operating Leases | ||
| Lease liabilities, current | $ 585,762 | $ 463,411 |
| Lease liabilities, non-current | 653,816 | 457,982 |
| Present value of lease liabilities | $ 1,239,578 | $ 921,393 |
Operating leases (Details 2) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Operating Leases | ||
| Year one | $ 614,626 | $ 484,526 |
| Year two | 440,321 | 299,848 |
| Year three | 229,487 | 169,461 |
| Total undiscounted cash flows | 1,284,434 | 953,835 |
| Less: Imputed interest | (44,856) | (32,442) |
| Present value of lease liabilities | $ 1,239,578 | $ 921,393 |
Operating leases (Details Narrative) - USD ($) | 3 Months Ended | |
|---|---|---|
Mar. 31, 2024 | Mar. 31, 2023 | |
| Operating Leases | ||
| Total lease cost | $ 8,809 | $ 4,239 |
| Principal payments | $ 164,059 | $ 112,651 |
| Weighted-average remaining lease term | 1 year 8 months 19 days | |
| Weighted-average discount rate | 3.00% | |
Finance lease liability (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Finance Lease Liability | ||
| Long term finance lease liability | $ 34,556 | $ 41,922 |
| Less: Current portion of finance lease liability | (27,761) | (28,868) |
| Total non-current finance lease liability | 6,795 | 13,056 |
| Current portion of finance lease liability | 27,761 | 28,867 |
| Total current finance lease liability | $ 27,761 | $ 28,867 |
Finance lease liability (Details Narrative) - USD ($) | 3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
| Finance Lease Liability | |||
| Finance lease arrangement | $ 89,833 | $ 101,646 | |
| Finance lease cost | 552 | $ 1,221 | |
| Principal payments on finance leases liability | $ 7,130 | $ 5,889 | |
Bank loan from an affiliate (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Debt Disclosure [Abstract] | ||
| Short term bank loan from an affiliate | $ 940,147 | $ 940,147 |
Bank loan from an affiliate (Details Narrative) - USD ($) | 1 Months Ended | |
|---|---|---|
Jul. 27, 2022 | Mar. 31, 2024 | |
| Debt Disclosure [Abstract] | ||
| Secured revolving credit line | $ 1,000,000 | |
| Line of credit | $ 5,045,617 |
Loan from a related party (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Loan From Related Party | ||
| Loan from a related party | $ 500,000 | $ 500,000 |
Loan from a related party (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended |
|---|---|---|
Sep. 28, 2023 | Mar. 31, 2024 | |
| Mr. Chan [Member] | Non-executive director [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Shares issued percentage | 49.63% | |
| Common stock shares held | 95,000 | |
| Ownership percentage | 53.50% | |
| Hapi Metaverse Inc. [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Shares held | 21,120,795 | |
| BMI Capital Partners International Limited [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Shares held | 39,968 | |
| Liquid Value Development Pte Ltd. [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Shares held | 313,154 | |
| Loan Agreement [Member] | ||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||
| Unsecured loan | $ 500,000 | |
| Interest rate | 8.00% |
Convertible loan from affiliates (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Convertible Loan From Affiliates | ||
| Convertible loan | $ 352,389 | $ 1,061,282 |
Convertible loan from affiliates (Details 1) - USD ($) | 3 Months Ended | |
|---|---|---|
Mar. 31, 2024 | Mar. 31, 2023 | |
| Short-Term Debt [Line Items] | ||
| Beginning balance | $ 1,061,282 | |
| Change in fair value of embedded derivatives | (708,893) | $ 34,752 |
| Ending balance | 352,389 | |
| Convertible Loan 1 [Member] | ||
| Short-Term Debt [Line Items] | ||
| Beginning balance | 24,446 | |
| Change in fair value of embedded derivatives | 4,446 | |
| Ending balance | 28,892 | |
| Convertible Loan 1 [Member] | Liability Component [Member] | ||
| Short-Term Debt [Line Items] | ||
| Beginning balance | 9,548 | |
| Change in fair value of embedded derivatives | 1,082 | |
| Ending balance | 10,630 | |
| Convertible Loan 1 [Member] | Derivative Component [Member] | ||
| Short-Term Debt [Line Items] | ||
| Beginning balance | 14,898 | |
| Change in fair value of embedded derivatives | 3,363 | |
| Ending balance | 18,261 | |
