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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Entrepreneur Universe Bright Group (QB) | USOTC:EUBG | OTCMarkets | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.209 | 0.121 | 0.2094 | 0.00 | 22:00:01 |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period
ended
Commission File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
| Title of Each Class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None |
Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark
whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company | |||
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
The number of shares of registrant’s
common stock outstanding as of November 9, 2023 was
ENTREPRENEUR UNIVERSE BRIGHT GROUP
FORM 10-Q
For the Quarterly Period Ended September 30, 2023
Table of Contents
| Page No. | ||
| NOTE | ii | |
| SPECIAL NOTE REGARDING FORWARD- LOOKING STATEMENTS | vi | |
| PART I - Financial Information | ||
| ITEM 1. | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) | 1 |
| ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 2 |
| ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 8 |
| ITEM 4. | CONTROLS AND PROCEDURES | 8 |
| PART II - Other Information | ||
| ITEM 1. | LEGAL PROCEEDINGS | 10 |
| ITEM 1A. | RISK FACTORS | 10 |
| ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS | 10 |
| ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 10 |
| ITEM 4. | MINE SAFETY DISCLOSURES | 10 |
| ITEM 5. | OTHER INFORMATION | 10 |
| ITEM 6. | EXHIBITS | 10 |
| 10 | ||
| SIGNATURES | 11 | |
i
NOTE
Entrepreneur Universe Bright Group, a Nevada corporation (“EUBG” or the “Company”), is not a Chinese operating company but a Nevada holding company. As a holding company with no material operations of our own, EUBG conducts all of its operations through its subsidiaries in Hong Kong and in the People’s Republic of China (“PRC” or “China”). Therefore our shareholders will not directly hold any equity interests in our Chinese operating subsidiaries. Unless otherwise mentioned or unless the context requires otherwise, when used in this Quarterly Report on Form 10-Q (the “Form 10-Q”), the terms “we,” “us,” and “our” refer to EUBG and its consolidated subsidiaries, or any one or more of them as the context may require, “HK subsidiary” refers to Entrepreneurship World Technology Holding Group Company Limited, our wholly-owned subsidiary and a Hong Kong limited company, and “PRC subsidiary” refers to Xi’an Yunchuang Space Information Technology Co., Ltd., f/k/a Entrepreneurship World Consultants Limited, a wholly-foreign owned Chinese subsidiary of HK subsidiary. EUBG is a holding company for its operating subsidiaries.
We currently do not, and we do not plan to use variable interest entities (“VIE”) to execute our business plan or to conduct our China-based operations. We do not have any contractual arrangements between the holding company, the HK subsidiary, and the PRC subsidiary. EUBG is a Nevada holding company and does not have any substantive operations other than directly or indirectly holding the equity interest in our operating subsidiaries in Hong Kong and China. Therefore our shareholders will not directly hold any equity interests in our Chinese operating subsidiaries. Our holding company structure involves unique risks to investors. Chinese regulatory authorities could disallow our corporate structure, which would likely result in a material change in our operations and/or the value of the Company’s common stock, including that it could cause the value of such securities to significantly decline or become worthless.
To the extent you make any investment in our Company, it will be in EUBG, our holding company in Nevada, and not in our operating subsidiaries in Hong Kong or in China. Because substantially all of our operations are conducted in China through our PRC subsidiary, the Chinese government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our PRC operations at any time, which could result in a material change in our operations and/or the value of the Company’s common stock. The Chinese government could also significantly limit or completely hinder our ability to list and/or remain listed on a U.S. or other foreign exchange, and to offer future securities to investors and cause the value of such securities to significantly decline or be worthless.
There are significant legal and operational risks associated with being in and conducting a substantial portion of our operations in mainland China. PRC laws and regulations governing our current business operations and corporate structure are sometimes vague and uncertain, and we face the risk that changes in the PRC laws, regulations and policies, including how those laws, regulations and policies will be interpreted or implemented could have a significant impact upon the business we may be able to conduct in the PRC which would likely result in a material change in our operations and/or the value of the Company’s common stock, including that it could cause the value of such securities to significantly decline or become worthless. Furthermore, these risks may significantly limit or completely hinder our ability to offer or continue to offer our securities to investors in the future.
Recent statements by the Chinese government have indicated an intent to exert more oversight and control over offerings that are conducted overseas and/or foreign investments in China based issuers. Any future action by the Chinese government expanding the categories of industries and companies whose foreign securities offerings are subject to government review could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless. In addition, recently, the PRC government initiated a series of regulatory actions and made a number of public statements on the regulation of business operations in China with little advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies listed overseas using a VIE structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding efforts in anti-monopoly enforcement. We may be subject to regulations relating to overseas securities offering and listing of China-based companies, including pursuant to the Opinions on Intensifying Crack Down on Illegal Securities Activities issued by the PRC government authorities, which called for enhanced oversight of overseas listed companies as well as overseas equity fundraising and listing by Chinese companies, and proposed measures such as the construction of regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies; the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies and the supporting guidelines issued by the China Securities Regulatory Commission (“CSRC”), which regulate overseas securities offering and listing activities by China-based companies; the draft Regulations on Network Data Security Management issued by the Cyberspace Administration of China(“CAC”), which requires, among other things, that a prior cybersecurity review be conducted by the Cybersecurity Review Office before listing overseas for data processors which process over one million users’ personal information, and for the listing in Hong Kong of data processors which affect or may affect national security; the Revised Cybersecurity Review Measures, jointly issued by the National Development and Reform Commission, the Ministry of Industry and Information Technology of the PRC, and several other administrations, which require, among other things, that a network platform operator holding over one million users’ personal information must apply with the Cybersecurity Review Office for a cybersecurity review before any public offering or listing outside of mainland PRC and Hong Kong.
ii
As of the date of this filing, our operating subsidiaries have not been involved in any investigations on cybersecurity review initiated by the CAC based on the Measures for Cybersecurity Review (2021) and the Draft Regulation, and we have not received any inquiry, notice, warning, sanctions in such respect or any regulatory objections to this registration. Because these statements and regulatory actions are new, however, it is highly uncertain how soon legislative or administrative regulation making bodies in China will respond to them, or what existing or new laws or regulations will be modified or promulgated, if any, or the potential impact such modified or new laws and regulations will have on our daily business operations or our ability to accept foreign investments and list on a U.S. exchange. If we are subject to such a probe or if we are required to comply with stepped-up supervisory requirements, valuable time from our management and money may be expended in complying and/or responding to the probe and requirements, thus diverting valuable resources and attention away from our operations. This may, in turn, negatively impact our operations.
As advised by our PRC legal counsel, we and our subsidiaries are not required to obtain permission or approval from any of the PRC authorities including CSRC or CAC to issue the Company’s common stock to foreign investors, nor have we, or our subsidiaries, applied for or received any denial for the Registration. However, recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the “Opinions on Severely Cracking Down on Illegal Securities Activities According to Law,” or the Opinions, which was made available to the public on July 6, 2021. The Opinions emphasized the need to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings by Chinese companies. Effective measures, such as promoting the construction of relevant regulatory systems will be taken to deal with the risks and incidents of China-concept overseas listed companies, and cybersecurity and data privacy protection requirements and similar matters. The Opinions and any related implementing rules to be enacted may subject us to compliance requirement in the future. Given the current regulatory environment in the PRC, we are still subject to the uncertainty of interpretation and enforcement of the rules and regulations in the PRC, which can change quickly with little advance notice, and any future actions of the PRC authorities. We cannot assure you that relevant PRC government agencies would reach the same conclusion as we do or as advised by our PRC legal counsel. However, (i) if we inadvertently concluded that such permissions or approvals are not required, or (ii) if the CSRC, the Cyberspace Administration of China or other regulatory PRC agencies later promulgate new rules requiring that we obtain their approvals to issue the Company’s common stock to foreign investors, and we are unable to obtain a waiver of such approval requirements, if and when procedures are established to obtain such a waiver, then we may not be able to list on a U.S. exchange. In addition, any uncertainties and/or negative publicity regarding such an approval requirement could have a material adverse effect on the trading price of our securities. It is uncertain when and whether we will be required to obtain permission from the China Securities Regulatory Commission to list on U.S. exchanges, and even if such permission is obtained, whether it will be denied or rescinded.
The PRC laws and regulations and government policy changes rapidly on digital training. For our digital training related services, we worked with Beida Jade Bird Vocational Education (“Jade Bird”) which was an authorized licensee of China National Personal Talent Training Network (“CNPTTN”), a PRC regulatory agency for the talent training. Jade Bird was in charge of its training courses, and the Company was authorized by Jade Bird as its sole training related administrator of the training courses, limited to coordinate the digital training related services to individual clients who were interested in conducting live-broadcasting business through social medias. The Company provided training related services, to these individual clients who subscribed courses, in arranging the examination, following up certificate issuance processes, addressing clients’ concerns, etc. On March 22, 2022, the PRC subsidiary learned that Jade Bird suspended its service after receiving a notice from CNPTTN and that until further notice CNPTTN has suspended all recruitment services using its CNPTTN’s name. As a result of CNPTTN’s suspension, the PRC subsidiary has also suspended its digital training related services with Jade Bird from March 22, 2022 until further notice. In the future, laws and regulations and the CNPTTN may require our PRC Subsidiary to meet additional requirements or obtain additional approvals, licenses or permits to conduct KOL training related business. If our PRC Subsidiary is unable to meet the relevant requirements or obtain the relevant approvals, licenses or permits, our PRC Subsidiary may not be able to continue to conduct the KOL training related business. As of the date of this filing, there is no further notice from CNPTTN and the service is still being suspended. As advised by our PRC legal counsel, other than the above, we and our subsidiaries are currently not required to obtain permission from any of the PRC authorities to operate its principal business. We cannot assure you that relevant PRC government agencies would reach the same conclusion as we do or as advised by our PRC legal counsel. If (i) we and our PRC legal counsel inadvertently concluded that such permissions or approvals are not required, or (ii) the relevant regulatory PRC agencies later promulgate new rules requiring that we obtain their approvals to operate our business, and we are unable to obtain approval or a waiver of such approval requirements, any uncertainties and/or negative publicity regarding such an approval requirement could have a material adverse effect on our business operation and the trading price of our securities.
iii
Although we concluded that we and our subsidiaries are currently not required to obtain permission from any of the PRC central or local government and that we have not received any denial to list on the U.S. exchange or to conduct our business operations, if (x) we inadvertently conclude that such approvals are not required when they are, (y) we do not receive or maintain such permissions or approvals if and when required, or (z) changes in applicable laws, regulations, or interpretations relating to our business or industry which would require us to obtain approvals in the future, our operations, financial conditions, and results of operations could be adversely affected, directly or indirectly, and the value of the Company’s common stock could significantly decline or become worthless.
On July 7, 2022, the CAC promulgated the Measures for the Security Assessment for Cross-border Transfer of Data (the “Security Assessment measures”), which will come into effect on September 1, 2022. The Security Assessment measures stipulates that data processors which provide data cross-border and have one of the following circumstances, should apply the security assessment to the national network information department through the provincial branches of network information department: (A) data processors to provide important data cross-border; (B) operators of critical information infrastructure and data processors handling personal information of more than 1 million people to provide personal information cross-border;(C) data processors which provide cross-border a cumulative total of 100,000 people’s personal information or 10,000 people’s sensitive personal information since January 1 of the previous year; (D) other situations requiring application for the security assessment regarding providing data cross-border as stipulated by the state Internet information department. As of the date of this filing, the PRC subsidiary has not provided any important data or personal data to any offshore institutions or individuals, so the PRC subsidiary do not need to apply for a security assessment at this stage. However, if we need to provide data to offshore institutions or individuals in the future and fall into the situations which should apply for the security assessment, we might not pass the security assessment.
In December 2020, the Holding Foreign Companies Accountable Act (“HFCAA”), was signed into law as part of a continued regulatory focus in the United States on access to audit and other information currently protected by national law. The HFCAA states if the Securities and Exchange Commission (“SEC”) determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the Public Company Accounting Oversight Board (“PCAOB”) for three consecutive years beginning in 2021, the SEC shall prohibit securities from being traded on a national securities exchange or in the over-the-counter trading market in the U.S. Following the filing of our Form 10 for fiscal year ended December 31, 2021, which was audited by Centurion ZD CPA & Co. (“CZD CPA”), an audit firm headquartered in Hong Kong, a jurisdiction that the PCAOB has determined that the PCAOB is unable to conduct inspections or investigate auditors, the SEC added us to its list of Commission-Identified Issuers identified under HFCAA. In December 2022, the Accelerating Holding Foreign Companies Accountable Act (“AHFCAA”) was signed into law, which amended the HFCAA to shorten the three-year period to two years.
On September 7, 2022, we dismissed CZD CPA and appointed Prager Metis CPAs, LLC (“PragerMetis”) as our independent auditor for the fiscal year end December 31, 2022. Our current auditors, PragerMetis, is located at Hackensack, New Jersey, and has been inspected by the PCAOB. We expect that this will satisfy the PCAOB inspection requirements for the audit of our consolidated financial statements, subject to compliance with SEC and other requirements prior to the two-year deadline of the AHFCAA.
Further, on August 26, 2022, the PCAOB signed a Statement of Protocol with the China Securities Regulatory Commission, or the CSRC, and the Ministry of Finance of the PRC, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. On December 15, 2022, the PCAOB announced that it “was able to secure complete access to inspect and investigate audit firms in the People’s Republic of China (PRC) for the first time in history, in 2022. Therefore, on December 15, 2022, the PCAOB Board voted to vacate previous determinations to the contrary.”
iv
EUBG is permitted to transfer cash as a loan and/or capital contribution to the HK subsidiary for its operations and the HK subsidiary is permitted to transfer cash as a loan and/or capital contribution to the PRC subsidiary for capital investment and company operations. For instance, the PRC subsidiary will use the cash for their daily business operations. However, under existing PRC regulations, any loans made to our PRC subsidiaries shall not exceed a statutory limit, and shall be filed with SAFE or its local bureau. Additionally, any capital contributions the HK subsidiary make to the PRC subsidiary shall be filed with the local commerce department. The PRC subsidiary is the main operating company to earn revenue. The HK subsidiary is also permitted under the laws of Hong Kong SAR to provide funding to EUBG through dividend distribution without restrictions on the amount of the funds. Current PRC laws require that dividends be paid only out of the profit for the year calculated according to PRC accounting principles, which differ from the generally accepted accounting principles in other jurisdictions. In addition, PRC laws also require a foreign-invested enterprise to set aside at least 10% of its after-tax profits, if any, to fund its statutory reserves, until the aggregate amount reaches 50% of its registered capital. In addition, a wholly foreign-owned enterprise may, at its discretion, allocate a portion of its after-tax profits based on PRC accounting principles to enterprise expansion funds, staff welfare, and bonus funds. Those reserve funds are not available for distribution as cash dividends. The PRC government’s control of foreign currency conversion may limit our foreign exchange transactions. Under existing PRC foreign exchange regulations, payments of current account items can be made in foreign currencies without prior approval from SAFE. However, approval from SAFE, or registration with SAFE or other appropriate departments is required where RMB shall be converted into foreign currency and be remitted out of the PRC. Failure to comply with the above regulations may result in liability under PRC laws for evasion of foreign exchange controls.
As of the date of this filing, our PRC subsidiary has distributed RMB64.5 million (approximately to $8.9 million) to its holding parent, our HK subsidiary. After deducting the withholding tax of approximately RMB6.4 million (approximately to $0.9 million) at a rate of 10% on the declared dividend, the net distribution amounts to RMB58.0 million (approximately to $8.0 million). However, we cannot ensure that we will be able to comply with the above regulations in all respects in the future. If we fail to comply with the above regulations, our ability to transfer cash and distribute earnings may be negatively affected, which could materially and adversely affect our liquidity and our ability to fund and expand our business. Since EUBG, the Nevada holding company, is not the direct parent company of the PRC subsidiary, EUBG and the PRC subsidiary cannot make transfers to the other. We intend to keep any future earnings to finance the expansion of our business conducted by our subsidiaries, and we do not anticipate that any cash dividends will be paid in the foreseeable future from the HK subsidiary to EUBG, the Nevada holding company, and/or from EUBG to its shareholders. As of the date of this filing, other than the above stated RMB64.5 million cash dividends transferred from our PRC subsidiary to our HK subsidiary for operational costs, no cash transfer or transfer of other assets (including dividends and distribution) have occurred among EUBG, our Nevada holding company, and either of its subsidiaries, our HK subsidiary or our PRC subsidiary.
