| NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES Basis of Presentation These financial statements have been
prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP"). The Company entered into Agreement and
Plan of Merger with AmericaTowne, Inc. whereas the merger was accounted under US GAAP as a business combination under common control
with the Company being the acquirer as both entities were owned by the same controlling shareholders. The consolidated financial
information have been presented at historical costs and on a retroactive basis of the entities. Before the merger, the Company was the
subsidiary of AmericaTowne, Inc. of which the consolidated financial statements are the combined financial statements of AmericaTowne,
Inc. and the Company. For better comparison, the financial statements of prior periods presented in this filing (including balance
sheet on December 31, 2017 and statements of operations as well as cash flow statements for the year ended, December 31, 2017)
are financial statements of AmericaTowne, Inc. On May 2, 2019, the Company reached
a determination to restate its previously filed financial statements for the year ended. The restatement decreases net income of
$51,683 for the year ended December 31, 2018. The restatement relates to correct error on amortizing stock based compensation and
relevant effect on income tax. The following summarizes the effects
of restatement:
Previously Reported Adjustment Restated
Deferred compensation: $ 1,689,009 (65,422 ) $ 1,623,587
Deferred tax assets: $ 640,636 13,739 $ 654,375
Retained earnings $ 1,998,689 51,683 $ 2,050,372
General and administrative expenses $ 1,890,686 65,422 $ 1,959,108
Provision for income taxes: $ (443,366 ) (13,739 ) $ (457,105 ) Principles of Consolidation The consolidated financial statements
include the accounts of the Company and all its majority-owned subsidiaries which require consolidation. Inter-company transactions
have been eliminated in consolidation. Accounting Method The Company's financial statements are
prepared using the accrual method of accounting. The Company has elected a fiscal year ending on December 31. Use of Estimates The preparation of financial statements
in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period. In the opinion of management, all adjustments
necessary in order to make the financial statements not misleading have been included. Actual results could differ from those
estimates. Financial Instruments The carrying amount reported in the balance
sheet for cash, accounts receivable, accounts payable, accrued expenses, interest payable and short-term notes payable approximate
fair value because of the immediate or short-term maturity of these financial instruments. Cash Equivalents The Company considers all highly liquid
investments with maturity of three months or less when purchased to be cash equivalents. Concentration of Credit Risk Financial instruments that potentially
subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents. The Company maintains
deposits in federally insured financial institutions in excess of federally insured limits. However, management believes the Company
is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits
are held. Property, Plant, and Equipment Property, plant and equipment are initially
recognized recorded at cost. Gains or losses on disposals are reflected as gain or loss in the period of disposal. The cost of
improvements that extend the life of plant and equipment are capitalized. These capitalized costs may include structural improvements,
equipment and fixtures. All ordinary repairs and maintenance costs are expensed as incurred. Depreciation for financial reporting
purposes is provided using the straight-line method over the estimated useful lives of the assets:
Office equipment 3-5 years For the years ended December 31, 2018 and
2017, depreciation expense is $15,682 and $8,484, respectively. Investments Investments primarily include cost method
investments. On December 31, 2018 and 2017, the carrying amount of investments was $3,860 and $3,860, respectively. There are no
identified events or changes in circumstances that may have a significant adverse effect on fair value of the investment as of
December 31, 2018. Income Taxes Income taxes are provided in accordance
with Statement of Financial Accounting Standards ASC 740 Accounting for Income Taxes. A deferred tax asset or liability is recorded
for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that some portion of all of the deferred tax assets will
be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The Company was established under the
laws of the State of Delaware and is subject to U.S. federal income tax and Delaware state income tax. Deferred income tax assets
and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will
result in future taxable or deductible amounts and are based on enacted tax laws and rates applicable to the periods in which
the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred
income tax assets to the amount expected to be realized. On December 31, 2018 and 2017, there is deferred tax assets of $654,375
and $169,291, respectively. The Company had $78,323 and $53,309 of income tax liability as of December 31, 2018 and 2017, respectively. Earnings per Share In February 1997, the FASB issued ASC
260, "Earnings per Share", which specifies the computation, presentation and disclosure requirements for earnings (loss)
per share for entities with publicly held common stock. ASC 260 supersedes the provisions of APB No. 15, and requires the presentation
of basic earnings (loss) per share and diluted earnings (loss) per share. The Company has adopted the provisions of ASC 260 effective
(inception). Basic earnings (loss) per common share
