Restatement for Correction of an Error

12 Months Ended

Jun. 30, 2022

Accounting Changes and Error Corrections [Abstract]

Restatement for Correction of an Error

Note 2 - Restatement for Correction of an Error

During the year end June 30, 2021, the Company had sales amounting to $5,278,370 with a customer that accounted for 56% of the total revenue for the year ended June 30, 2021. For the year ended June 30, 2020, the Company had sales with that customer amounting to $253,803 that accounted for 100% of the total revenue for the year ended June 30, 2020. The Company also had an accounts receivable balance in the amount of $1,640,779 as of June 30, 2021, with that customer. The management subsequently discovered that the customer is a related party within the definition ASC 850.

On October 25, 2020, the Company signed an agreement with a related party, which is also the Company’s major customer. The Company agreed to loan the related party $8,957,764  (RMB60,000,000) at an annual interest rate of 7.2%. The loan is guaranteed by a Company’s supplier which is also an important partner of the Company’s major customer and due on October 25, 2021. The borrower is required to pay all the principal and the relevant interest in full amount on the due date. The total loan receivable, net of allowance $0 and $6,417,350 as of June 30, 2022 and 2021, respectively. The principal and the relevant interest in full have been paid off in February 2022. As of June 30, 2021, the Company recognized $2,163,419 allowance of bad debt against the loan receivable from related party. During the year ended June 30, 2022, the Company reversed the $2,163,419 allowance and recognized the entire amount as other income in the accompany consolidated statement of operations and comprehensive income (loss). During the year ended June 30, 2022, the Company recognized the interest income of $764,421 and wrote off the interest income of $66,905. The management subsequently discovered that the customer is a related party within the definition ASC 850.

In the Company’s annual reports on Form 10-K for the years ended June 30, 2020 and June 30, 2021 and related quarterly reports (collectively, the “Affected Reports”), the Company is correcting the disclosure by reporting the above as related party transactions and balances.

The following is a comparison of restated financial statements to financial statements as previously reported:

Consolidated Statement of Operations	Year ended June 30, 2020
	As Previously Reported		Restatement Adjustment			As Restated
Revenue	$	253,803	$	(253,803	)	$	-
Revenue – Related Party		-		253,803			253,803
Total Revenue		253,803		-			253,803

Consolidated Balance Sheets	As of June 30, 2021
	As Previously Reported		Restatement Adjustment			As Restated
Current Assets:
Account receivable, net	$	2,602,392	$	(1,640,779	)	$	961,613
Account receivable - related party, net		-		1,640,779			1,640,779
Loan receivable, net		6,417,350		(6,417,350	)		-
Loan receivable - related party, net		-		6,417,350			6,417,350
Total Current Assets		9,163,675		-			9,163,675

Consolidated Statement of Operations	Year ended June 30, 2021
	As Previously Reported		Restatement Adjustment			As Restated
Revenue	$	9,489,187	$	(5,278,370	)	$	4,210,817
Revenue – Related Party		-		5,278,370			5,278,370
Total Revenue		9,489,187		-			9,489,187

Consolidated Statements of Cash Flows	Year ended June 30, 2021
	As Previously Reported			Restatement Adjustment			As Restated
(Increase) in account receivable	$	(4,177,743	)	$	3,158,126		$	(1,019,617	)
(Increase) in account receivable - related party		-			(3,158,126	)		(3,158,126	)
Net Cash Used in Operating Activities		(2,562,524	)		-			(2,562,524	)
Loan receivable		8,365,926			(8,365,926	)		-
Loan receivable - related party		-			8,365,926			8,365,926
Net Cash Used in Investing Activities		(8,443,822	)		-			(8,443,822	)
Net Cash Provided by Financing Activities		6,232,225			-			6,232,225

Unaudited Condensed Consolidated Balance Sheets	As of March 31, 2021
	As Previously Reported		Restatement Adjustment			As Restated
Current Assets:
Account receivable,	$	3,537,706	$	(3,192,013	)	$	345,693
Account receivable - related party		-		3,192,013			3,192,013
Loan receivable		8,242,010		(8,242,010	)		-
Loan receivable - related party		-		8,242,010			8,242,010
Total Current Assets		12,731,834		-			12,731,834

Unaudited Condensed Consolidated Statement of Operations	Three Months ended March 31, 2021
	As Previously Reported		Restatement Adjustment			As Restated
Revenue	$	765,616	$	(145,293	)	$	620,323
Revenue – Related Party		-		145,293			145,293
Total Revenue		765,616		-			765,616