The PRC government has significant oversight and discretion over the conduct of our business and may intervene or influence our operations as the government deems appropriate to further regulatory, political and societal goals. To the extent that the cash and assets of our business are in our PRC subsidiary and/or Hong Kong subsidiary, such cash or assets may not be available to fund our operations or for other use outside of the PRC and/or Hong Kong due to the potential intervention by the PRC government to impose restrictions and limitations over our ability or our subsidiaries’ ability to transfer cash or assets. Any such intervention in or influence on our business operations or action to exert more oversight and control over the cash or assets of our subsidiaries, once taken by the PRC government, could adversely affect our business, financial condition and results of operations and the value of our common stock, or significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless.
On September 1, 2021, our PRC subsidiary adopted a written Monetary and Cash Fund Management System (“Cash Management Policy”) for its operations in China and Hong Kong. The Cash Management Policy covers cash, bank deposits and other monetary funds owned by the PRC subsidiary and Hong Kong subsidiary and includes procedures on receiving funds, depositing funds, transferring funds and proper documentation and recording of cash. We adopted the Cash Management Policy in order to provide a process and guidance on collecting, accounting for, and safeguarding all cash and cash equivalents of our PRC subsidiary and Hong Kong subsidiary, including 1) checking the latest regulation requirements between China and Hong Kong; and 2) seeking approval from EUBG’s chief executive officer in order to transfer funds from our PRC subsidiary to our HK subsidiary. EUBG does not have a cash management policy.
For detailed discussions on such risks, please see the section captioned “Risk Factors” in our Annual Report on Form 10-K (the “Annual Report” or “Form 10-K”), filed with the SEC on March 29, 2023.
v
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (the “Quarterly Report” or “Form 10-Q”) includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements in this report other than statements of historical fact are forward-looking statements for purposes of these provisions, including any statements of the Company’s plans and objectives for future operations, the Company’s future financial or economic performance (including known or anticipated trends), and the assumptions underlying or related to the foregoing. Statements that include the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential,” or “continue,” or the negative thereof, or other comparable terminology, are forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” in our Annual Report filed with the SEC on March 29, 2023. Forward-looking statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. You should read these factors and the other cautionary statements made in this report and in the documents we incorporate by reference into this report as being applicable to all related forward-looking statements wherever they appear in this report or the documents we incorporate by reference into this report. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.
Any forward-looking statements contained in this Quarterly Report are only estimates or predictions of future events based on information currently available to our management and management’s current beliefs about the potential outcome of future events. Whether these future events will occur as management anticipates, whether we will achieve our business objectives, and whether our revenues, operating results or financial condition will improve in future periods are subject to numerous risks. There are a number of important factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements. These important factors include those that we discuss under the heading “Risk Factors” in this Quarterly Report and in other reports filed from time to time with the SEC that are incorporated by reference into this Quarterly Report. You should read these factors and the other cautionary statements made in this Quarterly Report and in the documents which we incorporate by reference into this Quarterly Report as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report or the documents we incorporate by reference into this Quarterly Report. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
vi
PART I - Financial Information
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
UNAUDITED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
1
ENTREPRENEUR UNIVERSE BRIGHT GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In U.S. dollars except for number of shares)
| September 30, 2023 | December 31, 2022 | |||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Other receivables and prepayments | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Plant and equipment, net | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Other payables and accrued liabilities | $ | $ | ||||||
| Other payables and accrued liabilities – related party | ||||||||
| Receipt in advance | ||||||||
| Operating lease liabilities, current | ||||||||
| Tax payables | ||||||||
| Amount due to a director | ||||||||
| Total current liabilities | ||||||||
| NON-CURRENT LIABILITY | ||||||||
| Deferred tax liabilities | ||||||||
| Operating lease liabilities, non-current | ||||||||
| Total non-current liabilities | ||||||||
| TOTAL LIABILITIES | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock, par value $ | ||||||||
| Common stock, par value $ | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserves | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive income | ||||||||
| Total stockholders’ equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-1
ENTREPRENEUR UNIVERSE BRIGHT GROUP
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(UNAUDITED)
(In U.S. dollars except for number of shares)
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ||||||||||||||||
| Selling expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income from operations | ||||||||||||||||
| Other income (expenses): | ||||||||||||||||
| Interest income | ||||||||||||||||
| Exchange loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Sundry income | ||||||||||||||||
| Total other income(expenses), net | ( | ) | ||||||||||||||
| Income before income tax | ||||||||||||||||
| Income tax expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ||||||||||
| Other comprehensive loss | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total comprehensive income (loss) | $ | $ | ( | ) | $ | $ | ||||||||||
| $ | * | $ | * | $ | * | $ | * | |||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| * |
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-2
ENTREPRENEUR UNIVERSE BRIGHT GROUP
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(UNAUDITED)
(In U.S. dollars except for number of shares)
Three and nine months ended September 30, 2022
| Common Stock | Additional | Preferred stock | Accumulated Other | Total | ||||||||||||||||||||||||||||||||
| Number of | Paid-In | Number of | Statutory | Retained | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Shares | Amount | Reserve | Earnings | Income | Equity | ||||||||||||||||||||||||||||
| Balance as of January 1, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of March 31, 2022 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2022 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of September 30, 2022 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
Three and nine months ended September 30, 2023
| Common Stock | Additional | Preferred stock | Accumulated Other | Total | ||||||||||||||||||||||||||||||||
| Number of | Paid-In | Number of | Statutory | Retained | Comprehensive | Stockholders’ | ||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Shares | Amount | Reserve | Earnings | Income | Equity | ||||||||||||||||||||||||||||
| Balance as of January 1, 2023 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of March 31, 2023 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Balance as of September 30, 2023 | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-3
ENTREPRENEUR UNIVERSE BRIGHT GROUP
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In U.S. dollars)
| For the nine months ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to cash generated from operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of operating lease right-of-use assets | ||||||||
| Deferred tax liabilities | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Other receivables and prepayments | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Other payables and accrued liabilities | ( | ) | ( | ) | ||||
| Tax payables | ||||||||
| Contract liabilities | ( | ) | ||||||
| Receipt in advance | ( | ) | ( | ) | ||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash generated from operating activities | ||||||||
| Cash flows from investing activities | ||||||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| Loan receivables from an unrelated third party | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows used in financing activities | ||||||||
| Repayment to a director | ( | ) | ( | ) | ||||
| Net cash used in financing activities | ( | ) | ( | ) | ||||
| Effect of exchange rates on cash | ( | ) | ( | ) | ||||
| Net increase (decrease) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid during the period for: | ||||||||
| Income taxes | $ | $ | ||||||
| Withholding tax paid | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
ENTREPRENEUR UNIVERSE BRIGHT GROUP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(UNAUDITED)
(In U.S. dollars except for number of shares)
NOTE 1 – ORGANIZATION AND BUSINESS
Entrepreneur Universe Bright Group (“EUBG” or the “Company”) was incorporated in the State of Nevada on April 21, 1999 under the name LE GOURMET CO, INC. and the Company’s name to Entrepreneur Universe Bright Group, with an effective date of April 3, 2020.
| Company name | Place/date of incorporation | Principal activities | ||
| 1. Entrepreneurship World Technology Holding Group Company Limited | ||||
| 2. Xian Yunchuang Space Information Technology Co., Ltd. | ||||
3. Xian Yunchuang Space Information Technology Co., Ltd, BaiYin Branch (Deregistered on June 30, 2023) |
COVID-19
In early January of 2020, a novel coronavirus (“COVID-19”) outbreak took place in Wuhan, China. Subsequently, it has spread rapidly to Asia and other parts of the world. The COVID-19 outbreak has resulted in widespread economic disruptions in China, as well as stringent government measures by the Chinese government to contain its transmissions including quarantines, travel restrictions, and temporary closures of non-essential businesses in China and elsewhere.
In early December 2022, China announced a nationwide loosening of its zero-covid policy, and most of the travel restrictions and quarantine requirements were lifted in December 2022. As a result, there were significant surges of COVID-19 cases in many cities in China from December 2022 to March 2023. However, based on the current situation, the Company does not expect a significant impact on the Company’s operations and financial results in the long run.
The Company achieved an operating revenue of $
F-5
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting.
The interim condensed consolidated financial information as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 have been prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim condensed consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, previously filed with the SEC on March 29, 2023.
In the opinion of management, all adjustments (which include all significant normal and recurring adjustments) necessary to present a fair statement of the Company’s interim condensed consolidated financial position as of September 30, 2023, its interim condensed consolidated results of operations and cash flows for the three and nine months ended September 30, 2023 and 2022, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.
Use of Estimates
The preparation of these financial statements in conformity with U.S. GAAP requires management of the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Recently Adopted Accounting Standards
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 is to be adopted on a modified retrospective basis. As a smaller reporting company, ASU 2016-13 will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022. The Company adopted these ASUs on January 1, 2023, and these amendments were applied prospectively.
In March 2022, the FASB issued ASU 2022-02, Topic 326. The ASU eliminates the accounting guidance for trouble debt restructurings by creditors in Subtopic 310-40, and enhances the disclosure requirements for modifications of loans to borrowers experiencing financial difficulty. Additionally, the ASU requires disclosure of gross writeoffs of receivables by year of origination for receivables within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost. This ASU is effective for periods beginning after December 15, 2022. The Company adopted this ASU on January 1, 2023, and these amendments were applied prospectively.
F-6
Recently Issued Accounting Standards
In October 2021, the FASB issued ASU No. 2021-08, “‘Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company does not expect the adoption of ASU 2021-04 to have a material effect on the condensed consolidated financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s condensed consolidated financial statements upon adoption.
Basis of Consolidation and Noncontrolling Interests
The condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
A
subsidiary is an entity in which (i) the Company directly or indirectly controls more than
Leases
The Company determines if an arrangement is a lease or contains a lease at inception of the arrangement. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. The Company elected the package of practical expedients permitted under the transition guidance to combine the lease and non-lease components as a single lease component for operating leases associated with the Company’s office space lease, and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the condensed consolidated statements of income on a straight-line basis over the lease term.
ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.
ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.
The Company recognized no impairment of ROU assets as of September 30, 2023 and December 31, 2022.
The operating lease is included in operating lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current on the Company’s condensed consolidated balance sheets.
F-7
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers cash, money market funds, investments in interest bearing demand deposit accounts, time deposits and all highly liquid investments placed with banks or other financial institutions with an original maturity of three and nine months or less to be cash equivalents.
As
of September 30, 2023, cash held in accounts managed by online payment platforms such as Alipay and WeChat Pay amounted to $
Accounts receivable
Accounts receivables are recorded at the invoiced amount, net of allowances for doubtful accounts and sales returns. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivables. The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions.
Outstanding accounts receivable balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
Plant and equipment
| Estimated useful lives (years) | ||||
| Motor vehicle | ||||
| Office equipment | ||||
The gain or loss on the disposal of plant and equipment is the difference between the net sales proceeds and the lower of the carrying value or fair value less cost to sell the relevant assets and is recognized in general and administrative expenses in the condensed consolidated statements of comprehensive income.
Impairment of Long-lived Assets
In accordance with ASC 360-10-35, we review the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company assesses the recover-ability of the assets based on the non-discounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated discounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. No impairment has been recorded by the Company for the three and nine months ended September 30, 2023 and 2022.
Revenue Recognition
The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five step model prescribed under ASU No. 2014-09: (i) identify 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 revenues when (or as) we satisfy the performance obligation.
The Company evaluates if it is a principal or an agent in a transaction to determine whether revenue should be recorded on a gross or net basis. The Company is acting as the principal if it obtains control over the goods and services before they are transferred to customers. When the Company is primarily obligated in a transaction, is generally subject to inventory risk, has latitude in establishing prices, or has several but not all of these indicators, the Company acts as the principal and revenue is recorded on a gross basis. When the Company is not primarily obligated in a transaction, does not generally bear the inventory risk and does not have the ability to establish the price, the Company acts as the agent and revenue is recorded on a net basis
The Company derives its revenue primarily from consultancy services, sourcing and marketing services, and digital training related services.
F-8
Consultancy services
The Company generates the majority of its revenues by providing consulting services to its clients.
Performance-based arrangements represent forms of variable consideration determined by pre-established fixed rates. In these arrangements, the Company’s fees are based on the attainment of contractually defined objectives with our client, such as assisting the client in achieving a specific business objective (e.g. end customer placed an order to buy a product or enrolment of a course, or improve the performance quality and profitability of our client’s livestream performers). The Company is entitled a fixed rate on revenue generated by the client that are related to the scope of respective consultancy services upon client acceptance on the services provided.
Sourcing and marketing services
The Company provides agency-based sourcing and marketing services to connect marketplace operators and merchants.
Agency-based sourcing and marketing services represents product procurement on behalf of marketplace operators. The Company recognized revenues from agency-based sourcing and marketing services at a fixed rate on the value of goods that are sourced and delivered to the ultimate customers by the merchants. The Company reports revenues from these transactions on a net basis because the performance obligation is to facilitate a transaction between marketplace operators and merchants, for which the Company did not obtain the control over the products before passing on to the end customers. The Company is not primarily responsible for fulfilling the promise and not exposed to inventory risk.
The post-sale services, goods return and other kinds of product issue are responsibilities of the merchants. Upon successful delivery to ultimate customers by the merchants, there is no unfulfilled obligation that could affect the marketplace operators’ and merchants’ acceptance of the services provided. The acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.
Digital training related services
Fixed-fee digital training related services are provided to clients who are interested to conduct live-broadcasting business through social medias. The Company require the clients to pay a pre-established fee in exchange for the services. Revenues are recognized when promised services (e.g. preliminary consulting work, setting up an e-learning account and delivery of learning materials) are delivered to the clients.
The
Company derived services revenues of $
Practical expedients and exemption
The Company has not occurred any costs to obtain contracts, and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.
F-9
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Consultancy services | ||||||||||||||||
| Sourcing and marketing services | ||||||||||||||||
| Digital training related services | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue recognized at a point in time | ||||||||||||||||
| Revenue recognized over time | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenue recorded on a gross basis | ||||||||||||||||
| Revenue recorded on a net basis | ||||||||||||||||
| $ | $ | $ | $ | |||||||||||||
Contract liabilities
The
Company’s contract liabilities consist of deferred revenue associated with consultancy fees and provision of fixed-fee training
related services.
| September 30, 2023 | December 31, 2022 | |||||||
| Balance at beginning of period | $ | $ | ||||||
| Service fees collected | ||||||||
| Refunded | ( | ) | ||||||
| Service revenue earned | ( | ) | ||||||
| Exchange realignment | ( | ) | ||||||
| Balance at end of period | $ | $ | ||||||
Cost of revenue
Cost of revenues consists primarily of employee compensation, service fees, agency fees, and the related IT expenses, which are directly attributable to the revenues
Employee benefits
Full
time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension
benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require
that the PRC subsidiary of the Company make contributions to the government for these benefits based on certain percentages of the employees’
salaries, up to a maximum amount specified by the local government. The Company has no legal obligation for the benefits beyond the contributions
made. Total amounts of such employee benefit expenses, which were expensed as incurred, were approximately $
F-10
Foreign Currency and Foreign Currency Translation
The reporting currency of the Company is the United States dollar (“US dollar”). The financial records of the Company’s PRC operating subsidiaries are maintained in their local currency, the Renminbi (“RMB”), which is the functional currency. The financial records of the Company’s Hong Kong operating subsidiary are maintained in its local currency, the Hong Kong Dollar (“HKD”), which is the functional currency. Assets and liabilities of the subsidiaries are translated into the reporting currency at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates, and income and expense items are translated using the average rate for the period. The translation adjustments are recorded in accumulated other comprehensive loss under shareholders’ equity.
Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical exchange rates. Transactions in currencies other than the applicable functional currencies during the period are converted into the functional currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the condensed consolidated statements of operations.
RMB
is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People’s
Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted
for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand.
| Nine months ended September 30, 2023 | ||
| Balance sheet, except for equity accounts | RMB | |
| Income statement and cash flows | RMB | |
| Nine months ended September 30, 2022 | ||
| Balance sheet, except for equity accounts | RMB | |
| Income statement and cash flows | RMB |
During
the periods presented, HKD is pegged to the U.S. dollar within a narrow range which is around HKD
Income Taxes
Income taxes are accounted for using an asset and liability approach which requires the recognition of income taxes payable or refundable for the current period and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Deferred income taxes are determined based on the differences between the accounting basis and the tax basis of assets and liabilities and are measured using the currently enacted tax rates and laws. Deferred tax assets are reduced by a valuation allowance, if based on available evidence, it is considered that it is more likely than not that some portion of or all of the deferred tax assets will not be realized. In making such determination, the Company considers factors including future reversals of existing taxable temporary differences, future profitability, and tax planning strategies. If events were to occur in the future that would allow the Company to realize more of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the deferred tax assets that would increase income for the period when those events occurred. If events were to occur in the future that would require the Company to realize less of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the valuation allowance against deferred tax assets that would decrease income for the period when those events occurred. Significant management judgment is required in determining income tax expense and deferred tax assets and liabilities.
The Company conducts business in the US, the PRC and Hong Kong and is subject to tax in these jurisdictions. As a result of its business activities, the Company will file tax returns that are subject to examination by the respective tax authorities.
F-11
Uncertain Tax Positions
Management
reviews regularly the adequacy of the provisions for taxes as they relate to the Company’s income and transactions. In order to
assess uncertain tax positions, the Company applies a more likely than not threshold and a two-step approach for tax position measurement
and financial statement recognition. For the two-step approach, the first step is to evaluate the tax position for recognition by determining
if the weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution
of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more
than
Net income per Share of Common Stock
The
Company has adopted ASC Topic 260, “Earnings per Share,” (“EPS”) which requires presentation of basic EPS on
the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and
denominator of the basic EPS computation.
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net income (loss) | $ | $ | ( | ) | $ | $ | ||||||||||
| Weighted average number of common stock outstanding | ||||||||||||||||
| Net income per share | ||||||||||||||||
| $ | * | $ | * | $ | * | $ | * | |||||||||
| * | Less than $ |
The calculation of basic net income per share of common stock is based on the net income (loss) for the three and nine months ended September 30, 2023 and 2022 and the weighted average number of ordinary shares outstanding.
For the three and nine months ended September 30, 2023 and 2022, the Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
Segments
The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operating results solely by monthly revenue of marketing consultation services and operating results of the Company and, as such, the Company has determined that the Company has one operating segment (provision of consulting, sourcing and marketing services, and digital training related services in China) as defined by ASC Topic 280 “Segment Reporting”.
F-12
Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. Certain current assets and current liabilities are financial instruments. 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 rates are equivalent to interest rates currently available. The three levels of valuation hierarchy are defined as follows:
| ● | 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 measurement. |
Valuation of debt products depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, and other relevant terms of the debt. Other factors that may be considered include the borrower’s ability to adequately service its debt, the fair market value of the borrower in relation to the face amount of its outstanding debt and the quality of collateral securing the Company’s debt investments. The fair value of these debt products classified as Level 2 are established by reference to the prices quoted by respective fund administrators.
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, other receivables, accounts payable and other payables, amounts due to a director and a shareholder and borrowings approximate their fair values because of the short maturity of these instruments or the rate of interest of these instruments approximate the market rate of interest.
Comprehensive Income
Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. Accumulated other comprehensive income includes cumulative foreign currency translation adjustment.
NOTE 3 – PLANT AND EQUIPMENT
| September 30, 2023 | December 31, 2022 | |||||||
| Motor vehicle | $ | $ | ||||||
| Office equipment | ||||||||
| Less: Accumulated depreciation | ( | ) | ( | ) | ||||
| Plant and equipment, net | $ | $ | ||||||
Depreciation
expenses, classified as operating expenses, were $
F-13
NOTE 4 – RELATED PARTY TRANSACTIONS
The following is the list of the related parties with which the Company had transactions for the three and nine months ended September 30, 2023 and 2022:
| (a) | Zhongchuang Boli Technology Co., Ltd. (“Zhongchuang Boli”) – a company incorporated in the Gansu, PRC. Zhongchuang Boli is wholly owned by the sister of the Company’s CEO, Mr. Guolin Tao, since February 3, 2021. |
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Sundry income | ||||||||||||||||
| Zhongchuang Boli | ||||||||||||||||
Sundry income was charged at fees agreed by both parties in accordance with a trademark licensing agreement.
| September 30, 2023 | December 31, 2022 | |||||||
| Amount due to a director | ||||||||
| - Mr. Guolin Tao | $ | $ | ||||||
| Other payables | ||||||||
| - Zhongchuang Boli | $ | |||||||
The
amount due to director as of September 30, 2023 and December 31, 2022 are unsecured, non-interest bearing and repayable on demand. As
at December 31, 2022, the carrying amount included expenses paid on behalf of Mr. Guolin of US$
NOTE 5 – ACCOUNTS RECEIVABLE, NET
| September 30, 2023 | December 31, 2022 | |||||||
| Account receivables | $ | $ | ||||||
| Less: Allowance for doubtful accounts | ||||||||
| $ | $ | |||||||
NOTE 6 – OTHER RECEIVABLES AND PREPAYMENTS
| September 30, 2023 | December 31, 2022 | |||||||
| Deposits and other receivables | $ | $ | ||||||
| Prepayments | ||||||||
| $ | $ | |||||||
F-14
NOTE 7 – OTHER PAYABLES AND ACCRUED LIABILITIES
| September 30, 2023 | December 31, 2022 | |||||||
| Other payables | $ | $ | ||||||
| Salary payable | ||||||||
| Accrued audit fees | ||||||||
| Value-added tax and other taxes payables | ||||||||
| Other accrued expenses | ||||||||
| $ | $ | |||||||
NOTE 8 – STATUTORY RESERVES
As
stipulated by the relevant laws and regulations in the PRC, company established in the PRC (the “PRC subsidiary”) is required
to maintain a statutory reserve made out of profit for the year based on the PRC subsidiary’ statutory financial statements which
are prepared in accordance with the accounting principles generally accepted in the PRC. The amount and allocation basis are decided
by the director of the PRC subsidiary annually and is not to be less than
In
addition, as a result of the relevant PRC laws and regulations which impose restriction on distribution or transfer of assets out of
the PRC statutory reserve, $
No
additional statutory reserves is recorded in September 30, 2023 because the aggregate amount of profits allocated to the reserves has
reached
NOTE 9 – INCOME TAXES
Income is subject to tax in the various countries in which the Company operates.
The
Company is incorporated in the State of Nevada and is subject to the U.S. federal tax and state tax. On December 22, 2017, the U.S. government
enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes
broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate income tax rate
from
The
Global Intangible Low-taxed Income (GILTI) is a new provision introduced by the Tax Cuts and Jobs Act. U.S. shareholders, who are domestic
corporations, of controlled foreign corporations (CFCs) are eligible for up to an
F-15
The Company mainly conducts its operating business through its subsidiaries in China, including Hong Kong.
The
subsidiary incorporated in Hong Kong is subject to Hong Kong taxation on income derived from their activities conducted in Hong Kong.
Hong Kong Profits Tax has been calculated at
The
subsidiary incorporated in mainland China is governed by the Income Tax Law of the PRC concerning foreign invested enterprises and foreign
enterprises and various local income tax laws (the Income Tax Laws), and are subject to
Under
the PRC EIT law, withholding income tax, normally at a rate of
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Current tax: | ||||||||||||||||
| China | $ | $ | $ | $ | ||||||||||||
| Deferred tax | ||||||||||||||||
| Hong Kong | ||||||||||||||||
| China | ( | ) | ( | ) | ( | ) | ||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Income before income tax | $ | $ | ||||||||||||||
| Statutory income tax rate | % | % | % | % | ||||||||||||
| Income tax credit computed at statutory income tax rate | ||||||||||||||||
| Reconciling items: | ||||||||||||||||
| Non-deductible expenses | ||||||||||||||||
| Rate differential in different tax jurisdictions | ||||||||||||||||
| Deferred tax provided on dividends withholding tax of PRC subsidiaries | ||||||||||||||||
| Under(over)-provision in prior year | ( | ) | ||||||||||||||
| Income tax expense | $ | $ | ||||||||||||||
| September 30, 2023 | December 31, 2022 | |||||||
| Deferred tax assets: | ||||||||
| Accelerated depreciation | $ | $ | ||||||
| Deductible temporarily difference arising from other payable | ||||||||
| Less: Net off with deferred tax liabilities for financial reporting purposes | ( | ) | ( | ) | ||||
| Net total deferred tax assets | $ | $ | ||||||
| Deferred tax liabilities: | ||||||||
| Undistributed profits of a PRC subsidiary | $ | $ | ||||||
| Less: Net off with deferred tax assets for financial reporting purposes | ( | ) | ( | ) | ||||
| Net total deferred tax liabilities | $ | $ | ||||||
F-16
NOTE 10 – LEASE
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Operating lease cost – straight line | ||||||||||||||||
| Total lease expense | $ | $ | $ | $ | ||||||||||||
| Operating leases | ||||
| Remainder of 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Thereafter | ||||
| Total undiscounted cash flows | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | $ | |||
| September 30, 2023 | ||||
| Weighted-average remaining lease term - year | ||||
| Weighted-average discount rate (%) | % | |||
| Nine months ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Operating cash outflows from operating lease | $ | $ | ||||||
F-17
NOTE 11 – CONTINGENCIES AND COMMITMENTS
Contingencies
Certain conditions may exist as of the date the condensed consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. There was no contingency of this type as of September 30, 2023 and December 31, 2022.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. There was no contingency of this type as of September 30, 2023 and December 31, 2022.
Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
NOTE 12 – CERTAIN RISKS AND CONCENTRATIONS
| (a) | Concentrations |
| Three months ended September 30, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Customer A | $ | % | $ | % | ||||||||||||
| Nine months ended September 30, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Customer A | $ | % | $ | % | ||||||||||||
| September 30, 2023 | December 31, 2022 | |||||||||||||||
| Customer A (note i) | $ | % | $ | % | ||||||||||||
For
the three and nine months ended September 30, 2023 and 2022, the Company derived services revenues of $
F-18
| Nine months ended September 30, | ||||||||||||
| 2023 | 2022 | |||||||||||
| Service vendor A | $ | % | $ | % | ||||||||
There
was no service vendor that individually comprised
| (b) | Credit risk |
At September 30, 2023 and December 31, 2022, the Company’s cash and cash equivalents included bank deposits in accounts maintained in China and Hong Kong and liquid funds in online payment platforms. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.
For the credit risk related to accounts receivable, the Company performs ongoing credit evaluations of its customers and, if necessary, maintains reserves for potential credit losses.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents.
As
of September 30, 2023 and December 31, 2022, $
The Company operates principally in the PRC and grants credit to its customers in this geographic region. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations.
NOTE 13 – SUBSEQUENT EVENTS
The Company has evaluated the existence of events and transactions subsequent to the balance sheet date through the date the unaudited condensed consolidated financial statements were issued and has determined that there were no significant subsequent events or transactions which would require recognition or disclosure in the unaudited condensed consolidated financial statements.
F-19
ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
COVID-19 Update
In early January of 2020, a novel coronavirus (“COVID-19”) outbreak took place in Wuhan, China. Subsequently, it has spread rapidly to Asia and other parts of the world. The COVID-19 outbreak has resulted in widespread economic disruptions in China, as well as stringent government measures by the Chinese government to contain its transmissions including quarantines, travel restrictions, and temporary closures of non-essential businesses in China and elsewhere.
In early December 2022, China announced a nationwide loosening of its zero-covid policy, and most of the travel restrictions and quarantine requirements were lifted in December 2022. As a result, there were significant surges of COVID-19 cases in many cities in China from December 2022 to March 2023. However, based on the current situation, the Company does not expect a significant impact on the Company’s operations and financial results in the long run.
The Company achieved an operating revenue of $4,597,664 and $2,851,656 for the nine months ended September 30, 2023 and 2022, respectively, representing an increase of approximately 61% from the prior period. The increase was mainly attributed to our consultation services in connection with a client engaged in live streaming business.
Overview
From 2007 to 2019, we were an inactive company looking for business opportunities, and did not have any active business activities. In May of 2019, our board of directors decided to embark on our new marketing consultancy services and e-commerce business in China. Our PRC subsidiary’s operations in China are the primary operations of the Company. While substantially all of our operations are located in China, we currently do not, and we do not plan to use variable interest entities to execute our business plan or to conduct our China-based operations. However, because our operations are in China and our major shareholders are located in China, there is always a risk that the Chinese government may in the future seek to affect operations of any company with any level of operations in China, including its ability to offer securities to investors, list its securities on a U.S. or other foreign exchange, conduct its business or accept foreign investment. If any or all of the foregoing were to occur, it could, in turn, result in a material change in the Company’s operations and/or the value of its common stock and/or significantly limit or completely hinder its ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or be worthless.
On March 22, 2022, the PRC subsidiary learned that Beijing Jade Bird Culture and Art Research Institute (“Jade Bird”), the key opinion leader (KOL) agency that the PRC subsidiary works with to coordinate digital training related service, suspended its service after receiving a notice from China National Personal Talent Training Network (“CNPTTN”), a PRC regulatory agency for the talent training, that until further notice CNPTTN has suspended all recruitment services using CNPTTN’s name from January 30, 2022. As a result of CNPTTN’s suspension, the PRC subsidiary has also suspended its digital training related services with Jade Bird until further notice. Jade Bird is an authorized licensee of CNPTTN. For the nine months ended September 30, 2023 and 2022, the digital training related services with Jade Bird represented 0% and 9.4% of our total revenue, or $0 and $267,874, respectively. For the three months ended September 30, 2023 and 2022, no revenue was generated from the digital training related services with Jade Bird.
Segment and Related Information
We operate as a single reportable segment “provision of consulting, sourcing and marketing services in China”.
Results of Operations and Financial Condition
Results of Operations for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022
2
The following table represents our unaudited condensed consolidated statement of operations for the three months ended September 30, 2023 and 2022.
| Three Months Ended September 30, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| $ | % of Revenues | $ | % of Revenues | |||||||||||||
| Revenues | $ | 1,714,7 86 | 100 | % | $ | 801,784 | 100 | % | ||||||||
| Cost of revenues | (114,040 | ) | (7) | % | (140,009 | ) | (17) | % | ||||||||
| Gross profit | 1,600,746 | 93 | % | 661,775 | 83 | % | ||||||||||
| Selling Expenses: | (9,277 | ) | (1) | % | (10,043 | ) | (1) | % | ||||||||
| General and administrative expenses | (380,211 | ) | (22) | % | (423,931 | ) | (53) | % | ||||||||
| Total other income (expenses), net | 9,447 | 1 | % | (124,016 | ) | (15) | % | |||||||||
| Income before income tax | 1,220,705 | 71 | % | 103,785 | 13 | % | ||||||||||
| Income tax expense | (479,535 | ) | (28) | % | (135,784 | ) | (17) | % | ||||||||
| Net income | $ | 741,170 | 43 | % | $ | (31,999 | ) | (4) | % | |||||||
Revenue and cost of revenue
During the three months ended September 30, 2023, we generated revenue of $1,714,786, which represents an increase of $913,002 or 113.9% compared to the same period in the prior year. The increase was mainly attributed to our consultation services in connection with a client engaged in live streaming business.
