| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Consolidation The unaudited condensed consolidated
financial statements have been prepared in accordance with the rules and regulations of the Security and Exchange Commission and accounting
principles generally accepted in the United States of America (’‘U.S. GAAP’’) for interim financial
reporting. Certain information and footnote disclosures normally included in financial statements prepared in conformity with U.S. GAAP
have been condensed or omitted pursuant to such rules and regulations. Accordingly, these statements should be read in conjunction with
the Company’s audited consolidated financial statements for the year ended December 31, 2023. In the opinion of the management,
the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments, which are necessary for
a fair presentation of financial results for the interim periods presented. The Company believes that the disclosures are adequate to
make the information presented not misleading. The accompanying unaudited condensed consolidated financial statements have been prepared
using the same accounting policies as used in the preparation of the Company’s consolidated financial statements for the year ended
December 31, 2023. The results of income for the six months ended June 30, 2024 are not necessarily indicative of the results
for the full year. Foreign currency translation Transactions denominated in
currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing on 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 on the date of the balance sheet. The reporting currency of the
Company is U.S. dollars (“$”) and the accompanying unaudited condensed consolidated financial statements have been expressed
in $. In general, assets and liabilities
of the Company whose functional currency is not the $, are translated into $, 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 the Company is recorded as a separate component of accumulated other comprehensive income within the statement of shareholders’
equity. Translation of amounts from
VND into $ has been made at the following exchange rates for the respective periods:
June 30, December 31,
VND exchange rate for balance sheet items, except for equity accounts 25,455 24,270
For the Six Months Ended
2024 2023
VND exchange rate for items in the statement of operations and comprehensive income, and statement of cash flows 24,962 23,527 No representation is made that
the VND amounts could have been, or could be, converted into U.S. dollars at the rates used in translation. Inventories, net Inventories are stated at the
lower of cost or net realizable value. Cost of inventories is determined using the moving weighted average cost method. Adjustments are
recorded to write down the cost of inventories to the estimated net realizable value due to damaged and slow-moving goods, which is dependent
upon factors such as historical and forecasted consumer demand, and specific customer requirements. The Company takes ownership, risks
and rewards of the products. Write downs are recorded in cost of revenues in the unaudited condensed consolidated statements of operations
and comprehensive income. For the six months ended June 30, 2024 and 2023, the Company provided inventory provision of $4,008,858 and
$ nil Revenue recognition The Company adopted ASC Topic 606,
Revenue from Contracts with Customers (“ASC 606”) since its setup. In accordance with ASC 606, revenue is recognized
when the control of the promised goods or services is transferred to the customers, and the performance obligations under the contract
have been satisfied, in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services (excluding
sales taxes collected on behalf of government authorities). The Company’s revenue contracts generally do not include a right of
return in relation to the delivered products or services. The Company determines revenue
recognition through the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations
in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the
contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation. The Company primarily generated
revenues from sales of solar cells. The Company officially commenced
sales of solar cells to customers in the second half of 2023. The Company recognizes revenue generated from sales of solar cells at a
point in time following the transfer of control of the solar cells to the customers, which typically occurs upon shipment or delivery
depending on the terms of the underlying contracts. The contracts with customers may contain provisions that require the Company to make
liquidated damage payments to the customer if the Company fails to ship or deliver solar cells before scheduled dates. The Company recognizes
these liquidated damages as a reduction of revenue. For the six months ended June 30, 2024 and 2023, the Company did not incur such liquidation
damages. Sales agreements typically
contain the assurance-type customary product warranties if defects in solar cells exceeds 0.4% of delivered quantity. The assurance-type
product warranties are subject to ASC 450, Contingencies. As of June 30, 2024 and December 31, 2023, the Company did not accrue warranty
liabilities. Contract liabilities Contract
liabilities are recognized if the Company receives consideration prior to satisfying the performance obligations, which include customer
advances and deferred revenue under service arrangements. As of June 30, 2024, the Company had contract liabilities of $4,913,175 and
$9,137,458 from third party customers and related party customers, respectively, which were expected to be recognized as revenues in
the six months ending December 31, 2024. As of December 31, 2023, the Company had contract liabilities of $530,817 and $28,815,934
from related party customers, respectively, which were recognized as revenues in the six months ended June 30, 2024. Income taxes The Company accounts for income
taxes in accordance with the U.S. GAAP for income taxes. Under the asset and liability method as required by this accounting standard,
the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between
the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due
plus deferred taxes. The charge for taxation is
based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that
have been enacted or substantively enacted by the balance sheet date. Deferred tax is accounted for
using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets
and liabilities in the financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it
is more likely than not these items will be utilized against taxable income in the future. Deferred tax is calculated using tax rates
that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in
the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities. An uncertain tax position is
recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination,
with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely
of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense
in the period incurred. As of June 30, 2024, income tax returns for the tax years ended December 31, 2023 and 2022 remain open for
statutory examination. Recently issued accounting standards The Jumpstart Our
Business Startups Act (“JOBS Act”) provides that an emerging growth company (“EGC”) as defined therein can
take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay
adoption of certain accounting standards until those standards would otherwise apply to private companies. The Company qualifies as
an EGC as of June 30, 2024 and has elected to apply the extended transition period. In December 2023, the
FASB issued ASU 2023-09, which is an update to Topic 740, Income Taxes. The amendments in this update related to the rate reconciliation
and income taxes paid disclosures improve the transparency of income tax disclosures by requiring (1) adding disclosures of pretax
income (or loss) and income tax expense (or benefit) to be consistent with U.S. Securities and Exchange Commission (SEC) Regulation S-X
210.4-08(h), Rules of General Application — General Notes to Financial Statements: Income Tax Expense, and (2) removing
disclosures that no longer are considered cost beneficial or relevant. For public business entities, the amendments in this Update are
effective for annual periods beginning after December 15, 2024. For entities other than public business entities, the amendments
are effective for annual periods beginning after December 15, 2025. Early adoption is permitted for annual financial statements that
have not yet been issued or made available for issuance. The amendments in this Update should be applied on a prospective basis. Retrospective
application is permitted. The Company does not expect the adoption of ASU 2023-09 would have a significant impact on the Company’s
consolidated balance sheets, consolidated statements of operations and comprehensive income (loss) and consolidated statements of cash
flows. In November 2023, the FASB
issued ASU 2023-07. The amendments improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant
segment expenses. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose
multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment,
and contain other disclosure requirements. The purpose of the amendments is to enable investors to better understand an entity’s
overall performance and assess potential future cash flows. The ASU applies to all public entities that are required to report segment
information in accordance with ASC 280. The Company does not expect the adoption of ASU 2023-07 would
have a significant impact on the Company’s consolidated balance sheets, consolidated statements of operations and comprehensive
income (loss) and consolidated statements of 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 financial
position, statements of operations and cash flows. Significant risks and uncertainties 1) Credit
risk Assets that potentially subject
the Company to significant concentration of credit risk primarily consist of cash. The maximum exposure of such assets to credit risk
is their carrying amount as at the balance sheet dates. As of June 30, 2024 and December 31, 2023, the Company held cash and restricted
cash of $44,386,823 and $18,997,493, respectively. All of cash and restricted cash were deposited in financial institutions located in
Vietnam and are not insured. To limit exposure to credit risk relating to deposits, the Company primarily place cash deposits with large
financial institutions in Vietnam which management believes are of high credit quality and the Company also continually monitors their
credit worthiness. 2) Foreign
currency risk As of June 30, 2024 and December 31,
2023, substantially all of the Company’s purchase and operating expenses activities and the Company’s assets and liabilities
are denominated in VND, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through
the State Bank of Vietnam (“SBV”) or other authorized financial institutions at exchange rates quoted by SBV. Approval
of foreign currency payments by the SBV or other regulatory institutions requires submitting a payment application form together with
suppliers’ invoices and signed contracts. The value of VND is subject to changes in central government policies and to international
economic and political developments affecting supply and demand in the Vietnam Foreign Exchange Trading System market. 3) Concentration
risk The Company commenced sales
to customers since the second half of 2023. The Company has a concentration of its revenues with specific customers and accounts
payable with specific vendors. For the six months ended June
30, 2024, one related party customer accounted for 81% of total revenues. For the six months ended June 30, 2024, two third party customers
accounted for 47% and 43% of revenues generated from third parties, respectively. As of June 30, 2024, three
suppliers from third parties accounted for 18%, 16%, and 14% of accounts payable, respectively. As of December 31, 2023, four suppliers
from third parties accounted for 30%, 15%, 12% and 11% of accounts payable, respectively. For the six months ended June
30, 2024, one related party supplier accounted for 100% of total purchases of inventories from a related party. For the six months ended
June 30, 2024, two third party suppliers accounted for 55% and 16% of purchases of inventories from third parties, respectively. For the
six months ended June 30, 2024, one related party supplier and one third party supplier accounted for 50% and 27% of total purchases of
inventories, respectively. For the six months ended June 30, 2023, the Company did not commence operations and did not purchase from suppliers. For the six months ended June
30, 2024, two third party suppliers accounted for 20% and 17% of purchases of property and equipment, respectively. For the six months
ended June 30, 2023, four third party suppliers accounted for 35%, 17%, 16% and 13% of purchases of property and equipment, respectively. |
