| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation The
consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States
of America. This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized
when earned, and expenses and losses are recognized when incurred. The consolidated financial statements are expressed in U.S. dollars. Principles
of Consolidation The
consolidated financial statements include the financial statements of the Company, its subsidiaries and variable interest entity (“VIE”).
All significant intercompany transactions and balances within the Company have been eliminated upon consolidation. Use
of Estimates and Assumptions The
preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make
estimate and assumptions that impact the presented amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the presented amounts of revenues and expenses during the period. Actual results may differ
from those estimates. Significant estimates during the year ended September 30, 2022 and 2021 include the collectability of receivables,
the useful lives of long-lived assets and intangibles, assumptions used in assessing impairment of long-lived assets, valuation of accruals
for expenses and tax due. Reclassification Certain
amounts in the prior period financial statements have been reclassified to conform to the current period presentation. Going
Concern The
accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the
United States of America which contemplate continuation of the Company as a going concern basis. The going-concern basis assures
that assets are realized and liabilities are extinguished in the ordinary course of business at amounts disclosed on the financial
statements. The Company’s ability to continue as a going concern depends on the liquidation of its current assets and business
developments. In assessing the Company’s liquidity, the Company monitors and analyzes its cash and cash equivalents and its
operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements,
operating expenses and capital expenditure obligations. For the year ended September 30, 2022, the Company incurred cash outflows
from operating activities of $ 1,592,130 1,972,841 4,254,598 The
Company continues to monitor its operations to help refine the Company’s financial liquidity. The financial liquidity of the
Company has declined to very unhealthy level in this year due to the decline in the balance of cash and cash equivalent. Options
under consideration in the review process include, but not limited to, increase of sales on its online business, reduction of
overhead costs, fund advance from the Company’s stockholders and directors, or financing through issuance of shares. Besides,
our new online platform which focuses on promoting and selling own brand preventive health care products to wholesalers and
retailers was placed in service in October 2022. Since the first quarter of 2022, the Company has been focusing on increasing its
revenue through its online platform to reduce the costs of goods sold and slimming its administrative overhead costs. For example,
we reduced the compensation and benefits of our executives, decreased office supplies expense, trimmed staff meeting expense.
Additionally, the Company obtained a fund advance of approximately $ 0.3 In
order to continue as a going concern for the next 12 months, the Company continues to focus on increasing its revenue through the
sale of health care products on its online platform, King Eagle Mall, and promoting and selling its own brand health care products
on its new online platform to reduce costs of goods sold, streamlining its overhead costs or obtaining a financing from its stockholders or directors. However,
the Company cannot provide any assurance that it will be able to increase revenue, that it will be able to successfully implement
its business plan, or that financing that will be available to it on commercially acceptable terms, if at all. The financial
statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets
or the amounts and classifications of liabilities that may result should the Company be unable to continue as a going concern. The
directors will continue to support the group by providing adequate financial assistance to enable the group to continue its business
operations for the foreseeable future. COVID-19
Outbreak The
COVID-19 pandemic has resulted in quarantines, travel restrictions, limitations on social or public gatherings, and the temporary closure
of business venues and facilities around the world. Due to restrictions, quarantines and closures in certain affected areas and government
agencies in the PRC, the approval process of our applications for construction permits for Smart Kiosks was delayed by the local governmental
agencies and construction projects of Smart Kiosks were therefore postponed. Businesses
and markets in mainland China have reopened and mainland China relaxed its policies and controls relating to COVID-19 in early
December 2022. The number of cases of COVID-19 is expected to increase greatly which may cause restrictions on our service agents to travel and launch face-to-face marketing activities. Construction of our Smart Kiosks may not be
immediate, which impacts our plan of enhancing our face-to-face customer services and increasing our market share. The Company
continues to focus its business on its online platform, King Eagle Mall, and to promote its own brand of consumer health care and
health related household products on its new online platform, which was introduced and implemented in October 2022, to mitigate the
