| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES Basis of Presentation The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“U.S.
GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial
reporting. The interim condensed consolidated financial
information as of September 30, 2022 and for the three and nine months periods ended September 30, 2022 and 2021 have been prepared without
audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in
consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.
The interim condensed consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto,
included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, previously filed with the SEC
on April 15, 2022. In the opinion of management, all adjustments
(which include all significant normal and recurring adjustments) necessary to present a fair statement of the Company’s interim
condensed consolidated financial position as of September 30, 2022, its interim condensed consolidated results of operations and cash
flows for the three and nine months period ended September 30, 2022 and 2021, as applicable, have been made. The interim results of operations
are not necessarily indicative of the operating results for the full fiscal year or any future periods. During the nine months ended September 30, 2022,
the Company experienced (and continues to experience) adverse impacts of novel coronavirus (COVID-19) and the related public health orders.
The Company expects that the impact of the COVID-19 outbreak on China and world economies will continue to have a material adverse impact
on the demand for the Company’s business. Because of the significant uncertainties surrounding the COVID-19 pandemic, the extent
of the business interruption and the related financial impact cannot be reasonably estimated at this time. Use of Estimates The preparation of these financial statements
in conformity with U.S. GAAP requires management of the Company to make estimates and judgments that affect the reported amounts
of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, the Company evaluates its estimates
based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other
sources. Actual results may differ from these estimates under different assumptions or conditions. Identified below are the accounting
policies that reflect the Company’s most significant estimates and judgments, and those that the Company believes are the most
critical to fully understanding and evaluating its condensed consolidated financial statements. The COVID-19 pandemic has created and
may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns,
depress demand for the Company’s business, and adversely impact its results of operations. During the nine months ended September
30, 2022, the Company faced increasing uncertainties around its estimates of revenue collectability and accounts receivable credit losses.
The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact
associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information emerges, and
such changes are recognized or disclosed in its condensed consolidated financial statements. Recently Adopted Accounting Standards In May 2021, the FASB issued ASU 2021-04, Earnings
Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic
718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain
Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance
as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written
call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a
new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified
or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model
that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination,
debt modification, and modifications unrelated to equity issuance and debt origination or modification). The Company applied the new
standard beginning January 1, 2022. The adoption of ASU 2021-04 did not have any impact on the Company’s condensed consolidated
financial statement presentation or disclosures. In November 2021, the FASB issued ASU 2021-10,
Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. This update requires certain annual
disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy.
The Company applied the new standard beginning January 1, 2022. The adoption of this guidance did not have a material impact on the Company’s
condensed consolidated financial statements. Recently Issued Accounting Standards In June 2016, the FASB
issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which requires entities to measure
all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable
and supportable forecasts. ASU 2016-13 replaces the existing incurred loss model and is applicable to the measurement of credit losses
on financial assets measured at amortized cost. ASU 2016-13 is to be adopted on a modified retrospective basis. As a smaller reporting
company, ASU 2016-13 will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022. The
Company is currently evaluating the impact that the adoption of ASU 2016-13 will have on its condensed consolidated financial statement
presentations and disclosures. In March 2022, the FASB issued ASU 2022-02, Topic 326. The ASU eliminates the accounting guidance for
trouble debt restructurings by creditors in Subtopic 310-40, and enhances the disclosure requirements for modifications of loans to borrowers
experiencing financial difficulty. Additionally, the ASU requires disclosure of gross writeoffs of receivables by year of origination
for receivables within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost. This ASU is
effective for periods beginning after December 15, 2022. The Company is currently evaluating the impact that the adoption of ASU 2016-13
and ASU 2022-02 will have on its condensed consolidated financial statement presentations and disclosures. Other accounting standards that have been issued
or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a
material impact on the Company’s condensed consolidated financial statements upon adoption. Basis of Consolidation and Noncontrolling Interests The condensed consolidated financial statements
include the financial statements of the Company and its subsidiaries. All significant inter-company balances and transactions within
the Company have been eliminated upon consolidation. A subsidiary is an entity in which (i) the
Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove
the majority of the members of the board of directors or to cast a majority of votes at the meeting of the board of directors or to govern
the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders. Leases The Company determines if an arrangement is a
lease or contains a lease at inception. Operating lease liabilities are recognized based on the present value of the remaining lease
payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily
determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the
commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets
represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the
Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of
the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. The Company
elected the package of practical expedients permitted under the transition guidance to combine the lease and non-lease components as
a single lease component for operating leases associated with the Company’s office space lease, and to keep leases with an initial
term of 12 months or less off the balance sheet and recognize the associated lease payments in the condensed consolidated statements
of income on a straight-line basis over the lease term. ROU assets are reviewed for impairment when indicators
of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property,
Plant, and Equipment, as ROU assets are long-lived nonfinancial assets. ROU assets are tested for impairment individually
or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities.
