| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE – 2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES The accompanying condensed consolidated financial
statements reflect the application of certain significant accounting policies as described in this note and elsewhere in the accompanying
condensed consolidated financial statements and notes.
l Basis of presentation These accompanying condensed consolidated financial
statements have been prepared in U.S. Dollars in conformity with generally accepted accounting principles in the United States of America
(“U.S. GAAP”) for interim financial information pursuant to the rules and regulations of the Securities and Exchange Commission
(the “SEC”). Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the financial
statements not misleading have been included. Operating results for the interim period ended September 30, 2023 are not necessarily indicative
of the results that may be expected for the fiscal year ending December 31, 2023. The information included in this Form 10-Q should be
read in conjunction with Management’s Discussion and Analysis, and the financial statements and notes thereto included in the Company’s
Form 10-K for the fiscal year ended December 31, 2022 filed with the SEC on March 15, 2023.
l Use of estimates and assumptions In preparing these condensed consolidated financial
statements, management makes estimates and assumptions that affect the reported amounts of assets and liabilities in the balance sheet
and revenues and expenses during the periods reported. Actual results may differ from these estimates.
l Basis of consolidation The consolidated financial statements include
the accounts of NLSC and its subsidiary Orient Express and Co., Ltd.
l Net loss per share Basic loss per share is calculated by dividing
the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted
earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average
number of shares outstanding during the period.
l Accounts receivable Accounts receivables are recorded at the invoiced
amount and do not bear interest, which are due within contractual payment terms, generally required deposits received in advance and the
remaining is due upon installation and inspection. Credit is extended based on evaluation of a customer's financial condition, the customer
credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered
past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of fiscal
year, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions
to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any
estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not
being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution
in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential
for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.
l Revenue Recognition The Company adopted Accounting Standards Update
("ASU") No. 2014-09, Revenue from Contracts with Customers Under ASU 2014-09, the Company recognizes revenue
when control of the promised goods or services is transferred to customers, in an amount that reflects the consideration the Company expects
to be entitled to in exchange for those goods or services. The Company applies the following five steps in
order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
· identify the contract with a customer;
· identify the performance obligations in the contract;
· determine the transaction price;
· allocate the transaction price to performance obligations in the contract; and
· recognize revenue as the performance obligation is satisfied. The Company’s revenue is derived from the
sales of rubber foaming machine. The Company considers customer order confirmations to be a contract with the customer. Customer confirmations
are executed at the time an order is placed. Revenue is recognized when control of the product is transferred to the customer (i.e., when
the Company’s performance obligation is satisfied), which typically occurs at shipment date. As a result, the Company has a present
and unconditional right to payment and record its accounts receivable. For each contract, the Company considers the promise
to transfer products to be the only identified performance obligation. The Company’s revenues are recognized at a point in time.
l Cash and Cash Equivalent Cash and cash equivalents are carried at cost
and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an
original maturity of three months or less as of the purchase date of such investments.
l 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 intangible asset held and used 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.
l Leases The Company adopted Topic 842, Leases (“ASC
842”). At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique
facts and circumstances present. Leases with a term greater than one year are recognized on the balance sheet as right-of-use (“ROU”)
assets, lease liabilities and long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with terms
of one year or less. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of
lease payments over the expected remaining lease term. However, certain adjustments to the right-of-use asset may be required for items
such as prepaid or accrued lease payments. The interest rate implicit in lease contracts is typically not readily determinable. As a result,
the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar
term an amount equal to the lease payments in a similar economic environment. In accordance with the guidance in ASC 842, components
of a lease should be split into three categories: lease components (e.g. land, building, etc.), non-lease components (e.g. common area
maintenance, consumables, etc.), and non-components (e.g. property taxes, insurance, etc.). Subsequently, the fixed and in-substance fixed
contract consideration (including any related to non-components) must be allocated based on the respective relative fair values to the
lease components and non-lease components. Lease expense is recognized on a straight-line
basis over the lease terms. Lease expense includes amortization of the ROU assets and accretion of the lease liabilities. Amortization
of ROU assets is calculated as the periodic lease cost less accretion of the lease liability. The amortized period for ROU assets is limited
to the expected lease term. The Company has elected a practical expedient
to combine the lease and non-lease components into a single lease component. The Company also elected the short-term lease measurement
and recognition exemption and does not establish ROU assets or lease liabilities for operating leases with terms of 12 months or less.
l 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:
● Level 1
● Level 2 -
● Level 3 The carrying value of the Company’s financial
instruments: cash and cash equivalents, restricted cash, accounts receivable, loans receivable and amount due to or from a related party,
approximate their fair values because of the short-term nature of these financial instruments. Fair value estimates are made at a specific point
in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties
and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect
the estimates.
l Income taxes The Company adopted the ASC 740 Income tax The estimated future tax effects of temporary
differences between the tax basis of assets and liabilities are reported in the accompanying balance sheets, as well as tax credit carry-backs
and carry-forwards. The Company periodically reviews the recoverability of deferred tax assets recorded on its balance sheets and provides
valuation allowances as management deems necessary.
l Uncertain tax positions The Company did not take any uncertain tax positions
and had no adjustments to its income tax liabilities or benefits pursuant to the ASC 740 provisions of Section 740-10-25 for the periods
ended September 30, 2023 and 2022.
l Related parties The Company follows the ASC 850-10, Related
Party Pursuant to section 850-10-20 the related parties
include a) affiliates of the Company; b) entities for which investments in their equity securities would be required, absent the election
of the fair value option under the Fair Value Option Subsection of section 825–10–15, to be accounted for by the equity method
by the investing entity; c) trusts for the benefit of employees, such as pension and Income-sharing trusts that are managed by or under
the trusteeship of management; d) principal owners of the Company; e) management of the Company; f) other parties with which the Company
may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one
of the transacting parties might be prevented from fully pursuing its own separate interests; and g) other parties that can significantly
influence the management or operating policies of the transacting parties or that have an ownership interest in one of the transacting
parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully
pursuing its own separate interests. The 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. However, disclosure of transactions that are eliminated in the preparation of consolidated
or combined financial statements is not required in those statements. The disclosures shall include: a) the nature of the relationship(s)
involved; b) a description of the transactions, including transactions to which no amounts or nominal amounts were ascribed, for each
of the periods for which income statements are presented, and such other information deemed necessary to an understanding of the effects
of the transactions on the financial statements; c) the dollar amounts of transactions for each of the periods for which income statements
are presented and the effects of any change in the method of establishing the terms from that used in the preceding period; and d) amount
due from or to related parties as of the date of each balance sheet presented and, if not otherwise apparent, the terms and manner of
settlement.
l Commitments and contingencies The Company follows the ASC 450-20, Commitments 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 condensed consolidated 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.
l Recent accounting pronouncements The FASB established the Accounting Standards
Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the
FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting
principles in the United States (“GAAP”). Rules and interpretative releases of the Securities
and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Other accounting standards that have been issued
or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements
upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its
financial condition, results of operations, cash flows or disclosures. |
