SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | ● Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”). The interim financial information provided is unaudited, but includes all adjustments which management considers necessary for the fair presentation of the results for these periods. Operating results for the interim period ended June 30, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2026. The information included in this Form 6-K should be read in conjunction with Management’s Discussion and Analysis, and the audited financial statements and notes thereto included in the Company’s Form 20-F for the fiscal year ended December 31, 2025, filed with the SEC on March 23, 2026.
Certain prior year amounts have been reclassified to conform to the current period presentation. These reclassifications have no impact on net earnings and financial position.
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| Principles of Consolidation | ● Principles of Consolidation
The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
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| Use of Estimates and Assumptions | ● Use of Estimates and Assumptions
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates reflected in the Company’s unaudited condensed consolidated financial statements include the useful lives of property, plant and equipment, impairment of long-lived assets, valuation of investments in equity securities, allowance for expected credit losses, allowance for obsolete inventories, revenue recognition, retirement plan cost, leases, warranty liabilities, provision for reinstatement cost, income tax provision, deferred taxes and uncertain tax position.
The inputs into the management’s judgments and estimates consider the Company’s critical and significant accounting estimates. Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Actual results could differ from these estimates.
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| Foreign Currency Transaction and Translation | ● Foreign Currency Transaction and Translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the unaudited condensed consolidated statements of operations and comprehensive loss.
The reporting currency of the Company is United States Dollar (“US$”) and the accompanying unaudited condensed consolidated financial statements have been expressed in US$. The Company’s major operating subsidiaries operating in Singapore maintain its books and records in US$, with the exception of HomesToLife Pte Ltd, which keeps its books in Singapore Dollars (“SGD”) being primary currency of the economic environment in which its business is conducted. However, other operating subsidiaries operating in overseas maintain their books and records in their respective local currencies, Australian Dollars (“AUD “), Euro (“EUR”), Japanese Yen (“JPY”), South Korean Won (“KRW”) and British Pound (“GBP”), which is a functional currency as being the primary currency of the economic environment in which their operations are conducted. In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into US$, in accordance with Accounting Standards Codification (“ASC”) Topic 830-30, Translation of Financial Statement (“ASC 830”), using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income (loss) within the unaudited condensed consolidated statements of changes in shareholders’ equity.
Translation of amounts has been made at the following exchange rates into US$1 for the six months ended June 30, 2025 and 2026:
The above currency exchange rates are derived from United Overseas Bank Limited as published at the above-mentioned dates. |
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| Cash and Cash Equivalents | ● Cash and Cash Equivalents
Cash and cash equivalents consist primarily of cash in readily available checking and saving accounts with banks. They consist of highly liquid investments that are readily convertible to cash and that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short maturities of these instruments.
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| Restricted Cash | ● Restricted Cash
Restricted cash comprises deposits pledged as security for bank guarantees supporting a subsidiary’s lease arrangements and a fixed deposit maintained by another subsidiary as collateral for its merchant acquiring facility.
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| Accounts Receivables | ● Accounts Receivables
Accounts receivable due from credit card processors, as the cash proceeds from accounts receivables are received within the next 3 working days, which are recorded at the gross billing amounts, net of the fee charges by credit card processors.
Accounts receivable due from customers and related parties in export sales and leather trading, are generally received under credit terms ranging from 7 to 115 days, which are recorded at their original invoice amounts.
Account receivables are presented net of an allowance for expected credit losses. The allowance is measured in accordance with ASC 326, Financial Instruments—Credit Losses, and reflects expected losses based on a combination of individual (specific) provisions and collective (general) provisions. The Company reviews expected credit losses for accounts receivable based on assessments of the recoverability of the accounts receivable and individual account analysis, including the current creditworthiness and the past collection history of each credit card processors and customers, and current economic industry trends. For individual (specific) provisions, the Company performs individual assessment of the debtors that exhibit indicators of elevated credit risk, such as current creditworthiness, past collection history, known disputes, and other information relevant to the individual counterparty’s ability to satisfy its obligations. For collective (general) provisions, the Company evaluates receivables on a pooled basis using historical collection experience adjusted for current conditions and anticipated future economic factors. These pooled estimates incorporate aging trends, historical loss rates, industry conditions, and macroeconomic forecasts relevant to the Company’s credit exposure. Based on these analyses, management develops an estimate of the lifetime expected credit losses for the account receivables. The allowance for credit losses is recorded against accounts receivables balances, with a corresponding charge recorded in the unaudited condensed consolidated statements of operations and comprehensive income.
