UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 under the
Securities Exchange Act of 1934
For the month of September 2023
Commission
File Number:
(Translation of registrant’s name into English)
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): _____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): _____
HUAHUI EDUCATION GROUP LIMITED
Explanatory Note
The following exhibits are submitted:
| 99.1 | Condensed Consolidated Financial Statements of Huahui Education Group Limited as of June 30, 2023 |
| 99.2 | Operating and Financial Review and Prospects |
SIGNATURE
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.
September 27, 2023
| Huahui Education Group Limited (Registrant) | |
| /s/ Shufang Zeng | |
Shufang Zeng | |
| Chief Executive Officer and President |
Exhibit 99.1
HUAHUI EDUCATION GROUP LIMITED
INTERIM CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2023
U.S. DOLLARS IN THOUSANDS
UNAUDITED
INDEX
| 1 |
HUAHUI EDUCATION GROUP LIMITED
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(In U.S. Dollars, except share data or otherwise stated)
| June 30, 2023 | December 31, 2022 | |||||||
| Unaudited | Audited | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | ||||||||
| Account receivable | ||||||||
| Other receivable | ||||||||
| Related party receivable | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets: | ||||||||
| Leasehold improvements and equipment, net | ||||||||
| Operating lease right-of-use assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | ||||||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities: | ||||||||
| Deferred revenue | ||||||||
| Accounts payable, other payables and accruals | ||||||||
| Short-term bank borrowings | ||||||||
| Current operating lease liabilities | ||||||||
| Amount due to related parties | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities: | ||||||||
| Non-current operating lease liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Shareholders’ equity (deficit) | ||||||||
| Share capital ($ par value, shares issued and outstanding for the six months ended June 30, 2023 and the year ended December 31, 2022) | ||||||||
| Additional paid-in capital | ( | ) | ( | ) | ||||
| Foreign currency translation reserve | ||||||||
| Retained (loss) | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ||||||
| Total shareholders’ equity (deficit) | ( | ) | ( | ) | ||||
| Total liabilities and equity | ||||||||
The accompanying notes are an integral part of the financial statements.
| 2 |
HUAHUI EDUCATION GROUP LIMITED
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited)
(In U.S. Dollars, except share data or otherwise stated)
| For the six months ended | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Revenue | ||||||||
| Cost of revenue | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Selling and marketing expenses | ( | ) | ( | ) | ||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Operating loss | ( | ) | ( | ) | ||||
| Other income (expenses), net | ( | ) | ||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax (expenses) | ( | ) | ( | ) | ||||
| Net loss | ( | ) | ( | ) | ||||
| Foreign currency translation differences | ( | ) | ( | ) | ||||
| Total comprehensive loss for the period | ( | ) | ( | ) | ||||
| Owners of the Company | ( | ) | ( | ) | ||||
| Non-controlling interest | ( | ) | ||||||
| Basic and diluted loss per ordinary share | ) | ) | ||||||
| Weighted average number of shares outstanding-Basic and diluted | ||||||||
The accompanying notes are an integral part of the financial statements.
| 3 |
HUAHUI EDUCATION GROUP LIMITED
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (Unaudited)
(In U.S. Dollars)
| Share Capital | Capital Reserve | Foreign Currency Translation Reserve | Retained Earnings (Loss) | Non- controlling interest | Total Equity (Deficit) | |||||||||||||||||||
| Balance at January 1, 2022 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Loss for the year | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Foreign currency translation gain | ( | ) | ( | ) | ||||||||||||||||||||
| Balance at June 30, 2022 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Balance at January 1, 2023 (audited) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Income (loss)for the period | ( | ) | ( | ) | ||||||||||||||||||||
| Foreign currency translation loss | ( | ) | ( | ) | ||||||||||||||||||||
| Balance at June 30, 2023 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
The accompanying notes are an integral part of the financial statements.
| 4 |
HUAHUI EDUCATION GROUP LIMITED
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In U.S. Dollars)
| For the six months ended | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Adjustments for: | ||||||||
| Depreciation expense | ||||||||
| Changes in: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Other receivables | ( | ) | ||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other payables and accruals | ||||||||
| Deferred revenue | ( | ) | ||||||
| Net cash provided from (used in) operating activities | ( | ) | ||||||
| Cash flows from investing activities: | ||||||||
| Net cash used in investing activities | ||||||||
| Cash flows from financing activities: | ||||||||
| Proceeds from advances from related parties | ||||||||
| Repayment of advances to related parties | ( | ) | ||||||
| Proceeds from short-term borrowings | ||||||||
| Net cash provided by (used in)financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
| Net (decrease) in cash and cash equivalents | ( | ) | ( | ) | ||||
| Cash and cash equivalents at the beginning of period | ||||||||
| Cash and cash equivalents at the end of period | ||||||||
| Supplemental disclosure of non-cash investing and financing activities: | ||||||||
| Right-of-use assets obtained in exchange for operating lease obligations | ||||||||
The accompanying notes are an integral part of the financial statements.
| 5 |
HUAHUI EDUCATION GROUP LIMITED
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. DESCRIPTION OF BUSINESS
HUAHUI EDUCATION GROUP LIMITED, formerly DUONAS CORP. (“HHEG Nevada” or “the Nevada Company”) was incorporated in the State of Nevada on September 19, 2014 to start business operations concerned with production of decorative items made from concrete.Through October 22, 2017, the Nevada Company’s primary business activity was the production of decorative items made from concrete
A change of control took place on November 2, 2017 upon the sale of shares of Nevada Company common stock by Vladyslav Beinars to various investors. In connection with the transaction, Vladyslav Beinars released the Nevada Company from all debts owed. Subsequently, the Nevada Company’s operations were restructured by the new investor group. As such, at December 31, 2018, the Nevada Company accounted for the related assets, liabilities and results of operations up to October 22, 2017 as a discontinued operation.
On February 22, 2019, the Nevada Company completed the process of redomiciling to the Cayman Islands. The Board of Directors established a wholly owned subsidiary in the Cayman Islands named HUAHUI EDUCATION GROUP LIMITED (“HHEG Cayman” or the “Company”), and merged the Nevada Company into HHEG Cayman, with HHEG Cayman as the surviving company. There was no change in the number of outstanding shares of Common Stock of the Nevada Company and each share of such Common Stock was converted into one ordinary share of HHEG Cayman.
On July 2, 2019, the Company’s Board of Directors unanimously approved changing the Company’s accounting fiscal year end from June 30 to December 31.
On
July 3, 2019, HHEG Cayman closed on a share exchange (the “Share Exchange”) with HUAHUI GROUP STOCK LTD (“HGSL”),
a Seychelles company limited by shares, and HUAHUI GROUP (HK) CO., LTD (“HGHK”), a company with limited liability formed
under the laws of Hong Kong and a wholly owned subsidiary of HGSL. As a result, HGHK is now a wholly owned subsidiary of the Company.
Under the Share Exchange Agreement , the Company issued a total of of its ordinary shares to the HGSL shareholders in exchange
for
ZDSE was incorporated as a limited company in the Peoples’ Republic of China (the “PRC”) on January 19, 2016. ZDSE is a professional management coaching organization engaged in researching, developing and applying methods for helping individuals to improve their personal and professional leadership skills and effectiveness. ZDSE’s clients include executive managers from large scale, small and medium-sized enterprises, as well as professionals and employees in various fields.
Zhongdehui (Shenyang) Education Consulting Co., Limited (“SYZDH”) was established on December 29, 2020 and Zhongdehui (Guangzhou) Education Consulting Co., Limited (“GZZDH”) was established on December 28, 2020. SYZDH has taken over the business of ZDSE’s Shenyang branch and GZZDH has taken over the business of ZDSE’s Guangzhou branch. On February 26, 2021, ZDSE’s Shenzhen Branch established a wholly-owned subsidiary, Shenzhen Zhengxinhui Education Technology Co., Limited, which was sold to an unrelated third
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party on June 28, 2021. Zhongdehui (JiNan) Education Consulting Co., Limited (“JNZDH”) was established as of April 14, 2022, engaged in researching, developing and applying methods for helping individuals to improve their personal and professional leadership skills and effectiveness. ZDSE’s clients include executive managers from large scale, small and medium-sized enterprises, as well as professionals and employees in various fields Shenzhen Huahui Media Technology Co., Ltd. (“HHMT”) was established in August 25,2020. HHMT’s business includes cultural exchange event planning; conference planning; corporate image planning; marketing planning; exhibition planning; stage lighting, audio equipment, display equipment, and technology development and sales, leasing, and door-to-door integration of multimedia teaching systems installation, and on-site maintenance. HHMT has one wholly-owned subsidiary, Shenzhen Jiarui Media Co., Limited (“SJMC”), which was formed on June 4, 2021 under the laws of the PRC. SJMC’s principal business is essentially the same as that of HHMT, including cultural exchange event planning; conference planning; corporate image planning; marketing planning; exhibition planning; stage lighting, audio equipment, display equipment, and technology development and sales, leasing, and door-to-door integration of multimedia teaching systems installation, and on-site maintenance. In addition, Huahui (Shenzhen) Education Management Co., Limited (“HEMC”), which was established on March 28, 2017 and previously conducted only minor operations providing administrative services for the Company, commenced providing consulting services on November 1, 2020.
Huahui Jinming (Shenzhen) Education Technology Co., Limited (“JMET”) was incorporated in the PRC on July 8, 2020 as a wholly owned subsidiary of HSEC. JEMT started operation in June 2022, holding training courses for individuals and enterprises to improve their professional and management skills
Shandong Yuli Big Data Technology Co., Limited (“SDYL”) was incorporated in the PRC on December 14, 2021, and is an 80% owned subsidiary of HSEC. Twenty percent of SDYL’s shares are owned by SYDL’s Legal Representative, Xinwen Yang. SDYL’s business model of “HR Technology + Platform + Service” utilizes human resources (“HR”) technology to build a HR platform that will provide payroll, personnel recruitment, labor dispatch, flexible employment, fiscal and tax planning and legal HR consultation through a mobile app and SDYL’s website. SDYL started operation in May 2022.
As of June 30, 2023, the Company’s subsidiaries are as follows:
| Entity | Date of incorporation | Date of acquisition | Place of incorporation | Percentage of legal ownership by the Company | Principal activities | |||||
| Huahui Group Stock Limited (“HGSL”) | N/A | % | ||||||||
| Huahui Group Co., Limited (“HGCL”) | N/A | % | ||||||||
| Huahui Group (HK) Co., Limited (“HGHK”) | % | |||||||||
| Huahui (Shenzhen) Education Management Co., Limited (“HEMC”) | % | |||||||||
| Shenzhen Huahui Shangxing Education Consulting Co., Limited (“HSEC”) | % | |||||||||
| Zhongdehui (Shenzhen) Education Development Co., Limited (“ZDSE”) | % | |||||||||
| Huahui Technology (HK) Co., Limited (“HTHK”) | N/A | % | ||||||||
| Huahui (Shenzhen) Education Technology Co., Ltd (“HETC”) | N/A | % | ||||||||
| Huahui Jinming (Shenzhen) Education Technology Co., Limited (“JMET”) | N/A | % | ||||||||
| Shenzhen Huahui Media Technology Co., Ltd.(“HHMT”) | N/A | % | ||||||||
| Zhongdehui (Guangzhou) Education Consulting Co., Limited (“GZZDH”) | N/A | % | ||||||||
| Zhongdehui (Shenyang) Education Consulting Co., Limited (“SYZDH”) | N/A | % | ||||||||
| Shenzhen Jiarui Media Co., Limited(SJMC) | N/A | % | ||||||||
| Shangdong Yuli Big Data Technology Co., Limited (SDYL) | N/A | % | ||||||||
| Zhongdehui (JiNan) Education Consulting Co., Limited (“JNZDH”) | N/A | % |
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The accompanying financial statements include the balances and results of operations of the Company and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchanges Commission (“SEC”) and in conformity with generally accepted accounting principles in the U.S. (“US GAAP”).
