| SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES A. Basis of presentation The consolidated financial statements have been
prepared in accordance with the United States generally accepted accounting principles (“U.S. GAAP”). B. Principles of consolidation The consolidated financial statements include
the accounts of the Company and its subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. C. Use of estimates The preparation of consolidated financial statements
in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and
expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates
are made; however actual results could differ from those estimates. Significant items subject to such estimates and assumptions include
valuation allowances for receivables and recoverability of carrying amount and the estimated useful lives of long-lived assets. These
estimates are often based on complex judgments and assumptions that management believes to be reasonable but are inherently uncertain
and unpredictable. Actual results could differ from these estimates. D. Functional currency and foreign currency
translation JRSS and JHCL’s functional currency is the
United States dollar (“US$”). Runteng’s functional currency is the Hong Kong dollar (“HK$”). The functional
currency of Laidian and Jiarun is the Renminbi (“RMB”). The Company’s reporting currency is US$.
Assets and liabilities of Runteng, Laidian and Jiarun are translated at the current exchange rate at the balance sheet dates, revenues
and expenses are translated at the average exchange rates during the reporting periods, and equity accounts are translated at historical
rates. Translation adjustments are reported in other comprehensive income. The exchange rates used for foreign currency translation
are as follows:
Six
Months Ended
2023 2022
(USD to RMB/ ( USD to RMB/
Assets and liabilities period end exchange rate 7.2513 / 7.8363 6.6977 / 7.8467
Revenue and expenses period average 6.9256 / 7.8394 6.4787 / 7.8257 E. Concentration of Credit Risk Financial instruments that potentially subject
the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities.
The Company places its cash in what it believes to be credit-worthy financial institutions. The majority of sales are either cash receipt
in advance or cash receipt upon delivery. As of June 30, 2023, one customer accounted for 100% of net accounts receivable, and as of December
31, 2022, no customer accounted for more than 5% of net accounts receivable. For those credit sales, the Company routinely assesses
the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for
uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.
For the six months ended June 30, 2023, one customer accounted for 100% of total revenue. For the six months ended June 30, 2022, no customer
accounted for more than 10% of net revenue. F. Cash and cash equivalents Cash and cash equivalents include all cash, deposits
in banks and other liquid investments with initial maturities of three months or less. G. Property and equipment Property and equipment are stated at cost. Expenditures
for maintenance and repairs are charged to operations when incurred, while additions and betterments are capitalized. Depreciation is
recorded on a straight-line basis reflective of the useful lives of the assets. When assets are retired or disposed, the asset’s
original cost and related accumulated depreciation are eliminated from accounts and any gain or loss is reflected in income. The estimated useful lives for property and equipment
categories are as follows:
Transportation instrument 5 years
Office equipment 5 years H. Leases In February 2016, the FASB issued ASU 2016-02
Leases (Topic 842), which increases transparency and comparability among organizations by recognizing right-of-use (“ROU”)
lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU maintains a
distinction between finance leases and operating leases, which is substantially similar to the classification criteria for distinguishing
between capital leases and operating leases in the previous lease guidance. Retaining this distinction allows the recognition, measurement
and presentation of expenses and cash flows arising from a lease to remain similar to the previous accounting treatment. A lessee is permitted
to make an accounting policy election by class of underlying asset to exclude from balance sheet recognition any lease assets and lease
liabilities with a term of 12 months or less, and instead to recognize lease expense on a straight-line basis over the lease term. For
both financing and operating leases, the ROU asset and lease liability is initially measured at the present value of the lease payments
in the consolidated balance sheet. In July 2018, the FASB issued ASU 2018-11 which provides entities with the option to initially apply
the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in
the period of adoption, if necessary. As discussed in Note 8, we adopted ASU 2016-02–Leases (Topic 842) effective January 1, 2019
utilizing the transition option provided by ASU 2018-11. I. Fair Value Measurement 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 nonfinancial 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 when selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. In determining the fair value for the assets and liabilities required or permitted to be recorded, 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: Unadjusted quoted prices in
active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2: Quoted prices in markets that
are not active, or inputs that is observable, either directly or indirectly, for substantially the full term of the asset or liability; Level 3: Prices or valuation techniques
that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). Cash and cash equivalents, other receivables,
deferred expenses, accounts payable, amount due to related parties, other payable and payroll payable are reflected in the accompanying
consolidated financial statements at amounts that approximate fair value because of the short-term nature of these instruments. The fair
value of the Company’s lease liabilities also approximates carrying value as they bear interest at current market rates. J. Segment and geographic information An operating segment is a component of the Group
that engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internal
financial reports that are provided to and regularly reviewed by the Group’s chief operating decision maker in order to allocate
resources and assess performance of the segment. In accordance with ASC (“Accounting Standard
Codification”) 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial
information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group,
in deciding how to allocate resources and in assessing performance. The Group uses the “management approach” in determining
