| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES Basis of Presentation and Principles of Consolidation The accompanying
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States
of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).
The consolidated financial statements include the accounts of the Company,and its Taiwan branch,. All significant intercompany accounts
and transactions have been eliminated. Certain amounts in the prior year’s
consolidated financial statements and notes have been revised to conform to the current year presentation. These reclassifications had
no impact on the reported results of operations and cash flows. Foreign Currency Translation The accompanying consolidated financial
statements are presented in United States dollar (“USD”), which is the reporting currency of the Company. The functional currency
of Cordyceps Sunshine HK is Hong Kong dollar (“HKD”). The functional currency of Chengdu Skyherb is Renminbi (“RMB”).
The functional currency of Cordyceps Sunshine Taiwan Branch is New Taiwan dollar (“TWD”). The
Company maintains its books and records in its functional currencies. Transactions denominated in currencies other than the functional
currencies are translated into the functional currencies at the exchange rates prevailing at the dates of the transactions. At the period
end, transactions denominated in currencies other than the functional currencies are translated into the functional currencies at the
exchange rates prevailing at the balance sheet date The resulting exchange differences are recorded in the statements of operations. The reporting currency of the Company is the United States Dollars
(“USD”), and the accompanying consolidated financial statements have been expressed in USD. In accordance with ASC Topic 830-
30, “Translation of Financial Statements”, assets and liabilities of the Company whose functional currency is not USD are
translated into USD, using the exchange rate on the balance sheet date. Capital accounts are translated at their historical exchange rates
when the capital transactions occurred. Revenues and expenses are translated at average rates prevailing during the period. The gains
and losses resulting from the translation of financial statements are recorded as a separate component of accumulated other comprehensive
gain (loss) within the statements of changes in shareholders ’ deficit. The exchange rates used for foreign currency translation
were as follows: (1) USD$1 = HKD
Balance Sheet
Period Covered Date Rates Average Rates
Year ended December 31, 2023 7.8087 7.8297
Year ended December 31, 2022 7.8015 7.8306
Year ended December 31, 2021 7.7996 7.7727 (2) USD$1 = RMB
Balance Sheet
Period Covered Date
Rates Average Rates
Year ended September 30, 2023 6.8972 6.7290
Year ended December 31, 2022 6.8972 6.7290
Year ended December 31, 2021 6.3726 6.4508 The RMB is not freely convertible
into foreign currency and all foreign exchange transactions must take place through local authorized institutions. No representation is
made that the RMB amounts could have been, or could be, converted into USD at the rates used in translation. (3) USD$1 = TWD
Balance Sheet
Period Covered Date
Rates Average Rates
Year ended December 31, 2023 30.7127 31.1471
Year ended December 31, 2022 30.7300 29.7963
Year ended December 31, 2021 27.7400 27.9366 Statements of Cash Flows In accordance
with FASB ASC 830-230, “Statement of Cash Flows”, cash flows from the Company’s operations are calculated based upon
the functional currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily
agree with changes in the corresponding balances on the balance sheet s Use of Estimates The preparation
of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts
of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various
other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events
and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience
is acquired, as additional information is obtained and as operating environment changes. Significant estimates and assumptions by management
include, among others, estimated life and impairment of long-lived assets, , contingencies, valuation of inventories and income taxes
including the valuation allowance for deferred tax assets. While the Company believes that
the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those
estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the financial statements
in the period they are determined to be necessary. Reclassification
of prior year presentation 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
and cash flows. A reclassification has been made to the Consolidated Balance Sheet as of December 31, 2022 to reclassify short term loan
of $414,000 to long term loan payable due to amendments of the loan agreements. Fair Value of Financial Instruments The Company adopted ASC 820 “Fair
Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement
and enhances disclosures requirements for fair value measures. Current assets and current liabilities qualified as financial instruments
and management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the
origination of such instruments and their expected realization and if applicable, their current interest rate is equivalent to interest
rates currently available. The three levels are defined as follow:
Level 1: Inputs to the valuation methodology are quoted prices (unadjusted)
for identical assets or liabilities in active markets.
Level 2: Inputs to the valuation methodology include quoted prices for
similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly
or indirectly, for substantially the full term of the financial instruments.