An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable
cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company recognized no impairment of ROU assets
as of September 30, 2022 and December 31, 2021. The operating lease is included in operating
lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current on the Company’s condensed
consolidated balance sheets. Cash and Cash Equivalents For purposes of the statement of cash flows,
the Company considers cash, money market funds, investments in interest bearing demand deposit accounts, time deposits and all highly
liquid investments placed with banks or other financial institutions with an original maturity of three months or less to be cash equivalents. As of September 30, 2022, cash held in accounts
managed by online payment platforms such as Alipay and WeChat Pay amounted to $599 (as at December 31, 2021: $161,188), which have been
classified as cash and cash equivalents in the condensed consolidated balance sheets. Accounts receivable Accounts receivable are recorded at the invoiced
amount, net of allowances for doubtful accounts and sales returns. The allowance for doubtful accounts is the Company’s best estimate
of the amount of probable credit losses in the Company’s existing accounts receivable. The Company determines the allowance based
on historical write-off experience, customer specific facts and economic conditions. Outstanding accounts receivable balances are
reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been
exhausted and the potential for recovery is considered remote. Plant and equipment Plant and equipment are recorded at cost less
accumulated depreciation and accumulated impairment. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets.
Estimated
Motor vehicle 4 – 5
Office equipment 3 The gain or loss on the disposal of plant and
equipment is the difference between the net sales proceeds and the lower of the carrying value or fair value less cost to sell the relevant
assets and is recognized in general and administrative expenses in the condensed consolidated statements of comprehensive income. Impairment of Long-lived Assets In accordance with ASC 360-10-35, we review the
carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an
asset may not be recoverable. The Company assesses the recover-ability of the assets based on the non-discounted future cash flows the
assets are expected to generate and recognize an impairment loss when estimated discounted future cash flows expected to result from
the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset.
If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted
cash flows approach or, when available and appropriate, to comparable market values. No impairment has been recorded by the Company for
the three and nine months ended September 30, 2022 and 2021. Revenue Recognition The Company recognizes revenues when its customer
obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for
those goods. The Company recognizes revenues following the five step model prescribed under ASU No. 2014-09: (i) identify contract(s)
with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the
transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) we satisfy the performance
obligation. The Company evaluates if it is a principal or
an agent in a transaction to determine whether revenue should be recorded on a gross or net basis. The Company is acting as the principal
if it obtains control over the goods and services before they are transferred to customers. When the Company is primarily obligated in
a transaction, is generally subject to inventory risk, has latitude in establishing prices, or has several but not all of these indicators,
the Company acts as the principal and revenue is recorded on a gross basis. When the Company is not primarily obligated in a transaction,
does not generally bear the inventory risk and does not have the ability to establish the price, the Company acts as the agent and revenue
is recorded on a net basis The Company derives its revenue primarily from
net transaction services, including consultancy services, sourcing and marketing services, and digital training related services. Consultancy services The Company generates the majority of its revenues
by providing consulting services to its clients. Most of its consulting service contracts are based on one of the following types of
arrangements: Performance-based arrangements Fixed-fee arrangements Sourcing and marketing services The Company provides agency-based sourcing and
digital marketing services to connect marketplace operators and merchants. Most of its sourcing and marketing services are based on one
of the following types of arrangements: Agency-based sourcing services Digital marketing services The post-sale services, goods return and other
kinds of product issue are responsibilities of the merchants. Upon successful delivery to ultimate customers by the merchants, there
is no unfulfilled obligation that could affect the marketplace operators’ and merchants’ acceptance of the services provided.
The acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied. Digital training related services Fixed-fee digital training related services
The Company derived services revenues of $702,371
and $1,515,371 for the three months ended September 30, 2022 and 2021, respectively; and $2,207,029 and $4,268,054 for the nine months
ended September 30, 2022 and 2021, respectively, from provision of certain consultancy services and sourcing and marketing services through
the program application (“App”) platform managed by a related company, Xi’an Chuangyetianxia Network Technology Co.,
Ltd. (“Xian CNT”). The Company CEO, Mr. Tao, has significant influence over Xian CNT. Practical expedients and exemption The Company has not occurred any costs to obtain
contracts, and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one
year or less. Other service income is earned when services
have been rendered. Revenue by major service line
Three months ended Nine months ended
2022 2021 2022 2021
Consultancy services 699,257 1,554,834 2,211,307 4,362,581
Sourcing and marketing services 102,527 67,637 372,475 116,834
Digital training related services - - 267,874 -
$ 801,784 $ 1,622,471 $ 2,851,656 $ 4,479,415 Revenue by recognition over time vs point in
time
Three months ended Nine months ended
2022 2021 2022 2021
Revenue recognized at a point in time 801,784 1,622,471 2,851,656 4,479,415
Revenue recognized over time - - - -
$ 801,784 $ 1,622,471 $ 2,851,656 $ 4,479,415 Revenue recorded on a gross vs net basis
Three
months ended Nine
months ended
2022 2021 2022 2021
Revenue recorded on a gross basis 699,257 1,554,834 2,479,181 4,362,581
Revenue recorded on a net basis 102,527 67,637 372,475 116,834
$ 801,784 $ 1,622,471 $ 2,851,656 $ 4,479,415 Contract liabilities The Company’s contract liabilities consist
of deferred revenue associated with consultancy fees and provision of fixed-fee training related services. The table below presents the
activity of the deferred consultancy services revenue during the nine months ended September 30, 2022 and December 31, 2021, respectively:
September 30, December 31,
Balance at beginning of period $ 216,142 $ -
Service fees collected 224,435 1,377,349
Refunded (152,888 ) -
Service revenue earned (267,874 ) (1,176,515 )
Exchange realignment (19,815 ) 15,308
Balance at end of period $ - $ 216,142 Cost of revenue Cost of revenues consists primarily of employee
compensation, service fees, agency fees, and the related IT expenses, which are directly attributable to the revenues Employee benefits Full time employees of the Company in the PRC
participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing
fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiary of the Company
make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum
amount specified by the local government. The Company has no legal obligation for the benefits beyond the contributions made. Total amounts
of such employee benefit expenses, which were expensed as incurred, were approximately $17,744 and $31,273 for the three months ended
September 30, 2022 and 2021, respectively; and $47,963 and $78,957 for the nine months ended September 30, 2022 and 2021, respectively. Foreign Currency and Foreign Currency Translation The reporting currency of the Company is the
United States dollar (“US dollar”). The financial records of the Company’s PRC operating subsidiaries are maintained
in their local currency, the Renminbi (“RMB”), which is the functional currency. The financial records of the Company’s
Hong Kong operating subsidiary are maintained in its local currency, the Hong Kong Dollar (“HKD”), which is the functional
currency. Assets and liabilities of the subsidiaries are translated into the reporting currency at the exchange rates at the balance
sheet date, equity accounts are translated at historical exchange rates, and income and expense items are translated using the average
rate for the period. The translation adjustments are recorded in accumulated other comprehensive loss under shareholders’ equity. Monetary assets and liabilities denominated in
currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange
at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical
exchange rates. Transactions in currencies other than the applicable functional currencies during the period are converted into the functional
currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the
condensed consolidated statements of operations. RMB is not a fully convertible currency. All
foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”)
or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are
the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation of amounts from RMB into US
dollars has been made at the following exchange rates for the respective periods:
Nine months ended September 30, 2022
Balance sheet, except for equity
accounts RMB 7.1160 to US$1.00
Income statement and cash flows RMB 6.6013 to US$1.00
Nine months ended September 30, 2021
Balance sheet, except
for equity accounts RMB 6.4466 to US$1.00
Income statement and
cash flows RMB 6.4714 to US$1.00 During the periods presented, HKD is pegged to
the U.S. dollar within a narrow range. Income Taxes Income taxes are accounted for using an asset
and liability approach which requires the recognition of income taxes payable or refundable for the current period and deferred tax liabilities
and assets for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns.