Account receivables are written off against the allowance when management concludes that the balance is uncollectible.
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| Inventories | ● Inventories
Inventories are finished goods for sales, such as sofas, armchairs, recliners, home accessories and other related products, which are stated at the lower of cost or net realizable value.
Cost of inventories is determined using the weighted average method or specific identification method, and includes all costs to acquire and other costs to bring the inventories to their present location and condition. The Company applies the specific identification method to inventory items, such as sofas, armchairs, recliners and customized furniture, for which individual unit costs can be directly tracked. Although products may be similar in design, each purchase batch is tracked separately due to differences in acquisition costs. Cost of goods sold is recognized based on the actual cost of the specific batch from which the item is sold. For other inventory items that are interchangeable in nature and not tracked by batch, such as home accessories and other related products, the Company uses the weighted average method. The Company takes ownership, risks, and rewards of the products purchased.
Inventories are written down to estimated net realizable value, which could be impacted by certain factors including historical usage, expected demand, anticipated sales price, and other factors. The Company continuously evaluates the recoverability of the Company’s inventories, and inventory provisions are recorded in the unaudited condensed consolidated statements of operations and comprehensive income. |
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| Property, Plant and Equipment | ● Property, Plant and Equipment
Freehold land has an unlimited useful life and therefore is not depreciated.
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values (in accordance with local regulatory requirements):
Expenditures for maintenance and repairs are charged to earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized. When assets are retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.
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| Investment in Equity Securities | ● Investment in Equity Securities
The Company accounts for equity securities without a readily determinable fair value under the measurement alternative prescribed by ASC 321, Investments - Equity Securities. Such investments are initially recorded at cost, including transaction costs, and are subsequently measured at cost, less impairment, adjusted for observable price changes in orderly transactions for identical or similar investments of the same issuer, if any.
The Company evaluates the investment for impairment at each reporting period, or more frequently if events or changes in circumstances indicate that the carrying amount may not be recoverable. If the Company determines that the fair value of the investment is less than its carrying amount and the decline in value is considered to be other than temporary, the carrying amount of the investment is written down to its fair value, with the impairment loss recognized in earnings.
On January 15, 2026, the Company acquired a 10% equity interest in Zeica Labs Pte. Ltd. for $1.0 million. The Company determined that it does not have a controlling financial interest or significant influence over Zeica Labs Pte. Ltd. and therefore accounts for the investment under ASC 321 using the measurement alternative. The consideration was fully paid in December 2025 and was included in other non-current assets as of December 31, 2025 until completion of the acquisition on January 15, 2026.
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| Impairment of Long-Lived Assets | ● Impairment of Long-Lived Assets
In accordance with the provisions of ASC Topic 360, Impairment or Disposal of Long-Lived Assets, all long-lived assets such as property, plant and equipment owned and held by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets. No impairment losses were recognized for the six months ended June 30, 2025 and 2026.
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| Revenue Recognition | ● Revenue Recognition
The Company receives revenue from contracts with customers, which are accounted for in accordance with Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”).
ASC Topic 606 provided the following overview of how revenue is recognized from the Company’s contracts with customers: The Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price – The transaction price is the amount of consideration in a contract to which an entity expects to be entitled in exchange for transferring promised goods or services to a customer.
Step 4: Allocate the transaction price to the performance obligations in the contract – Any entity typically allocates the transaction price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation – An entity recognizes revenue when (or as) it satisfies a performance obligation by transferring a promised good or service to a customer (which is when the customer obtains control of that good or service). The amount of revenue recognized is the amount allocated to the satisfied performance obligation. A performance obligation may be satisfied at a point in time (typically for promises to transfer goods to a customer) or over time (typically for promises to transfer service to a customer).
HOMESTOLIFE LTD AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares)
The major portion of the Company’s income is derived from contracts with customers, and as such, the revenue recognized depicts the transfer of promised goods to its customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company considers the terms of the contract and all relevant facts and circumstances when applying this guidance. The Company’s revenue recognition policies are in compliance with ASC Topic 606, as follows, by business segments:
Retail Sales
The Company typically enters into a sale contract with its customers at the retail outlets in Singapore and South Korea, where the rights of the parties, including payment terms, are identified and sales prices to the customers are fixed with separate sales rebate, discount, or other incentive and right of return exists on sales of merchandise. The Company’s performance obligation is to deliver products according to contract specifications. The Company recognizes gross product revenue at a point in time when the control of products or services is transferred to customers.
