| Summary of Significant Accounting Policies | Note
2. Summary of Significant Accounting Policies (a)
Basis of presentation and liquidation The
condensed consolidated balance Sheets as of August 31, 2024 and May 31, 2024 and the condensed consolidated statements of operations
and comprehensive income (loss), shareholders’ equity, and cash flow for the three months ended August 31, 2024 and 2023 have been
prepared by the Company is in conformity with generally accepted accounting principles in the United States (“US GAAP”). The
Company incurred net loss of $ 41,567 506,209 5,405,047 5,363,480 75,876 As
of August 31, 2024 and May 31, 2024, the Company had cash and cash equivalents of $ 72,054 2,521 2,138,621 1,979,652 (b)
Going Concern Uncertainties The
accompanying unaudited condensed consolidated financial statements have been prepared in conformity with U.S. GAAP which contemplates
continuation of the Company as a going-concern basis. The going-concern basis assumes that assets are realized, and liabilities are settled
in the ordinary course of business at amounts disclosed in the unaudited condensed consolidated financial statements. The Company’s
ability to continue as a going concern depends upon its ability to market and sell its products to generate positive operating cash flows.
The Company has an accumulated deficit of $ 5,405,047 5,363,480 41,567 506,209 75,876 100,463 The
Company’s cash position is not significant to support the Company’s daily operation. While the Company believes in the viability
of its business strategy plans such as Flash Lion e-commerce sales model, Cloud chain (including Wechat, REDnote and Tik Tok’s
short videos e-commerce sales model), and its ability to raise additional funds, there can be no assurance to that effect. The
Company’s ability to continue as a going concern is dependent upon its ability to improve profitability and increase of market
share, our business plan is to extend our market share through acquiring quality businesses in the automotive aftermarket industries,
in order to increase our customer base and supply channels, as well as to acquire more skilled employees and business connections in
the industries. We plan to further develop our online and offline marketing platform and internal enterprise resource planning system
(ERP) by engaging an external IT company during 2025. We
plan to diversify our existing product portfolio strategically, and thereby provide our customers with a wider range of choices and broaden
our existing customer base. In
addition, major shareholder agrees to provide financial support to the Company. However, management cannot provide any assurances that
the Company will be successful in accomplishing any of its plans. The accompanying unaudited condensed consolidated financial statements
do not include any adjustments that might result from the outcome of this uncertainty. (c)
Principles of Consolidation The
accompanying unaudited condensed consolidated financial statements include the financial statements of the Company, its subsidiaries
and the VIE. All significant inter-company transactions and balances between the Company, its subsidiaries and the VIE have been eliminated
upon consolidation. To
comply with PRC laws and regulations, the Company provides trading of motor oil, auto parts, exhaust gas cleaners and brand name management
services in China via its VIE, which hold critical operating licenses that enable the Company to do business in China. Substantially
all of the Company’s revenues, costs and net income (loss) in China are directly or indirectly generated through this VIE. The
Company has signed various agreements with its VIE and legal shareholders of the VIE to allow the transfer of economic benefits from
the VIE to the Company and to direct the activities of the VIE. The
Company believes that the contractual arrangements among its subsidiaries, the VIE and its shareholders are in compliance with the current
PRC laws and legally enforceable. However, uncertainties in the interpretation and enforcement of the PRC laws, regulations and policies
could limit the Company’s ability to enforce these contractual arrangements. As a result, the Company may be unable to consolidate
the VIE and its subsidiary in the unaudited condensed consolidated financial statements. The Company’s ability to control its VIE