Level 3: Inputs to the valuation methodology are unobservable and significant
to the fair value. As of the balance sheet date, the estimated fair values of the financial
instruments approximated their fair values due to the short-term nature of these instruments. For certain of the Company’s financial
instruments, including cash and cash equivalents, accounts payable, long term loan and other payables , the carrying amounts approximate
their fair values due to the short maturities. Cash and Cash Equivalents Cash and cash equivalents include
cash on hand and cash in time deposits, certificates of deposit and all other highly liquid instruments with original maturities of three
months or less. Accounts Receivable and allowance for Credit Losses Accounts receivable are stated at
the historical carrying amount net of allowance for expected credit losses.The Company adopted ASU No. 2016-13, “Financial
Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments” on January 1,
2021 using a modified retrospective approach. The Company also adopted this guidance to other receivables. To estimate expected credit
losses, the Company has identified the relevant risk characteristics of its customers and the related receivables. The Company considers
the past collection experience, current economic conditions, future economic conditions (external data and macroeconomic factors) and
changes in the Company’s customer collection trends. The allowance for credit losses and corresponding receivables were written
off when they are determined to be uncollectible. In circumstances in which the Company receives payment for accounts receivable that
have previously been written off, the Company reverses the allowance and bad debt.The allowance for doubtful receivables was $0 as of
December 31, 2023 and 2022. Consumptive biological assets The consumptive
biological assets refer to the held for sale, or to be harvested as products
in the future. The
prepared taiwanofungus cultivate medium is enclosed in a cultivation carrier at the beginning of the cultivation process. Then no materials
need to be added until the taiwanofungus grows and matures in the
cultivate medium. So the inventoried cost amounts mainly includes the Taiwanofungus cultivate medium that was prepared by the suppliers,
director cost, electricity, and rental of the cultivation site, etc. The consumptive biological assets consisting of raw materials, work-in-process,
and finished goods are stated at the lower of cost or net realizable value utilizing the weighted average method. The determination of net realizable
value of long-term taiwanofungus cultivation costs is based upon quarterly reviews of costs incurred and estimated costs to complete the
cultivating process. When costs incurred and the estimate to complete exceed the net realizable value of taiwanofungus cultivated, a loss
provision is recorded. The Company review and identify
impaired inventory quarterly, including excess or obsolete inventory, based on expected production usage, abnormal production cycle. Impaired
inventories are charged to cost of revenues in the period the impairment occurs. The allowance for inventory impairment are removed from
the accounts when the relevant inventory is sold or disposed. Property, Plant and Equipment Property and equipment primarily
consist of cultivation equipment, office equipment, furniture, tools and construction in progress. Cultivation equipment, office equipment,
furniture and tools are stated at cost less accumulated depreciation less any provision required for impairment in value. Depreciation
is computed using the straight-line method with residual value rate of 5% based on the estimated useful lives as follows:
Buildings and cultivation facilities 20 years (by local laws)
Machinery and equipment 3- 10 years
Office equipment and furniture The less of 5 years or lease term The Company constructs its cultivation
facilities, which is accounted for as construction in progress before completed. In addition to cost under the construction contracts,
interest cost and external costs directly related to the construction of such facilities, including equipment installation and shipping
costs, are capitalized. Costs of repairs and maintenance are expensed as incurred
and asset improvements are capitalized. The cost and related accumulated depreciation of assets disposed of or retired are removed from
the accounts, and any resulting gain or loss is reflected in the consolidated statement of income. Impairment of Long-lived Assets The Company reviews long-lived
assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the
future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment
recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. No impairment
of long-lived assets was recognized for the years ended December 31, 2023. The Company recorded a fixed asset impairment of $1,177
for the discontinued operation in the year ended December 31, 2022. Operating Lease The Company leases
are classified as operating leases in accordance with Topic 842. Under Topic 842, lessees are required to recognize the following for
all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation
to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents
the lessee’s right to use, or control the use of, a specified asset for the lease term. At the commencement
date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same
term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of
the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received.
All right-of-use assets are reviewed for impairment. No impairment for right-of-use lease assets incurred in the years ended December
31, 2023, and 2022. Research & Development Expenses Research and development expenses relating
to the development of new products and processes, including significant improvements and refinements to existing products, are expensed
when incurred in accordance with the FASB ASC 730, “Research and Development.” Research and development costs in continued
operation were $0, $118,444 and $25,052 for the years ended December 31, 2023, 2022 and 2021. Comprehensive Income (Loss) ASC 220 “Comprehensive Income”
established standards for reporting and display of comprehensive income/loss, its components and accumulated balances. Components of comprehensive
income/loss include net income/loss and foreign currency translation adjustments. The component of accumulated other comprehensive income
(loss) consisted of foreign currency translation adjustments. The accumulated other comprehensive income was $89,584 and $40,841 as of
December 31, 2023 and 2022. Revenue Recognition The Company
adopted ASC 606 upon inception. Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in
an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue
recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps:
(i) identify the 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 revenue when (or as) the
entity satisfies a performance obligation. Revenue for the sale of products is
derived from contracts with customers, which primarily include the sale of taiwanofungus products. The Company’s sales arrangements
do not contain variable consideration. Instead, the Company recognizes revenue at a point in time based on management’s evaluation
of when performance obligations under the terms of a contract with the customer are satisfied, and control of the products has been transferred
to the customer. For the vast majority of the Company’s product sales, the performance obligations and control of the products transfer
to the customer when products are delivered and customer acceptance is made. Revenue is
recognized for sales of taiwanofungus at the point in time when the taiwanofungus are delivered to or picked up by, and accepted by customers.