(b) Going Concern
The
Company incurred a net loss of $
The ability to continue as a going concern is dependent upon the Company generating profits in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on the Company’s ability to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, if at all. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The
Company expects to finance operations primarily through cash flows from operations and capital contributions from its CEO. During
the first six months of 2023, the CEO has provided $
| 8 |
(c) Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. Subsidiaries are all entities over which the Company has control. Control exists when the Company has the power over the entity, exposure or rights to variable returns from involvement in the entity, and the ability to use power over the entity to affect returns through its power over the entity. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
(d) Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent liabilities at the balance sheet date and revenue and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Company’s financial statements include the valuation allowance for deferred tax assets, economic lives and impairment of leasehold improvements and equipment, allowance for doubtful accounts, etc. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.
(e) Business combinations
Business combinations are recorded using the acquisition method of accounting. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred .
(f) Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. All cash and cash equivalents relate to cash on hand and cash at a bank at June 30, 2023 and 2022.
The Renminbi is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Company is permitted to exchange Renminbi for foreign currencies through banks that are authorized to conduct foreign exchange business.
(g) Leasehold Improvement and Equipment
An item of leasehold improvement and equipment is stated at cost less any accumulated depreciation and any accumulated allowance for decrease in value (if any).
The cost of leasehold improvements and equipment consists of its purchase price, import duties and non-refundable purchase taxes (after deducting trade discounts and rebates) and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. These can include the initial estimate of costs of dismantling and removing the item, and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period.
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The cost of replacing part of a leasehold improvement and equipment is included in the carrying amount of the asset when it is probable that future economic benefits will flow to the Company and the carrying amount of those replaced parts is derecognized. Repairs and maintenance are charged to the statement of income during the financial period in which they are incurred.
Depreciation is calculated on the straight-line basis to write off the cost of each asset to its residual value over the estimated useful life as follows:
| Leasehold improvement | |
| Furniture and education equipment | |
| Computer equipment and software |
The assets’ residual value, useful lives and depreciation method are regularly reviewed.
(h) Impairment of long-lived assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. Whenever there is an indication showing a permanent decrease in the amount of leasehold improvement and equipment, such as an evidence of obsolescence or physical damage of an asset or significant changes in the manner in which an asset is used or is expected to be used, the Company shall recognize loss on decrease in value of leasehold improvement and equipment in the statement of income where the carrying amount of the asset is higher than the recoverable amount. The Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets. The Company did not record any impairment losses on long-lived assets during the six months ended June 30, 2023 and 2022.
(i) Value added tax (“VAT”)
Since
May 1, 2016, all taxpayers, including ZDSE, are subject to value-added tax (“VAT”) instead of business tax.
To
support the novel coronavirus pneumonia prevention and control and accelerate the resumption of work, the VAT rate for small-scale taxpayers
having monthly sales of in excess of RMB
According
to the Announcement No.1 of Taxation Bureau of Ministry of Finance in 2023, which specifies reduction and exemption of value-added tax
(VAT) for small-scale VAT taxpayers, from Jan. 1st to Dec. 31st, 2023, the small-scale taxpayers with monthly sales of below
Currently,
of all the operating subsidiaries of the Company, with the exception of SDYL and HEMC, which are general taxpayers and subject to a VAT
rate of
| 10 |
(j) Income Recognition
Recognition of Revenue
Revenue is reported net of business taxes and VAT. The Company’s educational services consist of training programs and courses. Tuition is generally paid in advance and is initially recorded as deferred revenue. Revenue is recognized proportionately as the instruction is delivered over the period of the course for the course fees collected.
The primary sources of our revenues are as follows:
| (a) | Coaching course service revenue |
Revenue
is reported net of business taxes and VAT. The educational services consist of training programs and courses. Tuition is generally paid
in advance and is initially recorded as deferred revenue. The Company had $
| (b) | Conference and exhibition
planning service revenue was derived from HHMT which was established on August 25, 2020. HHMT has one wholly-owned subsidiary, Shenzhen
Jiarui Media Co., Limited (“SJMC”). Conference and exhibition planning service revenue for the six months ended June
30,2023 and 2022 was $ |
Revenue is generated through the delivery of services . Revenue is recognized when a customer receives services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those services. The Company applies the following five-step model in order to determine this amount:
| (i) | identification of the services in the contract; | |
| (ii) | determination of whether the services are performance obligations, including whether they are distinct in the context of the contract; | |
| (iii) | measurement of the transaction price, including the constraint on variable consideration; | |
| (iv) | allocation of the transaction price to the performance obligations; and | |
| (v) | recognition of revenue when (or as) the Company satisfies each performance obligation. |
The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers as services are performed over the remaining contractual terms.
For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all service revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.
| (c) | Consulting
service income is recognized when the services are rendered. The consulting service fee revenue in the first half of 2023 was $ |
| 11 |
| (d) | Human
resources outsourcing service income is recognized when the services are rendered, SDYL commenced business operations in May 2022.The
revenue from human resource outsourcing service fees in the first half of 2023 was $ |
Other Income and other expenses
Other income, and other expenses are recognized on an accrual basis in accordance with the substance of the relevant agreements.
(k) Operating leases
The Company determines if an arrangement contains a lease at inception. The Company elected the practical expedient, for all asset classes, to account for each lease component of a contract and its associated non-lease components as a single lease component, rather than allocating a standalone value to each component of a lease. For purposes of calculating operating lease obligations under the standard, the Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such option. The Company’s leases do not contain material residual value guarantees or material restrictive covenants. Operating lease expense is recognized on a straight-line basis over the lease terms. The discount rate used to measure a lease obligation is usually the rate implicit in the lease; however, the Company’s operating leases generally do not provide an implicit rate. Accordingly, the Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments. The incremental borrowing rate is an entity-specific rate which represents the rate of interest a lessee would pay to borrow on a collateralized basis over a similar term with similar payments.
The Company reports earnings per share in accordance with ASC 260 “Earnings Per Share,” which requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the reporting period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. Further, if the number of common shares outstanding increases as a result of a stock dividend or stock split or decreases as a result of a reverse stock split, the computations of a basic and diluted earnings per share shall be adjusted retrospectively for all periods presented to reflect that change in capital structure.
The Company’s basic earnings per share is computed by dividing the net income available to holders by the weighted average number of the Company’s ordinary shares outstanding. Diluted earnings per share reflects the amount of net income available to each ordinary share outstanding during the period plus the number of additional shares that would have been outstanding if potentially dilutive securities had been issued. The Company had no potentially dilutive ordinary shares as of June 30, 2022 and 2023.
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(m) Foreign Currency Translation
The Company’s reporting currency is the U.S. dollar and the functional currency is the Chinese Renminbi (“RMB”). All assets and liabilities are translated at exchange rates at the balance sheet date, revenue and expenses are translated at the average yearly exchange rates and equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of equity.
Transactions in currencies other than the functional currencies during the year are converted into the applicable functional currencies at the applicable rates of exchange prevailing at the dates of the transactions. Exchange gains and losses are recognized in the statements of operations.
The exchange rates utilized as follows:
| H1 2023 | H12022 | |||||||
| Year-end RMB exchange rate | ||||||||
| Average annual RMB exchange rate | ||||||||
No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
(n) Foreign Currency Risk
The
RMB is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank
of China, controls the conversion of the RMB into other currencies. The value of the RMB is subject to changes in central government
policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System
market.
(o) Fair Value
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when valuing the asset or liability. Authoritative literature provides a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
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Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
(p) Fair Value of financial instruments
The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, other receivables, amount due to related parties and accounts payable. The carrying amounts of cash and cash equivalents, accounts receivable, other receivables, amount due to related parties and accounts payable approximate their fair values due to the short-term maturities of these instruments.
(q) Income Taxes
Income tax expense consists of current and deferred taxation and is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized directly in other comprehensive income or equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable with respect to previous periods.
The Company accounts for income taxes using the asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax basis of assets and liabilities, net of operating loss carry forwards and credits, by applying enacted tax rates that will be in effect for the period in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in the statements of operations in the period of change.
The Company accounts for uncertain tax positions by reporting a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. Tax benefits are recognized from uncertain tax positions when the Company believes that it is more likely than not that the tax position will be sustained on examination by the tax authorities based on the technical merits of the position. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expenses. The Company did not record uncertain tax positions as of June 30, 2023 and December 31, 2022 as the amounts were immaterial.
(r) Comprehensive income
Comprehensive income includes net income and foreign currency translation adjustments. Comprehensive income is reported in the statements of comprehensive income.
(s) Concentration of credit risk
Financial instruments that potentially expose the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivables and other receivables.
As of June 30, 2023, substantially all of the Company’s cash and cash equivalents were deposited with financial institutions with high-credit ratings and quality.
Accounts Receivable represent tuition fees of ZDH and the planning service fees of HHMT and SJMC due from customers that typically are collected within a short period of time. Other receivables mainly represent short-term loans to other companies with interest charged, rental and utilities deposit. Management believes it has no significant risk related to its concentration within its accounts receivable.
The
Company did not have any customers that accounted for
| 14 |
(t) Impact of Covid-19
For
the last three years, the outbreak of Covid-19 pandemic continued in China. Although the epidemic prevention policy of China was open
since the end of December in 2022, China’s economy has not completely recovered and in the first half of 2023, the Company’s
(u) Share Capital
Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity.
(v) Recent accounting pronouncements
Recently issued accounting pronouncements not yet adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements. This ASU requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. This Accounting Standards Update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables and any other financial assets not excluded from the scope that have the contractual rights to receive cash. For public business entities, the amendments in this Update are effective for fiscal years beginning after January 1, 2023, including interim periods within those fiscal years. All entities may adopt the amendments in this Accounting Standards Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The Company is in the process of evaluating the impact of the adoption of this pronouncement on its consolidated financial statements.
The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s financial statements.
3. LEASEHOLD IMPROVEMENT AND EQUIPMENT, NET
| June 30, 2023 | December 31,2022 | |||||||
| Furniture and education equipment | $ | $ | ||||||
| Computer equipment and software | ||||||||
| Leasehold improvements | ||||||||
| $ | $ | |||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| $ | $ | |||||||
Depreciation
expense for the six months ended June 30, 2023 and 2022 was $
4. ACCOUNTS RECEIVABLE
The accounts receivable and allowance balances at June 30, 2023 and December 31, 2022 are as follows:
| June 30, 2023 | December 31, 2022 | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for doubtful accounts | ||||||||
| Accounts receivable, net | $ | $ | ||||||
No allowance for doubtful accounts was made during the six months ended June 30, 2023 and the year ended December 31, 2022.
5. OTHER RECEIVABLES
Other receivables mainly consist of a short-term loan to a third party, Dongguan Anxiang Technology Co., Ltd. and rental and utilities deposits paid for the Guangzhou and Liaoning office which are fully refundable.
| 15 |
6. ACCOUNTS PAYABLE, OTHER PAYABLES AND ACCRUALS
| June 30, 2023 | December 31, 2022 | |||||||
| Accounts payable (a) | $ | $ | ||||||
| Accrued payroll and welfare payable | ||||||||
| VAT and other taxes payable | ||||||||
| Others (b) | ||||||||
| $ | $ | |||||||
| (a) | ||
| (b) |
7. SHORT-TERM BANK BORROWINGS
On
January 10, 2023, we borrowed $
8. INCOME TAXES
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to income, corporate or capital gains tax, and the Cayman Islands currently have no form of estate duty, inheritance tax or gift tax. In addition, payments of dividends and capital in respect of its shares are not subject to taxation and no withholding will be required in the Cayman Islands on the payment of any dividend or capital to any holder of its shares, nor will gains derived from the disposal of its shares be subject to Cayman Islands income or corporation tax. No provision for income taxes in the Cayman Islands has been made as the Company had no taxable income for the six months ended June 30, 2023 and 2022.