The retail outlets will invoice the sale of products, and the revenue is recognized upon shipment or when the control of products is transferred to customers, which is the point at which the Company has satisfied its performance obligation. Payments received as deposits for the purchase orders made by the customers are recognized as customer deposits and included in current liabilities on the unaudited condensed consolidated balance sheets. Customer deposits are recognized as revenue when control over the ordered furniture is transferred to and accepted by the customer.
For the franchisee business in South Korea, the Company signs franchise agreements with qualified franchisees, which clearly stipulate the scope of authorized product sales, brand usage standards, supply terms, and payment conditions. Under this model, the Company’s performance obligation mainly involves providing qualified products to franchisees and offering necessary operational support, such as brand guidance, marketing assistance. Revenue is recognized when the control of products is transferred to franchisees (usually upon delivery and acceptance), as there is no subsequent right of return or price adjustment clause in the standard franchise agreement.
All revenues are reported net of any sales discounts or taxes. Refunds and returns, which are minimal, are recorded as a reduction of revenue.
In accordance with ASC Topic 606, Revenue Recognition: Principal Agent Considerations, the Company evaluates the terms in the agreements with its channels and independent contractors to determine whether or not the Company acts as the principal or as an agent in the arrangement with each party respectively. The determination of whether to record the revenue on a gross or net basis depends upon whether the Company has control over the goods prior to transferring it. In general, the Company controls the products as it has the obligation to (i) fulfil the products delivery and (ii) bear any inventory risk as legal owners. In addition, when establishing the selling prices for delivery of resale products, the Company has control to set its selling price to ensure it would generate profit for the products delivery arrangements. The Company believes that all these factors indicate that the Company is acting as a principal in this transaction. As a result, revenue from the sales of products is presented on a gross basis.
Export Sales and Leather Trading
The Company’s export sales revenue and leather trading revenue are principally derived from the sale of products, including upholstered sofas, and sale of leather materials, to corporate customers in overseas. Revenue is recognized at the point in time when the performance obligation has been satisfied and control of the products have been transferred to the customers, which generally occurs when the goods are delivered to the customer and all criteria for acceptance have been satisfied.
Generally, the Company enters into order confirmation with its customers which specify the rights of the parties, including product specifications, shipment term and payment terms and sales prices to the customers are fixed. The performance obligations in a given transaction are determined by the individual order confirmation with revenue recognized at the time that the performance obligations have been satisfied. All revenues are recognized based on the price specified in the order confirmation, net of any sales discounts or taxes. Refunds and returns, which are minimal, are recorded as a reduction of revenue.
The summary of sales tax rate (including value added tax and goods and service tax) by the governing countries is as follows:-
Product Return Policies
Among these segments, the Company only accepts the return of products that are defective or non-conforming due to defects in manufacturing and/or workmanship.
For retail business, the Company only accepts the return of products that are defective or non-conforming due to defects in manufacturing and/or workmanship within 3 to 14 days upon the receipt of products by the customers.
For export business, the Company does not accept product returns and instead provides a five-year warranty covering defects in manufacturing and/or workmanship.
The Company’s obligation to provide a refund for products that are defective or non-conforming due to defects in manufacturing and/or workmanship is recognized as a provision for warranty liabilities. Refer to “Warranty Liabilities” for disclosure of warranty liabilities.
Disaggregation of Revenue
The Company has disaggregated its net revenue from contracts with customers into categories based on business segments, as follows:
HOMESTOLIFE LTD AND SUBSIDIARIES NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Currency expressed in United States Dollars (“US$”), except for number of shares)
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| Cost of Goods Sold | ● Cost of Goods Sold
Cost of goods sold primarily consists of purchase costs of merchandizes from the vendors, inbound shipping and fulfilment costs necessary to bring inventory to its present location and condition, and inventory write-downs, which consist of allowance for obsolete and slow-moving inventories.
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| Sales and distribution expenses | ● Sales and distribution expenses
Sales and distribution expenses consist primarily of ocean freights, outwards land transports, salaries of our sales persons, sales commissions, and warranty expenses.
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| General and administrative expenses | ● General and administrative expenses
General and administrative expenses consist primarily of salaries of our office staff, depreciation of right-of-use assets of our office, professional fees, and traveling expenses. During the six months ended June 30, 2026, listing expenses of $1,087,814 were reported in the general and administrative expenses, as such expenses are administrative in nature. To conform to the current period presentation, listing expenses of $666,021 for the comparative period ended June 30, 2025 were reclassified to the general and administrative expenses.