Cost of revenue for the three months ended September 30, 2023 was $114,040, which represented a slight decrease of $25,969 or 18.5% compared to the same period in the prior year.
Profit margin for the three months ended September 30, 2023 was 93.3%, which represents an increase of 10.5% compared to the same period in the prior year. By closely managing the number of employees, we were able to effectively control our labor costs. As a result, the cost of revenues, which primarily consisted of direct labor costs, did not increase in alignment with the revenue growth, resulting in an increase in profit margin.
As a result of the above, the gross profit was $1,600,746 for the three months ended September 30, 2023, which represented an increase of $938,971 or 141.9% as compared to the same period in the prior year.
Selling expenses
During the three months ended September 30, 2023, we incurred $9,277 selling expenses, which represented a slight decrease of $766 or 7.6% as compared to the same period in the prior year. We maintained the selling expenses at a lower amount during the periods.
General and administrative expenses
During the three months ended September 30, 2023, we incurred $380,211 general and administrative expenses, which represented a decrease of $43,720 or 10.3% as compared to the same period in the prior year. Our general and administrative expenses consisted mainly of audit fees, professional fees, payroll expenses and consultancy fees. The decrease in general and administrative expenses was primarily due to reduced audit fees and professional fees incurred during the period. This reduction was primarily due to the absence of expenses related to the filing of a registration statement, which had been incurred in the same period of the prior year.
3
Total other income (expenses), net
During the three months ended September 30, 2023, we generated net other income of $9,447, which represented a difference of $133,463 or 107.6% as compared to the same period in the prior year. Our net other income (expenses) mainly consisted of bank interest income, exchange rate differences and sundry income. For the three months ended September 30, 2023 and 2022, the Company recognized exchange loss of $2,936 and $135,842, respectively. These losses mainly arose from the translation of certain foreign currency-denominated assets in our subsidiaries. The significant decrease in exchange loss compared to the prior year contributed to the difference in the overall other income (expenses) between the two periods.
Income tax expense
During the three months ended September 30, 2023, we incurred income tax expense of $479,535, which represented an increase of $343,751 or 253.2% as compared to the same period in the prior year. The income tax expenses consisted of the Enterprise Income Tax charged in China and the withholding tax accrued in connection with dividend distribution by PRC subsidiary.
For the three months ended September 30, 2023, our income tax expenses comprised of current tax expenses and deferred tax expenses of $377,892 and $101,643, respectively, compared to current tax expenses and deferred tax expenses of $127,727 and $8,057 for the three months ended September 30, 2022.
Net income (loss)
As a result of the above, we generated a net income of $741,170 and net loss of $31,999 for the three months ended September 30, 2023 and 2022, respectively.
Results of Operations for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022
The following table represents our unaudited condensed consolidated statement of operations for the nine months ended September 30, 2023 and 2022.
| Nine months ended September 30, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| $ | % of Revenues | $ | % of Revenues | |||||||||||||
| Revenues | $ | 4,597,664 | 100 | % | $ | 2,851,656 | 100 | % | ||||||||
| Cost of revenues | (337,175 | ) | (7) | % | (565,820 | ) | (20) | % | ||||||||
| Gross profit | 4,260,489 | 93 | % | 2,285,836 | 80 | % | ||||||||||
| Selling Expenses: | (15,995 | ) | 0 | % | (34,957 | ) | (1) | % | ||||||||
| General and administrative expenses | (1,194,007 | ) | (26) | % | (1,066,604 | ) | (37 | % | ||||||||
| Total other income, net | 40,260 | 1 | % | 35,905 | 1 | % | ||||||||||
| Income before income tax | 3,090,747 | 67 | % | 1,220,180 | 43 | % | ||||||||||
| Income tax expense | (1,227,673 | ) | (27) | % | (595,156 | ) | (21) | % | ||||||||
| Net income | $ | 1,863,074 | 41 | % | $ | 625,024 | 22 | % | ||||||||
Revenue and cost of revenue
During the nine months ended September 30, 2023, we generated revenue of $4,597,664, which represents an increase of $1,746,008 or 61.2% compared to the same period in the prior year. The increase was mainly attributed to our consultation services in connection with a client engaged in live streaming business.
Cost of revenue for the nine months ended September 30, 2023 was $337,175, which represented a decrease of $228,645 or 40.4% compared to the same period in the prior year. The decrease in cost of revenue is mainly due to the absence of direct operating costs related to digital training services used in the current period. For the nine months ended September 30, 2022, direct operating costs related to these services were $185,220.
4
Profit margin for the nine months ended September 30, 2023 was 92.7%, which represents an increase of 12.5% compared to the same period in the prior year. By closely managing the number of employees, we were able to effectively control our labor costs. As a result, the cost of revenues, which primarily consisted of direct labor costs, did not increase in alignment with the revenue growth, resulting in an increase in profit margin.
As a result of the above, the gross profit was $4,260,489 for the nine months ended September 30, 2023, which represented an increase of $1,974,653 or 86.4% as compared to the same period in the prior year.
Selling expenses
During the nine months ended September 30, 2023, we incurred $15,995 selling expenses, which represented a decrease of $18,962 or 54.2% as compared to the same period in the prior year. The decrease of selling expenses was mainly due to the tightening of entertainment policies and no staff costs incurred in selling activities during the current period.
General and administrative expenses
During the nine months ended September 30, 2023, we incurred $1,194,007 general and administrative expenses, which represented an increase of $127,403 or 11.9% as compared to the same period in the prior year. Our general and administrative expenses consisted mainly of audit fees, professional fees, payroll expenses and consultancy fees. The increase in general and administrative expenses was primarily due to increase of salaries for certain of our management.
Total other income, net
During the nine months ended September 30, 2023, we recorded net other income of $40,260, which represented an increase of $4,355 or 12.1% as compared to the same period in the prior year. The different was mainly due to certain sundry income generated in the prior year that did not recur in the current period, as well as exchange losses of $56,566, which arose from the translation of certain foreign currency-denominated assets in our subsidiaries. Our net other income mainly consisted of bank interest income, exchange rate differences and sundry income.
Income tax expense
During the nine months ended September 30, 2023, we incurred income tax expense of $1,227,673, which represented an increase of $632,517 or 106.3% as compared to the same period in the prior year. The income tax expenses consisted of the Enterprise Income Tax charged in China and the withholding tax incurred in Hong Kong.
For the nine months ended September 30, 2023, our income tax expenses comprised of current tax expenses and deferred tax expenses of $951,312 and $276,361, respectively, compared to current tax expenses and deferred tax expenses of $463,206 and $131,950 for the nine months ended September 30, 2022.
Net income
As a result of the above, we generated a net income of $1,863,074 and $625,024 for the nine months ended September 30, 2023 and 2022, respectively.
Liquidity and Capital Resources
Working Capital
| September 30, 2023 | December 31, 2022 | |||||||
| Cash and cash equivalents | $ | 8,706,694 | $ | 7,193,591 | ||||
| Total current assets | 9,390,349 | 7,501,638 | ||||||
| Total assets | 9,553,336 | 7,773,604 | ||||||
| Total liabilities | 921,779 | 889,404 | ||||||
| Retained earnings | 1,910,289 | 47,215 | ||||||
| Total equity | 8,631,557 | 6,884,200 | ||||||
5
Cash flow
The following table sets forth a summary of our cash flows for the periods indicated:
| Nine months ended September 30, | ||||||||
| 2023 | 2022 | |||||||
| Net cash generated from operating activities | $ | 1,780,630 | $ | 44,094 | ||||
| Cash flows used in investing activities | (1,849 | ) | (1,070,140 | ) | ||||
| Cash flows used in financing activities | (164,439 | ) | (3,490 | ) | ||||
| Effect of exchange rate changes on cash and cash equivalents | (101,239 | ) | (289,162 | ) | ||||
| Cash and cash equivalents, beginning of period | 7,193,591 | 7,649,129 | ||||||
| Cash and cash equivalents, end of period | $ | 8,706,694 | $ | 6,330,431 | ||||
Cash generated from operating activities
Net cash generated from operating activities for the nine months ended September 30, 2023 was $1,780,630, which represented an increase of $1,736,536 or 39 times as compared to the same period in the prior year. The increase of operating cash flows was mainly resulted from a combination of below operating activities changes:
Net income was $1,863,074 for the nine months ended September 30, 2023, as compared to $625,024 for the nine months ended September 30, 2022. The increase of net income of $1,238,050 or 198.1% was primarily due to the increase in revenue during the current period.
No cash movement of trade payable was resulted for the nine months ended September 30, 2023 because we suspended all digital training related services since March 22, 2022. For the nine months ended September 30, 2022, cash outflow of trade payables of $111,527 was all related to the digital training related services.
Cash inflow of tax payables was $301,211 for the nine months ended September 30, 2023, as compared to $106,699 for the same period in the prior year. Our tax payables primarily consist of the Enterprise Income Tax charged in China, which is accrued on a quarterly basis and settled in the subsequent quarter. Therefore, cash inflow of $301,211 for the nine months ended September 30, 2023 was mainly align with our business growth in the third quarter of 2023 and a larger tax provision that had been accrued.
No cash movement of contract liabilities for the nine months ended September 30, 2023 because we suspended the digital training related services since March 22, 2022. We do not have other contract require customer to pay the consideration before receiving the services. For the nine months ended September 30, 2022, cash outflow of contract liabilities was $208,106 which solely resulted from the digital training related services.
Cash used in investing activities
Cash used in investing activity for the nine months ended September 30, 2023 was $1,849 as compared to $1,070,140 used for the same period in the prior year. The cash used in investing activities for the September 30, 2023 was due to purchase of property, plant and equipment, while the net cash used in investing activities for the nine months ended September 30, 2022 were mainly due to loan receivables of $1,060,394 provided to two unrelated parties.
6
Cash used in financing activities
Cash used in financing activities for the nine months ended September 30, 2023 was $164,439 as compared to $3,490 used for the same period in the prior year. The amount was due to repayment to a director for the amount advanced by a director.
Future Capital Requirements
We believe that our ability to generate cash from operations are adequate to fund working capital, capital spending and other cash needs for at least the next 12 months. Our ability to generate adequate cash from operations in the future, however, will depend on, among other things, our ability to successfully implement our business strategies while continuing to tightly control our expenses, and to manage the impact of changes to the PRC regulatory environment. We can give no assurance that we will be able to successfully implement those strategies and cost control initiatives, or successfully adjust to any changes to PRC laws and regulations impacting our business. In addition, changes in our operating plans, lower than anticipated sales, increased expenses, interest rate increases, acquisitions or other events may cause us to seek additional debt or equity financing in future periods. We can give no assurance that financing will be available on acceptable terms or at all. Additional equity financing could be dilutive to holders of the Company’s common stock; debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions.
Contractual Obligations
We had the following contractual obligations and commercial commitments as of September 30, 2023:
| Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | |||||||||||||||
| Lease | 40,654 | 40,654 | - | - | - | |||||||||||||||
| TOTAL | $ | 40,654 | 40,654 | - | $ | - | $ | - | ||||||||||||
Off-Balance Sheet Arrangements
As of September 30, 2023 and December 31, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(a) (4) (ii) of Regulation S-K promulgated under the Securities Act of 1934.
Critical Accounting Policies
The preparation of condensed financial statements in conformity with accounting principles generally accepted in the United States requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. All significant inter-company transactions and balances have been eliminated in consolidation.
7
The interim condensed consolidated financial information as of September 30, 2023 and for the three and nine months period ended September 30, 2023 and 2022 have been prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim condensed consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, previously filed with the SEC on March 29, 2023.
Use of Estimates
The preparation of these financial statements in conformity with U.S. GAAP requires management of the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Identified below are the accounting policies that reflect the Company’s most significant estimates and judgments, and those that the Company believes are the most critical to fully understanding and evaluating its condensed consolidated financial statements.
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.
ITEM 4 - CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Report, we conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act). Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2023, our disclosure controls and procedures are not effective to ensure that information required to be disclosed by us in reports that we file or submit under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms.
The Company determined that there were control deficiencies that constituted material weaknesses, as described below as of September 30, 2023.
| 1. | We did not maintain appropriate cash controls – We had not maintained sufficient internal controls over financial reporting for the cash process, including failure to segregate cash handling and accounting functions, and did not require dual signature on our bank accounts. However, the effects of poor cash controls were mitigated in part by the fact that we had introduced certain cash management policies. |
| 2. | We did not implement appropriate information technology controls – We were retaining copies of all financial data and material agreements; however there is no formal procedure or evidence of normal backup of our data or off-site storage of the data in the event of theft, misplacement, or loss due to unmitigated factors. |
| 3. | We currently lack sufficient accounting personnel with the appropriate level of knowledge, experience and training in U.S. GAAP and SEC reporting requirements. |
| 4. | We do not have adequate written policies and procedures – Due to lack of adequate written policies and procedures for accounting and financial reporting, we did not establish a formal process to close our books monthly and account for all transactions in a timely manner. |
8
Accordingly, we concluded that these control deficiencies resulted in a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis by our internal controls.
Due to our small size and the early stage of our business, segregation of duties may not always be possible and may not be economically feasible. We have limited capital resources and have given priority in the use of those resources to our business development efforts. As a result, we have not been able to take steps to improve our internal controls over financial reporting during the quarter ended September 30, 2023. However, we continue to evaluate the effectiveness of internal controls and procedures on an ongoing basis. Once our operations grow and become more complex, our Board of Directors will take steps to remediate these material weaknesses as soon as practicable:
| 1. | We plan to formalize and provide training, on certain policies, including cash control. |
| 2. | We plan, as funding permits, to engage a third party consultant to help evaluate and improve the design of appropriate information technology controls. |
| 3. | We plan, as funding permits, to appoint additional personnel with U.S. GAAP and SEC reporting experience to assist with the preparation of our financial reporting. |
| 4. | Prepare written policies and procedures for accounting and financial reporting to establish a formal process to close our books monthly on an accrual basis and account for all transactions, including equity and debt transactions, in a timely manner. |
Despite the material weaknesses and deficiencies reported above, our management believes that our financial statements included in this report fairly present in all material respects our financial condition, results of operations and cash flows for the periods presented and that this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.
Changes in Internal Control over Financial Reporting
Other than as described above, there have been no changes in the internal controls over financial reporting during the most recently completed quarter ended September 30, 2023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
9
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties and an adverse result in these or other matters may arise from time to time that may harm our business. To the best knowledge of management, there are no material legal proceedings pending against the Company.
ITEM 1A - RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks set forth in the section captioned “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 29, 2023, before making an investment decision. If any of the risks actually occur, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section captioned “Special Note Regarding Forward Looking Statements” above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.
ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS
The following exhibits are filed as part of this Report.
| Exhibit No. | Description | |
| 31.1* | Certifications of the Principal Executive Officer and Principal Financial Officer under Section 302 of the Sarbanes-Oxley Act | |
| 32.1* | Certifications of the Principal Executive Officer and Principal Financial Officer under Section 906 of the Sarbanes-Oxley Act | |
| 101.INS* | Inline XBRL Instance Document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).* |
| * | Filed herewith |
10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Entrepreneur Universe Bright Group | ||
| Date: November 13, 2023 | By: | /s/ Guolin Tao |
| Guolin Tao | ||
| Chief Executive Officer and Chief Financial Officer | ||
| (Principal Executive Officer and Principal Financial Officer) | ||
11
Exhibit 31.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Guolin Tao, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Entrepreneur Universe Bright Group (the “Company”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;
4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and
5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.
