| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation and Going Concern The accompanying condensed consolidated financial
statements include the balances and results of operations of the Company have been prepared pursuant to the rules and regulations of the
U.S. Securities and Exchanges Commission (“SEC”) and in conformity with generally accepted accounting principles in the U.S.
(“US GAAP”). The accompanying condensed consolidated financial
statements are presented on the basis that the Company is a going concern. The going concern assumption contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. The Company incurred net loss of $ 254,896 443,053 1,568,777 1,668,122
- The Company will obtain financial support from the related parties.
- Based on the business plans of the Company, management expects to see a positive trend in the Company’s future results. The board of directors believes the Company has
adequate financial resources to continue in operational existence for at least 12 months from the date of the release of these condensed
consolidated financial statements. Accordingly, the going concern basis of accounting continues to be used in preparing the consolidated
financial statements for the nine months ended September 30, 2024. (b) Economic and Political Risks The Company’s operations are conducted in
the PRC. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political,
economic and legal environment in the PRC, and by the general state of the PRC economy. The Company’s operations in the PRC are
subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These
include risks associated with, among others, the political, economic and legal environment and foreign currency exchange. The Company’s
results may be adversely affected by changes in the political and social conditions in the PRC, and by changes in government policies
with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation. (c) Use of Estimates The preparation of financial statements in conformity
with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related
disclosures of contingent liabilities at the balance sheet date, and revenue and expenses in the financial statements and accompanying
notes. Significant accounting estimates reflected in the Company’s condensed consolidated financial statements include economic
lives and impairment of property, plant and equipment and allowance for doubtful accounts. Actual results could differ from those estimates
and such differences could affect the results of operations reported in future periods. (d) Cash and Cash Equivalents The Company considers all highly liquid investments
purchased with original maturities of three months or less to be cash equivalents. All cash and cash equivalents relate to cash on hand
and cash at bank at September 30, 2024 and December 31, 2023. The Renminbi is not freely convertible into foreign
currencies. Under the PRC Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange
Regulations, the Company is permitted to exchange Renminbi for foreign currencies through banks that are authorized to conduct foreign
exchange business. (e) Motor Vehicle The Company has one motor vehicle, which is stated
at cost less accumulated depreciation and accumulated impairment losses. Cost represents the purchase price of the motor vehicle and other
costs incurred to bring the motor vehicle into its existing use. Gains or losses on disposals are reflected as gain or loss in the period
of disposal. All ordinary repair and maintenance costs are expensed as incurred. Depreciation of the motor vehicle is provided
using the straight-line method over the estimated useful lives of 5 (f) Revenue Recognition The Company’s revenue recognition policy
is compliant with ASC 606, Revenue from Contracts with Customers that revenue is recognized when a customer obtains control of promised
goods and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those goods.
In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts
with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for
those goods. The Company applies the following five-step model in order to determine this amount:
(i) identification of the goods and services in the contract;
(ii) determination of whether the goods and services are performance obligations, including whether they are distinct in the context of the contract;
(iii) measurement of the transaction price, including the constraint on variable consideration;
(iv) allocation of the transaction price to the performance obligations; and
(v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to
contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services
it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews
the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct.
The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when
the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred
to customers at a point in time, typically upon delivery or service being rendered. Contract liabilities consist of advance from customers
related to cash received from customers for the future transfer of goods to customers. The balance of advance from customers represents
unfulfilled performance obligations in the sales agreement, i.e. products that have not yet been delivered. Once the related products
have been delivered, the amount in the advance from customers account is shifted to a revenue account. For all reporting periods, the Company has not
disclosed the value of unsatisfied performance obligations for all product revenue contracts with an original expected length of one year
or less, which is an optional exemption that is permitted under the adopted rules. (g) Foreign Currency Translation The Company’s reporting currency is the
U.S. dollar and the functional currency is the Chinese Renminbi (“RMB”). All assets and liabilities are translated at exchange
rates at the balance sheet date and revenue and expenses are translated at the average yearly exchange rates and equity is translated
at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign
exchange adjustments to other comprehensive income, a component of equity. Transactions in currencies other than the functional
currencies during the year are converted into the applicable functional currencies at the applicable rates of exchange prevailing at the
dates of the transactions. Exchange gains and losses are recognized in the statements of operations. The exchange rates utilized as follows:
Schedule of exchange rates
September 30, 2024 September 30, 2023
Period-end RMB exchange rate 7.02 7.28
Period average RMB exchange rate 7.19 7.02 No representation is made that the RMB amounts
could have been, or could be, converted into U.S. dollars at the rates used in translation. (h) Foreign Currency Risk The RMB is not a freely convertible currency.
