| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis
of Presentation The
accompanying interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles
generally accepted in the United States (“U.S. GAAP”). Going
Concern The
accompanying interim condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course of business. The realization of assets and the satisfaction
of liabilities in the normal course of business are dependent on, among other things, the Company’s ability to operate profitably,
to generate cash flows from operations, and to pursue financing arrangements to support its working capital requirements. In
assessing the Company’s liquidity, the Company monitors and analyzes its cash and cash equivalents and its operating and capital
expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital
expenditure obligations. As of March 31, 2024, the Company’s current liabilities exceeded the current assets by $15,187,671 ,
its accumulated deficit was and the Company has incurred losses during the six
months ended March 31, 2024 and 2023. None of the Company’s stockholders, officers or directors, or third parties, are under any
obligation to advance us funds, or to invest in us. Accordingly, we may not be able to obtain additional financing. If we are unable
to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but not necessarily
be limited to, curtailing operations, suspending the pursuit of our business plan, and reducing overhead expenses. We cannot provide
any assurance that new financing will be available to us on commercially acceptable terms, if at all. In
evaluating if there is substantial doubt about the ability to continue as a going concern, the Company are trying to alleviate the going
concern risk through (1) increasing cash generated from operations by controlling operating expenses and gradually shifted the business
focus to the brand authorization for community healthy station and operation service charges to bring in more revenue, (2) financing
from domestic banks and other financial institutions, and (3) equity or debt financing. The Company has certain plans to mitigate these
adverse conditions and to increase the liquidity. On
an on-going basis, the Company will also receive financial support commitments from the Company’s related parties. These
conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments
to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities
that may result should the Company be unable to continue as a going concern. Use
of Estimates The
preparation of these interim condensed consolidated 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 on-going 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. Revenue
Recognition The
Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration
which the Company expects to receive in exchange for those goods or services. 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) the Company satisfies the performance obligation. Revenues
are recognized when control of the promised goods or services is transferred to our customers, which may occur at a point in time or
over time depending on the terms and conditions of the agreement, in an amount that reflects the consideration we expect to be entitled
to in exchange for those goods or services. The Company
identified the following performance obligations for each type of contract: Training
Revenue The
Company’s online training course service primarily includes coursewares or videos which are already published on the website. Other
than providing the access, there are no bundle or multiple separable and distinct tasks. According to ASC 606-10-25-19, there is one
performance obligation for the training course service. The Company required and received fees before participants accessed the online
courses. Revenue recognised over the period of the card after the E-card was activated. Charge
for use of brand The
Company authorized other enterprises using the Company’s brand to set up community health stations, providing services to customers
at their location, with a brand usage fee. Revenue was recognized when such transaction was completed. The
amount of other revenues was immaterial compared to total revenue during the six months ended March 31, 2024 and 2023. Practical
expedients and exemption The
Company has not incurred 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. Other
service income is earned when services have been rendered. Contract
liability The
contract liabilities consist of advances from customers, which relate to unsatisfied performance obligations at the end of each reporting
period and consists of cash payments received in advance from customers in sales of training course and brand usage fee. As of March
31, 2024 and September 30, 2023, the Company's advances from customer unearned training fee and brand usage fee amounted to $299,182
and $129,758, respectively. The Company
reports revenues net of applicable sales taxes and related surcharges. Revenue
by major product line
For
The Three Months Ended For
The Six Months Ended
March
31, March
31,
2024 2023 2024 2023
Training Revenue $ 36 $ 85 $ 84 $ 174
Charge for use of brand - 21,636 - 21,636
Other Revenue - 1 - 1
Total Revenue $ 36 $ 21,722 $ 84 $ 21,811 Income
Taxes We
account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the
difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in
the period in which the differences are expected to reverse. The Company records a valuation allowance against deferred tax assets if,
based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not
be realized. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment
date. We
apply ASC 740, Accounting for Income Taxes Foreign
Currency and Foreign Currency Translation The