Deferred income taxes are determined based on the differences between the accounting basis and the tax basis of assets and liabilities
and are measured using the currently enacted tax rates and laws. Deferred tax assets are reduced by a valuation allowance, if based on
available evidence, it is considered that it is more likely than not that some portion of or all of the deferred tax assets will not
be realized. In making such determination, the Company considers factors including future reversals of existing taxable temporary differences,
future profitability, and tax planning strategies. If events were to occur in the future that would allow the Company to realize more
of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the deferred tax assets that would
increase income for the period when those events occurred. If events were to occur in the future that would require the Company to realize
less of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the valuation allowance against
deferred tax assets that would decrease income for the period when those events occurred. Significant management judgment is required
in determining income tax expense and deferred tax assets and liabilities. The Company conducts business in the PRC and
Hong Kong and is subject to tax in these jurisdictions. As a result of its business activities, the Company will file tax returns that
are subject to examination by the respective tax authorities. Uncertain Tax Positions Management reviews regularly the adequacy of
the provisions for taxes as they relate to the Company’s income and transactions. In order to assess uncertain tax positions, the
Company applies a more likely than not threshold and a two-step approach for tax position measurement and financial statement recognition.
For the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence
indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation
processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon
settlement. As of September 30, 2022 and December 31, 2021, the Company had not recorded any liability for uncertain tax positions. In
subsequent periods, any interest and penalties related to uncertain tax positions will be recognized as a component of income tax expense. Net (loss) income per Share of Common Stock The Company has adopted ASC Topic 260, “Earnings
per Share,” (“EPS”) which requires presentation of basic EPS on the face of the income statement for all entities with
complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation. In the accompanying
financial statements, basic earnings (loss) per share is computed by dividing net income by the weighted average number of shares of
common stock outstanding during the period.
Three months ended Nine months ended
2022 2021 2022 2021
Net (loss)
income $ (31,999 ) $ 207,551 $ 625,024 $ 1,296,228
Weighted average number of common stock outstanding
- basic and diluted 1,701,181,423 1,701,181,423 1,701,181,423 1,701,181,423
Net (loss) income per share
- basic and diluted $ 0.00 * $ 0.00 * $ 0.00 * $ 0.00 * * Less than $0.01 per share The calculation of basic net (loss) income per
share of common stock is based on the net (loss) income for the three and nine months ended September 30, 2022 and 2021 and the weighted
average number of ordinary shares outstanding. For the three and nine months ended September
30, 2022 and 2021, the Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding. Segments The Company uses the “management approach”
in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s
chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s
reportable segments. Management, including the chief operating decision maker, reviews operating results solely by monthly revenue of
marketing consultation services and operating results of the Company and, as such, the Company has determined that the Company has one
operating segment (provision of consulting, sourcing and marketing services, and digital training related services in China) as defined
by ASC Topic 280 “Segment Reporting”. Concentration of Credit Risk Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. As of September 30, 2022 and December 31, 2021,
$6,330,431 and $7,649,129 of the Company’s cash and cash equivalents, respectively were held at financial institutions and online
payment platforms located in the PRC and Hong Kong that management believes to be of high credit quality. The Company has not experienced
any losses on cash and cash equivalents to date. The Company does not require collateral or other securities to support financial instruments
that are subject to credit risk. The Company operates principally in the PRC and
Hong Kong and grants credit to its customers in these geographic regions. Although the PRC is economically stable, it is always possible
that unanticipated events in foreign countries could disrupt the Company’s operations. Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurement and
Disclosures
● Level 1 inputs to the valuation
methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
● Level 2 inputs to the valuation
methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets
or liability, either directly or indirectly, for substantially the full term of the financial instruments.