Seychelles
HGSL and HGCL are tax-exempted companies incorporated in Seychelles. Under the current laws of Seychelles, the Company and HGCL are not subject to income, corporate or capital gains tax, and Seychelles currently have no form of estate duty, inheritance tax or gift tax. In addition, payments of dividends and capital in respect of their shares are not subject to taxation and no withholding will be required in the Seychelles on the payment of any dividend or capital to any holder of their shares, nor will gains derived from the disposal of their shares be subject to Seychelles income or corporation tax. No provision for income taxes in Seychelles has been made as the Company and HGCL had no taxable income for the six months ended June 30, 2023 and 2022.
| 16 |
Hong Kong
HGHK
is incorporated in Hong Kong and is subject to an income tax rate of
PRC
The
Company’s PRC subsidiaries are subject to a
ZDSE,
HHMT and SJMC enjoyed a preferential tax rate of
Income tax expense (benefit)
| For the six months ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Current tax expense | $ | $ | ||||||
| Deferred tax expense | ||||||||
| $ | $ | |||||||
Income
taxes of ZDSE, HHMT, SJMC and JEMT are accrued at the tax rate of
| For the six months ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Loss before tax | $ | ( | ) | $ | ( | ) | ||
| Tax (credit) calculated at statutory tax rate ( | ( | ) | ( | ) | ||||
| Valuation allowance | ||||||||
| $ | $ | |||||||
The Company’s other subsidiaries have not recognized deferred income tax assets as of June 30, 2023 and December 31, 2022.
9. LEASES
The adoption of the new lease guidance did not have a material impact on the Company’s results of operations or liquidity but resulted in the recognition of operating lease liabilities and operating lease right-of-use assets on its balance sheets. Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.
The
Company leases various training centers in the PRC. Rent expense for the six months ended June 30, 2023 was $
| 17 |
Significant assumptions and judgments made as part of the adoption of this new lease standard include determining: (i) whether a contract contains a lease, (ii) whether a contract involves an identified asset, and (iii) which party to the contract directs the use of the asset. The discount rates used to calculate the present value of lease payments were determined based on hypothetical borrowing rates available to the Company over terms similar to the lease terms.
The Company’s future minimum payments under long-term non-cancelable operating leases are as follows:
| As of June 30, 2023 | As of December 31, 2022 | |||||||
| Within 1 year | ||||||||
| After 1 year but within 5 years | ||||||||
| Total lease payments | ||||||||
| Less: imputed interest | ( | ) | ( | ) | ||||
| Total lease obligations | ||||||||
| Less: current obligations | ( | ) | ( | ) | ||||
| Long-term lease obligations | ||||||||
Other information:
| For the six months ended | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flow from operating lease | ||||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | ||||||||
| Remaining lease term for operating leases (years) | ||||||||
| Weighted average discounted rate for operating leases | % | % | ||||||
10. RELATED PARTY TRANSACTIONS
(a) The Company had the following balances due to related parties:
| Relationship | June 30, 2023 | December 31, 2022 | ||||||||
| Junze Zhang | $ | $ | ||||||||
| Xinwen Yang | ||||||||||
| Qing Zuo | ||||||||||
| Total | $ | $ | ||||||||
The balances represent cash advances from related parties.
The balances with related parties are unsecured, non-interest bearing and repayable on demand.
| 18 |
| (b) | Transactions |
| For the six months ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Cash advance from related parties | ||||||||
| Qing Zuo | $ | $ | ||||||
| Junze Zhang | ||||||||
| Xinwen Yang | ||||||||
| $ | $ | |||||||
| (c) | The Company had the following balances due to and due from related parties: |
At June 30, 2023 and June 30, 2022, the Company lent funds to the following related parties. These loans were unsecured, non-interest bearing and repayable on demand.
| For the six months ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| Songlin Zhu(1) | $ | $ | ||||||
| Zheng Pei(2) | ||||||||
| Xinwen Yang(3) | ||||||||
| $ | $ | |||||||
| (1) | ||
| (2) | ||
| (3) |
11. RESERVES
| (a) | Legal reserve |
| (b) | Currency translation reserve |
The currency translation reserve represents translation differences arising from translation of foreign currency financial statements into the Company’s reporting currency.
| 19 |
Exhibit 99.2
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis of the consolidated results of operations of Huahui Education Group Limited .and its subsidiaries (the “Company”) for the six months ended June 30, 2023 and 2022 and the consolidated financial condition as of June 30, 2023 should be read in conjunction with the Company’s consolidated financial statements and the notes to those financial statements that are included in this Report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could” and similar expressions to identify forward-looking statements. For purposes of the following discussion and analysis, references to ‘‘we,’’ ‘‘our’’ and ‘‘us’’ refers to the Company or ZDSE, as appropriate.
OVERVIEW
We are a holding company incorporated in the Cayman Islands with no material operations of our own. As a holding company, we conduct operations in China through our operating subsidiaries, Zhongdehui (Shenzhen) Education Development Co., Limited (“ZDSE”), Shenzhen Huahui Media Technology Co., Limited (“HHMT”) and Huahui (Shenzhen) Education Management Co., Limited (“HEMC”), all of which are incorporated in the PRC. Huahui Jinming (Shenzhen) Education Technology Co., Limited (“JMET”) was incorporated in the PRC on July 8, 2020 as a wholly owned subsidiary of HSEC. JEMT started operations in June 2022, holding training courses for individuals and enterprises to improve their professional and management skills.Shandong Yuli Big Data Technology Co., Limited (“SDYL”) was incorporated in the PRC on December 14, 2021, and is an 80% owned subsidiary of HSEC; 20% of SDYL’s shares are owned by the corporate representative Xinwen Yang. SDYL’s business model of “HR Technology + Platform + Service” utilizes HR technology to build an HR platform that will provide payroll, personnel recruitment, labor dispatch, flexible employment, fiscal and tax planning and legal HR consultation through a mobile app and SDYL’s website. SDYL started operations in May 2022. ZDSE, HHMT, HEMC, JMET and SYDL are our “Operating Subsidiaries.”
ZDSE, the Company’s primary operating subsidiary, is engaged in the business of professional management coaching, including researching, developing and applying methods for helping individuals to improve their personal and professional leadership skills and effectiveness. ZDSE’s clients consist of executive managers from large scale, small and medium-sized enterprises, as well as professionals and employees in various fields.
ZDSE has developed “The Way of Management” program with ten modules and additional modules will be developed in the future. The current ten modules comprise the experiential course, of which 60% is comprised of scenario exercises, 20% of group interactions and 20% of specified topics. ZDSE also monitors the performance and the changes and development of clients in their workplaces. ZDSE’s coaches provide guidance and support to the Company’s clients both during completion of the modules and during the provision of post-completion services.
Financial Highlights for the Six Months Ended June 30, 2023
| ● | Net revenues increased by 64% to $264,838 compared with $412,653 for the first half of fiscal year 2022. |
| ● | Operating loss was $28,604 compared with an operating loss of $306,388 in the same period of 2022. |
| ● | Net loss was $42,489 compared with a net loss of $315,159 in the same period of 2022. |
| ● | Cash used in operating activities was $48,033, compared with $246,908 used in operating activities in the same period of 2022. |
| ● | Number of trainees increased by 8% to 219 compared with 202 in the first half of fiscal year 2022. |
Going Concern
The accompanying unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the discharge of liabilities in the normal course of business for the foreseeable future.
The Company incurred a net loss of $42,489 for the six months ended June 30, 2023. Net cash used in operating activities was $48,033 for the six months ended June 30, 2023. As of June 30, 2023, the Company had net current liabilities of $703,705 and a shareholders’ deficit of $485,101.
The ability to continue as a going concern is dependent upon the Company generating profits in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on the Company’s ability to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, if at all. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company expects to finance operations primarily through cash flows from revenues and capital contributions from its CEO. During 2023, the CEO has provided $232,304 in financial support for the operations of the Company. In the event that the Company requires additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, the CEO has indicated the intent and ability to provide additional equity financing.
Impact from COVID-19
Since the beginning of Jan. 2020, the outbreak of Covid-19 pandemic has impacted many countries and regions. During the pandemic period, China’s economy suffered from closures.. Although China’s pandemic prevention policy was open in January 2023, and all of HHEG’s subsidiaries have restored normal operation, HHEG’s revenues were severely impacted in the first half of 2023, due to the effects of the Covid-19 pandemic.
Explanation of Key Income Statement Items
Revenues
Revenue is reported net of business taxes and VAT.
The primary sources of our revenues are as follows:
| (a) | Coach course service revenue |
The Company’s educational services consist of training programs and courses. Tuition is generally paid in advance and is initially recorded as deferred revenue. Revenue is recognized proportionately as the instruction is delivered over the period of the course for the course fees collected. The educational services consist of training programs and The Company had $194,357 and $178,976 of deferred revenue as of June 30, 2023 and 2022, respectively, which will be recognized as revenue within the next six months..
| (b) | Conference and exhibition planning service revenue was derived from HHMT and its wholly-owned subsidiary, Shenzhen Jiarui Media Co., Limited (“SJMC”). Conference and exhibition planning service revenue as of June 30, 2023 and 2022 was $288,285 and $96,686, respectively. For the six month ended June 30, 2023, the revenue from conference and exhibition planning services was $288,285, accounting for 43% of our total revenue. For the six month ended June 30, 2022, the revenue from exhibition planning and conference services was $96,686, accounting for 23% of the total revenue. |
Revenue is generated through the delivery of services. Revenue is recognized when a customer receives services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those services. The Company applies the following five-step model in order to determine this amount:
| (i) | identification of the services in the contract; |
| (ii) | determination of whether the services are performance obligations, including whether they are distinct in the context of the contract; | |
| (iii) | measurement of the transaction price, including the constraint on variable consideration; | |
| (iv) | allocation of the transaction price to the performance obligations; and | |
| (v) | recognition of revenue when (or as) the Company satisfies each performance obligation. |
The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers as services are performed over the remaining contractual terms.
For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all service revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.
| (c) | Consulting service income is recognized when the services rendered.The consulting service fee revenue in the first half of 2023 was $1,499, accounting for only 0.22% of the total revenue. The consulting service fee revenue in the first half of 2022 was $18,248, accounting for only 4% of the total revenue. |
| (d) | Human resources outsourcing service income is recognized when the services rendered.The revenue from human resource outsourcing service fees in the first half of 2023 was $197,913, accounting for 29% of the total revenue. The revenue from human resource outsourcing service fees in the first half of 2022 was $24.63, accounting for 0.006% of the total revenue. |
Other income and other expenses
Other income, and other expenses are recognized on an accrual basis in accordance with the substance of the relevant agreements.
Costs and Operating Expenses
Cost of revenue mainly includes salaries of employees participating in ZDSE training, consulting services fees, travel expenses paid to trainers, rental fees for the HHMT equipment and other expenses.
Our selling and marketing expenses consist primarily of salaries paid to sales staff, travel expenses and other expenses Our general and administrative expenses consist primarily of salaries and related costs, allocated overhead costs, office supplies and administrative costs, bad debts, fees and expenses of our directors, depreciation, and professional service fees, including legal, insurance , audit fees, and Rental expenses.
