| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The financial statements of the Company have been
prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Going
Concern The accompanying
condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction of liabilities in
the normal course of business are dependent on, among other things, the Company’s ability to operate profitably, to generate cash
flows from operations, and to pursue financing arrangements to support its working capital requirements. 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. As of December 31, 2021, the Company’s current liabilities exceeded the current assets by $ ,
its accumulated deficit was $ and the Company has incurred losses during the three
months ended December 31, 2021 and 2020. None of the Company’s stockholders, officers or directors, or third parties, are under
any obligation to advance us funds, or to invest in us. Accordingly, we may not be able to obtain additional financing. If we are unable
to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily
be limited to, curtailing operations, suspending the pursuit of our business plan, and reducing overhead expenses. We cannot provide any
assurance that new financing will be available to us on commercially acceptable terms, if at all. In evaluating
if there is substantial doubt about the ability to continue as a going concern, the Company are trying to alleviate the going concern
risk through (1) increasing cash generated from operations by controlling operating expenses and increasing more online and offline training
sessions to bring in more training revenue, (2) financing from domestic banks and other financial institutions, and (3) equity or debt
financing. The Company has certain plans to mitigate these adverse conditions and to increase the liquidity. On an on-going
basis, the Company will also receive financial support commitments from the Company’s related parties. These conditions
raise substantial doubt about our ability to continue as a going concern. 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. Use of Estimates The preparation of these interim condensed consolidated
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 on-going 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 interim condensed consolidated financial statements. COVID-19 Outbreak In March 2020 the World Health Organization
declared coronavirus COVID-19 a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, workforces, customers,
and created significant volatility and disruption of financial markets. It has also disrupted the normal operations of many businesses,
including ours. This outbreak could decrease spending, adversely affect demand for our services and harm our business and results of operations.
It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects on our business
or results of operations at this time. Revenue Recognition The Company recognizes revenues when its customer
obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange
for those goods or services. 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) the Company satisfies the
performance obligation. Revenues are recognized when control of the promised
goods or services is transferred to our customers, which may occur at a point in time or over time depending on the terms and conditions
of the agreement, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. The Company identified the following performance obligations for each
type of contract: Training Revenue The Company’s offline training course service
primarily includes assigning instructors, providing offline classes and presenting training materials to the course participants who attend
the classes. The series of tasks as discussed above are interrelated and are not separable or distinct as the clients cannot benefit from
the standalone task. The Company’s online training course service
primarily includes coursewares or videos which are already published on the website. Other than providing the access, there are no bundle
or multiple separable and distinct tasks. According to ASC 606-10-25-19, there is one performance
obligation for the training course service. China Good Student Project Revenue The Company’s China Good Student
Project includes assisting in both promoting the program and organizing activities for the course participants. Those tasks are not separable
and the course participants cannot benefit from the standalone task as defined under ASC 606-10-25-19. Thus, there is only one performance
obligation with respect to the China Good Student Project service. Mobile Phone Revenue The Company’s sales contracts
of anti-addiction mobile phone device provide that the Company provides multiple delivery of the product specified in the contracts. The
contacts identify the quantity, product model, product type and unit price of the product that will be sold to our customers. The contracts
allow the customers to place separate orders within the credit limit as specified in the contracts. The delivery is based on the quantity