Date: November 13, 2023
| By: | /s/ Guolin Tao | |
| Name: | Guolin Tao | |
| Title: | Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Entrepreneur Universe Bright Group (the “Company”) on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacities and on the date indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 13, 2023
| By: | /s/ Guolin Tao | |
| Name: | Guolin Tao | |
| Title: | Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) |
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
| Preferred stock, shares authorized | 1,100,000 | 1,100,000 |
| Preferred stock, shares issued | ||
| Preferred stock, shares outstanding | ||
| Common stock, par value (in Dollars per share) | $ 0.0001 | $ 0.0001 |
| Common stock, shares authorized | 1,800,000,000 | 1,800,000,000 |
| Common stock, shares issued | 1,701,181,423 | 1,701,181,423 |
| Common stock, shares outstanding | 1,701,181,423 | 1,701,181,423 |
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|||
| Income Statement [Abstract] | ||||||
| Revenue | $ 1,714,786 | $ 801,784 | $ 4,597,664 | $ 2,851,656 | ||
| Cost of revenue | (114,040) | (140,009) | (337,175) | (565,820) | ||
| Gross profit | 1,600,746 | 661,775 | 4,260,489 | 2,285,836 | ||
| Selling expenses | (9,277) | (10,043) | (15,995) | (34,957) | ||
| General and administrative expenses | (380,211) | (423,931) | (1,194,007) | (1,066,604) | ||
| Income from operations | 1,211,258 | 227,801 | 3,050,487 | 1,184,275 | ||
| Other income (expenses): | ||||||
| Interest income | 3,068 | 10,522 | 21,568 | 33,489 | ||
| Exchange loss | (2,936) | (135,842) | (56,566) | (107,920) | ||
| Sundry income | 9,315 | 1,304 | 75,258 | 110,336 | ||
| Total other income(expenses), net | 9,447 | (124,016) | 40,260 | 35,905 | ||
| Income before income tax | 1,220,705 | 103,785 | 3,090,747 | 1,220,180 | ||
| Income tax expense | (479,535) | (135,784) | (1,227,673) | (595,156) | ||
| Net income (loss) | 741,170 | (31,999) | 1,863,074 | 625,024 | ||
| Other comprehensive loss | ||||||
| Foreign currency translation adjustment | (22,896) | (128,843) | (115,717) | (365,759) | ||
| Total comprehensive income (loss) | $ 718,274 | $ (160,842) | $ 1,747,357 | $ 259,265 | ||
| Net income per share - Basic (in Dollars per share) | [1] | $ 0 | $ 0 | $ 0 | $ 0 | |
| Weighted average number of common shares outstanding | ||||||
| Weighted average number of common shares outstanding - Basic (in Shares) | 1,701,181,423 | 1,701,181,423 | 1,701,181,423 | 1,701,181,423 | ||
| ||||||
Condensed Consolidated Statements of Operations and Comprehensive Income (Unaudited) (Parentheticals) - $ / shares |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|||
| Income Statement [Abstract] | ||||||
| Net income per share - diluted | [1] | $ 0.00 | $ 0.00 | $ 0.00 | $ 0.00 | |
| Weighted average number of common shares outstanding - Diluted | 1,701,181,423 | 1,701,181,423 | 1,701,181,423 | 1,701,181,423 | ||
| ||||||
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) |
Common Stock |
Additional Paid-In Capital |
Preferred stock |
Statutory Reserve |
Retained Earnings |
Accumulated Other Comprehensive Income |
Total |
|---|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2021 | $ 170,118 | $ 6,453,048 | $ 65,911 | $ (357,403) | $ 429,940 | $ 6,761,614 | |
| Balance (in Shares) at Dec. 31, 2021 | 1,701,181,423 | ||||||
| Net income (loss) | 391,173 | 391,173 | |||||
| Foreign currency translation adjustment | (5,135) | (5,135) | |||||
| Balance at Mar. 31, 2022 | $ 170,118 | 6,453,048 | 65,911 | 33,770 | 424,805 | 7,147,652 | |
| Balance (in Shares) at Mar. 31, 2022 | 1,701,181,423 | ||||||
| Balance at Dec. 31, 2021 | $ 170,118 | 6,453,048 | 65,911 | (357,403) | 429,940 | 6,761,614 | |
| Balance (in Shares) at Dec. 31, 2021 | 1,701,181,423 | ||||||
| Net income (loss) | 625,024 | ||||||
| Balance at Sep. 30, 2022 | $ 170,118 | 6,453,048 | 65,911 | 267,621 | 64,181 | 7,020,879 | |
| Balance (in Shares) at Sep. 30, 2022 | 1,701,181,423 | ||||||
| Balance at Mar. 31, 2022 | $ 170,118 | 6,453,048 | 65,911 | 33,770 | 424,805 | 7,147,652 | |
| Balance (in Shares) at Mar. 31, 2022 | 1,701,181,423 | ||||||
| Net income (loss) | 265,850 | 265,850 | |||||
| Foreign currency translation adjustment | (231,781) | 231,781 | |||||
| Balance at Jun. 30, 2022 | $ 170,118 | 6,453,048 | 65,911 | 299,620 | 193,024 | 7,181,721 | |
| Balance (in Shares) at Jun. 30, 2022 | 1,701,181,423 | ||||||
| Net income (loss) | (31,999) | (31,999) | |||||
| Foreign currency translation adjustment | (128,843) | (128,843) | |||||
| Balance at Sep. 30, 2022 | $ 170,118 | 6,453,048 | 65,911 | 267,621 | 64,181 | 7,020,879 | |
| Balance (in Shares) at Sep. 30, 2022 | 1,701,181,423 | ||||||
| Balance at Dec. 31, 2022 | $ 170,118 | 6,453,048 | 65,911 | 47,215 | 147,908 | 6,884,200 | |
| Balance (in Shares) at Dec. 31, 2022 | 1,701,181,423 | ||||||
| Net income (loss) | 431,457 | 431,457 | |||||
| Foreign currency translation adjustment | (15,494) | (15,494) | |||||
| Balance at Mar. 31, 2023 | $ 170,118 | 6,453,048 | 65,911 | 478,672 | 132,414 | 7,300,163 | |
| Balance (in Shares) at Mar. 31, 2023 | 1,701,181,423 | ||||||
| Balance at Dec. 31, 2022 | $ 170,118 | 6,453,048 | 65,911 | 47,215 | 147,908 | 6,884,200 | |
| Balance (in Shares) at Dec. 31, 2022 | 1,701,181,423 | ||||||
| Net income (loss) | 1,863,074 | ||||||
| Balance at Sep. 30, 2023 | $ 170,118 | 6,453,048 | 65,911 | 1,910,289 | 32,191 | 8,631,557 | |
| Balance (in Shares) at Sep. 30, 2023 | 1,701,181,423 | ||||||
| Balance at Mar. 31, 2023 | $ 170,118 | 6,453,048 | 65,911 | 478,672 | 132,414 | 7,300,163 | |
| Balance (in Shares) at Mar. 31, 2023 | 1,701,181,423 | ||||||
| Net income (loss) | 690,447 | 690,447 | |||||
| Foreign currency translation adjustment | (77,327) | (77,327) | |||||
| Balance at Jun. 30, 2023 | $ 170,118 | 6,453,048 | 65,911 | 1,169,119 | 55,087 | 7,913,283 | |
| Balance (in Shares) at Jun. 30, 2023 | 1,701,181,423 | ||||||
| Net income (loss) | 741,170 | 741,170 | |||||
| Foreign currency translation adjustment | (22,896) | (22,896) | |||||
| Balance at Sep. 30, 2023 | $ 170,118 | $ 6,453,048 | $ 65,911 | $ 1,910,289 | $ 32,191 | $ 8,631,557 | |
| Balance (in Shares) at Sep. 30, 2023 | 1,701,181,423 |
Organization and Business |
9 Months Ended | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||
| Organization and Business [Abstract] | |||||||||||||||||||||||||||||||
| ORGANIZATION AND BUSINESS | NOTE 1 – ORGANIZATION AND BUSINESS
Entrepreneur Universe Bright Group (“EUBG” or the “Company”) was incorporated in the State of Nevada on April 21, 1999 under the name LE GOURMET CO, INC. and the Company’s name to Entrepreneur Universe Bright Group, with an effective date of April 3, 2020.
The Company, through its wholly owned subsidiaries, mainly engages in provision of digital marketing consultation services in Hong Kong and China.
COVID-19
In early January of 2020, a novel coronavirus (“COVID-19”) outbreak took place in Wuhan, China. Subsequently, it has spread rapidly to Asia and other parts of the world. The COVID-19 outbreak has resulted in widespread economic disruptions in China, as well as stringent government measures by the Chinese government to contain its transmissions including quarantines, travel restrictions, and temporary closures of non-essential businesses in China and elsewhere.
In early December 2022, China announced a nationwide loosening of its zero-covid policy, and most of the travel restrictions and quarantine requirements were lifted in December 2022. As a result, there were significant surges of COVID-19 cases in many cities in China from December 2022 to March 2023. However, based on the current situation, the Company does not expect a significant impact on the Company’s operations and financial results in the long run.
The Company achieved an operating revenue of $4,597,664 and $2,851,656 for the nine months ended September 30, 2023 and 2022, respectively, representing an increase of approximately 61.2% from the prior period. The increase was mainly attributed to our consultation services in connection with a client engaged in live streaming business. |
Summary of Significant Accounting Policies |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting.
The interim condensed consolidated financial information as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 have been prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim condensed consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, previously filed with the SEC on March 29, 2023.
In the opinion of management, all adjustments (which include all significant normal and recurring adjustments) necessary to present a fair statement of the Company’s interim condensed consolidated financial position as of September 30, 2023, its interim condensed consolidated results of operations and cash flows for the three and nine months ended September 30, 2023 and 2022, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.
Use of Estimates
The preparation of these financial statements in conformity with U.S. GAAP requires management of the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Recently Adopted Accounting Standards
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 is to be adopted on a modified retrospective basis. As a smaller reporting company, ASU 2016-13 will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022. The Company adopted these ASUs on January 1, 2023, and these amendments were applied prospectively.
In March 2022, the FASB issued ASU 2022-02, Topic 326. The ASU eliminates the accounting guidance for trouble debt restructurings by creditors in Subtopic 310-40, and enhances the disclosure requirements for modifications of loans to borrowers experiencing financial difficulty. Additionally, the ASU requires disclosure of gross writeoffs of receivables by year of origination for receivables within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost. This ASU is effective for periods beginning after December 15, 2022. The Company adopted this ASU on January 1, 2023, and these amendments were applied prospectively.
Recently Issued Accounting Standards
In October 2021, the FASB issued ASU No. 2021-08, “‘Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company does not expect the adoption of ASU 2021-04 to have a material effect on the condensed consolidated financial statements.
Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s condensed consolidated financial statements upon adoption.
Basis of Consolidation and Noncontrolling Interests
The condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation.
A subsidiary is an entity in which (i) the Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meeting of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders.
Leases
The Company determines if an arrangement is a lease or contains a lease at inception of the arrangement. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. The Company elected the package of practical expedients permitted under the transition guidance to combine the lease and non-lease components as a single lease component for operating leases associated with the Company’s office space lease, and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the condensed consolidated statements of income on a straight-line basis over the lease term.
ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets.
ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities.
The Company recognized no impairment of ROU assets as of September 30, 2023 and December 31, 2022.
The operating lease is included in operating lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current on the Company’s condensed consolidated balance sheets.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers cash, money market funds, investments in interest bearing demand deposit accounts, time deposits and all highly liquid investments placed with banks or other financial institutions with an original maturity of three and nine months or less to be cash equivalents.
As of September 30, 2023, cash held in accounts managed by online payment platforms such as Alipay and WeChat Pay amounted to $2,599 (as at December 31, 2022: $2,717), which have been classified as cash and cash equivalents in the condensed consolidated balance sheets.
Accounts receivable
Accounts receivables are recorded at the invoiced amount, net of allowances for doubtful accounts and sales returns. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivables. The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions.
Outstanding accounts receivable balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.
Plant and equipment
Plant and equipment are recorded at cost less accumulated depreciation and accumulated impairment. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
The gain or loss on the disposal of plant and equipment is the difference between the net sales proceeds and the lower of the carrying value or fair value less cost to sell the relevant assets and is recognized in general and administrative expenses in the condensed consolidated statements of comprehensive income.
Impairment of Long-lived Assets
In accordance with ASC 360-10-35, we review the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company assesses the recover-ability of the assets based on the non-discounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated discounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. No impairment has been recorded by the Company for the three and nine months ended September 30, 2023 and 2022.
Revenue Recognition
The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five step model prescribed under ASU No. 2014-09: (i) identify 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 revenues when (or as) we satisfy the performance obligation.
The Company evaluates if it is a principal or an agent in a transaction to determine whether revenue should be recorded on a gross or net basis. The Company is acting as the principal if it obtains control over the goods and services before they are transferred to customers. When the Company is primarily obligated in a transaction, is generally subject to inventory risk, has latitude in establishing prices, or has several but not all of these indicators, the Company acts as the principal and revenue is recorded on a gross basis. When the Company is not primarily obligated in a transaction, does not generally bear the inventory risk and does not have the ability to establish the price, the Company acts as the agent and revenue is recorded on a net basis
The Company derives its revenue primarily from consultancy services, sourcing and marketing services, and digital training related services.
Consultancy services
The Company generates the majority of its revenues by providing consulting services to its clients.
Performance-based arrangements represent forms of variable consideration determined by pre-established fixed rates. In these arrangements, the Company’s fees are based on the attainment of contractually defined objectives with our client, such as assisting the client in achieving a specific business objective (e.g. end customer placed an order to buy a product or enrolment of a course, or improve the performance quality and profitability of our client’s livestream performers). The Company is entitled a fixed rate on revenue generated by the client that are related to the scope of respective consultancy services upon client acceptance on the services provided.
Sourcing and marketing services
The Company provides agency-based sourcing and marketing services to connect marketplace operators and merchants.
Agency-based sourcing and marketing services represents product procurement on behalf of marketplace operators. The Company recognized revenues from agency-based sourcing and marketing services at a fixed rate on the value of goods that are sourced and delivered to the ultimate customers by the merchants. The Company reports revenues from these transactions on a net basis because the performance obligation is to facilitate a transaction between marketplace operators and merchants, for which the Company did not obtain the control over the products before passing on to the end customers. The Company is not primarily responsible for fulfilling the promise and not exposed to inventory risk.
The post-sale services, goods return and other kinds of product issue are responsibilities of the merchants. Upon successful delivery to ultimate customers by the merchants, there is no unfulfilled obligation that could affect the marketplace operators’ and merchants’ acceptance of the services provided. The acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied.
Digital training related services
Fixed-fee digital training related services are provided to clients who are interested to conduct live-broadcasting business through social medias. The Company require the clients to pay a pre-established fee in exchange for the services. Revenues are recognized when promised services (e.g. preliminary consulting work, setting up an e-learning account and delivery of learning materials) are delivered to the clients.
The Company derived services revenues of $353,775 and $702,371 for the three months ended September 30, 2023 and 2022, respectively; and $1,146,176 and $2,207,029 for the nine months ended September 30, 2023 and 2022, respectively, from provision of certain consultancy services and sourcing and marketing services through the program application (“App”) platform managed by a related company, Xi’an Chuangyetianxia Network Technology Co., Ltd. (“Xian CNT”). The Company CEO, Mr. Tao, has significant influence over Xian CNT.
Practical expedients and exemption
The Company has not occurred any costs to obtain contracts, and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.
Revenue by major service line
Revenue by recognition over time vs point in time
Revenue recorded on a gross vs net basis
Contract liabilities
The Company’s contract liabilities consist of deferred revenue associated with consultancy fees and provision of fixed-fee training related services. The table below presents the activity of the deferred consultancy services revenue during the nine months ended September 30, 2023 and the year ended December 31, 2022, respectively:
Cost of revenue
Cost of revenues consists primarily of employee compensation, service fees, agency fees, and the related IT expenses, which are directly attributable to the revenues
Employee benefits
Full time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiary of the Company make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Company has no legal obligation for the benefits beyond the contributions made. Total amounts of such employee benefit expenses, which were expensed as incurred, were approximately $18,773 and $17,744 for the three months ended September 30, 2023 and 2022, respectively; and $64,921 and $47,963 for the nine months ended September 30, 2023 and 2022, respectively.