adverse impacts of COVID-19. The Company also follows up closely with the local governmental agencies regarding its applications for
construction permits for Smart Kiosks. However, as the pandemic increased overall public health consciousness in the PRC, the
Company’s average monthly online sale revenue increased by $ 0.2 34.4 0.4 0.6 Therefore,
we do not expect that the virus will have a material adverse effect on our business or financial results at this time. However, it is
not possible to predict the unanticipated consequence of the pandemic on our future business performance and liquidity due to the severity
of global situation of COVID-19. The Company continues to monitor and assess the evolving situation closely and evaluate its potential
exposure. Earnings
(loss) Per Share Basic
income (loss) per share is computed by dividing net income (loss) attributable to the holders of ordinary shares by the weighted average
number of ordinary shares outstanding during the year. Diluted income (loss) per share is calculated by dividing net income (loss) attributable
to the holders of ordinary shares as adjusted for the effect of dilutive ordinary share equivalents, if any, by the weighted average
number of ordinary shares and dilutive ordinary share equivalents outstanding during the period. However, ordinary share equivalents
are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be anti-dilutive,
such as in a period in which a net loss is recorded. Foreign
Currency Translation The
reporting currency of the Company is the U.S. Dollar. Our entity in British Virgin Islands use U.S. dollar. Our entities in the PRC and
Hong Kong use the local currencies, Renminbi (RMB) and Hong Kong Dollar (HKD), as its functional currencies as determined based on the
criteria of ASC 830, “Foreign Currency Translation”. Assets and liabilities are translated at the unified exchange rate as
quoted by www.xe.com at the end of the period. Income and expense accounts are translated at the average translation rates and the equity
accounts are translated at historical rates. Translation adjustments resulting from this process are included in accumulated other comprehensive
income in the statement of equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated
in a currency other than the functional currency are included in the results of operations as incurred. Translation adjustments included
in accumulated other comprehensive gain (loss) amounted to $ 279,367 (32,016) Below
is a table with foreign exchange rates used for translation: SCHEDULE OF FOREIGN EXCHANGE RATES
For the year ended September 30, 2022 (Average Rate) Hong Kong Dollar (HKD) Chinese Renminbi (RMB)
United States dollar ($1) 7.8221 6.5473
As of September 30, 2022 (Closing Rate)
United States dollar ($1) 7.8500 7.1159
For the year ended September 30, 2021 (Average Rate) Hong Kong Dollar (HKD) Chinese Renminbi (RMB)
United States dollar ($1) 7.7631 6.5101
As of September 30, 2021 (Closing Rate)
United States dollar ($1) 7.7851 6.4466 Cash
and Cash Equivalents Cash
and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions
and a certain amount of cash kept in electronic wallets, “e-wallets”. We consider all highly liquid investments with an original maturity of three
months or less when purchased to be cash equivalents. We maintain accounts with various financial institutions in the PRC, and also e-wallets.
As of September 30, 2022 and 2021, cash balances held in PRC banks are uninsured. Monies that are held in e-wallets are deemed equivalent
to cash, they are highly liquid, and are relatively unsafe compared to cash in banks. We have not experienced any losses in bank accounts
or e-wallets and believe we are not exposed to significant risks with respect to our cash in bank accounts and low risk for our cash in e-wallets. Financial
Instrument The
carrying amount reported in the balance sheet for cash, other receivables, accrued liabilities and other payables approximate fair value
because of the immediate or short-term maturity of these financial instruments. Property
and Equipment Property
and equipment are stated at cost less accumulated depreciation and impairment losses. Gains and losses on dispositions of property and
equipment are included in operating income (loss). Major additions, renewals and improvements are capitalized, while maintenance and
repairs are recognized as expense as incurred. Depreciation
is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method over the
useful lives of the assets are as follows: SCHEDULE OF PROPERTY PLANT AND EQUIPMENT USEFUL LIVES
Classification Estimated useful
life
Leasehold improvements 5
Office equipment 3
Computer equipment 3
Computer software 5 Intangible
Assets Intangible
assets represent the licensing cost for the trademark registration. For intangible assets with indefinite lives, the Company evaluates
intangible assets for impairment at least annually and more often whenever events or changes in circumstances indicate that the carrying
value may not be recoverable. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the
carrying value exceeds the fair value. For intangible assets with definite lives, they are amortized over estimated useful lives, and
are reviewed annually for impairment. The Company has not recorded impairment of intangible assets as of September 30, 2022 and 2021. Impairment
of Long-lived Assets Long-lived
assets, including buildings and intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances
(such as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying
value of an asset may not be recoverable. We assess the recoverability of the assets based on the undiscounted 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.