Our revenues and income (loss) may fluctuate substantially from quarter to quarter, and we believe that comparisons over longer periods of time may be more meaningful. The nature of certain of our expenses is mainly fixed or partially fixed and any fluctuation in revenues will generate a significant variation in gross profit and net income (loss).
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our financial statements in conformity with U.S. GAAP, which requires management to make certain estimates and apply judgments. We base our estimates and judgments on historical experience, current trends and other factors that management believes to be important at the time the financial statements are prepared. On a regular basis, we review our accounting policies and how they are applied and disclosed in our consolidated financial statements. Actual results could differ from those estimates made by management.
Our significant accounting policies are described in note 2 to our consolidated financial statements.
RESULTS OF OPERATIONS - HUAHUI EDUCATION GROUP LIMITED
The following discussion should be read in conjunction with the consolidated financial statements of Huahui Education Group Limited included in this Report.
Financial and Operating Data
(In US$, except number of trainees and percentages)
| For the six months ended June 30, | ||||||||||||
| 2023 | 2022 | Pct. Change | ||||||||||
| Revenue | 677,491 | 412,653 | 64 | % | ||||||||
| Operating (loss) | (28,604 | ) | (306,388 | ) | 90 | % | ||||||
| Net (loss) | (42,489 | ) | (315,159 | ) | 86 | % | ||||||
| Number of trainees | 219 | 202 | 8 | % | ||||||||
For the Six Months Ended June 30, 2023 Compared to the Six Months Ended June 30, 2022
Revenue
Net revenue for the six months ended June 30, 2023 was $677,491 compared to $412,653 for the six months ended June 30, 2022, a increase of $264,838 or 64%.The significant increase was in HMTC exhibition planning service revenue, which increased by $191,599 compared to the first half of 2022, an increase of 198%. SDYL started operating in May 2022, so its revenue in the first half of 2022 was relatively small . In the first half of 2023, SDYL’s revenue from human resource outsourcing services was $197,913, accounting for 29% of the total revenue.
Cost of Revenue
Cost of revenue for the six months ended June 30, 2023 was $114,456 compared to $129,472 for the six months ended June 30, 2022, a decrease of $15,016, or 11%.
Our cost of revenues for the two periods were:
| For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Amount (US$) | % of Total | Amount (US$) | % of Total | |||||||||||||
| Depreciation and amortization | 755 | 1 | % | 802 | 1 | % | ||||||||||
| Salary and welfare | $ | 38,997 | 34 | % | $ | 65,015 | 50 | % | ||||||||
| Travel and accommodations | 7,944 | 7 | % | 6,272 | 5 | % | ||||||||||
| Equipment rental fee | 44,661 | 39 | % | 28,448 | 22 | % | ||||||||||
| Consulting service fee | 19,952 | 17 | % | 24,197 | 19 | % | ||||||||||
| Other | 2,147 | 2 | % | 4,738 | 3 | % | ||||||||||
| Total | $ | 114,456 | 100 | % | $ | 129,472 | 100 | % | ||||||||
Operating Expenses
Selling and marketing expenses for the six months ended June 30, 2023 were $4,193 compared to $3,886 for the same period of 2022, an increase of $307 or 7%.
General and administrative expenses for the six months ended June 30, 2023 were $587,446 compared to $585,683 for the same period of 2022, an increase of $1,763, or 0.3%. The decrease in general and administrative expenses is primarily due to decreases in rental expenses and others. The following table sets forth the main components of our general and administrative expenses for the six-month periods ended June 30, 2023 and 2022:
| For the six months ended June 30, | ||||||||||||||||
| 2023 | 2022 | |||||||||||||||
| Amount (US$) | % of Total | Amount (US$) | % of Total | |||||||||||||
| General and administrative expense: | ||||||||||||||||
| Salary and welfare | $ | 324,988 | 55 | % | $ | 264,985 | 45 | % | ||||||||
| Depreciation and amortization | 3,287 | 1 | % | 10,531 | 2 | % | ||||||||||
| Travel and accommodations | 24,067 | 4 | % | 6,222 | 1 | % | ||||||||||
| Rental expenses | 151,777 | 25 | % | 225,515 | 39 | % | ||||||||||
| Office expenses | 20,743 | 4 | % | 29,937 | 5 | % | ||||||||||
| Legal and professional fees | 24,867 | 4 | % | 31,329 | 5 | % | ||||||||||
| Audit fee | 14,500 | 3 | % | 10,000 | 2 | % | ||||||||||
| Other | 23,217 | 4 | % | 7,164 | 1 | % | ||||||||||
| Total general and administrative expenses | $ | 587,446 | 100 | % | $ | 585,683 | 100 | % | ||||||||
Operating Loss
Operating loss for the first half of 2023 was $28,604 compared to a loss from operations of $306,388 in the first half of 2022.
Net Loss
Net loss for the six months ended June 30, 2023 was $27,019 compared with a net loss of $315,159 for the same period of 2022.
Impact of Inflation and Currency Fluctuations
Impact of Inflation
Our business has not been impacted by currency fluctuations.
Impact of Foreign Currency Fluctuations
In the six months ended June 30, 2023 the value of the RMB depreciated in relation to the U.S. dollar by approximately 5%. The continuous fluctuation of the exchange rates between the U.S. dollar and the RMB has no direct impact on the Company’s revenue.
We will continue to monitor exposure to currency fluctuations. We have not engaged in any currency hedging activities in order to reduce our exposure to currency fluctuations.
Liquidity and Capital Resources
Since our inception, our financing requirements have been met through cash advanced from our shareholders, who have lent the Company an aggregate of $922,919 as of June 30, 2023. During the six months ended June 30, 2029, our CEO provided $232,304 in financial support for the operations of the Company.
As of June 30, 2023, we had cash and cash equivalents of $37,306 compared to $84,487 as of December 31, 2022. We believe that our working capital is sufficient for our requirements over the next 12 months.
Cash Flows
The following table summarizes our cash flows for the periods presented
| For the six months ended June 30, | ||||||||
| 2023 | 2022 | |||||||
| (US$) | (US$) | |||||||
| Net cash provided by (used in) operating activities | 48,033 | (246,908 | ) | |||||
| Net cash used in investing activities | - | - | ||||||
| Net cash used in financing activities | (93,138 | ) | 190,230 | |||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (2,075 | ) | (7,560 | ) | ||||
| Net decrease in cash, cash equivalents and restricted cash | (47,181 | ) | (64,238 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of the period | 84,487 | 184,596 | ||||||
| Cash, cash equivalents and restricted cash at end of the period... | 37,306 | $ | 120,356 | |||||
Due to our improved operating results, during the six months ended June 30, 2023, $48,033 was used in operating activities compared to $246,908 used in operating activities during the six months ended June 30, 2022.
Nil was used in investing activities during the six months ended June 30, 2023 and 2022.
During the six months ended June 30, 2023, $93,138 was used in financing activities compared to $190,230 used in financing activities during the six months ended June 30, 2022. The net advances from related parties was $232,304 in the six months ended June 30, 2022 compared with $185,119 net repayments to related parties in the same period of 2022. As of June 30, 2023, we have borrowed $2,757 from China Construction Bank from January 10, 2023 to January 10, 2024, with a loan term of one year and an annualized interest rate of 4%. The loan is unsecured ..
The resulting change in cash for the six months ended June 30, 2023 was a decrease of $47,181. The cash and cash equivalents balance on January 1, 2022 was $84,487, and on June 30, 2023 it was $37,306.
Cover |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Cover [Abstract] | |
| Document Type | 6-K |
| Amendment Flag | false |
| Document Period End Date | Jun. 30, 2023 |
| Document Fiscal Period Focus | Q2 |
| Document Fiscal Year Focus | 2023 |
| Current Fiscal Year End Date | --12-31 |
| Entity File Number | 333-213314 |
| Entity Registrant Name | HUAHUI EDUCATION GROUP LIMITED |
| Entity Central Index Key | 0001680935 |
| Entity Address, Address Line One | 13th Floor, Building B1, Wisdom Plaza, |
| Entity Address, Address Line Two | Qiaoxiang Road, Nanshan District |
| Entity Address, Address Line Three | Shenzhen |
| Entity Address, City or Town | Guangdong Province |
| Entity Address, Country | CN |
| Entity Address, Postal Zip Code | 518000 |
Condensed Interim Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, par value | $ 0.0001 | $ 0.0001 |
| Common stock, shares issued | 302,734,900 | 302,734,900 |
| Common stock, shares outstanding | 302,734,900 | 302,734,900 |
Condensed Interim Consolidated Statements of Income (Loss) (Unaudited) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Income Statement [Abstract] | ||
| Revenue | $ 677,491 | $ 412,653 |
| Cost of revenue | (114,456) | (129,472) |
| Gross profit | 563,035 | 283,181 |
| Selling and marketing expenses | (4,193) | (3,886) |
| General and administrative expenses | (587,446) | (585,683) |
| Operating loss | (28,604) | (306,388) |
| Other income (expenses), net | 1,585 | (7,401) |
| Loss before income taxes | (27,019) | (313,789) |
| Income tax (expenses) | (15,470) | (1,370) |
| Net loss | (42,489) | (315,159) |
| Foreign currency translation differences | (7,269) | (11,223) |
| Total comprehensive loss for the period | (49,758) | (326,382) |
| Owners of the Company | (76,750) | (314,549) |
| Non-controlling interest | $ 34,261 | $ (610) |
| Basic loss per ordinary share | $ (0.00) | $ (0.00) |
| Diluted loss per ordinary share | $ (0.00) | $ (0.00) |
| Weighted average number of shares outstanding-Basic | 302,734,900 | 302,734,900 |
| Weighted average number of shares outstanding Diluted | 302,734,900 | 302,734,900 |
Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (Deficit) (Unaudited) - USD ($) |
Share Capital [Member] |
Capital Reserve [Member] |
Foreign Currency Translation Reserve [Member] |
Retained Earnings [Member] |
Noncontrolling Interest [Member] |
Total |
|---|---|---|---|---|---|---|
| Balance at Dec. 31, 2021 | $ 30,273 | $ (1,140) | $ 33,455 | $ (191,051) | $ (128,463) | |
| Income (loss)for the period | (314,549) | (610) | (315,159) | |||
| Foreign currency translation loss | (11,223) | (11,223) | ||||
| Balance at Jun. 30, 2022 | 30,273 | (1,140) | 22,232 | (505,600) | (610) | (454,845) |
| Balance at Dec. 31, 2022 | 30,273 | (1,140) | 9,851 | (472,503) | (1,824) | (435,343) |
| Income (loss)for the period | (76,750) | 34,261 | (42,489) | |||
| Foreign currency translation loss | (7,269) | (7,269) | ||||
| Balance at Jun. 30, 2023 | $ 30,273 | $ (1,140) | $ 2,582 | $ (549,253) | $ 32,437 | $ (485,101) |
DESCRIPTION OF BUSINESS |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DESCRIPTION OF BUSINESS | 1. DESCRIPTION OF BUSINESS
HUAHUI EDUCATION GROUP LIMITED, formerly DUONAS CORP. (“HHEG Nevada” or “the Nevada Company”) was incorporated in the State of Nevada on September 19, 2014 to start business operations concerned with production of decorative items made from concrete.Through October 22, 2017, the Nevada Company’s primary business activity was the production of decorative items made from concrete
A change of control took place on November 2, 2017 upon the sale of shares of Nevada Company common stock by Vladyslav Beinars to various investors. In connection with the transaction, Vladyslav Beinars released the Nevada Company from all debts owed. Subsequently, the Nevada Company’s operations were restructured by the new investor group. As such, at December 31, 2018, the Nevada Company accounted for the related assets, liabilities and results of operations up to October 22, 2017 as a discontinued operation.
