| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The
accompanying unaudited condensed consolidated financial statements reflect the application of certain significant accounting policies
as described in this note and elsewhere in the accompanying consolidated financial statements and notes. ●
Basis of consolidated presentation These
condensed consolidated financial statements, accompanying notes, and related disclosures have been prepared pursuant to the rules and
regulations of the U.S. Securities and Exchange Commission (“SEC”). These accompanying condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”).
The Company’s fiscal year end is December 31. The Company’s financial statements are presented in U.S. dollars. The
condensed consolidated financial statements include the accounts of EZAGOO LIMITED and its subsidiaries. All significant inter-company
balances and transactions within the Company have been eliminated upon consolidation. ●
Use of estimates In
preparing these condensed consolidated financial statements, management makes estimates and assumptions that affect the reported amounts
of assets and liabilities in the balance sheets and revenues and expenses during the periods reported. Actual results may differ from
these estimates. ●
Reclassification Certain
prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on
the reported results of operations. ●
Foreign currencies translation and re-measurement Transactions
denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing
at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated
into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded
in the statements of operations and comprehensive income. The
reporting currency of the Company is United States Dollars (“US$”) and the accompanying condensed financial statements have
been expressed in US$. In addition, the Company’s subsidiary in People’s Republic of China maintains its books and record
in its local currency, Chinese Yuan (“RMB”), which is functional currency as being the primary currency of the economic environment
in which the entity operates. In
general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not US$ are translated into
US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet
date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation
of financial statements of foreign subsidiary are recorded as a separate component of accumulated other comprehensive income (loss) within
the statements of stockholders’ deficit. Translation
of amounts from RMB into US$1 has been made at the following exchange rates for the respective periods: SCHEDULE
OF FOREIGN CURRENCY TRANSLATION OF EXCHANGE RATES
2022 2021
As
of and for the nine months
2022 2021
(Unaudited) (Unaudited)
Period-end
RMB: US$1 exchange rate 7.12 6.44
Period-average
RMB: US$1 exchange rate 6.60 6.47
Period-end
HK$: US$1 exchange rate 7.85 7.78
Period-average
HK$: US$1 exchange rate 7.83 7.77
Period-end
and Period-average RMB and HK$: US$1 exchange rate 7.83 7.77 EZAGOO
LIMITED NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 (Unaudited) (Currency
expressed in United States Dollars (“US$”), except for number of shares) ●
Cash and cash equivalents The
company considers all highly liquid instruments with a maturity of nine months or less at the time of issuance to be cash
equivalents. Cash and cash equivalents consist of cash on hand, demand deposits placed with banks that located in US, the Hong
Kong and mainland China. ●
Account receivables Account
receivables are stated at the customer obligations due under normal trade terms net of allowance for doubtful accounts. ●
Property, plant and equipment Property,
plant and equipment are carried at cost less accumulated depreciation. Depreciation is provided over their estimated useful lives, using
the straight-line method. Estimated useful lives of the property and equipment are as follows: SCHEDULE
OF PLANT AND EQUIPMENT EXPECTED USEFUL LIVES
Office
equipment 3 5 The
cost of maintenance and repairs is charged to expenses as incurred, whereas significant renewals and betterments are capitalized. ●
Lease The
Company accounts for its leases in accordance with ASC 842 Leases. The Company leases office space. The Company concludes on whether
an arrangement is a lease at inception. This determination as to whether an arrangement contains a lease is based on an assessment as
to whether a contract conveys the right to the Company to control the use of identified property, plant or equipment for period of time
in exchange for consideration. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company recognizes
these lease expenses on a straight-line basis over the lease term. The
Company has assessed its contracts and concluded that its leases consist of only operating leases. Operating leases are included in operating
lease right-of-use (ROU) assets, current portion of operating lease liabilities, and operating lease liabilities in the Company’s
consolidated balance sheets. ROU
assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date
based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate,
the Company determines an incremental borrowing rate based on the information available at commencement date in determining the present
value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its
credit rating would be. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease expense
for lease payments is recognized on a straight-line basis over the lease term. ●
Revenue recognition The
Company assesses and follows the guidance of ASC 606, revenue from contracts with customers is recognized using the following five steps:
1. Identify
the contract(s) with a customer;
a.
The
parties to the contract have approved the contract (in writing, orally, or in accordance with other customary business practices)
and are committed to perform their respective obligations.
b.
The
entity can identify each party’s rights regarding the services to be transferred.
c.
The
entity can identify the payment terms for the services to be transferred.
d.
The
contract has commercial substance (that is, the risk, timing, or amount of the entity’s future cash flows is expected to change
as a result of the contract).
e.
It
is probable that the entity will collect substantially all of the consideration to which it will be entitled in exchange for the
services that will be transferred to the customer.
2. Identify
the performance obligations in the contract;
a.
According
to the contract, the Company and Customer has to maintain the performance obligation, respectively.
b.
The
customer shall pay for the advertising services after signing of the contract and provide appropriate advertisement materials to
the Company, the Company shall ensure the advertisement of the Customer is published according to the contract terms.
3. Determine
the transaction price;
a.
For
the advertising contract, the transaction price is explicitly stated in fixed amount in the contract. There is no variable consideration,
such as discounts, rebates, consideration payable to customer or noncash consideration. There was no price concession, and the Company
did not expect any price concession for the service performed during the nine months ended September 30, 2022 and 2021.
b.