functional currency of the Company is the United States dollar (“US dollar”). Fengyuan Beijing and Zhuoxun Beijing, which
are based in PRC, the local currency, the Chinese Yuan (“RMB”), as their functional currencies. An entity’s functional
currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in
which the entity primarily generates and expends cash. Management’s judgment is essential to determine the functional currency
by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. Foreign
currency transactions denominated in currencies other than the functional currency are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at
the balance sheet date are re-measured at the applicable rates of exchange in effect at that date. Gains and losses resulting from foreign
currency re-measurement are included in the statements of comprehensive loss. The
interim condensed consolidated financial statements are presented in U.S. dollars. Assets and liabilities are translated into U.S. dollars
at the current exchange rate in effect at the balance sheet date, and revenues and expenses are translated at the average of the exchange
rates in effect during the reporting period. Stockholders’ equity accounts are translated using the historical exchange rates at
the date the entry to stockholders’ equity was recorded, except for the change in retained earnings during the period, which is
translated using the historical exchange rates used to translate each period’s income statement. Differences resulting from translating
functional currencies to the reporting currency are recorded in accumulated other comprehensive income in the interim condensed consolidated
balance sheets. Translation
of amounts from RMB into U.S. dollars has been made at the following exchange rates:
Balance sheet items, except for equity accounts
March 31, 2024 RMB7.2221 to $1
September 30, 2023 RMB7.2942 to $1
Income statement and cash flows items
For the six months ended March 31, 2024 RMB7.1828 to $1
For the six months ended March 31, 2023 RMB6.9766 to $1 Cash
and Cash Equivalents Cash
and cash equivalents consist of cash on hand and at banks and highly liquid investments, which are unrestricted from withdrawal or use,
and which have original maturities of three months or less when purchased. Other
monetary funds Other
monetary funds consist of cash deposited in financial institutions other than banks. Allowance
for credit loss The
Company adopted ASU 2016-13, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments (“ASC 326”) on October 1,2023. ASC 326 requires the application of a credit loss model
based prospectively on current expected credit losses (CECL), and replaces the previous model based retrospectively on past incurred
losses. When a receivable does not share risk characteristics with other receivables, management will evaluate such receivable for expected
credit loss on an individual basis. Doubtful accounts balances are written off and deducted from allowance, when receivables are deemed
uncollectible, after all collection efforts have been exhausted and the potential for recovery is considered remote. The adoption of
ASC 326 did not have a material impact on our consolidated financial statements and related disclosures. Inventory,
net Inventories
are stated at the lower of cost (weighted average basis) or net realizable value. The methods of determining inventory costs are used
consistently from year to year. Net realizable value is based on estimated selling prices less selling expenses and any further costs
expected to be incurred for completion. Adjustments to reduce the cost of inventory to net realizable value are made, if required, for
estimated excess, obsolescence, or impaired balances. Long-Lived
Assets Long-lived
assets consist primarily of property, plant and equipment and intangible assets. Property,
plant and equipment Property,
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. Estimated Office and computer equipment 5 Lease improvement 3 Transportation equipment 5 Expenditure
for maintenance and repairs is expensed as incurred. The
gain or loss on the disposal of property, 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 other expenses in the interim condensed consolidated statements
of comprehensive loss. Intangible
Assets Intangible
assets mainly comprise domain names and trademarks. Intangible assets are recorded at cost less accumulated amortization with no residual
value. Amortization of intangible assets o is computed using the straight-line method over their estimated useful lives. The
estimated useful lives of the Company’s intangible assets are listed below: Estimated Software 10 Impairment
of Long-lived Assets In
accordance with ASC 360-10-35, the Company reviews 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. Based on the existence of one or more indicators
of impairment, the Company measures any impairment of long-lived assets using the projected discounted cash flow method at the asset
group level. The estimation of future cash flows requires significant management judgment based on the Company’s historical results
and anticipated results and is subject to many factors. The discount rate that is commensurate with the risk inherent in the Company’s
business model is determined by its management. An impairment loss would be recorded if the Company determined that the carrying value
of long-lived assets may not be recoverable. The impairment to be recognized is measured by the amount by which the carrying values of
the assets exceed the fair value of the assets. As of March 31, 2024, the impairment of intangible assets was $38,726. No Credit
risk Financial
instruments that potentially subject the Company to a significant concentration of credit risk consist primarily of cash and cash equivalents.