On February 22, 2019, the Nevada Company completed the process of redomiciling to the Cayman Islands. The Board of Directors established a wholly owned subsidiary in the Cayman Islands named HUAHUI EDUCATION GROUP LIMITED (“HHEG Cayman” or the “Company”), and merged the Nevada Company into HHEG Cayman, with HHEG Cayman as the surviving company. There was no change in the number of outstanding shares of Common Stock of the Nevada Company and each share of such Common Stock was converted into one ordinary share of HHEG Cayman.
On July 2, 2019, the Company’s Board of Directors unanimously approved changing the Company’s accounting fiscal year end from June 30 to December 31.
On July 3, 2019, HHEG Cayman closed on a share exchange (the “Share Exchange”) with HUAHUI GROUP STOCK LTD (“HGSL”), a Seychelles company limited by shares, and HUAHUI GROUP (HK) CO., LTD (“HGHK”), a company with limited liability formed under the laws of Hong Kong and a wholly owned subsidiary of HGSL. As a result, HGHK is now a wholly owned subsidiary of the Company. Under the Share Exchange Agreement , the Company issued a total of of its ordinary shares to the HGSL shareholders in exchange for 100% of the Common Stock of HGSL. After the closing, the HGSL shareholders owned approximately % of the Company’s outstanding shares and the former shareholders of the Company owned approximately %. Mr. Zihua Wu, the former sole officer and director of the Company, resigned from all positions with the Company immediately before the closing of the Share Exchange and Mr. Junze Zhang was appointed as the Company’s President, Chief Executive Officer, Chief Financial Officer and Secretary, as well as a director and Mr. Zhongpeng Chen was appointed a director of the Company. As a result of the Share Exchange, HGSL became a wholly owned subsidiary of the Company and ZHONGDEHUI (SZ) DEVELOPMENT CO., LTD (“ZDSE”), HGSL’s indirect, wholly-owned subsidiary, became the Company’s sole operational business. Consequently, the Company believes that the Share Exchange caused the Company to cease to be a shell company.
ZDSE was incorporated as a limited company in the Peoples’ Republic of China (the “PRC”) on January 19, 2016. ZDSE is a professional management coaching organization engaged in researching, developing and applying methods for helping individuals to improve their personal and professional leadership skills and effectiveness. ZDSE’s clients include executive managers from large scale, small and medium-sized enterprises, as well as professionals and employees in various fields.
Zhongdehui (Shenyang) Education Consulting Co., Limited (“SYZDH”) was established on December 29, 2020 and Zhongdehui (Guangzhou) Education Consulting Co., Limited (“GZZDH”) was established on December 28, 2020. SYZDH has taken over the business of ZDSE’s Shenyang branch and GZZDH has taken over the business of ZDSE’s Guangzhou branch. On February 26, 2021, ZDSE’s Shenzhen Branch established a wholly-owned subsidiary, Shenzhen Zhengxinhui Education Technology Co., Limited, which was sold to an unrelated third
party on June 28, 2021. Zhongdehui (JiNan) Education Consulting Co., Limited (“JNZDH”) was established as of April 14, 2022, engaged in researching, developing and applying methods for helping individuals to improve their personal and professional leadership skills and effectiveness. ZDSE’s clients include executive managers from large scale, small and medium-sized enterprises, as well as professionals and employees in various fields Shenzhen Huahui Media Technology Co., Ltd. (“HHMT”) was established in August 25,2020. HHMT’s business includes cultural exchange event planning; conference planning; corporate image planning; marketing planning; exhibition planning; stage lighting, audio equipment, display equipment, and technology development and sales, leasing, and door-to-door integration of multimedia teaching systems installation, and on-site maintenance. HHMT has one wholly-owned subsidiary, Shenzhen Jiarui Media Co., Limited (“SJMC”), which was formed on June 4, 2021 under the laws of the PRC. SJMC’s principal business is essentially the same as that of HHMT, including cultural exchange event planning; conference planning; corporate image planning; marketing planning; exhibition planning; stage lighting, audio equipment, display equipment, and technology development and sales, leasing, and door-to-door integration of multimedia teaching systems installation, and on-site maintenance. In addition, Huahui (Shenzhen) Education Management Co., Limited (“HEMC”), which was established on March 28, 2017 and previously conducted only minor operations providing administrative services for the Company, commenced providing consulting services on November 1, 2020.
Huahui Jinming (Shenzhen) Education Technology Co., Limited (“JMET”) was incorporated in the PRC on July 8, 2020 as a wholly owned subsidiary of HSEC. JEMT started operation in June 2022, holding training courses for individuals and enterprises to improve their professional and management skills
Shandong Yuli Big Data Technology Co., Limited (“SDYL”) was incorporated in the PRC on December 14, 2021, and is an 80% owned subsidiary of HSEC. Twenty percent of SDYL’s shares are owned by SYDL’s Legal Representative, Xinwen Yang. SDYL’s business model of “HR Technology + Platform + Service” utilizes human resources (“HR”) technology to build a HR platform that will provide payroll, personnel recruitment, labor dispatch, flexible employment, fiscal and tax planning and legal HR consultation through a mobile app and SDYL’s website. SDYL started operation in May 2022.
As of June 30, 2023, the Company’s subsidiaries are as follows:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The accompanying financial statements include the balances and results of operations of the Company and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchanges Commission (“SEC”) and in conformity with generally accepted accounting principles in the U.S. (“US GAAP”).
(b) Going Concern
The Company incurred a net loss of $42,489 for the six months ended June 30, 2023. Net cash used in operating activities was $48,033 for the six months ended June 30, 2023. As of June 30, 2023, the Company had net current liabilities of $703,705 and a shareholders’ deficit of $485,101.
The ability to continue as a going concern is dependent upon the Company generating profits in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on the Company’s ability to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, if at all. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company expects to finance operations primarily through cash flows from operations and capital contributions from its CEO. During the first six months of 2023, the CEO has provided $232,304 in financial support for the operations of the Company. In the event that the Company requires additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, the CEO has indicated the intent and ability to provide additional equity financing.
(c) Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. Subsidiaries are all entities over which the Company has control. Control exists when the Company has the power over the entity, exposure or rights to variable returns from involvement in the entity, and the ability to use power over the entity to affect returns through its power over the entity. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
(d) Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent liabilities at the balance sheet date and revenue and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Company’s financial statements include the valuation allowance for deferred tax assets, economic lives and impairment of leasehold improvements and equipment, allowance for doubtful accounts, etc. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.
(e) Business combinations
Business combinations are recorded using the acquisition method of accounting. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred .
(f) Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. All cash and cash equivalents relate to cash on hand and cash at a bank at June 30, 2023 and 2022.
The Renminbi is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Company is permitted to exchange Renminbi for foreign currencies through banks that are authorized to conduct foreign exchange business.
(g) Leasehold Improvement and Equipment
An item of leasehold improvement and equipment is stated at cost less any accumulated depreciation and any accumulated allowance for decrease in value (if any).
The cost of leasehold improvements and equipment consists of its purchase price, import duties and non-refundable purchase taxes (after deducting trade discounts and rebates) and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. These can include the initial estimate of costs of dismantling and removing the item, and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period.
The cost of replacing part of a leasehold improvement and equipment is included in the carrying amount of the asset when it is probable that future economic benefits will flow to the Company and the carrying amount of those replaced parts is derecognized. Repairs and maintenance are charged to the statement of income during the financial period in which they are incurred.
Depreciation is calculated on the straight-line basis to write off the cost of each asset to its residual value over the estimated useful life as follows:
The assets’ residual value, useful lives and depreciation method are regularly reviewed.
(h) Impairment of long-lived assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. Whenever there is an indication showing a permanent decrease in the amount of leasehold improvement and equipment, such as an evidence of obsolescence or physical damage of an asset or significant changes in the manner in which an asset is used or is expected to be used, the Company shall recognize loss on decrease in value of leasehold improvement and equipment in the statement of income where the carrying amount of the asset is higher than the recoverable amount. The Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets. The Company did not record any impairment losses on long-lived assets during the six months ended June 30, 2023 and 2022.
(i) Value added tax (“VAT”)
Since May 1, 2016, all taxpayers, including ZDSE, are subject to value-added tax (“VAT”) instead of business tax. VAT small-scale taxpayers are subject to a VAT rate of 3%, with the exception of VAT small-scale taxpayers with monthly sales of less than RMB 100,000, which are exempt from VAT according to notice No. 13 (2019), effective as of January 1, 2019.
To support the novel coronavirus pneumonia prevention and control and accelerate the resumption of work, the VAT rate for small-scale taxpayers having monthly sales of in excess of RMB 100,000 was reduced from 3% to 1%, while VAT small-scale taxpayers with monthly sales of less than RMB 100,000 continue to be exempt from VAT. In order to further support the development of small and micro enterprises, the Ministry of Finance and the State Administration of Taxation announced on March 31, 2021 that any small-scale VAT taxpayer with monthly sales of less than RMB150,000 will be exempted from VAT from April 1, 2021 to December 31, 2022. Further, in accordance with The Announcement of Ministry of Finance and State Taxation Administration on Exemption of VAT for VAT Small-scale Taxpayer (No. 15, 2022), effective from April 1, 2022 to December 31 2022, VAT small-scale taxpayers, regardless of monthly sales, are exempt from VAT but are subject to a 3% tax rate for assessable income.
According to the Announcement No.1 of Taxation Bureau of Ministry of Finance in 2023, which specifies reduction and exemption of value-added tax (VAT) for small-scale VAT taxpayers, from Jan. 1st to Dec. 31st, 2023, the small-scale taxpayers with monthly sales of below RMB 100,000 are exempted from VAT; and for the small-scale taxpayers with monthly sales of above RMB 100,000, the VAT tax rate has been reduced from 3% to 1%.
Currently, of all the operating subsidiaries of the Company, with the exception of SDYL and HEMC, which are general taxpayers and subject to a VAT rate of 6%, are small-scale taxpayers and subject to a VAT tax rate of 1%(2022:3%).
(j) Income Recognition
Recognition of Revenue
Revenue is reported net of business taxes and VAT. The Company’s educational services consist of training programs and courses. Tuition is generally paid in advance and is initially recorded as deferred revenue. Revenue is recognized proportionately as the instruction is delivered over the period of the course for the course fees collected. The primary sources of our revenues are as follows:
Revenue is reported net of business taxes and VAT. The educational services consist of training programs and courses. Tuition is generally paid in advance and is initially recorded as deferred revenue. The Company had $194,357 and $178,976 of deferred revenue as of June 30, 2023 and 2022, respectively, which will be recognized as revenue within the next 6 months. Revenue is recognized proportionately as the instruction is delivered over the period of the course for the course fees collected.
Revenue is generated through the delivery of services . Revenue is recognized when a customer receives services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those services. The Company applies the following five-step model in order to determine this amount:
The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers as services are performed over the remaining contractual terms.
For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all service revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.
Other Income and other expenses
Other income, and other expenses are recognized on an accrual basis in accordance with the substance of the relevant agreements.
(k) Operating leases
The Company determines if an arrangement contains a lease at inception. The Company elected the practical expedient, for all asset classes, to account for each lease component of a contract and its associated non-lease components as a single lease component, rather than allocating a standalone value to each component of a lease. For purposes of calculating operating lease obligations under the standard, the Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such option. The Company’s leases do not contain material residual value guarantees or material restrictive covenants. Operating lease expense is recognized on a straight-line basis over the lease terms. The discount rate used to measure a lease obligation is usually the rate implicit in the lease; however, the Company’s operating leases generally do not provide an implicit rate. Accordingly, the Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments. The incremental borrowing rate is an entity-specific rate which represents the rate of interest a lessee would pay to borrow on a collateralized basis over a similar term with similar payments.