Foreign Currency and Foreign Currency Translation
The reporting currency of the Company is the United States dollar (“US dollar”). The financial records of the Company’s PRC operating subsidiaries are maintained in their local currency, the Renminbi (“RMB”), which is the functional currency. The financial records of the Company’s Hong Kong operating subsidiary are maintained in its local currency, the Hong Kong Dollar (“HKD”), which is the functional currency. Assets and liabilities of the subsidiaries are translated into the reporting currency at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates, and income and expense items are translated using the average rate for the period. The translation adjustments are recorded in accumulated other comprehensive loss under shareholders’ equity.
Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical exchange rates. Transactions in currencies other than the applicable functional currencies during the period are converted into the functional currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the condensed consolidated statements of operations.
RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation of amounts from RMB into US dollars has been made at the following exchange rates for the respective periods:
During the periods presented, HKD is pegged to the U.S. dollar within a narrow range which is around HKD 7.8 to USD 1.00 for both periods.
Income Taxes
Income taxes are accounted for using an asset and liability approach which requires the recognition of income taxes payable or refundable for the current period and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Deferred income taxes are determined based on the differences between the accounting basis and the tax basis of assets and liabilities and are measured using the currently enacted tax rates and laws. Deferred tax assets are reduced by a valuation allowance, if based on available evidence, it is considered that it is more likely than not that some portion of or all of the deferred tax assets will not be realized. In making such determination, the Company considers factors including future reversals of existing taxable temporary differences, future profitability, and tax planning strategies. If events were to occur in the future that would allow the Company to realize more of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the deferred tax assets that would increase income for the period when those events occurred. If events were to occur in the future that would require the Company to realize less of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the valuation allowance against deferred tax assets that would decrease income for the period when those events occurred. Significant management judgment is required in determining income tax expense and deferred tax assets and liabilities.
The Company conducts business in the US, the PRC and Hong Kong and is subject to tax in these jurisdictions. As a result of its business activities, the Company will file tax returns that are subject to examination by the respective tax authorities.
Uncertain Tax Positions
Management reviews regularly the adequacy of the provisions for taxes as they relate to the Company’s income and transactions. In order to assess uncertain tax positions, the Company applies a more likely than not threshold and a two-step approach for tax position measurement and financial statement recognition. For the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon settlement. In subsequent periods, any interest and penalties related to uncertain tax positions will be recognized as a component of income tax expense. As of September 30, 2023 and December 31, 2022, the Company had not recorded any liability for uncertain tax positions.
Net income per Share of Common Stock
The Company has adopted ASC Topic 260, “Earnings per Share,” (“EPS”) which requires presentation of basic EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation. In the accompanying financial statements, basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period.
The calculation of basic net income per share of common stock is based on the net income (loss) for the three and nine months ended September 30, 2023 and 2022 and the weighted average number of ordinary shares outstanding.
For the three and nine months ended September 30, 2023 and 2022, the Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding.
Segments
The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operating results solely by monthly revenue of marketing consultation services and operating results of the Company and, as such, the Company has determined that the Company has one operating segment (provision of consulting, sourcing and marketing services, and digital training related services in China) as defined by ASC Topic 280 “Segment Reporting”.
Fair Value of Financial Instruments
ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. Certain current assets and current liabilities are financial instruments. 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 rates are equivalent to interest rates currently available. The three levels of valuation hierarchy are defined as follows:
Valuation of debt products depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, and other relevant terms of the debt. Other factors that may be considered include the borrower’s ability to adequately service its debt, the fair market value of the borrower in relation to the face amount of its outstanding debt and the quality of collateral securing the Company’s debt investments. The fair value of these debt products classified as Level 2 are established by reference to the prices quoted by respective fund administrators.
The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, other receivables, accounts payable and other payables, amounts due to a director and a shareholder and borrowings approximate their fair values because of the short maturity of these instruments or the rate of interest of these instruments approximate the market rate of interest.
Comprehensive Income
Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. Accumulated other comprehensive income includes cumulative foreign currency translation adjustment. |
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Plant and Equipment |
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| PLANT AND EQUIPMENT | NOTE 3 – PLANT AND EQUIPMENT
Plant and equipment as of September 30, 2023 and December 31, 2022 are summarized below:
Depreciation expenses, classified as operating expenses, were $19,260 and $20,194 for the three months ended September 30, 2023 and 2022, respectively; and $59,558 and $62,516 for the nine months ended September 30, 2023 and 2022, respectively. |
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Related Party Transactions |
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| RELATED PARTY TRANSACTIONS | NOTE 4 – RELATED PARTY TRANSACTIONS
The following is the list of the related parties with which the Company had transactions for the three and nine months ended September 30, 2023 and 2022:
Related party transaction
Sundry income was charged at fees agreed by both parties in accordance with a trademark licensing agreement.
Related party balances
The amount due to director as of September 30, 2023 and December 31, 2022 are unsecured, non-interest bearing and repayable on demand. As at December 31, 2022, the carrying amount included expenses paid on behalf of Mr. Guolin of US$3,276. |
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Accounts Receivable, Net |
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| ACCOUNTS RECEIVABLE, NET | NOTE 5 – ACCOUNTS RECEIVABLE, NET
Accounts receivable as of September 30, 2023 and December 31, 2022:
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| OTHER RECEIVABLES AND PREPAYMENTS | NOTE 6 – OTHER RECEIVABLES AND PREPAYMENTS
Other receivables and prepayments consisted of the following as of September 30, 2023 and December 31, 2022:
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| OTHER PAYABLES AND ACCRUED LIABILITIES | NOTE 7 – OTHER PAYABLES AND ACCRUED LIABILITIES
Other payables and accrued liabilities and consisted of the following as of September 30, 2023 and December 31, 2022:
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Statutory Reserves |
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| Statutory Reserves [Abstract] | |
| STATUTORY RESERVES | NOTE 8 – STATUTORY RESERVES
As stipulated by the relevant laws and regulations in the PRC, company established in the PRC (the “PRC subsidiary”) is required to maintain a statutory reserve made out of profit for the year based on the PRC subsidiary’ statutory financial statements which are prepared in accordance with the accounting principles generally accepted in the PRC. The amount and allocation basis are decided by the director of the PRC subsidiary annually and is not to be less than 10% of the profit for the year of the PRC subsidiary. The aggregate amount allocated to the reserves will be limited to 50% of registered capital for certain subsidiaries. Statutory reserve can be used for expanding the capital base of the PRC subsidiary by means of capitalization issue.
In addition, as a result of the relevant PRC laws and regulations which impose restriction on distribution or transfer of assets out of the PRC statutory reserve, $65,911 representing the PRC statutory reserve of the subsidiary as of September 30, 2023 and December 31, 2022, are also considered under restriction for distribution.
No additional statutory reserves is recorded in September 30, 2023 because the aggregate amount of profits allocated to the reserves has reached 50% of registered capital of the PRC subsidiary. |
Income Taxes |
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| INCOME TAXES | NOTE 9 – INCOME TAXES
Income is subject to tax in the various countries in which the Company operates.
The Company is incorporated in the State of Nevada and is subject to the U.S. federal tax and state tax. On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act makes broad and complex changes to the U.S. tax code, including, but not limited to, (1) reducing the U.S. federal corporate income tax rate from 35 percent to 21 percent; (2) requiring companies to pay a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries; (3) generally eliminating U.S. federal corporate income taxes on dividends from foreign subsidiaries; (4) providing modification to subpart F provisions and new taxes on certain foreign earnings such as Global Intangible Low-Taxed Income (GILTI). Except for the one-time transition tax, most of these provisions go into effect starting January 1, 2018.
The Global Intangible Low-taxed Income (GILTI) is a new provision introduced by the Tax Cuts and Jobs Act. U.S. shareholders, who are domestic corporations, of controlled foreign corporations (CFCs) are eligible for up to an 80% deemed paid foreign tax credit (FTC) and a 50% deduction of the current year inclusion with the full amount of the Section 78 gross-up subject to limitation. This new provision is effective for tax years of foreign corporations beginning after December 31, 2017. The Company has evaluated whether it has additional provision amount resulted by the GILTI inclusion on current earnings and profits of its foreign controlled corporations. The Company has made an accounting policy choice of treating taxes due on future U.S. inclusions in taxable amount related to GILTI as a current period expense when incurred. As of September 30, 2023 and 2022, the Company does not have any aggregated positive tested income; and as such, does not have additional provision amount recorded for GILTI tax.
The Company mainly conducts its operating business through its subsidiaries in China, including Hong Kong.
The subsidiary incorporated in Hong Kong is subject to Hong Kong taxation on income derived from their activities conducted in Hong Kong. Hong Kong Profits Tax has been calculated at 16.5% of the estimated assessable profit for the three and nine months ended September 30, 2023 and 2022. The provision for Hong Kong Profits Tax is calculated at 8.25% on assessable profits up to $274,168 (HK$2,000,000) for the three and nine months ended September 30, 2023 and 2022 and subject to a waiver of 100% of the profits tax under a cap of $1,371 (HK$10,000) for the three and nine months ended September 30, 2023 and 2022, respectively.
The subsidiary incorporated in mainland China is governed by the Income Tax Law of the PRC concerning foreign invested enterprises and foreign enterprises and various local income tax laws (the Income Tax Laws), and are subject to 25% tax rate throughout the periods presented.
Under the PRC EIT law, withholding income tax, normally at a rate of 10%, is imposed on dividend paid by PRC entities out of its profits earned since January 1, 2008 to its overseas investors (including Hong Kong investors). Deferred taxation on the undistributed profits of the PRC subsidiaries has been provided in the condensed consolidated financial statements to the extent that in the opinion of the directors such profits will be distributed in the foreseeable future. Total undistributed profits of the Company’s PRC subsidiary at September 30, 2023 and December 31, 2022 were $3,171,412 and $1,882,886, respectively. At September 30, 2023 and December 31, 2022, the Company recognized deferred tax liabilities of $317,141 and $188,289, respectively, in respect of the undistributed profits.
Income tax expense consists of the following:
The provision for income taxes consisted of the following:
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of September 30, 2023 and December 31, 2022 are presented below:
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| Lease [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASE | NOTE 10 – LEASE
On June 10, 2021, the Company entered into a lease agreement for office space in Xian, the PRC with a non-cancellable lease term, commencing on July 16, 2021 and expiring on July 15, 2024. The monthly rental payment is approximately $4,686 (RMB32,951) per month.
Operating lease expense for the three and nine months ended September 30, 2023 and 2022 were as follows:
The following is a schedule, by years, of maturities of lease liabilities as of September 30, 2023:
Lease term and discount rate
Supplemental cash flow information related to lease where the Company was the lessee for the nine months ended September 30, 2023 and 2022 was as follows:
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Contingencies and Commitments |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Contingenies and Commitments [Abstract] | |
| CONTINGENCIES AND COMMITMENTS | NOTE 11 – CONTINGENCIES AND COMMITMENTS
Contingencies
Certain conditions may exist as of the date the condensed consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. There was no contingency of this type as of September 30, 2023 and December 31, 2022.
If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. There was no contingency of this type as of September 30, 2023 and December 31, 2022.
Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed. |
Certain Risks and Concentrations |
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| Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CERTAIN RISKS AND CONCENTRATIONS | NOTE 12 – CERTAIN RISKS AND CONCENTRATIONS
The Company had net revenue from the following customers that individually comprised 10% or more of net revenue for the three and nine months ended September 30, 2023 and 2022:
The Company had accounts receivable from the following customers that individually comprised 10% or more of net accounts receivable as of September 30, 2023 and December 31, 2022:
For the three and nine months ended September 30, 2023 and 2022, the Company derived services revenues of $353,775 and $702,371 for the three months ended September 30, 2023 and 2022, respectively; and $1,146,176 and $2,207,029 for the nine months ended September 30, 2023 and 2022, respectively, through the APP platform managed by Xian CNT, represented 21%, 88%, 25% and 77% of our total revenue.
The Company had cost of revenue from the following service vendor that individually comprised 10% or more of cost of revenue for the nine months ended September 30, 2023 and 2022:
There was no service vendor that individually comprised 10% or more of accounts payable as of September 30, 2023 and December 31, 2022.
At September 30, 2023 and December 31, 2022, the Company’s cash and cash equivalents included bank deposits in accounts maintained in China and Hong Kong and liquid funds in online payment platforms. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.
For the credit risk related to accounts receivable, the Company performs ongoing credit evaluations of its customers and, if necessary, maintains reserves for potential credit losses.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents.
As of September 30, 2023 and December 31, 2022, $8,706,694 and $7,193,591 of the Company’s cash and cash equivalents, respectively were held at financial institutions and online payment platforms located in the PRC and Hong Kong that management believes to be of high credit quality. The Company has not experienced any losses on cash and cash equivalents to date. The Company does not require collateral or other securities to support financial instruments that are subject to credit risk.
The Company operates principally in the PRC and grants credit to its customers in this geographic region. Although the PRC is economically stable, it is always possible that unanticipated events in foreign countries could disrupt the Company’s operations. |
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Subsequent Events |
9 Months Ended |
|---|---|
Sep. 30, 2023 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 13 – SUBSEQUENT EVENTS
The Company has evaluated the existence of events and transactions subsequent to the balance sheet date through the date the unaudited condensed consolidated financial statements were issued and has determined that there were no significant subsequent events or transactions which would require recognition or disclosure in the unaudited condensed consolidated financial statements. |
Accounting Policies, by Policy (Policies) |
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| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States of America generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The interim condensed consolidated financial information as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 have been prepared without audit, pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures, which are normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. The interim condensed consolidated financial information should be read in conjunction with the Financial Statements and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, previously filed with the SEC on March 29, 2023. In the opinion of management, all adjustments (which include all significant normal and recurring adjustments) necessary to present a fair statement of the Company’s interim condensed consolidated financial position as of September 30, 2023, its interim condensed consolidated results of operations and cash flows for the three and nine months ended September 30, 2023 and 2022, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods. |
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| Use of Estimates | Use of Estimates The preparation of these financial statements in conformity with U.S. GAAP requires management of the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an ongoing basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. |
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| Basis of Consolidation and Noncontrolling Interests | Basis of Consolidation and Noncontrolling Interests The condensed consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries. All significant inter-company balances and transactions within the Company have been eliminated upon consolidation. A subsidiary is an entity in which (i) the Company directly or indirectly controls more than 50% of the voting power; or (ii) the Company has the power to appoint or remove the majority of the members of the board of directors or to cast a majority of votes at the meeting of the board of directors or to govern the financial and operating policies of the investee pursuant to a statute or under an agreement among the shareholders or equity holders. |
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| Leases | Leases The Company determines if an arrangement is a lease or contains a lease at inception of the arrangement. Operating lease liabilities are recognized based on the present value of the remaining lease payments, discounted using the discount rate for the lease at the commencement date. As the rate implicit in the lease is not readily determinable for the operating lease, the Company generally uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future lease payments. Operating lease right-of-use (“ROU assets”) assets represent the Company’s right to control the use of an identified asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets are generally recognized based on the amount of the initial measurement of the lease liability. Lease expense is recognized on a straight-line basis over the lease term. The Company elected the package of practical expedients permitted under the transition guidance to combine the lease and non-lease components as a single lease component for operating leases associated with the Company’s office space lease, and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the condensed consolidated statements of income on a straight-line basis over the lease term. ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets. ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company recognized no impairment of ROU assets as of September 30, 2023 and December 31, 2022. The operating lease is included in operating lease right-of-use assets, operating lease liabilities-current and operating lease liabilities-non-current on the Company’s condensed consolidated balance sheets.
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| Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers cash, money market funds, investments in interest bearing demand deposit accounts, time deposits and all highly liquid investments placed with banks or other financial institutions with an original maturity of three and nine months or less to be cash equivalents. As of September 30, 2023, cash held in accounts managed by online payment platforms such as Alipay and WeChat Pay amounted to $2,599 (as at December 31, 2022: $2,717), which have been classified as cash and cash equivalents in the condensed consolidated balance sheets. |
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| Accounts receivable | Accounts receivable Accounts receivables are recorded at the invoiced amount, net of allowances for doubtful accounts and sales returns. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivables. The Company determines the allowance based on historical write-off experience, customer specific facts and economic conditions. Outstanding accounts receivable balances are reviewed individually for collectability. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
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| Plant and equipment | Plant and equipment Plant and equipment are recorded at cost less accumulated depreciation and accumulated impairment. Depreciation is computed using the straight-line method over the estimated useful lives of the assets.