also depends on the authorization by the shareholders of the VIE to exercise voting rights on all matters requiring shareholders’
approval in the VIE. The Company believes that the agreements on authorization to exercise shareholder’s voting power are legally
enforceable. In addition, if the legal structure and contractual arrangements with its VIE were found to be in violation of any future
PRC laws and regulations, the Company may be subject to fines or other actions. The Company believes the possibility that it will no
longer be able to control and consolidate its VIE as a result of the aforementioned risks and uncertainties is remote. The
following table sets forth its subsidiaries and the VIE, including their country of incorporation or residence and our ownership interest
in such subsidiaries. Please see “Note 4 VIE Structure and Arrangements”. Schedule of Ownership Interest in Subsidiaries
Entity
Name Date
of Incorporation Parent
Entity Interest % Nature
of Operation Place
of Incorporation
CXJ
Investment Group Company Ltd (BVI
CXJ) 2020/2/19 US
CXJ 100 Investment
holding British
Virgin Islands
CXJ
(HK) Technology Group Company Ltd (HK
CXJ) 2020/3/11 BVI
CXJ 100 Investment
holding Hong
Kong, PRC
CXJ
(Shenzhen) Technology Co., Ltd (SZ
CXJ) 2020/5/26 HK
CXJ 100 Investment
holding PRC
VIE:
CXJ
Technology (Hangzhou) Co., Ltd (HZ
CXJ) 2019/3/28 SZ
CXJ 100 Trading,
brand name management fee and consultancy services PRC
Qingdao
Hong Run Kuo Ye Network Technology Co., Ltd (QD
CXJ) 2019/8/19 HZ
CXJ 100 Trading
and consultancy services PRC
Xishijie
Automobile Industry Ecology Technology Co., Ltd (formerly known as Shenzhen Lanbei Ecological
Technology Co., Ltd) (SZ
Lanbei) 2020/10/28 HZ
CXJ 51 Trading
and consultancy services PRC
Longkou
Xianganfu Trading Co., Ltd. (Longkou
CXJ) 2018/4/23 SZ
CXJ 100 Trading
and consultancy services PRC The
Company disposed 51 1 (d)
Use of Estimates The
preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements. The estimates and judgments
will also affect the reported amounts for certain revenues and expenses during the reporting period. Certain significant accounting policies
that contain subjective management estimates and assumptions include those related to going concern, current expected credit loss, allowance
of deferred tax asset, useful lives and impairment of long-lived assets, valuation of intangible assets acquired and impairment of goodwill.
Actual results may materially differ from these estimates. (e)
Foreign Currency The
Company translates its foreign operations to the U.S. dollar in accordance with ASC 830, “ Foreign Currency Matters The
reporting currency for the Company and its subsidiaries is the U.S. dollar. The Company, BVI CXJ and HK CXJ’s functional currency
is the U.S. dollar; SZ CXJ and their VIEs and subsidiary which are incorporated in PRC use the Chinese Renminbi (“RMB”) as
their functional currency. The
Company’s subsidiaries, whose records are not maintained in that company’s functional currency, re-measure their records
into their functional currency as follows:
● Monetary
assets and liabilities at exchange rates in effect at the end of each period
● Nonmonetary
assets and liabilities at historical rates
● Revenue
and expense items at the average rate of exchange prevailing during the period Gains
and losses from these re-measurements were not significant and have been included in the Company’s results of operations. The
Company’s subsidiaries, whose functional currency is not the U.S. dollar, translate their records into the U.S. dollar as follows:
● Assets
and liabilities at the rate of exchange in effect at the balance sheet date
● Equities
at the historical rate
● Revenue
and expense items at the average rate of exchange prevailing during the period Adjustments
arising from such translations are included in accumulated other comprehensive income in shareholders’ equity. Translation
of amounts from RMB into US$1 has been made at the following exchange rates for the respective periods: Schedule of Exchange Rates
2024 2023
As
of and for the
2024 2023
Period-end RMB: US$1 exchange rate 7.09 7.25
Period-average RMB: US$1 exchange rate 7.22 7.19
Exchange rate 7.22 7.19 The
RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions.