Unaudited Condensed Consolidated Statement of Operations	Nine Months ended March 31, 2021
	As Previously Reported		Restatement Adjustment			As Restated
Revenue	$	8,499,788	$	(5,233,559	)	$	3,266,229
Revenue – Related Party		-		5,233,559			5,233,559
Total Revenue		8,499,788		-			8,499,788

Unaudited Condensed Consolidated Statements of Cash Flows	Nine Months ended March 31, 2021
	As Previously Reported			Restatement Adjustment			As Restated
Account receivable	$	(3,470,436	)	$	3,131,315		$	(339,121	)
Account receivable - related party		-			(3,131,315	)		(3,131,315	)
Net Cash Used in Operating Activities		(2,578,186	)		-			(2,578,186	)
Loan receivable		8,085,285			(8,085,285	)		-
Loan receivable - related party		-			8,085,285			8,085,285
Net Cash Used in Investing Activities		(8,162,519	)		-			(8,162,519	)
Net Cash Provided by Financing Activities		6,232,225			-			6,232,225

Unaudited Condensed Consolidated Balance Sheets	As of December 31, 2020
	As Previously Reported		Restatement Adjustment			As Restated
Current Assets:
Account receivable	$	3,121,049	$	(3,121,049	)	$	-
Account receivable - related party		-		3,121,049			3,121,049
Loan receivable		8,275,862		(8,275,862	)		-
Loan receivable - related party		-		8,275,862			8,275,862
Total Current Assets		13,414,168		-			13,414,168

Unaudited Condensed Consolidated Statement of Operations	Three Months ended December 31, 2020
	As Previously Reported		Restatement Adjustment			As Restated
Revenue	$	2,590,594	$	(1,472,062	)	$	1,118,532
Revenue – Related Party		-		1,472,062			1,472,062
Total Revenue		2,590,594		-			2,590,594

Unaudited Condensed Consolidated Statement of Operations	Six Months ended December 31, 2020
	As Previously Reported		Restatement Adjustment			As Restated
Revenue	$	7,734,172	$	(5,088,266	)	$	2,645,906
Revenue – Related Party		-		5,088,266			5,088,266
Total Revenue		7,734,172		-			7,734,172

Unaudited Condensed Consolidated Statements of Cash Flows	Six Months ended December 31, 2020
	As Previously Reported			Restatement Adjustment			As Restated
Account receivable	$	(3,006,281	)	$	3,006,281		$	-
Account receivable - related party		-			(3,006,281	)		(3,006,281	)
Net Cash Used in Operating Activities		(2,151,847	)		-			(2,151,847	)
Loan receivable		7,971,539			(7,971,539	)		-
Loan receivable - related party		-			7,971,539			7,971,539
Net Cash Used in Investing Activities		(8,047,686	)		-			(8,047,686	)
Net Cash Provided by Financing Activities		6,232,225			-			6,232,225

Unaudited Condensed Consolidated Balance Sheets	As of September 30, 2020
	As Previously Reported		Restatement Adjustment			As Restated
Current Assets:
Account receivable	$	1,439,494	$	(1,424,766	)	$	14,728
Account receivable - related party		-		1,424,766			1,424,766
Total Current Assets		12,966,548		-			12,966,548

Unaudited Condensed Consolidated Statement of Operations	Three Months ended September 30, 2020
	As Previously Reported		Restatement Adjustment			As Restated
Revenue	$	5,143,578	$	(3,616,204	)	$	1,527,374
Revenue – Related Party		-		3,616,204			3,616,204
Total Revenue		5,143,578		-			5,143,578

Unaudited Condensed Consolidated Statements of Cash Flows	Three Months ended September 30, 2020
	As Previously Reported			Restatement Adjustment			As Restated
Account receivable	$	(1,413,328	)	$	1,398,868		$	(14,460	)
Account receivable - related party		-			(1,398,868	)		(1,398,868	)
Net Cash Used in Operating Activities		(1,456,401	)		-			(1,456,401	)
Net Cash Used in Investing Activities		(74,593	)		-			(74,593	)
Net Cash Provided by Financing Activities		6,232,225			-			6,232,225

As a result of the restatement in 2020 and 2021, there is no change in the total balances of assets, liabilities, net loss or loss per share.