The gain or loss on the disposal of plant and equipment is the difference between the net sales proceeds and the lower of the carrying value or fair value less cost to sell the relevant assets and is recognized in general and administrative expenses in the condensed consolidated statements of comprehensive income. |
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| Impairment of Long-lived Assets | Impairment of Long-lived Assets In accordance with ASC 360-10-35, we review the carrying values of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company assesses the recover-ability of the assets based on the non-discounted future cash flows the assets are expected to generate and recognize an impairment loss when estimated discounted future cash flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted cash flows approach or, when available and appropriate, to comparable market values. No impairment has been recorded by the Company for the three and nine months ended September 30, 2023 and 2022. |
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| Revenue Recognition | Revenue Recognition The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which it expects to receive in exchange for those goods. The Company recognizes revenues following the five step model prescribed under ASU No. 2014-09: (i) identify 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 revenues when (or as) we satisfy the performance obligation. The Company evaluates if it is a principal or an agent in a transaction to determine whether revenue should be recorded on a gross or net basis. The Company is acting as the principal if it obtains control over the goods and services before they are transferred to customers. When the Company is primarily obligated in a transaction, is generally subject to inventory risk, has latitude in establishing prices, or has several but not all of these indicators, the Company acts as the principal and revenue is recorded on a gross basis. When the Company is not primarily obligated in a transaction, does not generally bear the inventory risk and does not have the ability to establish the price, the Company acts as the agent and revenue is recorded on a net basis The Company derives its revenue primarily from consultancy services, sourcing and marketing services, and digital training related services.
Consultancy services The Company generates the majority of its revenues by providing consulting services to its clients. Performance-based arrangements represent forms of variable consideration determined by pre-established fixed rates. In these arrangements, the Company’s fees are based on the attainment of contractually defined objectives with our client, such as assisting the client in achieving a specific business objective (e.g. end customer placed an order to buy a product or enrolment of a course, or improve the performance quality and profitability of our client’s livestream performers). The Company is entitled a fixed rate on revenue generated by the client that are related to the scope of respective consultancy services upon client acceptance on the services provided. Sourcing and marketing services The Company provides agency-based sourcing and marketing services to connect marketplace operators and merchants. Agency-based sourcing and marketing services represents product procurement on behalf of marketplace operators. The Company recognized revenues from agency-based sourcing and marketing services at a fixed rate on the value of goods that are sourced and delivered to the ultimate customers by the merchants. The Company reports revenues from these transactions on a net basis because the performance obligation is to facilitate a transaction between marketplace operators and merchants, for which the Company did not obtain the control over the products before passing on to the end customers. The Company is not primarily responsible for fulfilling the promise and not exposed to inventory risk. The post-sale services, goods return and other kinds of product issue are responsibilities of the merchants. Upon successful delivery to ultimate customers by the merchants, there is no unfulfilled obligation that could affect the marketplace operators’ and merchants’ acceptance of the services provided. The acceptance provisions have lapsed, or the Company has objective evidence that all criteria for acceptance have been satisfied. Digital training related services Fixed-fee digital training related services are provided to clients who are interested to conduct live-broadcasting business through social medias. The Company require the clients to pay a pre-established fee in exchange for the services. Revenues are recognized when promised services (e.g. preliminary consulting work, setting up an e-learning account and delivery of learning materials) are delivered to the clients. The Company derived services revenues of $353,775 and $702,371 for the three months ended September 30, 2023 and 2022, respectively; and $1,146,176 and $2,207,029 for the nine months ended September 30, 2023 and 2022, respectively, from provision of certain consultancy services and sourcing and marketing services through the program application (“App”) platform managed by a related company, Xi’an Chuangyetianxia Network Technology Co., Ltd. (“Xian CNT”). The Company CEO, Mr. Tao, has significant influence over Xian CNT. Practical expedients and exemption The Company has not occurred any costs to obtain contracts, and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.
Revenue by major service line
Revenue by recognition over time vs point in time
Revenue recorded on a gross vs net basis
Contract liabilities The Company’s contract liabilities consist of deferred revenue associated with consultancy fees and provision of fixed-fee training related services. The table below presents the activity of the deferred consultancy services revenue during the nine months ended September 30, 2023 and the year ended December 31, 2022, respectively:
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| Cost of revenue | Cost of revenue Cost of revenues consists primarily of employee compensation, service fees, agency fees, and the related IT expenses, which are directly attributable to the revenues |
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| Employee benefits | Employee benefits Full time employees of the Company in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiary of the Company make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Company has no legal obligation for the benefits beyond the contributions made. Total amounts of such employee benefit expenses, which were expensed as incurred, were approximately $18,773 and $17,744 for the three months ended September 30, 2023 and 2022, respectively; and $64,921 and $47,963 for the nine months ended September 30, 2023 and 2022, respectively.
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| Foreign Currency and Foreign Currency Translation | Foreign Currency and Foreign Currency Translation The reporting currency of the Company is the United States dollar (“US dollar”). The financial records of the Company’s PRC operating subsidiaries are maintained in their local currency, the Renminbi (“RMB”), which is the functional currency. The financial records of the Company’s Hong Kong operating subsidiary are maintained in its local currency, the Hong Kong Dollar (“HKD”), which is the functional currency. Assets and liabilities of the subsidiaries are translated into the reporting currency at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates, and income and expense items are translated using the average rate for the period. The translation adjustments are recorded in accumulated other comprehensive loss under shareholders’ equity. Monetary assets and liabilities denominated in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates of exchange at the balance sheet date. Nonmonetary assets and liabilities are remeasured into the applicable functional currencies at historical exchange rates. Transactions in currencies other than the applicable functional currencies during the period are converted into the functional currencies at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in the condensed consolidated statements of operations. RMB is not a fully convertible currency. All foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC, which are determined largely by supply and demand. Translation of amounts from RMB into US dollars has been made at the following exchange rates for the respective periods:
During the periods presented, HKD is pegged to the U.S. dollar within a narrow range which is around HKD 7.8 to USD 1.00 for both periods. |
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| Income Taxes | Income Taxes Income taxes are accounted for using an asset and liability approach which requires the recognition of income taxes payable or refundable for the current period and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. Deferred income taxes are determined based on the differences between the accounting basis and the tax basis of assets and liabilities and are measured using the currently enacted tax rates and laws. Deferred tax assets are reduced by a valuation allowance, if based on available evidence, it is considered that it is more likely than not that some portion of or all of the deferred tax assets will not be realized. In making such determination, the Company considers factors including future reversals of existing taxable temporary differences, future profitability, and tax planning strategies. If events were to occur in the future that would allow the Company to realize more of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the deferred tax assets that would increase income for the period when those events occurred. If events were to occur in the future that would require the Company to realize less of its deferred tax assets than the presently recorded net amount, an adjustment would be made to the valuation allowance against deferred tax assets that would decrease income for the period when those events occurred. Significant management judgment is required in determining income tax expense and deferred tax assets and liabilities. The Company conducts business in the US, the PRC and Hong Kong and is subject to tax in these jurisdictions. As a result of its business activities, the Company will file tax returns that are subject to examination by the respective tax authorities.
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| Uncertain Tax Positions | Uncertain Tax Positions Management reviews regularly the adequacy of the provisions for taxes as they relate to the Company’s income and transactions. In order to assess uncertain tax positions, the Company applies a more likely than not threshold and a two-step approach for tax position measurement and financial statement recognition. For the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon settlement. In subsequent periods, any interest and penalties related to uncertain tax positions will be recognized as a component of income tax expense. As of September 30, 2023 and December 31, 2022, the Company had not recorded any liability for uncertain tax positions. |
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| Net income per Share of Common Stock | Net income per Share of Common Stock The Company has adopted ASC Topic 260, “Earnings per Share,” (“EPS”) which requires presentation of basic EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation. In the accompanying financial statements, basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period.
The calculation of basic net income per share of common stock is based on the net income (loss) for the three and nine months ended September 30, 2023 and 2022 and the weighted average number of ordinary shares outstanding. For the three and nine months ended September 30, 2023 and 2022, the Company has no potentially dilutive securities, such as options or warrants, currently issued and outstanding. |
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| Segments | Segments The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. Management, including the chief operating decision maker, reviews operating results solely by monthly revenue of marketing consultation services and operating results of the Company and, as such, the Company has determined that the Company has one operating segment (provision of consulting, sourcing and marketing services, and digital training related services in China) as defined by ASC Topic 280 “Segment Reporting”.
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| Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC Topic 820, Fair Value Measurement and Disclosures, defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This topic also establishes a fair value hierarchy, which requires classification based on observable and unobservable inputs when measuring fair value. Certain current assets and current liabilities are financial instruments. 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 rates are equivalent to interest rates currently available. The three levels of valuation hierarchy are defined as follows:
Valuation of debt products depends upon a number of factors, including prevailing interest rates for like securities, expected volatility in future interest rates, and other relevant terms of the debt. Other factors that may be considered include the borrower’s ability to adequately service its debt, the fair market value of the borrower in relation to the face amount of its outstanding debt and the quality of collateral securing the Company’s debt investments. The fair value of these debt products classified as Level 2 are established by reference to the prices quoted by respective fund administrators. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, accounts receivable, other receivables, accounts payable and other payables, amounts due to a director and a shareholder and borrowings approximate their fair values because of the short maturity of these instruments or the rate of interest of these instruments approximate the market rate of interest. |
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| Comprehensive Income | Comprehensive Income Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. Accumulated other comprehensive income includes cumulative foreign currency translation adjustment. |
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| Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016-13”), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 is to be adopted on a modified retrospective basis. As a smaller reporting company, ASU 2016-13 will be effective for the Company for interim and annual reporting periods beginning after December 15, 2022. The Company adopted these ASUs on January 1, 2023, and these amendments were applied prospectively. In March 2022, the FASB issued ASU 2022-02, Topic 326. The ASU eliminates the accounting guidance for trouble debt restructurings by creditors in Subtopic 310-40, and enhances the disclosure requirements for modifications of loans to borrowers experiencing financial difficulty. Additionally, the ASU requires disclosure of gross writeoffs of receivables by year of origination for receivables within the scope of Subtopic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost. This ASU is effective for periods beginning after December 15, 2022. The Company adopted this ASU on January 1, 2023, and these amendments were applied prospectively.
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| Recently Issued Accounting Standards | Recently Issued Accounting Standards In October 2021, the FASB issued ASU No. 2021-08, “‘Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” (“ASU 2021-08”). This ASU requires entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The amendments improve comparability after the business combination by providing consistent recognition and measurement guidance for revenue contracts with customers acquired in a business combination and revenue contracts with customers not acquired in a business combination. The amendments are effective for the Company beginning after December 15, 2023, and are applied prospectively to business combinations that occur after the effective date. The Company does not expect the adoption of ASU 2021-04 to have a material effect on the condensed consolidated financial statements. Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the Company’s condensed consolidated financial statements upon adoption. |
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Organization and Business (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||
| Organization and Business [Abstract] | |||||||||||||||||||||||||||||||
| Schedule of Provision of Digital Marketing Consultation Services | The
Company, through its wholly owned subsidiaries, mainly engages in provision of digital marketing consultation services in Hong Kong and
China.
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Summary of Significant Accounting Policies (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Significant Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Straight-Line Method Over the Estimated Useful Lives | Plant
and equipment are recorded at cost less accumulated depreciation and accumulated impairment. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets.
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| Schedule of Revenue by Major Service Line | Revenue
by major service line
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| Schedule of Revenue by Recognition Over Time Vs Point in Time | Revenue
by recognition over time vs point in time
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| Schedule of Revenue Recorded On A Gross Vs Net Basis | Revenue
recorded on a gross vs net basis
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| Schedule of Contract Liabilities Consist of Deferred Revenue | The table below presents the activity of the deferred consultancy services revenue during the nine months ended September
30, 2023 and the year ended December 31, 2022, respectively:
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| Schedule of Exchange Rates for the Respective Periods | Translation of amounts from RMB into US dollars has been made at the following exchange rates for the respective periods:
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| Schedule of Basic Earnings per Share | In the accompanying financial statements, basic earnings per share is computed by dividing
net income by the weighted average number of shares of common stock outstanding during the period.