No representation is made that the RMB amounts could have been, or could be, converted into US dollars at the rates used in translation. (f)
Cash and Cash Equivalents Cash
and cash equivalents consist of cash on hand, demand deposits placed with banks or other financial institutions and have original maturities
of less than three months. The Company’s primary bank deposits are located in the USA, Hong Kong and the PRC. (g)
Accounts Receivable and Allowance for Doubtful Accounts Accounts
receivable is presented net of allowance for doubtful accounts. Our accounts receivable consists mainly of trade receivables derived
from selling of motor oil and auto parts with contractual payment terms. The provision for doubtful accounts reflects the current estimate
of credit losses expected to be incurred over the life of the financial asset, based on historical experience, current conditions and
reasonable forecasts of future economic conditions. Further,
we evaluate the collectability of our accounts receivable and if there is doubt that we will collect the full amount, we will record
a reserve specific to that customer’s receivable balance. There was no provision for doubtful accounts for the period ended August
31, 2024. (h)
Inventories, Net Inventories
consisting of finished goods are stated at the lower of cost or market value. The Company used the weighted average cost method of accounting
for inventory. Inventories on hand are evaluated on an on-going basis to determine if any items are obsolete, spoiled, or in excess of
future demand. The Company provides impairment that is charged directly to cost of sales when is has been determined the product is obsolete,
spoiled, and the Company will not be able to sell it at a normal profit above its carrying cost. The Company’s primary products
are motor oil and auto parts. i)
Property and equipment Property
and equipment are stated at cost, less depreciation, amortization and impairments. Depreciation and amortization of property and equipment
are provided using the straight-line method. The estimated useful lives for computer equipment, computer software, engineering and test
equipment and furniture and fixtures are generally three five years five ten years twenty-five
years (j)
Prepayments Prepayments
are mainly consisted of prepaid income tax, rental, prepayments for consulting fee and advances to supplies. (k)
Intangible Assets The
intangible assets consist of costs occurred to develop the software and purchased patents for business operations. We evaluate intangible
assets for impairment when factors indicate that the carrying value of an asset may not be recoverable. When factors indicate that such
assets should be evaluated for possible impairment, we review whether we will be able to realize our intangible assets by analyzing the
projected undiscounted cash flows in measuring whether the asset is recoverable. If
an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value
of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. The
Company recognized an impairment loss on intangible assets amounted to $ 1,588 0 (l)
Impairment of Long-lived Assets Other Than Goodwill The
Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
assets may not be recoverable. Impairment may be the result of becoming obsolete from a change in the industry or new technologies. Impairment
is present if the carrying amount of an asset is less than its undiscounted cash flows to be generated. If
an asset is considered impaired, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value
of the asset. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. (m)
Goodwill Goodwill
represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. In
accordance with FASB ASC Topic 350, “Intangibles-Goodwill and Others”, goodwill is subject to at least an annual assessment
for impairment or more frequently if events or changes in circumstances indicate that an impairment may exist, applying a fair-value
based test. Fair value is generally determined using a discounted cash flow analysis. In
January 2017, the FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the
Test for Goodwill Impairment (ASU 2017-04), which eliminates step two from the goodwill impairment test. Under ASU 2017-04, an entity
should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds its fair value up to the
amount of goodwill allocated to that reporting unit. ASU 2017-04 is effective for annual and interim reporting periods beginning after
December 15, 2022 for smaller reporting companies. The Company has early adopted ASU 2017-04 on June 1, 2020. (n)
Fair Value of Financial Instruments The
Company accounts for financial instruments in accordance to ASC Topic 820, “Fair Value Measurements and Disclosures,” which
requires disclosure of the fair value of financial instruments held by the Company and ASC Topic 825, “Financial Instruments,”
which defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure
requirements for fair value measures. The carrying amounts reported in the condensed consolidated balance sheets for financial assets
and liabilities, which primarily consist of cash and cash equivalents, accounts receivable, prepayments and other current assets, accounts
payable, accrued liabilities, customer advances, are a reasonable estimate of their fair values because of the short period of time between
the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation
hierarchy are defined as follows: ●
Level 1 inputs to the valuation methodology are quoted prices 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 asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ●
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. (o)
Revenue Recognition In
accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic
606, Revenue from Contracts Under
Topic 606, revenues are recognized when the promised products have been confirmed of delivery or services have been transferred to the
consumers in amounts that reflect the consideration the customer expects to be entitled to in exchange for those services. The Company
presents value added taxes (“VAT”) as reductions of revenues. The Company recognizes revenues net of value added taxes (“VAT”)
and relevant charges. Product
Revenue We
generate revenue primarily from the sales of motor oil, auto parts and automobile exhaust cleaners directly to customers. We recognize
product revenue at a point in time when the control of the products has been transferred to customers. The transfer of control is considered