The Company reports earnings per share in accordance with ASC 260 “Earnings Per Share,” which requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the reporting period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. Further, if the number of common shares outstanding increases as a result of a stock dividend or stock split or decreases as a result of a reverse stock split, the computations of a basic and diluted earnings per share shall be adjusted retrospectively for all periods presented to reflect that change in capital structure.
The Company’s basic earnings per share is computed by dividing the net income available to holders by the weighted average number of the Company’s ordinary shares outstanding. Diluted earnings per share reflects the amount of net income available to each ordinary share outstanding during the period plus the number of additional shares that would have been outstanding if potentially dilutive securities had been issued. The Company had no potentially dilutive ordinary shares as of June 30, 2022 and 2023.
(m) Foreign Currency Translation
The Company’s reporting currency is the U.S. dollar and the functional currency is the Chinese Renminbi (“RMB”). All assets and liabilities are translated at exchange rates at the balance sheet date, revenue and expenses are translated at the average yearly exchange rates and equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of equity.
Transactions in currencies other than the functional currencies during the year are converted into the applicable functional currencies at the applicable rates of exchange prevailing at the dates of the transactions. Exchange gains and losses are recognized in the statements of operations.
The exchange rates utilized as follows:
No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
(n) Foreign Currency Risk
The RMB is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of the RMB into other currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. 100% of the Company’s cash and cash equivalents are in RMB as of June 30, 2023 and 2022, respectively.
(o) Fair Value
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when valuing the asset or liability. Authoritative literature provides a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
(p) Fair Value of financial instruments
The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, other receivables, amount due to related parties and accounts payable. The carrying amounts of cash and cash equivalents, accounts receivable, other receivables, amount due to related parties and accounts payable approximate their fair values due to the short-term maturities of these instruments.
(q) Income Taxes
Income tax expense consists of current and deferred taxation and is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized directly in other comprehensive income or equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable with respect to previous periods.
The Company accounts for income taxes using the asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax basis of assets and liabilities, net of operating loss carry forwards and credits, by applying enacted tax rates that will be in effect for the period in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in the statements of operations in the period of change.
The Company accounts for uncertain tax positions by reporting a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. Tax benefits are recognized from uncertain tax positions when the Company believes that it is more likely than not that the tax position will be sustained on examination by the tax authorities based on the technical merits of the position. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expenses. The Company did not record uncertain tax positions as of June 30, 2023 and December 31, 2022 as the amounts were immaterial.
(r) Comprehensive income
Comprehensive income includes net income and foreign currency translation adjustments. Comprehensive income is reported in the statements of comprehensive income.
(s) Concentration of credit risk
Financial instruments that potentially expose the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivables and other receivables.
As of June 30, 2023, substantially all of the Company’s cash and cash equivalents were deposited with financial institutions with high-credit ratings and quality.
Accounts Receivable represent tuition fees of ZDH and the planning service fees of HHMT and SJMC due from customers that typically are collected within a short period of time. Other receivables mainly represent short-term loans to other companies with interest charged, rental and utilities deposit. Management believes it has no significant risk related to its concentration within its accounts receivable.
The Company did not have any customers that accounted for 10% or more of the Company’s net revenues for the six months ended June 30, 2023 or 2022.
(t) Impact of Covid-19
For the last three years, the outbreak of Covid-19 pandemic continued in China. Although the epidemic prevention policy of China was open since the end of December in 2022, China’s economy has not completely recovered and in the first half of 2023, the Company’s revenue increased by only 8% compared with the first half of 2022.
(u) Share Capital
Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity.
(v) Recent accounting pronouncements
Recently issued accounting pronouncements not yet adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements. This ASU requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. This Accounting Standards Update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables and any other financial assets not excluded from the scope that have the contractual rights to receive cash. For public business entities, the amendments in this Update are effective for fiscal years beginning after January 1, 2023, including interim periods within those fiscal years. All entities may adopt the amendments in this Accounting Standards Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The Company is in the process of evaluating the impact of the adoption of this pronouncement on its consolidated financial statements.
The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s financial statements.
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LEASEHOLD IMPROVEMENT AND EQUIPMENT, NET |
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| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASEHOLD IMPROVEMENT AND EQUIPMENT, NET | 3. LEASEHOLD IMPROVEMENT AND EQUIPMENT, NET
Depreciation expense for the six months ended June 30, 2023 and 2022 was $4,042 and $11,334, respectively. The Company did not record any long-lived asset impairment losses during the six months ended June 30, 2023 and the year ended December 31, 2022.
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ACCOUNTS RECEIVABLE |
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| Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||||||
| ACCOUNTS RECEIVABLE | 4. ACCOUNTS RECEIVABLE
The accounts receivable and allowance balances at June 30, 2023 and December 31, 2022 are as follows:
No allowance for doubtful accounts was made during the six months ended June 30, 2023 and the year ended December 31, 2022.
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OTHER RECEIVABLES |
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| Other Receivables | |
| OTHER RECEIVABLES | 5. OTHER RECEIVABLES
Other receivables mainly consist of a short-term loan to a third party, Dongguan Anxiang Technology Co., Ltd. and rental and utilities deposits paid for the Guangzhou and Liaoning office which are fully refundable.
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ACCOUNTS PAYABLE, OTHER PAYABLES AND ACCRUALS |
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| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCOUNTS PAYABLE, OTHER PAYABLES AND ACCRUALS | 6. ACCOUNTS PAYABLE, OTHER PAYABLES AND ACCRUALS
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SHORT-TERM BANK BORROWINGS |
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Jun. 30, 2023 | |
| Debt Disclosure [Abstract] | |
| SHORT-TERM BANK BORROWINGS | 7. SHORT-TERM BANK BORROWINGS
On January 10, 2023, we borrowed $2,757 from China Construction Bank with a loan term of one year and an annualized interest rate of 4%. The loan is unsecured.
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INCOME TAXES |
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| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES | 8. INCOME TAXES
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to income, corporate or capital gains tax, and the Cayman Islands currently have no form of estate duty, inheritance tax or gift tax. In addition, payments of dividends and capital in respect of its shares are not subject to taxation and no withholding will be required in the Cayman Islands on the payment of any dividend or capital to any holder of its shares, nor will gains derived from the disposal of its shares be subject to Cayman Islands income or corporation tax. No provision for income taxes in the Cayman Islands has been made as the Company had no taxable income for the six months ended June 30, 2023 and 2022.
Seychelles
HGSL and HGCL are tax-exempted companies incorporated in Seychelles. Under the current laws of Seychelles, the Company and HGCL are not subject to income, corporate or capital gains tax, and Seychelles currently have no form of estate duty, inheritance tax or gift tax. In addition, payments of dividends and capital in respect of their shares are not subject to taxation and no withholding will be required in the Seychelles on the payment of any dividend or capital to any holder of their shares, nor will gains derived from the disposal of their shares be subject to Seychelles income or corporation tax. No provision for income taxes in Seychelles has been made as the Company and HGCL had no taxable income for the six months ended June 30, 2023 and 2022.
Hong Kong
HGHK is incorporated in Hong Kong and is subject to an income tax rate of 16.5% for taxable income generated from operations in Hong Kong. No provision for income taxes in Hong Kong has been made as HGHK had no taxable income for the six months ended June 30, 2023 and 2022.
PRC
The Company’s PRC subsidiaries are subject to a 25% standard enterprise income tax except for those deemed as profit method enterprises or qualified for small-scale enterprises, or granted preferential tax treatment.
ZDSE, HHMT and SJMC enjoyed a preferential tax rate of 5% for the six months ended June 30, 2023 and 2.5% for the year ended December 31, 2022.
No provision for income taxes has been made for our other subsidiaries in the PRC.
Income tax expense (benefit)
Income taxes of ZDSE, HHMT, SJMC and JEMT are accrued at the tax rate of 5%. The deferred income tax assets of ZDSE are calculated according to the preferential tax rate of 5% for the six months ended June 30, 2023.
The Company’s other subsidiaries have not recognized deferred income tax assets as of June 30, 2023 and December 31, 2022.
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LEASES |
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| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| LEASES | 9. LEASES
The adoption of the new lease guidance did not have a material impact on the Company’s results of operations or liquidity but resulted in the recognition of operating lease liabilities and operating lease right-of-use assets on its balance sheets. Right-of-use (“ROU”) assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term.
The Company leases various training centers in the PRC. Rent expense for the six months ended June 30, 2023 was $154,322. The Company has three operating leases with lease terms of more than one year, which are classified as operating leases. The longest lease term expires in November 2027. There are no residual value guarantees and no restrictions or covenants imposed by the lease. The Company has $431,428 of right-of-use assets, $206,867 in current operating lease liabilities and $224,561 in non-current operating lease liabilities as of June 30, 2023.
Significant assumptions and judgments made as part of the adoption of this new lease standard include determining: (i) whether a contract contains a lease, (ii) whether a contract involves an identified asset, and (iii) which party to the contract directs the use of the asset. The discount rates used to calculate the present value of lease payments were determined based on hypothetical borrowing rates available to the Company over terms similar to the lease terms.
The Company’s future minimum payments under long-term non-cancelable operating leases are as follows:
Other information:
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RELATED PARTY TRANSACTIONS |
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED PARTY TRANSACTIONS | 10. RELATED PARTY TRANSACTIONS
(a) The Company had the following balances due to related parties:
The balances represent cash advances from related parties.
The balances with related parties are unsecured, non-interest bearing and repayable on demand.
At June 30, 2023 and June 30, 2022, the Company lent funds to the following related parties. These loans were unsecured, non-interest bearing and repayable on demand.
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RESERVES |
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| Reserves | |||||
| RESERVES | 11. RESERVES
Pursuant to the laws applicable to the PRC’s Foreign Investment Enterprises, the Company must make appropriations from after-tax profit to non-distributable reserve funds. Subject to certain cumulative limits, the general reserve requires annual appropriations of 10% of after-tax profits as determined under the PRC laws and regulations at each year-end until the balance reaches 50% of the PRC entity registered capital; the other reserve appropriations are at the Company’s discretion. These reserves can only be used for specific purposes of enterprise expansion and are not distributable as cash dividends. During the six months ended June 30, 2023 and 2022, the Company did not accrue any legal reserve.
The currency translation reserve represents translation differences arising from translation of foreign currency financial statements into the Company’s reporting currency. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | (a) Basis of Presentation
The accompanying financial statements include the balances and results of operations of the Company and have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchanges Commission (“SEC”) and in conformity with generally accepted accounting principles in the U.S. (“US GAAP”).
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| Going Concern | (b) Going Concern
The Company incurred a net loss of $42,489 for the six months ended June 30, 2023. Net cash used in operating activities was $48,033 for the six months ended June 30, 2023. As of June 30, 2023, the Company had net current liabilities of $703,705 and a shareholders’ deficit of $485,101.
The ability to continue as a going concern is dependent upon the Company generating profits in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s continuation as a going concern is dependent on the Company’s ability to meet obligations as they become due and to obtain additional equity or alternative financing required to fund operations until sufficient sources of recurring revenues can be generated. There can be no assurance that the Company will be successful in its plans described above or in attracting equity or alternative financing on acceptable terms, if at all. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
The Company expects to finance operations primarily through cash flows from operations and capital contributions from its CEO. During the first six months of 2023, the CEO has provided $232,304 in financial support for the operations of the Company. In the event that the Company requires additional funding to finance the growth of the Company’s current and expected future operations as well as to achieve our strategic objectives, the CEO has indicated the intent and ability to provide additional equity financing.