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Plant and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Plant and Equipment | Plant
and equipment as of September 30, 2023 and December 31, 2022 are summarized below:
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Related Party Transactions (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Related Party Transaction | Related
party transaction
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| Schedule of Related Party Balances | Related
party balances
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Accounts Receivable, Net (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||
| Accounts Receivable, Net [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of Accounts Receivable | Accounts
receivable as of September 30, 2023 and December 31, 2022:
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Other Receivables and Prepayments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||
| Other Receivables and Prepayments [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of Other Receivables and Prepayments | Other
receivables and prepayments consisted of the following as of September 30, 2023 and December 31, 2022:
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Other Payables and Accrued Liabilities (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other Payables and Accrued Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Other Payables and Accrued Liabilities | Other
payables and accrued liabilities and consisted of the following as of September 30, 2023 and December 31, 2022:
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Income Taxes (Tables) |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Income Tax Expense | Income
tax expense consists of the following
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| Schedule of Provision for Income Taxes | The
provision for income taxes consisted of the following:
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| Schedule of Deferred Tax Assets and Liabilities | The
tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of September
30, 2023 and December 31, 2022 are presented below:
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Lease (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Lease [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Operating Lease Expense | Operating
lease expense for the three and nine months ended September 30, 2023 and 2022 were as follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Maturities of Lease Liabilities | The
following is a schedule, by years, of maturities of lease liabilities as of September 30, 2023:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Lease Term and Discount Rate | Lease
term and discount rate
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Supplemental Cash Flow Information Related to Lease | Supplemental
cash flow information related to lease where the Company was the lessee for the nine months ended September 30, 2023 and 2022 was as
follows:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Certain Risks and Concentrations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Customers that Individually Comprised 10% or more of Net Revenue | The
Company had net revenue from the following customers that individually comprised 10% or more of net revenue for the three and nine months
ended September 30, 2023 and 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Customers that Individually Comprised 10% or more of Net Accounts Receivable | The
Company had accounts receivable from the following customers that individually comprised 10% or more of net accounts receivable as of
September 30, 2023 and December 31, 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Service Vendor that Individually Comprised 10% or more of Cost of Revenue | The
Company had cost of revenue from the following service vendor that individually comprised 10% or more of cost of revenue for the nine
months ended September 30, 2023 and 2022:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Business (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Organization and Business [Abstract] | ||
| Operating revenue | $ 4,597,664 | $ 2,851,656 |
| Increase in percentage | 61.20% | |
Summary of Significant Accounting Policies (Details) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
|
Sep. 30, 2023
USD ($)
$ / shares
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
$ / shares
|
Sep. 30, 2023
HKD ($)
|
Sep. 30, 2022
USD ($)
|
Dec. 31, 2022
USD ($)
|
|
| Summary of Significant Accounting Policies [Abstract] | ||||||
| Voting power percentage | 50.00% | 50.00% | ||||
| Cash held in accounts | $ 2,599 | $ 2,599 | $ 2,717 | |||
| Derived services revenues | 353,775 | $ 702,371 | 1,146,176 | $ 2,207,029 | ||
| Employee benefit expense | $ 18,773 | $ 17,744 | 64,921 | $ 47,963 | ||
| Range price | $ 1 | $ 7.8 | ||||
| Settlement percentage | 50.00% | 50.00% | ||||
| Per share price (in Dollars per share) | $ / shares | $ 0.01 | $ 0.01 | ||||
Summary of Significant Accounting Policies (Details) - Schedule of Straight-Line Method Over the Estimated Useful Lives |
Sep. 30, 2023 |
|---|---|
| Motor vehicle [Member] | Minimum [Member] | |
| Schedule of Straight-Line Method Over the Estimated Useful Lives [Line Items] | |
| Estimated useful lives (years) | 4 years |
| Motor vehicle [Member] | Maximum [Member] | |
| Schedule of Straight-Line Method Over the Estimated Useful Lives [Line Items] | |
| Estimated useful lives (years) | 5 years |
| Office equipment [Member] | |
| Schedule of Straight-Line Method Over the Estimated Useful Lives [Line Items] | |
| Estimated useful lives (years) | 3 years |
Summary of Significant Accounting Policies (Details) - Schedule of Revenue by Major Service Line - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Consultancy Services [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Revenue by major service line | $ 1,714,786 | $ 699,257 | $ 4,591,688 | $ 2,211,307 |
| Sourcing and Marketing Services [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Revenue by major service line | 102,527 | 5,976 | 372,475 | |
| Digital Training Related Services [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Revenue by major service line | 267,874 | |||
| Revenue by Major Service Line [Member] | ||||
| Revenue from External Customer [Line Items] | ||||
| Revenue by major service line | $ 1,714,786 | $ 801,784 | $ 4,597,664 | $ 2,851,656 |
Summary of Significant Accounting Policies (Details) - Schedule of Revenue by Recognition Over Time Vs Point in Time - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Schedule of Revenue by Recognition Over Time Vs Point in Time [Line Items] | ||||
| Revenue by recognition over time vs point in time | $ 1,714,786 | $ 801,784 | $ 4,597,664 | $ 2,851,656 |
| Revenue recognized at a point in time [Member] | ||||
| Schedule of Revenue by Recognition Over Time Vs Point in Time [Line Items] | ||||
| Revenue by recognition over time vs point in time | 1,714,786 | 801,784 | 4,597,664 | 2,851,656 |
| Revenue recognized over time [Member] | ||||
| Schedule of Revenue by Recognition Over Time Vs Point in Time [Line Items] | ||||
| Revenue by recognition over time vs point in time | ||||
Summary of Significant Accounting Policies (Details) - Schedule of Revenue Recorded On A Gross Vs Net Basis - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Schedule of revenue recorded on a gross vs net basis [Abstract] | ||||
| Revenue recorded on a gross basis | $ 1,714,786 | $ 699,257 | $ 4,591,688 | $ 2,479,181 |
| Revenue recorded on a net basis | 102,527 | 5,976 | 372,475 | |
| Total revenue | $ 1,714,786 | $ 801,784 | $ 4,597,664 | $ 2,851,656 |
Summary of Significant Accounting Policies (Details) - Schedule of Contract Liabilities Consist of Deferred Revenue - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Schedule of contract liabilities consist of deferred revenue [Abstract] | ||
| Balance at beginning of period | $ 216,142 | |
| Service fees collected | 220,183 | |
| Refunded | (149,992) | |
| Service revenue earned | (262,799) | |
| Exchange realignment | (23,534) | |
| Balance at end of period |
Summary of Significant Accounting Policies (Details) - Schedule of Exchange Rates for the Respective Periods |
9 Months Ended | |||
|---|---|---|---|---|
|
Sep. 30, 2023
$ / shares
|
Sep. 30, 2023
¥ / shares
|
Sep. 30, 2022
$ / shares
|
Sep. 30, 2022
¥ / shares
|
|
| Schedule of exchange rates for the respective periods [Abstract] | ||||
| Balance sheet, except for equity accounts | (per share) | $ 1 | ¥ 7.2948 | $ 1 | ¥ 7.116 |
| Income statement and cash flows | (per share) | $ 1 | ¥ 7.0313 | $ 1 | ¥ 6.6013 |
Summary of Significant Accounting Policies (Details) - Schedule of Basic Earnings per Share - USD ($) |
3 Months Ended | 9 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Jun. 30, 2023 |
Mar. 31, 2023 |
Sep. 30, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|||
| Schedule of basic earnings per share [Abstract] | ||||||||||
| Net income (loss) | $ 741,170 | $ 690,447 | $ 431,457 | $ (31,999) | $ 265,850 | $ 391,173 | $ 1,863,074 | $ 625,024 | ||
| Weighted average number of common stock outstanding | ||||||||||
| Weighted average number of common stock outstanding -Basic | 1,701,181,423 | 1,701,181,423 | 1,701,181,423 | 1,701,181,423 | ||||||
| Net income per share | ||||||||||
| Net income per share -Basic | [1] | $ 0 | $ 0 | $ 0 | $ 0 | |||||
| ||||||||||
Summary of Significant Accounting Policies (Details) - Schedule of Basic Earnings per Share (Parentheticals) - $ / shares |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|||
| Schedule of basic earnings per share [Abstract] | ||||||
| Weighted average number of common stock outstanding -Diluted (in Shares) | 1,701,181,423 | 1,701,181,423 | 1,701,181,423 | 1,701,181,423 | ||
| Net income per share -Diluted | [1] | $ 0.00 | $ 0.00 | $ 0.00 | $ 0.00 | |
| ||||||
Plant and Equipment (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Property, Plant and Equipment [Line Items] | ||||
| Depreciation expenses | $ 19,260 | $ 20,194 | $ 59,558 | $ 62,516 |
Plant and Equipment (Details) - Schedule of Plant and Equipment - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of Plant and Equipment [Line Items] | ||
| Plant and equipment, gross | $ 359,887 | $ 378,710 |
| Less: Accumulated depreciation | (236,899) | (189,821) |
| Plant and equipment, net | 122,988 | 188,889 |
| Vehicles [Member] | ||
| Schedule of Plant and Equipment [Line Items] | ||
| Plant and equipment, gross | 349,154 | 369,244 |
| Office Equipment [Member] | ||
| Schedule of Plant and Equipment [Line Items] | ||
| Plant and equipment, gross | $ 10,733 | $ 9,466 |
Related Party Transactions (Details) |
Dec. 31, 2022
USD ($)
|
|---|---|
| Related Party Transactions [Abstract] | |
| Carrying amount included expenses paid | $ 3,276 |
Related Party Transactions (Details) - Schedule of Related Party Transaction - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Zhongchuang Boli [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Sundry income | $ 1,952 | $ 6,038 | ||
Related Party Transactions (Details) - Schedule of Related Party Balances - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Mr. Guolin Tao [Member] | ||
| Schedule of Related Party Balances [Line Items] | ||
| Amount due to a director | $ 3,498 | $ 167,936 |
| Zhongchuang Boli [Member] | ||
| Schedule of Related Party Balances [Line Items] | ||
| Other payable | $ 1,940 |
Accounts Receivable, Net (Details) - Schedule of Accounts Receivable - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of Accounts Receivable [Line Items] | ||
| Account receivables | $ 643,424 | $ 234,978 |
| Less: Allowance for doubtful accounts | ||
| Total | $ 643,424 | $ 234,978 |
Other Receivables and Prepayments (Details) - Schedule of Other Receivables and Prepayments - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Other Receivables and Prepayments [Abstract] | ||
| Deposits and other receivables | $ 20,564 | $ 15,948 |
| Prepayments | 19,667 | 57,121 |
| Total other receivables and prepayments | $ 40,231 | $ 73,069 |
Other Payables and Accrued Liabilities (Details) - Schedule of Other Payables and Accrued Liabilities - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Schedule of Other Payables and Accrued Liabilities [Abstract] | ||
| Other payables | $ 53,216 | $ 60,047 |
| Salary payable | 81,635 | 62,830 |
| Accrued audit fees | 145,000 | |
| Value-added tax and other taxes payables | 54,327 | 30,838 |
| Other accrued expenses | 5,026 | 71,012 |
| Accrued liabilities and other payables | $ 194,204 | $ 369,727 |
Statutory Reserves (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Statutory Reserves [Abstract] | ||
| Percentage of profit | 10.00% | |
| Registered capital percentage | 50.00% | |
| Statutory reserve (in Dollars) | $ 65,911 | $ 65,911 |
| Reserves percentage | 50.00% |
Income Taxes (Details) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 22, 2017 |
Jan. 01, 2008 |
Sep. 30, 2023
USD ($)
|
Sep. 30, 2023
HKD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2022
HKD ($)
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2023
HKD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2022
HKD ($)
|
Dec. 31, 2022
USD ($)
|
|
| Income Taxes [Line Items] | |||||||||||
| Deemed paid foreign tax credit, percentage | 80.00% | 80.00% | |||||||||
| Deduction of the current year, percentage | 50.00% | 50.00% | |||||||||
| Estimated assessable profit, percentage | 16.50% | 16.50% | 16.50% | 16.50% | 16.50% | 16.50% | 16.50% | 16.50% | |||
| Provision tax in percentage | 8.25% | 8.25% | 8.25% | 8.25% | 8.25% | 8.25% | 8.25% | 8.25% | |||
| Assessable profits | $ 274,168 | $ 2,000,000 | $ 274,168 | $ 2,000,000 | $ 274,168 | $ 2,000,000 | $ 274,168 | $ 2,000,000 | |||
| Operating waiver, percentage | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | |||
| Profits tax | $ 1,371 | $ 10,000 | $ 1,371 | $ 10,000 | $ 1,371 | $ 10,000 | $ 1,371 | $ 10,000 | |||
| Income tax percentage | 10.00% | 25.00% | 25.00% | ||||||||
| Deferred tax liabilities (in Dollars) | $ 317,141 | $ 317,141 | $ 188,289 | ||||||||
| PRC Subsidiary [Member] | |||||||||||
| Income Taxes [Line Items] | |||||||||||
| Profits tax | $ 3,171,412 | $ 1,882,886 | |||||||||
| Maximum [Member] | |||||||||||
| Income Taxes [Line Items] | |||||||||||
| Income tax rate, percentage | 35.00% | ||||||||||
| Minimum [Member] | |||||||||||
| Income Taxes [Line Items] | |||||||||||
| Income tax rate, percentage | 21.00% | ||||||||||
Income Taxes (Details) - Schedule of Income Tax Expense - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Deferred tax | ||||
| Deferred tax | $ 129,523 | $ (33,117) | ||
| Total income tax expense | $ 479,535 | $ 135,784 | 1,227,673 | 595,156 |
| China [Member] | ||||
| Current tax: | ||||
| Current tax | 377,892 | 127,727 | 951,312 | 463,206 |
| Deferred tax | ||||
| Deferred tax | (675) | (584) | 292 | (1,504) |
| Hong Kong [Member] | ||||
| Deferred tax | ||||
| Deferred tax | $ 102,318 | $ 8,641 | $ 276,069 | $ 133,454 |
Income Taxes (Details) - Schedule of Provision for Income Taxes - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Schedule of Provision for Income Taxes [Abstract] | ||||
| Income before income tax | $ 1,220,705 | $ 103,785 | $ 3,090,747 | $ 1,220,180 |
| Statutory income tax rate | 21.00% | 21.00% | 21.00% | 21.00% |
| Income tax credit computed at statutory income tax rate | $ 256,348 | $ 21,795 | $ 649,057 | $ 256,238 |
| Reconciling items: | ||||
| Non-deductible expenses | 40,408 | 75,971 | 131,235 | 134,157 |
| Rate differential in different tax jurisdictions | 60,013 | 28,203 | 160,316 | 84,678 |
| Deferred tax provided on dividends withholding tax of PRC subsidiaries | 102,318 | 9,561 | 276,069 | 133,454 |
| Under(over)-provision in prior year | 20,448 | 254 | 10,996 | (13,371) |
| Income tax expense | $ 479,535 | $ 135,784 | $ 1,227,673 | $ 595,156 |
Income Taxes (Details) - Schedule of Deferred Tax Assets and Liabilities - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Deferred tax assets: | ||
| Accelerated depreciation | $ 3,083 | $ 3,558 |
| Deductible temporarily difference arising from other payable | 11,853 | 12,535 |
| Less: Net off with deferred tax liabilities for financial reporting purposes | (14,936) | (16,093) |
| Net total deferred tax assets | ||
| Deferred tax liabilities: | ||
| Undistributed profits of a PRC subsidiary | 317,141 | 188,289 |
| Less: Net off with deferred tax assets for financial reporting purposes | (14,936) | (16,093) |
| Net total deferred tax liabilities | $ 302,205 | $ 172,196 |
Lease (Details) |
9 Months Ended | |
|---|---|---|
|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2023
CNY (¥)
|
|
| Lease [Abstract] | ||
| Description of lease agreement | On June 10, 2021, the Company entered into a lease agreement for office space in Xian, the PRC with a non-cancellable lease term, commencing on July 16, 2021 and expiring on July 15, 2024. | On June 10, 2021, the Company entered into a lease agreement for office space in Xian, the PRC with a non-cancellable lease term, commencing on July 16, 2021 and expiring on July 15, 2024. |
| Rental payment | $ 4,686 | ¥ 32,951 |
Lease (Details) - Schedule of Operating Lease Expense - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Schedule of Operating Lease Expense [Abstract] | ||||
| Operating lease cost – straight line | $ 14,059 | $ 14,406 | $ 42,177 | $ 44,925 |
| Total lease expense | $ 14,059 | $ 14,406 | $ 42,177 | $ 44,925 |
Lease (Details) - Schedule of Maturities of Lease Liabilities |
Sep. 30, 2023
USD ($)
|
|---|---|
| Schedule of Maturities of Lease Liabilities [Abstract] | |
| Remainder of 2023 | $ 13,551 |
| 2024 | 27,103 |
| 2025 | |
| 2026 | |
| Thereafter | |
| Total undiscounted cash flows | 40,654 |
| Less: imputed interest | (655) |
| Present value of lease liabilities | $ 39,999 |
Lease (Details) - Schedule of Lease Term and Discount Rate |
Sep. 30, 2023 |
|---|---|
| Schedule of Lease Term and Discount Rate [Abstract] | |
| Weighted-average remaining lease term - year | 9 months |
| Weighted-average discount rate (%) | 4.90% |
Lease (Details) - Schedule of Supplemental Cash Flow Information Related to Lease - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Schedule of Supplemental Cash Flow Information Related to Lease [Line Items] | ||
| Operating cash outflows from operating lease | $ 42,177 | $ 44,925 |
Certain Risks and Concentrations (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
| Certain Risks and Concentrations (Details) [Line Items] | |||||
| Net revenue percentage | 10.00% | 10.00% | 10.00% | 10.00% | |
| Net accounts receivable percentage | 10.00% | 10.00% | |||
| Derived services revenues (in Dollars) | $ 353,775 | $ 702,371 | $ 1,146,176 | $ 2,207,029 | |
| Cost of revenue percentage | 10.00% | 10.00% | |||
| Accounts payable percentage | 10.00% | 10.00% | |||
| Cash and cash equivalents (in Dollars) | $ 8,706,694 | $ 8,706,694 | $ 7,193,591 | ||
| Xian CNT [Member] | |||||
| Certain Risks and Concentrations (Details) [Line Items] | |||||
| Percentage of net revenue | 21.00% | 88.00% | 25.00% | 77.00% | |
Certain Risks and Concentrations (Details) - Schedule of Customers that Individually Comprised 10% or more of Net Revenue - Customer A [Member] - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Concentration Risk [Line Items] | ||||
| Net revenue | $ 1,364,218 | $ 437,679 | $ 3,427,497 | $ 1,284,209 |
| Net revenue percentage | 80.00% | 55.00% | 75.00% | 45.00% |
Certain Risks and Concentrations (Details) - Schedule of Customers that Individually Comprised 10% or more of Net Accounts Receivable - Accounts Receivable [Member] - Customer Concentration Risk [Member] - Customer A [Member] - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
| Certain Risks and Concentrations (Details) - Schedule of Customers that Individually Comprised 10% or more of Net Accounts Receivable [Line Items] | ||
| Accounts receivable | $ 511,448 | $ 189,195 |
| Accounts receivable percentage | 79.00% | 70.00% |
Certain Risks and Concentrations (Details) - Schedule of Service Vendor that Individually Comprised 10% or more of Cost of Revenue - Service vendor A [Member] - Revenue, Segment Benchmark [Member] - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
| Risks and Uncertainties [Line items] | ||
| Cost of revenue (in Dollars) | $ 135,223 | |
| Cost of revenue percentage | 24.00% | |
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