complete when products have been picked up by or shipped to our customers. Our sales arrangements for automobile exhaust cleaners and
auto parts usually require a full prepayment before the delivery of products. We
also generate revenue from the sales of auto parts directly to the customers, such as a business or individual engaged in auto parts
businesses. We recognize revenue at a point in time when products are delivered and customer acceptance is made. For the sales arrangements
of auto parts products, we generally require payment upon issuance of invoices. Service
Revenue We
also generate revenue from brand name authorization fee and brand name management service under separate contracts. Revenue from brand
name authorization and management services include service fees for provision of brand name “teenage hero car” to our customers,
and provision of management service. Revenue from the maintenance service to the customers is recognized at a point in time when services
are provided. Revenue from the management service to the customer is recognized as the performance obligation is satisfied over time
over the contracting period. (p)
Sales and Distribution Expense Sales
and distribution expenses consist of payroll related costs, promotion expenses, transportation costs, conference expenses, office expenses,
travelling and entertainment expenses. (q)
General and Administrative Expenses General
and administrative expenses consist of payroll related costs, consultancy expenses, bad debts written off, intangible assets written
off, rental expenses, office expense, travelling and entertainment expenses. (r)
Operating Leases The
Company recognizes its leases in accordance with ASC 842 - Leases. Under ASC 842, operating lease right-of-use (“ROU”) assets
and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. ROU assets represent
our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising
from the lease. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s
incremental borrowing rate, on a secured basis. The lease term includes option renewal periods and early termination payments when it
is reasonably certain that the Company will exercise those rights. The initial measurement of the ROU asset is equal to the initial lease
liability plus any initial direct costs and prepayments, less any lease incentives. The Company elected the short-term lease exemption
for contracts with lease terms of 12 months or less. The Company accounts for the lease and non-lease components of its leases as a single
lease component. Lease expense is recognized on a straight-line basis over the lease term. (s)
Value-added Taxes Revenue
is recognized net of value-added taxes (“VAT”). The VAT is based on gross sales price and VAT rates applicable to the Company
is 17% for the period from the beginning of 2018 till the end of April 2018, then changed to 16% from May 2018 to the end of March 2019,
and changed to 13% from April 2019. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers
against their output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded as VAT payable if output VAT is larger
than input VAT and is recorded as VAT recoverables if input VAT is larger than output VAT. All of the VAT returns filed by the Company’s
subsidiaries in China, have been and remain subject to examination by the tax authorities. (t)
Income Taxes The
Company followed the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes, or ASC 740. 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
recorded a valuation allowance to offset 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 rate is recognized
in tax expense in the period that includes the enactment date of the change in tax rate. The
Company accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties related to unrecognized tax benefit
recognized in accordance with ASC 740 are classified in the consolidated statements of comprehensive loss as income tax expense. (u)
Employee Benefit Expenses As
stipulated by the regulations of the PRC, full-time employees of the Company are entitled to various government statutory employee benefit
plans, including medical insurance, maternity insurance, workplace injury insurance, unemployment insurance and pension benefits through
a PRC government-mandated multi-employer defined contribution plan. The Company is required to make contributions to the plan and accrues
for these benefits based on certain percentages of the qualified employees’ salaries. (v)
Comprehensive Income (Loss) Comprehensive
income (loss) is defined as the changes in equity of the Company during a period from transactions and other events and circumstances
excluding transactions resulting from investments by owners and distributions to owners. Among other disclosures, ASC 220, Comprehensive
Income, requires that all items that are required to be recognized under current accounting standards as components of comprehensive
income be reported in a financial statement that is displayed with the same prominence as other financial statements. For each of the
periods presented, the Company’s comprehensive income (loss) includes net loss and foreign currency translation adjustment and
is presented in the consolidated statements of operations and comprehensive income (loss). (w)
Earnings Per Share The
Company computes earnings per share (“EPS”) in accordance with ASC Topic 260, “Earnings per share”. Basic EPS
is measured as the income or loss available to common shareholders divided by the weighted average common shares outstanding for the
period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential common shares (e.g., convertible
securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later.
Potential common shares that have an anti-dilutive effect (i.e. those that increase income per share or decrease loss per share) are
excluded from the calculation of diluted EPS. (x)
Segment Reporting The
Company reports each material operating segment in accordance with ASC 280, “Segment Reporting”. Operating segments are defined
as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker
is the chief executive officer. The Company has determined that it has only one (y)
Recently Issued Accounting Standards During
the period ended August 31, 2024, there have been no new, or existing, recently issued accounting pronouncements that are of significance,
or potential significance, that impact the Company’s consolidated financial statements. |