Costs accumulated during the taiwanofungus cultivating process are recognized as inventory; and charged to cost of goods sold upon taiwanofungus
delivery to or pick up by customers. The Company’s
return policy allows for the return of damaged or defective products, and the Company absorbs the shipping fee for the return. The Management
believes the return is immaterial because the customers inspect and accept the goods upon delivery or pick up. There were no return for
the years ended December 31, 2023, and 2022. Payments for taiwanofungus sales received in advance in
accordance to the contract is recognized as deferred revenues when received. Income Taxes The Company is subject to the
Provisional Regulations on Income Tax The Company
accounts for income taxes under the provision of FASB ASC 740- 10, 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. Earnings per share Basic earnings
per ordinary share is computed by dividing net earnings attributable to ordinary shareholders by the weighted-average number of ordinary
shares outstanding during the period. Diluted earnings per share is computed by dividing net income attributable to ordinary shareholders
by the sum of the weighted average number of ordinary share outstanding and of potential ordinary share (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. Potential ordinary
shares 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 earnings per share. For the years ended December 31, 2023, 2022 and 2021, the Company had no dilutive stocks. Concentration of Credit Risk Financial
instruments the Company holds that are subject to concentrations of credit risk are cash, notes receivables and accounts receivable arising
from its normal business activities. The Company places its cash and restricted cash in what it believes to be credit-worthy financial
institutions. The Company routinely assesses the credit status of its customers and, based upon factors surrounding the credit risks,
establishes an allowance, if required, for uncollectible accounts. The company believes its accounts receivable and others receivable
credit risk exposure beyond such allowance is limited. Related Parties Transactions 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 as a related party transaction
when there is a transfer of resources or obligations between related parties. Related parties may be individuals or corporate entities. 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. It is not, however, practical to determine the fair value of amounts of related party transactions due to their
related party nature. Segment Reporting ASC 280,
“Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach
model is based on the way a company’s chief operating decision maker organizes segments within the Company for making operating
decisions assessing performance and allocating resources. Reportable segments are based on products and services, geography, legal structure,
management structure, or any other manner in which management disaggregates a company. Management
determined the Company’s operations constitute a single reportable segment in accordance with ASC 280. The Company operates exclusively
in one business and industry segment: cultivating and sales of Chinese rare medicinal herb, taiwanofungus raw material and its finished
products. Recently Issued Accounting Pronouncements On October 1st, 2022, the Company adopted
ASU No. 2021-10, Government Assistance (Topic 832): This ASU requires business entities to disclose information about government assistance
they receive if the transactions were accounted for by analogy to either a grant or a contribution accounting model. The disclosure requirements
include the nature of the transaction and the related accounting policy used, the line items on the balance sheets and statements of operations
that are affected and the amounts applicable to each financial statement line item and the significant terms and conditions of the transactions.
The ASU is effective for annual periods beginning after December 15, 2021. The disclosure requirements can be applied either retrospectively
or prospectively to all transactions in the scope of the amendments that are reflected in the financial statements at the date of initial
application and new transactions that are entered into after the date of initial application. The Company adopted the ASU prospectively
on October 1st, 2022. Adoption of this ASU did not have a material impact on our consolidated financial statements. In June 2022, the FASB issued ASU 2022-03
Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update clarifies
that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security
and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate unit of account,
recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity securities subject
to contractual sale restrictions. The amendments in this update are effective for the Group beginning January 1, 2024 on a prospective
basis. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for
issuance. The Company is currently assessing the impact and does not expect that the adoption of this guidance will have a material impact
on its financial position, results of operations and cash flows. The Company does not believe other recently issued
but not yet effective accounting standards, if currently adopted, would have a material impact on its the consolidated financial position,
statements of operations and cash flows. |