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| Basis of Consolidation | (c) Basis of Consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiaries. Subsidiaries are all entities over which the Company has control. Control exists when the Company has the power over the entity, exposure or rights to variable returns from involvement in the entity, and the ability to use power over the entity to affect returns through its power over the entity. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
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| Use of estimates | (d) Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, related disclosures of contingent liabilities at the balance sheet date and revenue and expenses in the financial statements and accompanying notes. Significant accounting estimates reflected in the Company’s financial statements include the valuation allowance for deferred tax assets, economic lives and impairment of leasehold improvements and equipment, allowance for doubtful accounts, etc. Actual results could differ from those estimates and such differences could affect the results of operations reported in future periods.
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| Business combinations | (e) Business combinations
Business combinations are recorded using the acquisition method of accounting. The purchase price of the acquisition is allocated to the tangible assets, liabilities, identifiable intangible assets acquired and non-controlling interest, if any, based on their estimated fair values as of the acquisition date. The excess of the purchase price over those fair values is recorded as goodwill. Acquisition-related expenses and restructuring costs are expensed as incurred .
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| Cash and Cash Equivalents | (f) Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. All cash and cash equivalents relate to cash on hand and cash at a bank at June 30, 2023 and 2022.
The Renminbi is not freely convertible into foreign currencies. Under the PRC Foreign Exchange Control Regulations and Administration of Settlement, Sales and Payment of Foreign Exchange Regulations, the Company is permitted to exchange Renminbi for foreign currencies through banks that are authorized to conduct foreign exchange business.
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| Leasehold Improvement and Equipment | (g) Leasehold Improvement and Equipment
An item of leasehold improvement and equipment is stated at cost less any accumulated depreciation and any accumulated allowance for decrease in value (if any).
The cost of leasehold improvements and equipment consists of its purchase price, import duties and non-refundable purchase taxes (after deducting trade discounts and rebates) and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. These can include the initial estimate of costs of dismantling and removing the item, and restoring the site on which it is located, the obligation for which an entity incurs either when the item is acquired or as a consequence of having used the item during a particular period.
The cost of replacing part of a leasehold improvement and equipment is included in the carrying amount of the asset when it is probable that future economic benefits will flow to the Company and the carrying amount of those replaced parts is derecognized. Repairs and maintenance are charged to the statement of income during the financial period in which they are incurred.
Depreciation is calculated on the straight-line basis to write off the cost of each asset to its residual value over the estimated useful life as follows:
The assets’ residual value, useful lives and depreciation method are regularly reviewed.
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| Impairment of long-lived assets | (h) Impairment of long-lived assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. Whenever there is an indication showing a permanent decrease in the amount of leasehold improvement and equipment, such as an evidence of obsolescence or physical damage of an asset or significant changes in the manner in which an asset is used or is expected to be used, the Company shall recognize loss on decrease in value of leasehold improvement and equipment in the statement of income where the carrying amount of the asset is higher than the recoverable amount. The Company measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Company would recognize an impairment loss based on the fair value of the assets. The Company did not record any impairment losses on long-lived assets during the six months ended June 30, 2023 and 2022.
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| Value added tax (“VAT”) | (i) Value added tax (“VAT”)
Since May 1, 2016, all taxpayers, including ZDSE, are subject to value-added tax (“VAT”) instead of business tax. VAT small-scale taxpayers are subject to a VAT rate of 3%, with the exception of VAT small-scale taxpayers with monthly sales of less than RMB 100,000, which are exempt from VAT according to notice No. 13 (2019), effective as of January 1, 2019.
To support the novel coronavirus pneumonia prevention and control and accelerate the resumption of work, the VAT rate for small-scale taxpayers having monthly sales of in excess of RMB 100,000 was reduced from 3% to 1%, while VAT small-scale taxpayers with monthly sales of less than RMB 100,000 continue to be exempt from VAT. In order to further support the development of small and micro enterprises, the Ministry of Finance and the State Administration of Taxation announced on March 31, 2021 that any small-scale VAT taxpayer with monthly sales of less than RMB150,000 will be exempted from VAT from April 1, 2021 to December 31, 2022. Further, in accordance with The Announcement of Ministry of Finance and State Taxation Administration on Exemption of VAT for VAT Small-scale Taxpayer (No. 15, 2022), effective from April 1, 2022 to December 31 2022, VAT small-scale taxpayers, regardless of monthly sales, are exempt from VAT but are subject to a 3% tax rate for assessable income.
According to the Announcement No.1 of Taxation Bureau of Ministry of Finance in 2023, which specifies reduction and exemption of value-added tax (VAT) for small-scale VAT taxpayers, from Jan. 1st to Dec. 31st, 2023, the small-scale taxpayers with monthly sales of below RMB 100,000 are exempted from VAT; and for the small-scale taxpayers with monthly sales of above RMB 100,000, the VAT tax rate has been reduced from 3% to 1%.
Currently, of all the operating subsidiaries of the Company, with the exception of SDYL and HEMC, which are general taxpayers and subject to a VAT rate of 6%, are small-scale taxpayers and subject to a VAT tax rate of 1%(2022:3%).
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| Income Recognition | (j) Income Recognition
Recognition of Revenue
Revenue is reported net of business taxes and VAT. The Company’s educational services consist of training programs and courses. Tuition is generally paid in advance and is initially recorded as deferred revenue. Revenue is recognized proportionately as the instruction is delivered over the period of the course for the course fees collected. The primary sources of our revenues are as follows:
Revenue is reported net of business taxes and VAT. The educational services consist of training programs and courses. Tuition is generally paid in advance and is initially recorded as deferred revenue. The Company had $194,357 and $178,976 of deferred revenue as of June 30, 2023 and 2022, respectively, which will be recognized as revenue within the next 6 months. Revenue is recognized proportionately as the instruction is delivered over the period of the course for the course fees collected.
Revenue is generated through the delivery of services . Revenue is recognized when a customer receives services and is recognized in an amount that reflects the consideration that the Company expects to receive in exchange for those services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those services. The Company applies the following five-step model in order to determine this amount:
The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied. Generally, the Company’s performance obligations are transferred to customers as services are performed over the remaining contractual terms.
For all reporting periods, the Company has not disclosed the value of unsatisfied performance obligations for all service revenue contracts with an original expected length of one year or less, which is an optional exemption that is permitted under the adopted rules.
Other Income and other expenses
Other income, and other expenses are recognized on an accrual basis in accordance with the substance of the relevant agreements.
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| Operating leases | (k) Operating leases
The Company determines if an arrangement contains a lease at inception. The Company elected the practical expedient, for all asset classes, to account for each lease component of a contract and its associated non-lease components as a single lease component, rather than allocating a standalone value to each component of a lease. For purposes of calculating operating lease obligations under the standard, the Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such option. The Company’s leases do not contain material residual value guarantees or material restrictive covenants. Operating lease expense is recognized on a straight-line basis over the lease terms. The discount rate used to measure a lease obligation is usually the rate implicit in the lease; however, the Company’s operating leases generally do not provide an implicit rate. Accordingly, the Company uses its incremental borrowing rate at lease commencement to determine the present value of lease payments. The incremental borrowing rate is an entity-specific rate which represents the rate of interest a lessee would pay to borrow on a collateralized basis over a similar term with similar payments.
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| Earnings Per Share |
The Company reports earnings per share in accordance with ASC 260 “Earnings Per Share,” which requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the reporting period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock. Further, if the number of common shares outstanding increases as a result of a stock dividend or stock split or decreases as a result of a reverse stock split, the computations of a basic and diluted earnings per share shall be adjusted retrospectively for all periods presented to reflect that change in capital structure.
The Company’s basic earnings per share is computed by dividing the net income available to holders by the weighted average number of the Company’s ordinary shares outstanding. Diluted earnings per share reflects the amount of net income available to each ordinary share outstanding during the period plus the number of additional shares that would have been outstanding if potentially dilutive securities had been issued. The Company had no potentially dilutive ordinary shares as of June 30, 2022 and 2023.
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| Foreign Currency Translation | (m) Foreign Currency Translation
The Company’s reporting currency is the U.S. dollar and the functional currency is the Chinese Renminbi (“RMB”). All assets and liabilities are translated at exchange rates at the balance sheet date, revenue and expenses are translated at the average yearly exchange rates and equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of equity.
Transactions in currencies other than the functional currencies during the year are converted into the applicable functional currencies at the applicable rates of exchange prevailing at the dates of the transactions. Exchange gains and losses are recognized in the statements of operations.
The exchange rates utilized as follows:
No representation is made that the RMB amounts could have been, or could be, converted into U.S. dollars at the rates used in translation.
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| Foreign Currency Risk | (n) Foreign Currency Risk
The RMB is not a freely convertible currency. The State Administration for Foreign Exchange, under the authority of the People’s Bank of China, controls the conversion of the RMB into other currencies. The value of the RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. 100% of the Company’s cash and cash equivalents are in RMB as of June 30, 2023 and 2022, respectively.
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| Fair Value | (o) Fair Value
Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when valuing the asset or liability. Authoritative literature provides a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The level in the hierarchy within which the fair value measurement in its entirety falls is based upon the lowest level of input that is significant to the fair value measurement as follows:
Level 1
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
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| Fair Value of financial instruments | (p) Fair Value of financial instruments
The Company’s financial instruments consist primarily of cash and cash equivalents, accounts receivable, other receivables, amount due to related parties and accounts payable. The carrying amounts of cash and cash equivalents, accounts receivable, other receivables, amount due to related parties and accounts payable approximate their fair values due to the short-term maturities of these instruments.
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| Income Taxes | (q) Income Taxes
Income tax expense consists of current and deferred taxation and is recognized in profit or loss except to the extent that it relates to items recognized directly in other comprehensive income or equity, in which case it is recognized directly in other comprehensive income or equity. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable with respect to previous periods.
The Company accounts for income taxes using the asset and liability approach. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax basis of assets and liabilities, net of operating loss carry forwards and credits, by applying enacted tax rates that will be in effect for the period in which the differences are expected to reverse. The effect on deferred taxes of a change in tax rates is recognized in the statements of operations in the period of change.
The Company accounts for uncertain tax positions by reporting a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. Tax benefits are recognized from uncertain tax positions when the Company believes that it is more likely than not that the tax position will be sustained on examination by the tax authorities based on the technical merits of the position. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expenses. The Company did not record uncertain tax positions as of June 30, 2023 and December 31, 2022 as the amounts were immaterial.
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| Comprehensive income | (r) Comprehensive income
Comprehensive income includes net income and foreign currency translation adjustments. Comprehensive income is reported in the statements of comprehensive income.
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| Concentration of credit risk | (s) Concentration of credit risk
Financial instruments that potentially expose the Company to significant concentration of credit risk consist primarily of cash and cash equivalents, accounts receivables and other receivables.
As of June 30, 2023, substantially all of the Company’s cash and cash equivalents were deposited with financial institutions with high-credit ratings and quality.
Accounts Receivable represent tuition fees of ZDH and the planning service fees of HHMT and SJMC due from customers that typically are collected within a short period of time. Other receivables mainly represent short-term loans to other companies with interest charged, rental and utilities deposit. Management believes it has no significant risk related to its concentration within its accounts receivable.
The Company did not have any customers that accounted for 10% or more of the Company’s net revenues for the six months ended June 30, 2023 or 2022.
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| Impact of Covid-19 | (t) Impact of Covid-19
For the last three years, the outbreak of Covid-19 pandemic continued in China. Although the epidemic prevention policy of China was open since the end of December in 2022, China’s economy has not completely recovered and in the first half of 2023, the Company’s revenue increased by only 8% compared with the first half of 2022.