is computed by dividing net income (loss) available to common shareholders by the weighted-average number of shares of common stock
outstanding during the period. Diluted earnings per common share is computed by dividing income available to common shareholders
by the weighted-average number of shares of common stock outstanding during the period increased to include the number of additional
shares of common stock that would have been outstanding if potentially dilutive securities had been issued. There were no potentially
dilutive securities outstanding during the periods presented. For the years ended December 31, 2018
and 2017, diluted earnings per share are the same as basic earnings per share due to the lack of dilutive items in the Company. Segment Information The standard, "Disclosures about
Segments of an Enterprise and Related Information", codified with ASC 280, requires certain financial and supplementary information
to be disclosed on an annual and interim basis for each reportable segment of an enterprise. The Company believes that it operates
in business segment of marketing and sales in China while the Company's general administration function is performed in the United
States. On December 31, 2018, all assets and liabilities are in the United States where the income and expense has been incurred
since inception to December 31, 2018. Impact of New Accounting Standards The Company does not expect the adoption
of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position,
or cash flow. Pushdown Accounting and Goodwill Pursuant to applicable rules (FASB
ASC 805-50-S99) the Company used push down accounting to reflect Yilaime Corporation's purchase of 100% of the shares of the Company's
common stock. Richard Chiang, the Company's prior sole shareholder entered into an agreement to sell an aggregate of 10,000,000
shares of the Company's common stock to Yilaime Corporation effective upon the closing date of the Share Purchase Agreement dated
June 26, 2014. Richard Chiang executed the agreement and owned no shares of the Company's common stock. This transaction resulted
in Yilaime Corporation retaining rights, title and interest to all issued and outstanding shares of common stock in the Company. Revenue Recognition The Company's revenue recognition policies
comply with FASB ASC Topic 605. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred,
the price is fixed or determinable, collectability is reasonably assured, and there are no significant subsequent obligations for
the Company to assume. Prior to an agreement, the Company assesses
whether collectability from the potential customer is reasonably assured. The Company reviews the customer's financial condition,
which is an indicator of both its ability to pay, and, in turn, whether or not revenue is realizable. The ability to pay is an important criterion
for entrance into an agreement with the customer. If management believes that the potential customer does not have the ability
to pay, normally an agreement is not entered into with the customer. If, at the outset an arrangement is
entered into and the Company determines that the collectability of the revenue amount from the customer is questionable, management
would not recognize revenue until it receives the amount due or conditions change so that collectability is reasonably assured.
If collectability is reasonably assured at the outset of an arrangement, but subsequent changes in facts and circumstances indicate
collection from the customer is no longer probable, the amount is recorded as bad debt expense. There are two primary customer agreements
currently offered to the Company's customers - (a) Licensing, Lease and Use Agreement ("Licensing Agreement"), and (b)
Exporter Services Agreement ("Exporter Agreement"). (a) Licensing, Lease and Use Agreement For the License, Lease and Use Agreement,
the Company reflects revenue recognition over the course of the term. (b) Exporter Services Agreement. For services provided in the Exporter
Service Agreement, the Company has two primary types of services called the Service Fee and Transaction Fee. Additionally, under
certain circumstances, the Company may charge an Extension Fee. The customer under the Exporter Services Agreement is defined in
this section as the "Exporter." The Service Fee Upon signing the Exporters Agreement,
the Exporter is provided with services consisting of eight related components including: 1) market analysis; 2) review of proposed
goods and services; 3) expectations for supply and demand in the market; 4) conducting export business in China; 5) information
on financing; 6) information on the export tax savings programs; 7) international trade center assistance; and 8) selecting and
assigning a tax saving company. All eight components of the Service Fee are delivered as one deliverable upon the signing or shortly
thereafter of the Exporter Service Agreement with the exporter. The Company completes the earnings process upon the signing the
Exporter Service Agreement since the one service fee deliverable has been delivered and we have no further obligations. Revenue
is not recognized until the completion of these eight components and the Company has no further obligations. The Transaction Fee During this process, the Exporter's
goods and services are tested in the market, buyers or identified, deals or negotiated and the exporter products and services are
delivered, and payment is made. The Transaction Fee is normally a percentage of each transaction. The Transaction Fee process includes
the Exporter's participation in three programs: 1) the Sample and Test Market Program; 2) Market Acceptance Program; and 3) Export
Delivery Action. In the Sample and Test Market Program, an Exporter's products and services are tested in the market; sources of