reportable operating segments. The management approach considers the internal organization and reporting used by the Group’s chief
operating decision maker for making operating decisions and assessing performance as the source for determining the Group’s reportable
segments. The Group’s CODM has been identified as the chief executive officer (the “CEO”), who reviews consolidated
results when making decisions about allocating resources and assessing performance of the Group. The Group has determined that there is only one
reportable operating segment since all of the services provided are viewed as an integrated business process and allocation of the resources
and assessment of the performance are not separately evaluated by the Group’s CODM. K. Revenue recognition The Company recognizes revenue when the contract
and performance obligations are identified with a customer, the transaction price are determined and allocated to the performance obligations
in the contract for which the amount of revenue can be reliably measured. The Company will recognize revenue when the entity satisfies
a performance obligation, it is probable that economic benefits will flow to the entity, and specific criteria have been met for each
of the Company’s activities. L. Shares Issued for Officer’s Compensation The Company accounts for stock-based compensation
in accordance with ASC 718-10 “Compensation-Stock Compensation” which requires the measurement and recognition of compensation
expense for all share-based payment awards made to employees and directors including employee stock options, restricted stock units, and
stock appreciation rights are based on estimated fair values. Stock-based compensation expense recognized during the period is based on
the value of the portion of share-based payment awards that is ultimately expected to vest during the period. The Company accounts for non-employee stock-based
awards at fair value in accordance with the measurement and recognition criteria of ASC 505-50 “Equity-Based Payments to Non-Employees. Share-based payment awards granted to a customer
shall be measured and classified according to the terms of award. A share-based payment transaction shall be measured based on the fair
value. On May 5, 2022, the Company issued 3,913,000 shares of its common stock as officer compensation to Zhong Zhuowei upon the initiation
of operations of Laidian. These shares had a negotiated value of $1,056,510, of which $74,652 was obligation for Laidian’s paid
in capital, remaining $981,858 was the expense of the Company for 3 years since April of 2022. For the six months ended June 30, 2023,
the Company recorded $163,643 compensation expenses. M. Income taxes The Company has adopted FASB ASC Topic 740, “Income
Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events
that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each
period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. In July 2006, the FASB issued FIN 48(ASC 740-10),
Accounting for Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109 (ASC 740), which requires income tax positions
to meet a more-likely-than-not recognition threshold to be recognized in the financial statements. Under FIN 48 (ASC 740-10), tax positions
that previously failed to meet the more-likely-than-not threshold should be recognized in the first subsequent financial reporting period
in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not threshold should be derecognized
in the first subsequent financial reporting period in which that threshold is no longer met. The application of tax laws and regulations is
subject to legal and factual interpretation, judgment and uncertainty. Tax laws and regulations themselves are subject to change as a
result of changes in fiscal policy, changes in legislation, the evolution of regulations and court rulings. Therefore, the actual liability
may be materially different from our estimates, which could result in the need to record additional tax liabilities or potentially reverse
previously recorded tax liabilities or deferred tax asset valuation allowance. As a result of the implementation of FIN 48 (ASC
740-10), the Company made a comprehensive review of its portfolio of tax positions in accordance with recognition standards established
by FIN 48 (ASC 740-10). The Company recognized no material adjustments to liabilities or shareholder’s equity as a result of the
implementation. The adoption of FIN 48 did not have a material impact on the Company’s unaudited consolidated financial statements. Enterprise income tax is determined under the
Provisional Regulations of PRC Concerning Income Tax on Enterprises promulgated by the PRC, income tax is payable by enterprises at a
rate of 25% of their taxable income. N. Earnings per share Basic earnings per common share is computed by
using net income divided by the weighted average number of shares of common stock outstanding for the periods presented. Diluted earnings
per share is computed by dividing net income by the weighted average number of shares of common stock, common stock equivalents and potentially
dilutive securities outstanding for the periods presented. The dilutive earnings per share will not be computed if the effect would be
anti-dilutive. O. Reclassification The comparative figures before April 1, 2022 have
been reclassified to conform to current year presentation to reflect the disposal of a component of business derived from the recognition
of a spin-off transaction on April 28, 2022. P. Recently adopted accounting pronouncements The FASB has issued Accounting Standards Update
(ASU) No. 2019-01, Leases (Topic 842): Codification Improvements. The new ASU aligns the guidance for fair value of the underlying asset
by lessors that are not manufacturers or dealers in Topic 842 with that of existing guidance. As a result, the fair value of the underlying
asset at lease commencement is its cost, reflecting any volume or trade discounts that may apply. However, if there has been a significant
lapse of time between when the underlying asset is acquired and when the lease commences, the definition of fair value (in Topic 820,
Fair Value Measurement) should be applied. The ASU also requires lessors within the scope
of Topic 942, Financial Services—Depository and Lending, to present all “principal payments received under leases” within
investing activities. Finally, the ASU exempts both lessees and lessors
from having to provide certain interim disclosures in the fiscal year in which a company adopts the new leases standard. We do not believe other recently issued but not
yet effective accounting standards, if currently adopted, would have a material effect on the consolidated financial position, statements
of operations and cash flows. |