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| Share Capital | (u) Share Capital
Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity.
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| Recent accounting pronouncements | (v) Recent accounting pronouncements
Recently issued accounting pronouncements not yet adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements. This ASU requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. This Accounting Standards Update affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables and any other financial assets not excluded from the scope that have the contractual rights to receive cash. For public business entities, the amendments in this Update are effective for fiscal years beginning after January 1, 2023, including interim periods within those fiscal years. All entities may adopt the amendments in this Accounting Standards Update through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective (that is, a modified-retrospective approach). The Company is in the process of evaluating the impact of the adoption of this pronouncement on its consolidated financial statements.
The Company reviews new accounting standards as issued. Management has not identified any other new standards that it believes will have a significant impact on the Company’s financial statements.
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DESCRIPTION OF BUSINESS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SUBSIDIARY INFORMATION | As of June 30, 2023, the Company’s subsidiaries are as follows:
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||
| SCHEDULE OF ESTIMATE USEFUL LIFE OF ASSETS | Depreciation is calculated on the straight-line basis to write off the cost of each asset to its residual value over the estimated useful life as follows:
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| SUMMARY OF EXCHANGE OF CURRENCY RATES | The exchange rates utilized as follows:
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LEASEHOLD IMPROVEMENT AND EQUIPMENT, NET (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF LEASEHOLD IMPROVEMENTS AND EQUIPMENT |
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ACCOUNTS RECEIVABLE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||
| Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ACCOUNTS RECEIVABLE AND ALLOWANCE | The accounts receivable and allowance balances at June 30, 2023 and December 31, 2022 are as follows:
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ACCOUNTS PAYABLE, OTHER PAYABLES AND ACCRUALS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF ACCOUNTS PAYABLE, OTHER PAYABLES AND ACCRUALS |
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INCOME TAXES (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF INCOME TAX EXPENSES BENEFITS | Income tax expense (benefit)
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| SCHEDULE OF RECONCILIATION OF EFFECTIVE INCOME TAX RATES |
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LEASES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF FUTURE MINIMUM PAYMENTS UNDER LONG-TERM NON -CANCELABLE OPERATING LEASES | The Company’s future minimum payments under long-term non-cancelable operating leases are as follows:
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| SCHEDULE OF OTHER INFORMATION OF OPERATING LEASES | Other information:
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RELATED PARTY TRANSACTIONS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE OF AMOUNT DUE TO RELATED PARTIES | (a) The Company had the following balances due to related parties:
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DESCRIPTION OF BUSINESS (Details Narrative) - shares |
Jul. 03, 2019 |
Nov. 02, 2017 |
Jun. 30, 2023 |
|---|---|---|---|
| Sale of stock shares issued in transaction | 2,000,000 | ||
| Huahui Group Stock Limited [Member] | |||
| Number of ordinary shares of common stock exchanged | 300,000,000 | ||
| Ownership interest percentage | 100.00% | 100.00% | |
| Huahui Group Stock Limited [Member] | Shareholders [Member] | |||
| Ownership interest percentage | 99.10% | ||
| Huahui Group Stock Limited [Member] | Former Shareholders [Member] | |||
| Ownership interest percentage | 0.90% |
SCHEDULE OF ESTIMATE USEFUL LIFE OF ASSETS (Details) |
Jun. 30, 2023 |
|---|---|
| Leasehold Improvements [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration] | Property plant and equipment useful life |
| Furniture and Fixtures [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Property plant and equipment useful life | 5 years |
| Computer Equipment [Member] | Minimum [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Property plant and equipment useful life | 3 years |
| Computer Equipment [Member] | Maximum [Member] | |
| Property, Plant and Equipment [Line Items] | |
| Property plant and equipment useful life | 5 years |
SUMMARY OF EXCHANGE OF CURRENCY RATES (Details) |
Jun. 30, 2023 |
Jun. 30, 2022 |
|---|---|---|
| Year-End RMB [Member] | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Foreign currency exchange rate, translation | 7.2536 | 6.6994 |
| Annual-Average RMB [Member] | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Foreign currency exchange rate, translation | 6.9213 | 6.5108 |
SCHEDULE OF LEASEHOLD IMPROVEMENTS AND EQUIPMENT (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property, Plant and Equipment [Abstract] | ||
| Furniture and education equipment | $ 21,828 | $ 22,917 |
| Computer equipment and software | 65,005 | 68,248 |
| Leasehold improvements | 69,662 | 73,135 |
| Leasehold improvement and equipment, gross | 156,495 | 164,300 |
| Less: accumulated depreciation | (144,758) | (147,929) |
| Leasehold improvement and equipment, net | $ 11,737 | $ 16,371 |
LEASEHOLD IMPROVEMENT AND EQUIPMENT, NET (Details Narrative) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Property, Plant and Equipment [Abstract] | ||
| Depreciation expense | $ 4,042 | $ 11,334 |
SCHEDULE OF ACCOUNTS RECEIVABLE AND ALLOWANCE (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Credit Loss [Abstract] | ||
| Accounts receivable | $ 441,077 | $ 458,896 |
| Less: allowance for doubtful accounts | ||
| Accounts receivable, net | $ 441,077 | $ 458,896 |
SCHEDULE OF ACCOUNTS PAYABLE, OTHER PAYABLES AND ACCRUALS (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
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|---|---|---|---|---|---|---|
| Payables and Accruals [Abstract] | ||||||
| Accounts payable | [1] | $ 149,805 | $ 136,302 | |||
| Accrued payroll and welfare payable | 74,368 | 85,229 | ||||
| VAT and other taxes payable | 26,837 | 14,067 | ||||
| Others | [2] | 221,532 | 132,138 | |||
| Total other payables and accruals | $ 472,542 | $ 367,736 | ||||
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SHORT-TERM BANK BORROWINGS (Details Narrative) - USD ($) |
Jan. 10, 2023 |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|---|
| Short-Term Debt [Line Items] | |||
| Short term borrowing | $ 2,757 | ||
| Construction Loan Payable [Member] | |||
| Short-Term Debt [Line Items] | |||
| Short term borrowing | $ 2,757 | ||
| Short term borrowing interst rate | 4.00% |
SCHEDULE OF INCOME TAX EXPENSES BENEFITS (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Income Tax Disclosure [Abstract] | ||
| Current tax expense | $ 15,470 | $ 1,370 |
| Deferred tax expense | ||
| Total income taxes | $ 15,470 | $ 1,370 |
SCHEDULE OF RECONCILIATION OF EFFECTIVE INCOME TAX RATES (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Income Tax Disclosure [Abstract] | ||
| Loss before tax | $ (27,019) | $ (313,789) |
| Tax (credit) calculated at statutory tax rate (25%) | (6,754) | (78,447) |
| Valuation allowance | 22,224 | 79,817 |
| Total income taxes | $ 15,470 | $ 1,370 |
SCHEDULE OF RECONCILIATION OF EFFECTIVE INCOME TAX RATES (Details) (Parenthetical) |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Income Tax Disclosure [Abstract] | |
| Income tax statutory tax rate | 25.00% |
INCOME TAXES (Details Narrative) - USD ($) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|
| Provision for income taxes | $ 15,470 | $ 1,370 | |
| Income tax statutory tax rate | 25.00% | ||
| ZDSE, HHMT and SJMC [Member] | |||
| Income tax preferential tax rate | 5.00% | 2.50% | |
| Income tax statutory tax rate | 5.00% | ||
| ZDSE [Member] | |||
| Income tax preferential tax rate | 5.00% | ||
| HONG KONG | |||
| Income tax rate | 16.50% | ||
| CHINA | |||
| Income tax rate | 25.00% | ||
| Provision for income taxes | $ 0 | ||
SCHEDULE OF FUTURE MINIMUM PAYMENTS UNDER LONG-TERM NON -CANCELABLE OPERATING LEASES (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Leases [Abstract] | ||
| Within 1 year | $ 222,921 | $ 235,961 |
| After 1 year but within 5 years | 231,227 | 343,465 |
| Total lease payments | 454,148 | 579,426 |
| Less: imputed interest | (22,720) | (33,681) |
| Total lease obligations | 431,428 | 545,745 |
| Less: current obligations | (206,867) | (214,758) |
| Long-term lease obligations | $ 224,561 | $ 330,987 |
SCHEDULE OF OTHER INFORMATION OF OPERATING LEASES (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Operating cash flow from operating lease | $ 58,965 | $ 113,152 |
| Right-of-use assets obtained in exchange for operating lease liabilities | $ 467,046 | $ 651,279 |
| Weighted average discount rate for operating lease | 4.75% | 4.75% |
| Minimum [Member] | ||
| Remaining lease term for operating lease (years) | 1 year 9 months | 2 years 9 months |
| Maximum [Member] | ||
| Remaining lease term for operating lease (years) | 4 years 5 months 1 day | 3 years 3 months |
LEASES (Details Narrative) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Leases [Abstract] | ||
| Rent expense | $ 154,322 | |
| Lessee operating lease description | The Company has three operating leases with lease terms of more than one year | |
| Lessee operating lease term of contract | 1 year | |
| Operating lease right-of-use assets | $ 431,428 | $ 545,745 |
| Operating lease liabilities current | 206,867 | 214,758 |
| Operating lease liabilities non-current | $ 224,561 | $ 330,987 |
SCHEDULE OF AMOUNT DUE TO RELATED PARTIES (Details) - USD ($) |
6 Months Ended | 12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Dec. 31, 2022 |
|||||||
| Related Party Transaction [Line Items] | |||||||||
| Total | $ 922,919 | $ 704,980 | |||||||
| Cash advance from related parties | 232,304 | $ 185,119 | |||||||
| Repayment to related parties | $ 313,289 | ||||||||
| Junze Zhang [Member] | |||||||||
| Related Party Transaction [Line Items] | |||||||||
| Relationship | Shareholder and director of the Company | Shareholder and director of the Company | |||||||
| Total | $ 916,865 | $ 698,624 | |||||||
| Cash advance from related parties | $ 232,304 | 180,151 | |||||||
| Xinwen Yang [Member] | |||||||||
| Related Party Transaction [Line Items] | |||||||||
| Relationship | Director of the SDYL | Director of the SDYL | |||||||
| Total | |||||||||
| Cash advance from related parties | 4,968 | ||||||||
| Repayment to related parties | [1] | $ 164,867 | |||||||
| Qing Zuo [Member] | |||||||||
| Related Party Transaction [Line Items] | |||||||||
| Relationship | Chairman of the Board of ZDSE since December 20, 2018 | Chairman of the Board of ZDSE since December 20, 2018 | |||||||
| Total | $ 6,054 | $ 6,356 | |||||||
| Cash advance from related parties | |||||||||
| Songlin Zhu [Member] | |||||||||
| Related Party Transaction [Line Items] | |||||||||
| Repayment to related parties | [2] | 109,218 | |||||||
| Zheng Pei [Member] | |||||||||
| Related Party Transaction [Line Items] | |||||||||
| Repayment to related parties | [3] | $ 39,204 | |||||||
| |||||||||
RESERVES (Details Narrative) |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| PRC's Foreign Investment Enterprises [Member] | |
| Legal reserves percentage description | Pursuant to the laws applicable to the PRC’s Foreign Investment Enterprises, the Company must make appropriations from after-tax profit to non-distributable reserve funds. Subject to certain cumulative limits, the general reserve requires annual appropriations of 10% of after-tax profits as determined under the PRC laws and regulations at each year-end until the balance reaches 50% of the PRC entity registered capital; the other reserve appropriations are at the Company’s discretion |
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