goods and services are confirmed; price indications are confirmed; and an Exporter and buyer match occurs. In the Market Acceptance
Program, the export deal is identified and negotiated. Finally, in the Export Delivery Action, the goods are shipped and delivered
and payment is made. The Company does not recognize revenue until completion of these three programs and the Company has no further
obligations. Throughout the life of the Exporter
Agreement, the Company expects Exporters to complete multiple transactions. Each transaction is a separate and independent process. The Extension Fee The Extension Fee is an independent
accounting unit. The Extension Fee is a fee charged to those Exporters who in rare cases for whatever reason fail to avail themselves
of the Transaction Process. The Exporter has one-year to participate in the Sample and Test Market Program. Afterwards, provided
no transaction has occurred and the Exporter agrees to pay a fee equal to 25% of the original Service fee within thirty (30) days
(the "Extension Fee"), the Exporter may continue the Transaction Process. If the Extension Fee is not paid, the Exporter's
participation and membership in the Sample and Test Program terminates. In the event of termination, the balance of any prior fees
is still due and payable. Provided that the Exporter agrees to
pay the Extension Fee and continues with the Transaction Process, at the end of the Transaction Process and the last Transaction
Fee deliverable is made, the Transaction Fee Process is completed. Upon completion, the Company has no further obligations, revenue
is recognized, and the Exporter is invoiced for both the Extension Fee and the Transaction Fee. After the Exporter pays the Extension
Fee, if no transaction has occurred for sixty (60) calendars days, the Company is exempt from any obligation to provide further
Transaction Process services and it recognizes revenue of the Extension Fee. The Company recognizes revenue on a
gross basis. We have gross presentation for services
provided by Yilaime, a contractor to the Company prior to the consummation of an arrangement. In accordance with ASC605-45-45, the
gross basis to recognize revenue applies since the Company is the primary obligor in the arrangement. The Company expects to realize revenue
for export funding and support, and franchise and license fees for United States support locations, and education initiatives.
Additionally, if and when the Company further develops AmericaTowne, revenues would be expected to be recognized for (a) villa
sales, rentals, timeshare and leasing; (b) hotel leasing and or operational revenues and sales; (c) theme park and performing art
center operations, sales and/or leasing; and (d) senior care facilities, operations and or sales. The Company does not provide unconditional
right of return, price protection or any other concessions to its customers. Valuation of Goodwill We assess goodwill for potential impairments
at the end of each fiscal year, or during the year if an event or other circumstance indicates that we may not be able to recover
the carrying amount of the asset. In evaluating goodwill for impairment, we first assess qualitative factors to determine whether
it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than
its carrying amount. If we conclude that it is not more likely than not that the fair value of a reporting unit is less than its
carrying value, then no further testing of the goodwill assigned to the reporting unit is required. However, if we conclude that
it is more likely than not that the fair value of a reporting unit is less than its carrying value, then we perform a two-step
goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment to be recognized,
if any. In the first step of the review process,
we compare the estimated fair value of the reporting unit with its carrying value. If the estimated fair value of the reporting
unit exceeds its carrying amount, no further analysis is needed. If the estimated fair value of the reporting unit is less than
its carrying amount, we proceed to the second step of the review process to calculate the implied fair value of the reporting unit
goodwill in order to determine whether any impairment is required. We calculate the implied fair value of the reporting unit goodwill
by allocating the estimated fair value of the reporting unit to all of the assets and liabilities of the reporting unit as if the
reporting unit had been acquired in a business combination. If the carrying value of the reporting unit's goodwill exceeds the
implied fair value of the goodwill, we recognize an impairment loss for that excess amount. In allocating the estimated fair value
of the reporting unit to all of the assets and liabilities of the reporting unit, we use industry and market data, as well as knowledge
of the industry and our past experiences. We base our calculation of the estimated
fair value of a reporting unit on the income approach. For the income approach, we use internally developed discounted cash flow
models that include, among others, the following assumptions: projections of revenues and expenses and related cash flows based
on assumed long-term growth rates and demand trends; expected future investments to grow new units; and estimated discount rates.
We base these assumptions on our historical data and experience, third-party appraisals, industry projections, micro and macro
general economic condition projections, and our expectations. We have had no goodwill impairment charges
for the year ended December 31, 2018. The estimated fair value of each of our reporting units exceeded its' respective carrying
amount by more than 100 percent based on our models and assumptions. |