As of March 31, 2024 and September 30, 2023, substantially all of the Company’s cash and cash equivalents were held by major financial
institutions located in the PRC, which management believes are of high credit quality. For
the credit risk related to trade accounts receivable, the Company performs ongoing credit evaluations of its customers and, if necessary,
maintains reserves for potential credit losses. Historically, such losses have been within management’s expectations. Concentrations For
the six months ended March 31, 2024 and 2023, no single customer accounted for more than 10% of total revenue. For the six months ended
March 31, 2024, three suppliers accounted for 78%, 14%, 8% of the Company’s total purchases, respectively. For the six months ended
March 31, 2023, one supplier accounted for 100% of the Company's total purchases. As of March 31, 2024, no supplier accounted for 10%
of the Company's total accounts payable balance. As of September 30, 2023, one supplier accounted for 10% of the Company's total accounts
payable balance. Segments The
Company evaluates a reporting unit by first identifying its operating segments, and then evaluates each operating segment to determine
if it includes one or more components that constitute a business. If there are components within an operating segment that meets the
definition of a business, the Company evaluates those components to determine if they must be aggregated into one or more reporting units.
If applicable, when determining if it is appropriate to aggregate different operating segments, the Company determines if the segments
are economically similar and, if so, the operating segments are aggregated. The Company has only one major reportable segment in the
periods presented. Fair
Value of Financial Instruments U.S.
GAAP establishes a three-tier hierarchy to prioritize the inputs used in the valuation methodologies in measuring the fair value of financial
instruments. This hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs
when measuring fair value. The three-tier fair value hierarchy is: Level
1 – observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level
2 – include other inputs that are directly or indirectly observable in the market place. Level
3 – unobservable inputs which are supported by little or no market activity. The
carrying value of the Company’s financial instruments, including cash and cash equivalents, other receivables, other current assets,
accounts and other payables, and other short-term liabilities approximate their fair value due to their short maturities. Restricted
assets Fengyuan
Beijing and Zhuoxun Beijing are restricted in their ability to transfer a portion of their net assets to the Company. The payment of
dividends by entities organized in China is subject to limitations, procedures and formalities. Regulations in the PRC currently permit
payment of dividends only out of accumulated profits as determined in accordance with accounting standards and regulations in China.
Fengyuan Beijing and Zhuoxun Beijing are also required to set aside at least 10% of its after-tax profit based on PRC accounting standards
each year to its statutory reserves account until the accumulative amount of such reserves reaches 50% of its respective registered capital.
The aforementioned reserves can only be used for specific purposes and are not distributable as cash dividends. In
addition, the Company’s operations are conducted and revenues are generated in China, and all of the Company’s revenues earned
and currency received are denominated in RMB. RMB is subject to the foreign exchange control regulation in China, and, as a result, the
Company may be unable to distribute any dividends outside of China due to PRC foreign exchange control regulations that restrict the
Company’s ability to convert RMB into U.S. dollars. Recent
Accounting Pronouncements Accounting
Pronouncements Issued But Not Yet Adopted The
ASU 2023-07: Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures provides improvements to reportable segment
disclosure requirements, primarily through enhanced disclosures about significant segment expenses. In addition, the amendments enhance
interim disclosure requirements, clarify circumstances in which an entity can disclose multiple measures of segment profit or loss, provide
new segment disclosure requirements for entities with a single reportable segment and contain other disclosure requirements. The ASU
is effective for fiscal years beginning after December 15, 2023, and interim periods in fiscal years beginning after December 15, 2024.
The ASU should be adopted retrospectively to all periods presented in the financial statements unless it is impracticable to do so. The
adoption of ASU 2023-07 is not expected to materially impact the Company’s consolidated balance sheets, statements of income and
comprehensive income, cash flows or disclosures. In
December 2023, the FASB issued ASU 2023-09, Improvement to Income Tax Disclosure. This standard requires more transparency about income
tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid information.
This standard also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective
for public business entities, for annual periods beginning after December 15, 2024. We expect the adoption of this ASU will not have
a material effect on the consolidated financial statements. Except
for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have material impact on the consolidated
financial position, statements of operations and cash flows. |