the customers order. The Company’s customers can benefit from the mobile phone devices every time it delivers to them. Therefore,
the delivery of the products is separately identifiable and distinct. Hence, there are multiple performance obligations
in each of the sale contracts of anti-addiction mobile phone device. 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 product line
For The Three Months Ended
2021 2020
Training Revenue $ 95,155 $ 1,260,600
Mobile Phone Revenue - -
Other Revenue 1,023 872
Total Revenue $ 96,178 $ 1,261,472 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 Foreign Currency and Foreign Currency Translation The functional currency of the Company is the
United States dollar (“US dollar”). Fengyuan Beijing, Zhuoxun Beijing, and Zhuoxun Beijing’s subsidiaries,
all of which are based in PRC, use the local currency,
the Chinese Yuan (“RMB”), as their functional currencies. An entity’s functional currency is the currency of the primary
economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and
expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash
flows, sales price and market, expenses, financing and inter-company transactions and arrangements. Foreign currency transactions denominated in currencies
other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are re-measured at the applicable
rates of exchange in effect at that date. Gains and losses resulting from foreign currency re-measurement are included in the statements
of comprehensive loss. The interim condensed consolidated financial statements
are presented in U.S. dollars. Assets and liabilities are translated into U.S. dollars at the current exchange rate in effect at the balance
sheet date, and revenues and expenses are translated at the average of the exchange rates in effect during the reporting period. Stockholders’
equity accounts are translated using the historical exchange rates at the date the entry to stockholders’ equity was recorded, except
for the change in retained earnings during the period, which is translated using the historical exchange rates used to translate each
period’s income statement. Differences resulting from translating functional currencies to the reporting currency are recorded in
accumulated other comprehensive income in the interim condensed consolidated balance sheets. Translation of amounts from RMB into U.S. dollars
has been made at the following exchange rates:
Balance sheet items, except for equity accounts
December 31, 2021 RMB6.3726 to $1
September 30, 2021 RMB6.4567 to $1
Income statement and cash flows items
For the three months ended December 31, 2021 RMB6.3914 to $1
For the three months ended December 31, 2020 RMB6.6235 to $1 Cash and Cash Equivalents Cash and cash equivalents consist of cash on hand
and at banks and highly liquid investments, which are unrestricted from withdrawal or use, and which have original maturities of three
months or less when purchased. Other monetary funds Other monetary funds consist of cash deposited
in financial institutions other than banks. Accounts Receivable, Net The carrying value of accounts receivable is reduced
by an allowance that reflects the Company’s best estimate of the amounts that will not be collected. The Company makes estimations
of the collectability of accounts receivable. Many factors are considered in estimating the general allowance, including reviewing delinquent
accounts receivable, performing an aging analysis and a customer credit analysis, and analyzing historical bad debt records and current
economic trends. The adoption of the new revenue standards did
not change the Company’s historical accounting methods for its accounts receivable. Long-Lived Assets Long-lived assets consist primarily of property,
plant and equipment and intangible assets. Property, plant and equipment Property, 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 useful lives (years)
Office and computer equipment 5
Lease improvement 3
Transportation equipment 5 Expenditure for maintenance and repairs is expensed
as incurred. The gain or loss on the disposal of property,
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 interim condensed consolidated statements of comprehensive
loss. Intangible Assets Intangible assets mainly comprise domain names
and trademarks. Intangible assets are recorded at cost less accumulated amortization with no residual value. Amortization of intangible
assets o is computed using the straight-line method over their estimated useful lives. The estimated useful lives of the Company’s
intangible assets are listed below:
Estimated useful lives (years)
Software 10 Impairment of Long-lived Assets In accordance with ASC 360-10-35, the Company
reviews 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. Based on the existence of one or more indicators of impairment, the Company measures any impairment
of long-lived assets using the projected discounted cash flow method at the asset group level. The estimation of future cash flows requires
significant management judgment based on the Company’s historical results and anticipated results and is subject to many factors.