When we identify an impairment, reduce the carrying amount of the asset to the estimated fair value based on a discounted cash flows
approach or, when available and appropriate, to comparable market values. As of September 30, 2022 and 2021, management determined that
there was no impairment. Fair
Value Measurements The
Company applies the provisions of ASC Subtopic 820-10, “Fair Value Measurements”, for fair value measurements of financial
assets and financial liabilities and for fair value measurements of non-financial items that are recognized or disclosed at fair value
in the financial statements. ASC 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements. Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted
to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers
assumptions that market participants would use when pricing the asset or liability. ASC
820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. ASC 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value
hierarchy are as follows:
● 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. The
Company’s financial assets and liabilities include cash, receivables, accounts payable and accrued expenses. Related
Party Transactions The
Company follows the ASC 850-10, “Related Party Disclosures” for the identification of related parties and disclosure
of related party transactions. 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
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 c) such other information deemed necessary to an understanding of the nature of the related party
transactions. Comprehensive
Income (Loss) Other
comprehensive income (loss) refers to revenues, expenses, gains and losses that under generally accepted accounting principles are included
in comprehensive income but are excluded from net income (loss) as these amounts are recorded directly as an adjustment to stockholders’
equity. Our other comprehensive loss for the years ended September 30, 2022 and 2021 was comprised of foreign currency translation adjustments. Revenue
Recognition Revenue
is comprised of sales of goods and represents the amount of consideration
the Company is entitled to upon the transfer of goods. Pursuant to FASB ASU No. 2016-08, Revenue from Contracts with Customers (TOPIC
606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), the Company recorded revenue on a gross basis, net of
surcharges and value added tax (“VAT”) of gross sales. The Company recorded revenue on a gross basis because the Company is
the primary obligor of the sales arrangements has latitude in establishing prices, has discretion in suppliers’ selection and assumes
credit risks on receivables on gross sales from customers. The
Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU
2014-09”) using the full retrospective transition method. The Company’s adoption of ASU 2014-09 did not have a material impact
on the amount and timing of revenue recognized in its consolidated financial statements. 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. Consistent
with the criteria of ASC 606 “Revenue from Contracts with Customers,” we recognize revenue when performance obligations are
satisfied by transferring control of a promised good or service to a customer. For performance obligations that are satisfied at a point
in time, we also consider the following indicators to assess whether control of a promised good or service is transferred to the customer:
(i) right to payment, (ii) legal title, (iii) physical possession, (iv) significant risks and rewards of ownership, and (v) acceptance
of the good or service. For performance obligations satisfied over time, we recognize revenue over time by measuring the progress toward
complete satisfaction of a performance obligation. Deferred
Revenue Deferred
revenue results from transactions where the Company has received the payments from the customers but revenue recognition criteria
under the five-step model of ASC Topic 606 have yet to be met. Once all revenue recognition criteria have been satisfied, the
revenues will be recognized upon the transfer of risk and rewards to the customers in the consolidated statement of operations. We
anticipated the majority of the revenue will be recognized in the fiscal year 2023. Management agreed that the amount received is
non-refundable; however, this term is not bound by any agreement. Thus, the customers may have the rights to challenge and demand
the advances to be refunded under relevant Commercial Laws or regulations. Accrued Product Liability The Company records accruals for
product liability when deemed probable and estimable based on facts and circumstances, and prior claims experience. Accruals for product
credit are valued based upon the Company’s prior claims experience, including defect goods, goods lost in transit. We have experienced
insignificant amount of goods returned and claims from goods lost in transit from the past, our product liability is insignificant; therefore,
Management believes product liability accrual as at September, 30 2022 and 2021 is not required. Discount allowed - Accrued Store-Credit We provide store-credit, “Golden
Beans” to our customers after sales of goods to them. The Golden Beans can be utilized against their future purchases with restrictions
and expiry date. The amount utilized will be recognized as direct discount as and when the sales arise, and the price net of this discount
has been controlled and set by the management, to ensure that the sales will always result in a gross profit. As such, we do not accrue
any liability from this store-credit as there is no present obligation arising from this Golden Bean as of September, 30 2022, and 2021,
and the utilization of these Golden Beans is not expected to result in an outflow from the Company’s resources embodying economic
benefits. Lease Under
ASC Topic 842, the Company determines if an arrangement is a lease at inception. Lease assets and liabilities are recognized at the present
value of the future lease payments at the lease commencement date. The interest rate used to determine the present value of the future
lease payments is the Company’s incremental borrowing rate based on the information available at the lease commencement date. The
Company generally uses the base, non-cancelable lease term in calculating the right-of-use assets and lease liabilities. The
Company may recognize the lease payments in the condensed consolidated statements of operation on a straight-line basis over the lease
terms and variable lease payments in the periods in which the obligations for those payments are incurred, if any. The lease payments
under the lease arrangements are fixed. The
Company elected the package of practical expedients which allow the Company to carryforward its historical lease classification, its
assessment on whether a contract is or contains a lease, and its initial direct costs for any lease that exists prior to adoption of
the new standard. The
Company also elected to apply the short-term lease exception for lease arrangements with a lease term of 12 months or less at commencement.