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| Advertising Costs | ● Advertising Costs
The Company recognizes advertising costs as incurred. Advertising costs for the six months ended June 30, 2025 and 2026 were $2,776,143 and $2,474,892, respectively.
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| Shipping and Fulfilment Costs | ● Shipping and Fulfilment Costs
Shipping and fulfilment costs incurred to deliver the products from the warehouse to the customers and recorded in sales and distribution expenses in the unaudited condensed consolidated statements of operations and comprehensive income.
For the six months ended June 30, 2025 and 2026, the aggregate shipping and fulfilment costs were $11,264,802 and $13,505,914, respectively.
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| Listing expenses | ● Listing expenses
Listing expenses consist primarily of audit fees, statutory and legal expenses, and insurance expenses.
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| Comprehensive Income (Loss) | ● Comprehensive Income (Loss)
ASC Topic 220, Comprehensive Income, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income (loss) as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income (loss), as presented in the accompanying consolidated statements of changes in shareholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income (loss) is not included in the computation of income tax expense or benefit.
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| Segment Reporting | ● Segment Reporting
ASC Topic 280, Segment Reporting (“ASC 280”), establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in financial statements for detailing the Company’s business segments.
The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer, who has determined that it operates in three reportable segments, Retail, Export sales and Leather Trading segments for the periods presented.
The CODM evaluates the performance of each segment based on the regularly reviewed net sales, gross profit and income from operations (excluding intercompany charges) of the segment. The CODM uses net sales, gross profit and income from operations when evaluating each segment during the budget and forecasting processes. The CODM considers actual-to-budget variances for both profit measures when assessing segment performance and making decisions about the allocation of operating and capital resources to each segment. General corporate expenses include expenses incurred and directed by the corporate office that are not allocated to segments.
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| Retirement Plan Costs | ● Retirement Plan Costs
Contributions to retirement plans (which are defined contribution plans) are charged to general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations and comprehensive income as the related employee services are provided.
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| Leases | ● Leases
The Company adopts the Financial Accounting Standards Board (“FASB”) ASU 2016-02 “Leases (Topic 842).” for all periods presented. This standard requires lessees to recognize lease assets (“right-of-use”) and related lease obligations (“lease liabilities”) on the balance sheet for leases with terms in excess of twelve months. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities.
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease liabilities in the unaudited condensed consolidated balance sheets. The Company does not have any finance lease for all periods presented.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease and finance lease ROU assets and liabilities are recognized, based on the present value of lease payments over the lease term discounted using the rate implicit in the lease. In cases where the implicit rate is not readily determinable, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term. For operating leases, lease expense for lease payments is recognized on a straight-line basis over the lease term.
All of the Company’s real estate leases with recognized lease assets (“right-of-use”) and related lease obligations (“lease liabilities”) are classified as operating leases. The Company has elected to not separate lease and non-lease components for property leases and account for them as one single lease component.
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| Warranty Liabilities | ● Warranty Liabilities
The Company offers a product warranty to its customers for repairs and replacements, generally twelve (12) months to 10 years, from the date of shipment accepted by the customers, in accordance with applicable law or industry standard, which is limited to the original equipment manufacturers’ warranties on the defective or non-conforming products. Historically, the Company experienced a low rate of repairs and replacements on product claims. The provision for the expected warranty claims is estimated based on the past experience requested by the customers.
Warranty expense was $4,004,614 and $3,096,219 for the six months ended June 30, 2025 and 2026, respectively.
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| Provision for Reinstatement Cost | ● Provision for Reinstatement Cost
Provisions for the costs to reinstate leased properties to their original condition, as required by the terms and conditions of the leases, are recognized at the date of inception of the leases at the Company’s best estimate of the expenditure that would be required to reinstate the leased properties. Estimates are regularly reviewed and adjusted as appropriate for new circumstances. The provision for reinstatement costs will be expected to be materialized in 0.42 to 4.75 years in accordance with the lease terms.
During the six months ended June 30, 2025 and 2026, the Company made provision for reinstatement cost of $77,277 and $120,564, respectively. |
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| Income Taxes | ● Income Taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
For the six months ended June 30, 2025 and 2026, the Company did not have any interest and penalties associated with tax positions. As of December 31, 2025 and June 30, 2026, the Company did not have any significant unrecognized uncertain tax positions.
The Company is subject to income tax in both local and foreign jurisdictions. In connection with its business activities, the Company files tax returns that are subject to examination by the applicable tax authorities.