The
contract does not contain any elements that would cause consideration under the arrangement to be variable (Examples include discounts,
rebates, refunds, credits, incentives, tiered pricing, price guarantees, right of return, etc.).
c.
There
are no factors that exist whereby it is not probable that a significant reversal or revenues will not occur in the contract. EZAGOO
LIMITED NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 (Unaudited) (Currency
expressed in United States Dollars (“US$”), except for number of shares)
4. Allocate
the transaction price to the performance obligations in the contract; and
a.
There
were no multiple performance obligations to which the transaction price must be allocated, and each contract only has one performance
obligation. The standalone selling price is explicated stated in the contract.
5. Recognize
revenue when (or as) the entity satisfies a performance obligation.
a. Per
ASC 606, an entity shall recognize revenue when (or as) the entity satisfies a performance obligation by transferring a promised
good or service (that is, an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset.
b. Revenue
is recognized when the advertising service is performed. According to the sample advertising contract, upon obtaining the signed
contract from the Customer, the service period would be started. Therefore, the revenue is recognized when the service completely
provided at that point in time. Under
Topic 606, revenues are recognized when the promised services have been confirmed and transferred to the consumers in amounts that reflect
the consideration the customer expects to be entitled to in exchange for those services. The Company presents value added taxes (“VAT”)
as reductions of revenues. The Company recognizes revenues net of value added taxes (“VAT”) and relevant charges. As
of January 1, 2022, the Company’s revenue will mainly be generated revenue from Xindian application platform. According to the
announcement of <Approval of Changsha Municipal People’s Government on establishing Changsha Bus Group Co., LTD.> that was
issued by the Changsha government on November 17, 2020, “In order to accelerate the development of the Changsha City, the local
government decided to set up the Changsha Public Transportation Group Ltd, which is holds Baojun Bus Co., Zhongwang Bus Co., and Tongchang
Bus Co.” These mentioned Bus companies are used to be our vendors, our contracts with Zhongwang Bus Co., and Tongchang Bus Co.,
were expired on February 9, 2021, and April 1, 2020, respectively, and we were not renewed as they were the first batch of bus companies
to be merged by the Changsha government. The contract with Baojun Bus Co., was expired on December 31, 2020 but we continued the bus
rent on a monthly basis until December 28, 2021. The Changsha government completed the merge and acquisition at the end of 2021, which
makes it very difficult for us to continue to operate in this area. During
the period ended September 30, 2022, the Company conducted its business in generally two revenue streams: the advertisement income of
mobile short video, and the commission income from e-commerce business & other value-added services that started from June 1, 2022. ●
Cost of revenues Cost
of revenue includes bus media terminal rental fees, bus monitors maintenance fees, bus screen installation fees, internet data fees,
cloud fees for storage use and the operating salaries for the staffs who running the Xindian application. ●
Imputed Interest The
Company owned director and related parties some loans which are unsecured, interest-free with no fixed payment term, for working capital
purpose. Imputed interests were $ 59,401 17,220 ●
Value-added taxes Revenue
is recognized net of value-added taxes (“VAT”). The VAT is based on gross sales price and VAT rates applicable to the Company
is 6% for the nine months ended September 30, 2022 and 2021. All of the VAT returns filed by the Company’s subsidiaries in the
PRC, have been and remain subject to examination by the PRC tax authorities for five years from the date of filing. VAT payables are
included in accrued liabilities. ●
Income taxes The
Company followed the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes, or ASC 740. 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
recorded a valuation allowance to offset 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 rate is recognized
in tax expense in the period that includes the enactment date of the change in tax rate. The
Company accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognizable tax
benefit recognized in accordance with ASC 740 are classified in the consolidated statements of comprehensive loss as income tax expense. EZAGOO
LIMITED NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR
THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022 (Unaudited) (Currency
expressed in United States Dollars (“US$”), except for number of shares) ●
Earnings per share The
Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, “Earnings per share”. Basic EPS
is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the
period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible
securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later.
Any potential common shares in 2022 and 2021 that have an anti-dilutive effect (i.e. those that increase income per share or decrease
loss per share) are excluded from the calculation of diluted EPS. ●
Commitments and contingencies Liabilities
for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable
that a liability has been incurred and the amount of the assessment can be reasonably estimated. ●
Related party transaction A
related party is generally defined as (i) any person that holds 10% or more of the Company’s securities and their immediate families,
(ii) the Company’s management, (iii) someone that directly or indirectly controls, is controlled by or is under common control
with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction
is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. Transactions
involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive,
free market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related
party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations
can be substantiated. ●
Recent accounting pronouncements In
March 2021, the FASB issued ASU 2021-03, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill
Impairment,” which simplifies how an entity is required to test goodwill for impairment by eliminating step two from the goodwill
impairment test. Step two of the goodwill impairment test measures a goodwill impairment loss by comparing the implied fair value of
a reporting unit’s goodwill with its carrying amount. The new guidance is effective prospectively but not applicable for us for
the period ending September 30, 2022. Early adoption is
permitted for both interim and annual financial statements that have not yet been issued
or made available for issuance as of March 30, 2021. An entity should not retroactively adopt the amendments in this update for interim
financial statements already issued in the year of adoption. We are evaluating the effects,
if any, of the adoption of this guidance on our financial position, results of operations and cash flows. In
June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement. The new guidance modifies disclosure requirements related to
fair value measurement. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2023. Implementation on a prospective or retrospective basis varies by specific disclosure requirement.
Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The
Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of
any such pronouncements may be expected to cause a material impact on its financial condition or the results of its operations. |