● Level 3 inputs to the valuation
methodology are unobservable and significant to the fair value measurement. Valuation of debt products depends upon a number
of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, and other relevant
terms of the debt. Other factors that may be considered include the borrower’s ability to adequately service its debt, the fair
market value of the borrower in relation to the face amount of its outstanding debt and the quality of collateral securing the Company’s
debt investments. The fair value of these debt products classified as Level 2 are established by reference to the prices quoted by respective
fund administrators. The carrying amounts of financial assets and
liabilities, such as cash and cash equivalents, accounts receivable, other receivables, loan to a related company, accounts payable and
other payables, amounts due to a director and a shareholder and borrowings approximate their fair values because of the short maturity
of these instruments or the rate of interest of these instruments approximate the market rate of interest. Comprehensive Income Comprehensive income is defined as the change
in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments
from owners and distributions to owners. Accumulated other comprehensive income includes cumulative foreign currency translation adjustment. | NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation The
accompanying consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting
principles (“U.S. GAAP”). After
the close of the year to which these financial statements relate, the Company experienced (and continues to experience) adverse impacts
of novel coronavirus (COVID-19) and the related public health orders. In December 2021, there was a COVID-19 outbreak in Xian city, the
PRC. Finally, the Company expects that the impact of the COVID-19 outbreak on the United States and world economies will continue to
have a material adverse impact on the demand for the Company’s business. Because of the significant uncertainties surrounding the
COVID-19 pandemic, the extent of the business interruption and the related financial impact cannot be reasonably estimated at this time. Use
of Estimates The
preparation of these financial statements in conformity with U.S. GAAP requires management of the Company to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing
basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Identified below are the accounting policies that reflect the Company’s most significant estimates and judgments, and those that
the Company believes are the most critical to fully understanding and evaluating its consolidated financial statements. The COVID-19 pandemic
has created and may continue to create significant uncertainty in macroeconomic conditions, which may cause further business slowdowns
or shutdowns, depress demand for the Company’s business, and adversely impact its results of operations. During the year ended
December 31, 2021, the Company faced increasing uncertainties around its estimates of revenue collectability and accounts receivable
credit losses. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration
and degree of impact associated with the COVID-19 pandemic. Its estimates may change as new events occur and additional information
emerges, and such changes are recognized or disclosed in its consolidated financial statements. Recently
Adopted Accounting Standards In
December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income
taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent
application among reporting entities. Upon adoption, the Company must apply certain aspects of this standard retrospectively for all
periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to retained
earnings as of the beginning of the fiscal year of adoption. The Company applied the new standard beginning January 1, 2021. The
adoption of ASU 2019-12 did not have any impact on the Company’s consolidated financial statement presentation or disclosures. In
August 2020, the FASB issued ASU No. 2020-06 (“ASU 2020-06”) “Debt—Debt with Conversion and Other Options (Subtopic
470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).” ASU 2020-06 reduces the number
of accounting models for convertible debt instruments by eliminating the cash conversion and beneficial conversion models. As a result,
a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features
require bifurcation and recognition as derivatives. For contracts in an entity’s own equity, the type of contracts primarily affected
by this update are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure
to meet the settlement conditions of the derivative scope exception. This update simplifies the related settlement assessment by removing
the requirements to (i) consider whether the contract would be settled in registered shares, (ii) consider whether collateral is required
to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. Early
adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and only if adopted as of the beginning of
such fiscal year. The Company adopted ASU 2020-06 effective January 1, 2021. The adoption of ASU 2020-06 did not have any impact on the
Company’s consolidated financial statement presentation or disclosures. The adoption of ASU 2020-06 did not have any impact on
the Company’s consolidated financial statement presentation or disclosures. Recently
Issued Accounting Standards In
June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which requires
entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current
conditions, and reasonable and supportable forecasts. ASU 2016-13 replaces the existing incurred loss model and is applicable to the
measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 is to be adopted on a modified retrospective
basis. As a smaller reporting company, ASU 2016-13 will be effective for the Company for interim and annual reporting periods beginning
after December 15, 2022. The Company is currently evaluating the impact that the adoption of ASU 2016-13 will have on its consolidated
financial statement presentations and disclosures. In
May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50),
Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic
815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU
2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an
exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange
as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as
the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification
or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment
for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination
or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods
within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring
on or after the effective date. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects
to early adopt ASU 2021-04 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes
that interim period. The adoption of ASU 2021-04 is not expected to have any impact on the Company’s consolidated financial statement
presentation or disclosures. In
November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance.