The discount rate that is commensurate with the risk inherent in the Company’s business model is determined by its management. An
impairment loss would be recorded if the Company determined that the carrying value of long-lived assets may not be recoverable. The impairment
to be recognized is measured by the amount by which the carrying values of the assets exceed the fair value of the assets. No impairment
has been recorded by the Company as of December 31, 2021 and September 30, 2021. Credit risk Financial instruments that potentially subject
the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. As of December 31, 2021 and
September 30, 2021, substantially all of the Company’s cash and cash equivalents were held by major financial institutions located
in the PRC, which management believes are of high credit quality. For the credit risk related to trade accounts
receivable, the Company performs ongoing credit evaluations of its customers and, if necessary, maintains reserves for potential credit
losses. Historically, such losses have been within management’s expectations. Segments The Company evaluates a reporting unit by first
identifying its operating segments, and then evaluates each operating segment to determine if it includes one or more components that
constitute a business. If there are components within an operating segment that meets the definition of a business, the Company evaluates
those components to determine if they must be aggregated into one or more reporting units. If applicable, when determining if it is appropriate
to aggregate different operating segments, the Company determines if the segments are economically similar and, if so, the operating segments
are aggregated. The Company has only one major reportable segment in the periods presented. Fair Value of Financial Instruments U.S. GAAP establishes a three-tier hierarchy to
prioritize the inputs used in the valuation methodologies in measuring the fair value of financial instruments. This hierarchy also requires
an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three-tier
fair value hierarchy is: Level 1 – observable inputs that reflect
quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 – include other inputs that are
directly or indirectly observable in the market place. Level 3 – unobservable inputs which are
supported by little or no market activity. The carrying value of the Company’s financial
instruments, including cash and cash equivalents, accounts and other receivables, other current assets, accounts and other payables, and
other short-term liabilities approximate their fair value due to their short maturities. In accordance with ASC 825, for investments in
financial instruments with a variable interest rate indexed to performance of underlying assets, the Company elected the fair value method
at the date of initial recognition and carried these investments at fair value. Changes in the fair value are reflected in the accompanying
interim condensed statements of operations and comprehensive loss as other income (expense). To estimate fair value, the Company refers
to the quoted rate of return provided by banks at the end of each period using the discounted cash flow method. The Company classifies
the valuation techniques that use these inputs as Level 2 of fair value measurements. As of December 31, 2021 and September 30, 2021, the Company had no
investments in financial instruments. Restricted assets Fengyuan Beijing, Zhuoxun Beijing, and
Zhuoxun Beijing’s subsidiaries are restricted in their ability to transfer a portion of their net assets to the Company. The
payment of dividends by entities organized in China is subject to limitations, procedures and formalities. Regulations in the PRC
currently permit payment of dividends only out of accumulated profits as determined in accordance with accounting standards and
regulations in China. Fengyuan Beijing, Zhuoxun Beijing and Zhuoxun Beijing’s subsidiaries are also required to set aside at
least 10% of its after-tax profit based on PRC accounting standards each year to its statutory reserves account until the
accumulative amount of such reserves reaches 50% of its respective registered capital. The aforementioned reserves can only be used
for specific purposes and are not distributable as cash dividends. In addition, the Company’s operations are
conducted and revenues are generated in China, and all of the Company’s revenues earned and currency received are denominated in
RMB. RMB is subject to the foreign exchange control regulation in China, and, as a result, the Company may be unable to distribute any
dividends outside of China due to PRC foreign exchange control regulations that restrict the Company’s ability to convert RMB into
U.S. dollars. Recent Accounting Pronouncements Accounting Pronouncements Issued But Not Yet
Adopted Financial Instruments. In June 2016, the FASB
issued Accounting Standards Update No. 2016-13,“Financial Instruments - Credit Losses (Topic 326)” (“ASU 2016-13”).
ASU 2016-13 revises the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded.
Originally, ASU 2016-13 was effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15,
2019, with early adoption permitted. In November 2019, FASB issued ASU 2019-10, “Financial Instruments – Credit Losses (Topic
326), Derivatives and Hedging (Topic 815), and Leases (Topic 842).” This ASU defers the effective date of ASU 2016-13 for public
companies that are considered smaller reporting companies as defined by the SEC to fiscal years beginning after December 15, 2022, including
interim periods within those fiscal years. The Company is planning to adopt this standard in the first quarter of fiscal 2023.The Company
is currently evaluating the potential effects of adopting the provisions of ASU No. 2016-13 on its consolidated financial statements. In October 2020, the FASB issued ASU 2020-10,
Codification Improvements. This update ensures all disclosure guidance that requires or provides an option for an entity to provide notes
to the financial statements is included in the Disclosure Section (Section 50) of the Codification. This update also provides various
codification improvements in which the original guidance was unclear. This update becomes effective for annual periods beginning after
December 15, 2020 and early adoption is permitted for any annual or interim period for which financial statements have not been issued.
The Company does not expect the adoption of this new standard will have a material impact on its financial condition or results of operations. Except for the above-mentioned pronouncements,
there are no new recent issued accounting standards that will have material impact on the consolidated financial position, statements
of operations and cash flows. |