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| Net Income Per Share |
The Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, Earnings per Share (“ASC 260”). ASC 260 requires companies to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average ordinary share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential ordinary shares (e.g. convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS.
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| Related Parties | ● Related Parties
The Company follows the ASC Topic 850-10, Related Party (“ASC 850”) for the identification of related parties and disclosure of related party transactions.
Pursuant to ASC 850, the related parties include: a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election of the fair value option under the Fair Value Option Subsection of ASC Topic 825–10–15, to be accounted for by the equity method by the investing entity; c) trusts for the benefit of employees, such as pension and income-sharing trusts that are managed by or under the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The unaudited condensed consolidated financial statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and other similar items in the ordinary course of business. The disclosures shall include: a) the nature of the relationship(s) involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each of the periods for which statements of operations are presented, and such other information deemed necessary to an understanding of the effects of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which statements of operations are presented; and d) amount due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of settlement. However, disclosure of transactions that are eliminated in the preparation of unaudited condensed consolidated financial statements is not required in those statements. |
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| Commitments and Contingencies | ● Commitments and Contingencies
The Company follows the ASC Topic 450-20, Commitments to report accounting for contingencies. Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or un-asserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be disclosed.
Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not believe, based upon information available at this time that these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, financial position, and results of operations or cash flows.
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| Fair Value Measurement | ● Fair Value Measurement
The Company follows the guidance of the ASC Topic 820-10, Fair Value Measurements and Disclosures (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
The Company does not have any non-financial assets or liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis.
The Company’s financial instruments consist of cash and cash equivalents, restricted cash, accounts receivable, amounts due from related parties, deposit, prepayments and other receivables, Investments in equity securities, accounts payable, accrued liabilities and other payables and amounts due to related parties. As at December 31, 2025 and June 30, 2026, the carrying value of these financial instruments approximate at their fair values because of the short-term nature of these financial instruments, except investments in equity securities.
The Company measures its derivative financial instruments at fair value on a recurring basis.
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| Reclassifications | ● Reclassifications
Certain reclassifications and adjustments have been made to the prior period’s financial statements to conform to the current period’s presentation and to ensure consistency throughout the financial statements.
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| Recently Issued Accounting Pronouncements | ● Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies and adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.
Recently adopted accounting pronouncements
In July 2025, the FASB issued 2025-05 to improve the measurement of credit losses for accounts receivable and contract assets. The guidance provides a practical expedient for all entities to assume that current conditions as of the balance sheet date remain unchanged for the remaining life of the assets. The update aims to reduce the cost and complexity of estimating credit losses while maintaining decision-useful information for financial statement users. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025. The Company adopted this standard effective January 1, 2026.
Recently issued accounting pronouncements not yet adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires that an entity disclose, in the notes to consolidated financial statements, specified information about certain costs and expenses. The amendment in the ASU is intended to enhance the transparency and decision usefulness to better understand the major components of an entity’s income statement. The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the impact of the new standards on its consolidated financial statements which is expected to result in enhanced disclosures.
In December 2025, the FASB issued ASU 2025-11 to amend the guidance in “Interim Reporting” (Topic 270). The update provides clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period. The amendments do not change the underlying objectives of interim reporting but are designed to enhance clarity in application. The ASU is effective for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years. Management is currently evaluating the effects impact that the adoption of this update may have on its financial statements.
In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. The amendments are intended to better align hedge accounting with an entity’s risk management activities and simplify certain aspects of the hedge accounting guidance. The amendments address, among other matters, the assessment of similar risk exposures for groups of forecasted transactions in cash flow hedges, hedging of interest payments on certain choose-your-rate debt instruments, cash flow hedges of forecasted nonfinancial transactions, the use of certain net written options as hedging instruments, and certain hedging relationships involving foreign-currency-denominated debts. The amendments are effective for fiscal years beginning after December 15, 2026, and interim reporting periods within those fiscal years. Early adoption is permitted. The amendments are generally required to be applied prospectively, with certain transition elections available for existing hedging relationships. Management does not expect the adoption of this new standard to have a material impact on its financial statements, as the Company does not apply hedge accounting.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. The amendments make various technical corrections, clarifications, and other improvements to the FASB Accounting Standards Codification across multiple Topics. The amendments are effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years. Early adoption permitted, including adoption of individual amendments on an issue-by-issue basis. Management does not expect the adoption of amendments to have a material impact on its financial statements.
Except for the above-mentioned pronouncements, there are no new recently issued accounting standards that will have a material impact on the unaudited condensed consolidated and combined balance sheets, statements of operations and cash flows. |
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