Lease terms used to compute the present value of lease payments do not include any option to extend, renew, or terminate the lease that
the Company is not reasonably certain to exercise upon the lease inception. Accordingly, operating lease right-of-use assets and liabilities
do not include leases with a lease term of 12 months or less. Research
and Development Expenses Research
and development (R&D) expenses are all costs associated with the original development and design of the product as well as any intellectual
property (IP) generated during the development phase, including patents and copyrights. Research and development expenses are included
in the overall operating expenses and reflected as a separate line item on the consolidated statement of operations. We purchase the consumer preventive
health food and health related household products sold on our platforms from our suppliers and we did not develop, design or manufacture
those products. Moreover, although we have built our online platform and mobile commerce in-house, the compensation costs for our in-house
technology team were not significant. Accordingly, instead of capitalizing the compensation costs of our in-house technology team as Research
and Development in Balance Sheet or presenting it as Research and Development expenses, we included these amounts in Employee Compensation
and Benefit expenses within General and Administrative expenses for the years ended September 30, 2022 and 2021. Selling
Expenses Selling expenses consist primarily of marketing and promotional service
fee to service agents and other costs incurred by our sales and marketing department such as staff costs, office supplies and other incidental
expenses that are incurred directly to attract or retain consumers. Our
selling expenses for the years ended September 30, 2022 and 2021 were $ 6,641,485 3,741,389 5,844,846 2,929,080 Concentration
of Risk Credit
risk Financial
instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents
and other receivable. As September 30, 2022 and 2021, $ 252,512 1,796,861 1,886,622 12,162,295 Historically,
deposits in Chinese banks are secure due to state policy to protect depositor interests. However, China promulgated a Bankruptcy Law
in August 2006 that came into effect on June 1, 2007, which contains a separate article expressly stating that the State Council may
promulgate implementation measures to provide for the bankruptcy of Chinese banks based on the Bankruptcy Law. Under the current Bankruptcy
Law, a Chinese bank may file bankruptcy if it deems itself to be insolvent. In addition, since China’s concession to the World
Trade Organization, foreign banks have been gradually permitted to operate in China and have intensified competition in many aspects,
especially since the opening of the Renminbi business to foreign banks in late 2006. Therefore, the risk of bankruptcy at the institutions
that the Company maintains deposits has increased. In the event of bankruptcy, the Company is unlikely to reclaim its deposits in full
since it is unlikely to be classified as a secured creditor under PRC laws. Risks
of variable interest entity structure In
the opinion of management, (i) the corporate structure of the Company is in compliance with existing PRC laws and regulations; (ii) the
VIE Arrangements are valid and binding, and do not result in any violation of PRC laws or regulations currently in effect; and (iii)
the business operations of the foreign-invested enterprise and the VIE are in compliance with existing PRC laws and regulations in all
material respects. However,
there are substantial uncertainties regarding the interpretation and application of current and future PRC laws and regulations. Accordingly,
the Company cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to the foregoing opinion of its
management. If the current corporate structure of the Company or the VIE Arrangements is found to be in violation of any existing or
future PRC laws and regulations, the Company may be required to restructure its corporate structure and operations in the PRC to comply
with changing and new PRC laws and regulations. In the opinion of management, the likelihood of loss in respect of the Company’s
current corporate structure or the VIE Arrangements is remote based on current facts and circumstances. Foreign
currency exchange risk The
value of RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political
and economic conditions and the foreign exchange policy adopted by the PRC government. It is difficult to predict how market forces or
PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. There remains significant
international pressure on the PRC government to adopt a more flexible currency policy, which could result in greater fluctuation of the
RMB against the U.S. dollar. The Company is a holding company and it relies on dividends paid by the Company’s operating subsidiaries
in China for its cash needs. Any significant revaluation of the RMB may materially and adversely affect its liquidity and cash flows.
To the extent that the Company needs to convert U.S. dollars into RMB for its operations, appreciation of the RMB against the U.S. dollar
would have an adverse effect on the RMB amount the Company would receive. Conversely, if the Company decides to convert RMB into U.S.
dollars for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar
amount the Company would receive. Liquidity
risk Liquidity risk is the risk that the Company will encounter difficulty raising
liquid funds to meet commitments as they fall due. See our commitments and contingencies in Note 13 under Item 8, Financial Statements
and Supplementary Data. In meeting its liquidity requirements, the Company continues to focus on increasing its revenue through the sale
of consumer health care products on its online platform, King Eagle Mall, and promoting its own brand of preventive health care related
products on its new online platform to reduce its costs of goods sold, streamlining its overhead costs, or obtaining financing from its
stockholders or directors. Concentration
of customers and vendors There
was no revenue from customers that individually represent greater than 10% For
the year ended September 30, 2022, four major vendors accounted for 18% 16% 16% 12% For
the year ended September 30, 2021, three major vendors accounted for 22% 16% 14% Income
Taxes We
account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the
difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in
the period in which the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets if,
based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not
be realized. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment
date. We
apply ASC 740, Accounting for Income Taxes Commitments
and Contingencies The
Company follows the ASC 450-20, “Contingencies” 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 un-asserted 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 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. Recent
Accounting Pronouncement Recently
Adopted Accounting Standards Income
Taxes Accounting
Pronouncements Issued But Not Yet Adopted Financial
Instruments In
the period from October 2022 through December 2022, the FASB has not issued any additional accounting standards updates that have a significant
impact on the Company. |