| Convertible Loan 2 [Member] | ||
| Short-Term Debt [Line Items] | ||
| Beginning balance | 1,036,836 | |
| Ending balance | 323,497 | |
| Convertible Loan 2 [Member] | Liability Component [Member] | ||
| Short-Term Debt [Line Items] | ||
| Beginning balance | 172,286 | |
| Change in fair value of embedded derivatives | 2,455 | |
| Ending balance | 174,741 | |
| Convertible Loan 2 [Member] | Derivative Component [Member] | ||
| Short-Term Debt [Line Items] | ||
| Beginning balance | 864,550 | |
| Change in fair value of embedded derivatives | (715,794) | |
| Ending balance | 148,756 | |
| Convertible Debt [Member] | ||
| Short-Term Debt [Line Items] | ||
| Beginning balance | 1,061,282 | |
| Change in fair value of embedded derivatives | (708,893) | |
| Ending balance | $ 352,389 | |
Convertible loan from affiliates (Details 2) | 3 Months Ended |
|---|---|
Mar. 31, 2024 USD ($) | |
| Short-Term Debt [Line Items] | |
| Beginning balance | $ 1,061,282 |
| Ending balance | 352,389 |
| Convertible Loan 2 [Member] | |
| Short-Term Debt [Line Items] | |
| Beginning balance | 1,036,836 |
| Change in fair value of embedded derivatives | (713,339) |
| Ending balance | 323,497 |
| Convertible Loan 2 [Member] | Liability Component [Member] | |
| Short-Term Debt [Line Items] | |
| Beginning balance | 172,286 |
| Change in fair value of embedded derivatives | 2,455 |
| Ending balance | 174,741 |
| Convertible Loan 2 [Member] | Derivative Component [Member] | |
| Short-Term Debt [Line Items] | |
| Beginning balance | 864,550 |
| Change in fair value of embedded derivatives | (715,794) |
| Ending balance | $ 148,756 |
Convertible loan from affiliates (Details Narrative) - $ / shares | 3 Months Ended | |
|---|---|---|
Sep. 06, 2022 | Mar. 31, 2024 | |
| HMI [Member] | ||
| Line of Credit Facility [Line Items] | ||
| Number of shares converted | 7,344,632 | |
| Maximum number of warrants to purchase | 36,723,160 | |
| Conversion rate | $ 0.1770 | |
| Exercise price | $ 0.1770 | |
| Term | 5 years | |
| Maximum Credit Line [Member] | ||
| Line of Credit Facility [Line Items] | ||
| Interest rate | 8.00% |
Other payables and accrued liabilities (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Payables and Accruals [Abstract] | ||
| Accrual | $ 1,365,764 | $ 1,133,800 |
| Income taxes payable | 46,185 | 57,961 |
| Taxes penalty payable | 1,410,000 | 1,410,000 |
| Total other payables and accrued liabilities | $ 2,821,949 | $ 2,601,761 |
Deferred income (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
|---|---|---|
| Deferred Income | ||
| Service fees received in advance | $ 967,558 | $ 778,126 |
Statutory reserves (Details Narrative) - USD ($) | 3 Months Ended | |
|---|---|---|
Mar. 31, 2024 | Dec. 31, 2023 | |
| Deferred revenue | $ 778,126 | $ 291,171 |
| Remaining reserve percent | 25.00% | |
| Minimum [Member] | ||
| Banking regulation, maximum payout ratio | 10.00% | |
| Maximum [Member] | ||
| Banking regulation, maximum payout ratio | 50.00% |
Related party and shareholder transactions (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due from related parties | $ 2,657,731 | $ 3,058,220 | ||||||||||||||||||||||
| Allowance for amounts due from related parties | (2,527,545) | (2,527,545) | ||||||||||||||||||||||
| Due from related parties, net | 130,186 | 530,675 | ||||||||||||||||||||||
| Due to a related party | 12,953 | 83,649 | ||||||||||||||||||||||
| Value Exchange International Limited [Member] | ||||||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due from related parties | [1] | 2,361,150 | 2,401,994 | |||||||||||||||||||||
| Cucumbuy.com Limited [Member] | ||||||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due from related parties | [2] | 80,769 | ||||||||||||||||||||||
| Due to a related party | [2] | 17,961 | ||||||||||||||||||||||
| SmartMyWays Co., Limited [Member] | ||||||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due from related parties | [3] | 79,146 | 40,098 | |||||||||||||||||||||
| Retail Intelligent Unit Limited [Member] | ||||||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due from related parties | [4] | 28,846 | ||||||||||||||||||||||
| Due to a related party | [4] | 36,795 | ||||||||||||||||||||||