This update requires certain annual disclosures about transactions with a government that are accounted for by applying a grant or contribution
accounting model by analogy. This update is effective for annual periods beginning after December 15, 2021, and early application is
permitted. This guidance should be applied either prospectively to all transactions that are reflected in financial statements at the
date of initial application and new transactions that are entered into after the date of initial application or retrospectively to those
transactions. The Company does not expect the impact of this guidance to have a material impact on the Company’s consolidated financial
statements. Other
accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until
a future date are not expected to have a material impact on the Company’s consolidated financial statements upon adoption. Basis
of Consolidation and Noncontrolling Interests The
consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company
balances and transactions within the Company have been eliminated upon consolidation. A
subsidiary is an entity in which (i) the Company directly or indirectly controls more than 50% of the voting power; or (ii) the
Company has the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the
meeting of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an
agreement among the shareholders or equity holders. Leases
The
Company determines if an arrangement is a lease or contains a lease at inception. Operating lease liabilities are recognized based on
the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the
rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate
based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use
(“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and
lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized
based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the
lease term. The Company elected the package of practical expedients permitted under the transition guidance to combine the lease and
non-lease components as a single lease component for operating leases associated with the Company’s office space lease, and to
keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the consolidated
statements of income on a straight-line basis over the lease term. ROU
assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject
to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets. ROU
assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent
from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used,
which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets
and liabilities. The
Company recognized no impairment of ROU assets as of December 31, 2021 and December 31, 2020. The
operating lease is included in operating lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current
on the Company’s consolidated balance sheets. Cash
and Cash Equivalents For
purposes of the statement of cash flows, the Company considers cash, money market funds, investments in interest bearing demand deposit
accounts, time deposits and all highly liquid investments placed with banks or other financial institutions with an original maturity
of three months or less to be cash equivalents. As
of December 31, 2021, cash held in accounts managed by online payment platforms such as Alipay and WeChat Pay amounted to $161,188 (as
at December 31, 2020: Nil Accounts
receivable Accounts
receivable are recorded at the invoiced amount, net of allowances for doubtful accounts and sales returns. The allowance for doubtful
accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable.
The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions. Outstanding
accounts receivable balances are reviewed individually for collectability. Account balances are charged off against the allowance after
all means of collection have been exhausted and the potential for recovery is considered remote. Debt
products All
debt products are carried at fair value at the end of each reporting period. Changes in the carrying amount of debt products relating
to interest income calculated using the effective interest method are recognized in consolidated statement of profit or loss. Other changes
in the carrying amount of these products, net of any related tax effects, are excluded form earnings and are included in other comprehensive
income or loss and reported as a separate component of stockholders’ equity or deficit until realized. Realized gains and losses
and declines in value judged to be other than temporary, if any, on debt products are included in other income (expense), net. The
Company regularly reviews all of its investments for other-than-temporary declines in estimated fair value. Its review includes the consideration
of the cause of the impairment, including the creditworthiness of the security issuers, the number of securities in an unrealized loss
position, the severity and duration of the unrealized losses, whether the Company has the intent to sell the securities and whether it
is more likely than not that the Company will be required to sell the securities before the recovery of their amortized cost basis. When
the Company determines that the decline in estimated fair value of an investment is below the amortized cost basis and the decline is
other-than-temporary, it reduces the carrying value of the security and record a loss for the amount of such decline. The Company has
not recorded any declines in value judged to be other than temporary on its investments in debt securities. Plant
and equipment Plant
and equipment are recorded at cost less accumulated depreciation and accumulated impairment. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets.
Estimated
Motor vehicle 4 - 5 The
gain or loss on the disposal of plant and equipment is the difference between the net sales proceeds and the lower of the carrying value
or fair value less cost to sell the relevant assets and is recognized in general and administrative expenses in the consolidated statements
of comprehensive income. Impairment
of Long-lived Assets In
accordance with ASC 360-10-35, we review the carrying values of long-lived assets for impairment whenever events or changes in circumstances
indicate that the carrying value of an asset may not be recoverable. The Company assesses the recover-ability of the assets based on
the non-discounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated discounted future
cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than
the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated
fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. No impairment has
been recorded by the Company for the years ended December 31, 2021 and 2020. Revenue
Recognition The
Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration
which it expects to receive in exchange for those goods. The Company recognizes revenues following the five step model prescribed under
ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine
the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues
when (or as) we satisfy the performance obligation. The
Company evaluates if it is a principal or an agent in a transaction to determine whether revenue should be recorded on a gross or net
basis. The Company is acting as the principal if it obtains control over the goods and services before they are transferred to customers.
When the Company is primarily obligated in a transaction, is generally subject to inventory risk, has latitude in establishing prices,
or has several but not all of these indicators, the Company acts as the principal and revenue is recorded on a gross basis. When the
Company is not primarily obligated in a transaction, does not generally bear the inventory risk and does not have the ability to establish
the price, the Company acts as the agent and revenue is recorded on a net basis The
Company derives its revenue primarily from net transaction services, including consultancy services, sourcing and marketing services,
and digital training related services. Consultancy
services The
Company generates the majority of its revenues by providing consulting services to its clients. Most of its consulting service contracts
are based on one of the following types of arrangements: Performance-based
arrangements Fixed-fee arrangements Sourcing and marketing services The Company provides agency-based sourcing and
digital marketing services to connect marketplace operators and merchants. Most of its sourcing and marketing services are based on one
of the following types of arrangements: Agency-based sourcing services Digital marketing services The post-sale services, goods return and other
kinds of product issue are responsibilities of the merchants. Upon successful delivery to ultimate customers by the merchants, there
is no unfulfilled obligation that could affect the marketplace operators’ and merchants’ acceptance of the services provided.
The acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied. Digital training related services Fixed-fee digital training related services
The Company derived services revenues of $4,152,617
and $8,592,970 for the years ended December 31, 2021 and 2020, respectively, from provision of certain consultancy services and sourcing
and marketing services through the program application (“App”) platform managed by a related company, Xi’an Chuangyetianxia
Network Technology Co., Ltd. (“Xian CNT”). The Company CEO, Mr. Tao, has significant influence over Xian CNT. During the years ended December 31, 2021 and
2020, revenues generated from Xian CNT are disclosed in note 5 of the consolidated financial statements. Practical expedients and exemption The Company has not occurred any costs to obtain
contracts, and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one
year or less. Other service income is earned when services
have been rendered. Revenue by major service line
2021 2020
Consultancy services 4,237,261 8,984,967
Sourcing and marketing services 223,620 202,056
Digital training related services 1,176,515 -
$ 5,637,396 $ 9,187,023 Revenue by recognition over time vs point in
time
2021 2020
Revenue recognized at a point in time 5,637,396 9,100,334
Revenue recognized over time - 86,689
$ 5,637,396 $ 9,187,023 Revenue recorded on a gross vs net basis
2021 2020
Revenue recorded on a gross basis 5,413,776 8,984,967
Revenue recorded on a net basis 223,620 202,056
$ 5,637,396 $ 9,187,023 Contract liabilities The Company’s contract liabilities consist
of deferred revenue associated with consultancy fees and provision of fixed-fee training related services. The table below presents the
activity of the deferred consultancy services revenue during the years ended December 31, 2021 and 2020, respectively:
2021 2020
Balance at beginning of year $ - $ 87,136
Service fees collected 1,377,349 -
Service revenue earned (1,176,515 ) (86,689 )
Exchange realignment 15,308 (447 )
Balance at end of year $ 216,142 $ - Cost of revenue Cost of revenues consists primarily of employee
compensation, service fees, agency fees, and the related IT expenses, which are directly attributable to the revenues Employee benefits Full time employees of the Company in the PRC
participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing
fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiary of the Company
make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum
amount specified by the local government. The Company has no legal obligation for the benefits beyond the contributions made. Total amounts
of such employee benefit expenses, which were expensed as incurred, were approximately $124,386 (including prior years housing funds
of $11,014) and $4,911 for the years ended December 31, 2021 and 2020, respectively. Foreign Currency and Foreign Currency Translation The reporting currency of the Company is the
United States dollar (“US dollar”). The financial records of the Company’s PRC operating subsidiaries are maintained
in their local currency, the Renminbi (“RMB”), which is the functional currency. The financial records of the Company’s
Hong Kong operating subsidiary are maintained in its local currency, the Hong Kong Dollar (“HKD”), which is the functional
currency. Assets and liabilities of the subsidiaries are translated into the reporting currency at the exchange rates at the balance
sheet date, equity accounts are translated at historical exchange rates, and income and expense items are translated using the average
rate for the year. The translation adjustments are recorded in accumulated other comprehensive loss under shareholders’ equity. Monetary assets and liabilities denominated in
currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange
at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical
exchange rates. Transactions in currencies other than the applicable functional currencies during the year are converted into the functional
currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the
consolidated statements of operations. RMB is not a fully convertible currency. All
foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”)
or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are
the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation of amounts from RMB into US
dollars has been made at the following exchange rates for the respective periods:
Year ended December 31,
2020
Balance sheet,
except for equity accounts RMB 6.5401 to US$1.00
Income statement and cash
flows RMB 6.9021 to US$1.00
Year ended December 31,
2021
Balance sheet, except for
equity accounts RMB 6.3559 to US$1.00
Income statement and cash
flows RMB 6.4519 to US$1.00 During the years presented, HKD is pegged to
the U.S. dollar within a narrow range. Income Taxes Income taxes are accounted for using an asset
and liability approach which requires the recognition of income taxes payable or refundable for the current year and deferred tax liabilities
and assets for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns.