The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of the
RMB into other currencies. The value of the RMB is subject to changes in central government policies and to international economic and
political developments affecting supply and demand in the China Foreign Exchange Trading System market. All the Company’s cash and
cash equivalents are in RMB. (i) Fair Value Fair value is the price that would be received
from selling 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 valuing the asset or liability. Authoritative literature provides a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its
entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows: Level 1 Level 1 applies to assets or liabilities
for which there are quoted prices in active markets for identical assets or liabilities. Level 2 Level 2 applies to assets or liabilities
for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, such
as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with
insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable
or can be derived principally from, or corroborated by observable market data. Level 3 Level 3 applies to assets or liabilities
for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the
assets or liabilities. (j) Fair Value of Financial Instruments The Company’s financial instruments consist
primarily of cash and cash equivalents, other receivables, advances to suppliers, accounts payable, other payables and accruals, and advances
from customers. The carrying amounts of these balances approximate their fair values due to the short-term maturities of these instruments. (k) Income Taxes Income tax expense comprises current and deferred
taxation and is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive
income or equity, in which case it is recognized directly in other comprehensive income or equity. Current tax is the expected tax payable
on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date and any adjustment to tax payable
with respect to previous periods. The Company accounts for income taxes using the
asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on the difference between the
financial reporting and tax basis of assets and liabilities, net of operating loss carry forwards and credits, by applying enacted tax
rates that will be in effect for the period in which the differences are expected to reverse. The effect on deferred taxes of a change
in tax rates is recognized in the statements of operations in the period of change. The Company accounts for uncertain tax positions
by reporting liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return.
Tax benefits are recognized from uncertain tax positions when the Company believes that it is more likely than not that the tax position
will be sustained on examination by the tax authorities based on the technical merits of the position. The Company recognizes interest
and penalties if any, related to unrecognized tax benefits in income tax expenses. (l) Comprehensive Income or Loss Comprehensive income or loss includes net income
and foreign currency translation adjustments. Comprehensive income or loss is reported in the statements of comprehensive income or loss. (m) Concentration of Credit Risk Financial instruments that potentially expose
the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents and other receivables. As of
September 30, 2024 and December 31, 2023, substantially all of the Company’s cash and cash equivalents were deposited with financial
institutions with high-credit ratings and quality. During the three and nine months ended September 30, 2024 and 2023, all revenues were
generated from third parties. Details of customer who accounted for 10% or more
of the Company’s total revenue for the three and nine months ended September 30, 2024 and 2023 are as follows:
Schedule of concentration risk total revenue
For the three months ended September 30,
2024 2023
Amount % of total revenue Amount % of total revenue
Customer A $ – – $ 100,408 16
Customer B – – 84,400 14
Customer C – – 63,606 10
Customer D 144,700 99 – –
$ 144,700 99 $ 248,414 40
For the nine months ended September 30,
2024 2023
Amount % of total revenue Amount % of total revenue
Customer A $ – – $ 215,481 12
Customer B 74,713 25 – –
Customer C 25,901 8 – –
Customer D 144,700 48 – –
Customer E 19,687 6 – –
$ 265,001 87 $ 215,481 12 Details of supplier who accounted for 10% or more
of the Company’s total purchase for the three and nine months ended September 30, 2024 and 2023 are as follows:
Schedule of concentration risk total purchase
For the three months ended September 30,
2024 2023
Amount % of total purchase Amount % of total purchase
Supplier A $ 140,553 100 $ 630,774 98
For the nine months ended September 30,
2024 2023
Amount % of total purchase Amount % of total purchase
Supplier A $ 263,145 100 $ 2,255,410 99 (n) Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13, “Financial
Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” In November 2021, the FASB issued ASU 2021-10,
“ Government Assistance (Topic 832) On December 14, 2023, the FASB issued ASU 2023-09,
“Income Taxes (Topic 740): Improvements to Income Tax Disclosures” The Company has considered all other recently
issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its consolidated
financial statements. |