| TAP Technology (HK) Limited [Member] | ||||||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due from related parties | [5] | 79,893 | 73,481 | |||||||||||||||||||||
| Value Exchange International (Taiwan) Co, Ltd [Member] | ||||||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due from related parties | [6] | 27,927 | 11,972 | |||||||||||||||||||||
| Value E Consultant International (M) Sdn. Bhd [Member] | ||||||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due from related parties | [7] | 530,675 | ||||||||||||||||||||||
| SA-Network Limited [Member] | ||||||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due to a related party | [8] | 10,802 | 10,784 | |||||||||||||||||||||
| Value X International Pte. Ltd [Member] | ||||||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due to a related party | [9] | 1,510 | 10,014 | |||||||||||||||||||||
| Smart Reward Express Limited [Member] | ||||||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due to a related party | [10] | 641 | 641 | |||||||||||||||||||||
| Hapi Retail Company Limited [Member] | ||||||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||||||
| Due to a related party | [11] | $ 7,454 | ||||||||||||||||||||||
| ||||||||||||||||||||||||
Related party and shareholder transactions (Details 1) - USD ($) | 3 Months Ended | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2024 | Mar. 31, 2023 | |||||||||||||||||||
| Cucumbuy.com Limited [Member] | ||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||
| Service income received | [1] | $ 107,023 | ||||||||||||||||||
| Subcontracting fees payable | [1] | (46,154) | (53,846) | |||||||||||||||||
| Management fees received | [1] | 3,077 | ||||||||||||||||||
| SmartMyWays Co., Limited [Member] | ||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||
| Service income received | [2] | 51,244 | ||||||||||||||||||
| Subcontracting fees payable | [2] | (42,308) | (46,154) | |||||||||||||||||
| Management fees received | [2] | 3,077 | ||||||||||||||||||
| Retail Intelligent Unit Limited [Member] | ||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||
| Service income received | [3] | 73,333 | ||||||||||||||||||
| Subcontracting fees payable | [3] | (23,077) | (38,462) | |||||||||||||||||
| Management fees received | [3] | 3,077 | ||||||||||||||||||
| TAP Technology (HK) Limited [Member] | ||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||
| Service income received | [4] | 12,821 | ||||||||||||||||||
| Subcontracting fees payable | [4] | (19,231) | (27,523) | |||||||||||||||||
| Management fees received | [4] | 3,077 | ||||||||||||||||||
| Value Exchange International (Taiwan) Co, Ltd [Member] | ||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||
| Service income received | [5] | 13,917 | ||||||||||||||||||
| Subcontracting fees payable | [5] | (372) | (5,516) | |||||||||||||||||
| Value Exchange International Limited [Member] | ||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||
| Subcontracting fees payable | [6] | (56,228) | (262,125) | |||||||||||||||||
| Management fees received | [6] | 20,167 | ||||||||||||||||||
| Value E Consultant International (M) Sdn. Bhd [Member] | ||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||
| Subcontracting fees payable | [7] | (41,450) | ||||||||||||||||||
| SA-Network Limited [Member] | ||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||
| Subcontracting fees payable | [8] | (96,380) | (39,070) | |||||||||||||||||
| Value X International Pte. Ltd [Member] | ||||||||||||||||||||
| Related Party Transaction [Line Items] | ||||||||||||||||||||
| Subcontracting fees payable | [9] | $ (21,534) | ||||||||||||||||||
| ||||||||||||||||||||
Subsequent events (Details Narrative) - Credit Agreement 2024 [Member] | Jul. 15, 2024 USD ($) |
|---|---|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |
| Maximum amount of unsecured credit line | $ 110,000 |
| Face amount | $ 100,000 |
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![Form 10-Q/A - Quarterly report [Sections 13 or 15(d)]: [Amend] (2024)](data:image/png;base64,iVBORw0KGgoAAAANSUhEUgAAAAEAAAABCAQAAAC1HAwCAAAAC0lEQVR42mP8/h8AAvMB+NzmkbcAAAAASUVORK5CYII=)