Deferred income taxes are determined based on the differences between the accounting basis and the tax basis of assets and liabilities
and are measured using the currently enacted tax rates and laws. Deferred tax assets are reduced by a valuation allowance, if based on
available evidence, it is considered that it is more likely than not that some portion of or all of the deferred tax assets will not
be realized. In making such determination, the Company considers factors including future reversals of existing taxable temporary differences,
future profitability, and tax planning strategies. If events were to occur in the future that would allow the Company to realize more
of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the deferred tax assets that would
increase income for the period when those events occurred. If events were to occur in the future that would require the Company to realize
less of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the valuation allowance against
deferred tax assets that would decrease income for the period when those events occurred. Significant management judgment is required
in determining income tax expense and deferred tax assets and liabilities. The Company conducts business in the PRC and
Hong Kong and is subject to tax in these jurisdictions. As a result of its business activities, the Company will file tax returns that
are subject to examination by the respective tax authorities. Uncertain Tax Positions Management reviews regularly the adequacy of
the provisions for taxes as they relate to the Company’s income and transactions. In order to assess uncertain tax positions, the
Company applies a more likely than not threshold and a two-step approach for tax position measurement and financial statement recognition.
For the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence
indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation
processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon
settlement. As of December 31, 2021 and 2020, the Company had not recorded any liability for uncertain tax positions. In subsequent periods,
any interest and penalties related to uncertain tax positions will be recognized as a component of income tax expense. Net income per Share of Common Stock The Company has adopted ASC Topic 260, “Earnings
per Share,” (“EPS”) which requires presentation of basic EPS on the face of the income statement for all entities with
complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation. In the accompanying
financial statements, basic earnings (loss) per share is computed by dividing net income by the weighted average number of shares of
common stock outstanding during the year.
2021 2020
Net income $ 1,086,400 $ 4,968,070
Weighted average number of common stock outstanding
- basic and diluted 1,701,181,423 1,701,181,423
Net income per share
- basic and diluted $ 0.00 * $ 0.00 *
* Less than $0.01 per share The calculation of basic net income per share
of common stock is based on the net income for the years ended December 31, 2021 and 2020 and the weighted average number of ordinary
shares outstanding. For the years ended December 31, 2021 and 2020,
the Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding. Segments The Company uses the “management approach”
in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s
chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s
reportable segments. Management, including the chief operating decision maker, reviews operating results solely by monthly revenue of
marketing consultation services and operating results of the Company and, as such, the Company has determined that the Company has one
operating segment (provision of consulting, sourcing and marketing services, and digital training related services in China) as defined
by ASC Topic 280 “Segment Reporting”. Concentration of Credit Risk Financial instruments that potentially subject
the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents. As of December 31, 2021 and 2020, $7,649,129
and $3,846,470 of the Company’s cash and cash equivalents, respectively were held at financial institutions and online payment
platforms located in the PRC and Hong Kong that management believes to be of high credit quality. The Company has not experienced any
losses on cash and cash equivalents to date. The Company does not require collateral or other securities to support financial instruments
that are subject to credit risk. The Company operates principally in the PRC and
Hong Kong and grants credit to its customers in these geographic regions. Although the PRC is economically stable, it is always possible
that unanticipated events in foreign countries could disrupt the Company’s operations. Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurement and
Disclosures
● Level
1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets
or liabilities in active markets.
● Level
2 inputs to the valuation methodology include quoted prices for similar assets and liabilities
in active markets, and inputs that are observable for the assets or liability, either directly
or indirectly, for substantially the full term of the financial instruments.
● Level
3 inputs to the valuation methodology are unobservable and significant to the fair value
measurement. Valuation of debt products depends upon a number
of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, and other relevant
terms of the debt. Other factors that may be considered include the borrower’s ability to adequately service its debt, the fair
market value of the borrower in relation to the face amount of its outstanding debt and the quality of collateral securing the Company’s
debt investments. The fair value of these debt products classified as Level 2 are established by reference to the prices quoted by respective
fund administrators. The carrying amounts of financial assets and
liabilities, such as cash and cash equivalents, accounts receivable, other receivables, loan to a related company, accounts payable and
other payables, amounts due to a director and a shareholder and borrowings approximate their fair values because of the short maturity
of these instruments or the rate of interest of these instruments approximate the market rate of interest. Comprehensive Income Comprehensive income is defined as the change
in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments
from owners and distributions to owners. Accumulated other comprehensive income includes cumulative foreign currency translation adjustment. |
