NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note
1 – Organization and Operations, and Going Concern
In
these notes, the terms “us”, “we”, “it”, “its”, “Shengda”, the “Company”
or “our” refer to Shengda Network Technology, Inc. and Subsidiaries. Shengda was incorporated under the laws of the State
of Nevada on March 14, 2018 under the name Soltrest, Inc. and changed its name to Shengda Network Technology Inc.
The
Company’s principal business is to provide portal for the sale of products offered by reliable manufacturers and merchants at competitive
prices. Products run the gamut from electronics to daily consumable products, food and clothing.
On
April 20, 2020, the Company purchased 10,000 shares of common stock of Peaker International Trade Group Limited (“Peaker”)
for a total consideration of $1,330. These shares comprised of 100% of the then issued and outstanding shares of common stock of Peaker.
Peaker was formed in 2018 in Hong Kong. On May 15, 2020, Peaker formed a Company in China Zhejiang Jingmai Electronic Commerce Ltd.,
of which Peaker is the sole shareholder.
Risk
and Uncertainty Concerning COVID-19 Pandemic
In
December 2019, an outbreak of a novel strain of coronavirus (COVID-19). On March 11, 2020, the World Health Organization characterized
COVID-19 as a pandemic. The Company is currently monitoring the outbreak of COVID-19 and the related business and travel restrictions
and changes to behavior intended to reduce its spread. While the Company’s operations are principally located outside the United
States, we utilize various consultants located in the United States, we participate in a global supply chain, and the existence of a
worldwide pandemic, the fear associated with COVID-19, or any, pandemic, and the reactions of governments around the world in response
to COVID-19, or any, pandemic, to regulate the flow of labor and products and impede the travel of personnel, may impact our ability
to conduct normal business operations, which could adversely affect our results of operations and liquidity. Disruptions to our supply
chain and business operations, or to our suppliers’ or customers’ supply chains and business operations, could include disruptions
from the closure of supplier and manufacturer facilities, interruptions in the supply of raw materials and components, personnel absences,
or restrictions on the shipment of our or our suppliers’ or customers’ products, any of which could have adverse ripple effects
on our manufacturing output and delivery schedule. Any of these uncertainties could have a material adverse effect on our business, financial
condition or results of operations.
Note
2 – Basis of Presentation and Summary of Significant Accounting Policies
Basis
of Presentation
The
unaudited condensed consolidated financial statements included herein have been prepared by Shengda Network Technology Inc. and Subsidiaries,
including its consolidated subsidiaries, the “Company”, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared
in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed
or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures are adequate to make the information
presented not misleading. For purposes of comparability, certain prior period amounts have been reclassified to conform to the current
year presentation. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial
statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2021, filed with
the SEC on September 28, 2021.
The
unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments)
which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. The results of operations
for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period
or for the fiscal year.
The
preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (1) the
reported amounts of assets; (2) liabilities and disclosure of contingent assets and liabilities at the date of the financial statements;
and (3) the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications
Certain
amounts in the prior periods presented have been reclassified to conform to the current period financial statement presentation. These
reclassifications have no effect on previously reported net income or loss.
Principles
of Consolidation
The
unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary Peaker International
Trade Group Limited or “Peaker” and Peaker’s wholly owned subsidiary Zhejiang Jingmai Electronic Commerce Ltd., in
China. All significant inter-company accounts and transactions have been eliminated in consolidation.
Use
of Estimates
The
preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial
statements and the reported amounts of revenues and expenses during the reporting periods. Management bases its estimates on historical
experience and on various assumptions that are believed to be reasonable in relation to the consolidated financial statements taken as
a whole under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
that are not readily apparent from other sources. Management regularly evaluates the key factors and assumptions used to develop the
estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions.
After such evaluations, if deemed appropriate, those estimates are adjusted accordingly. The actual results experienced by the Company
may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates
and the actual results, future results of operations will be affected.
Cash
The
Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.
The Company did not have any cash equivalents at March 31, 2022 and June 30, 2021, respectively.
Accounts
Receivable
Accounts
receivable are generated primarily through sales to customers and are stated at invoiced amount, net of an allowance for doubtful accounts,
and bear no interest. A provision for doubtful accounts is determined based on a specific review of outstanding customer balances and
historical customer write-off amounts and is charged to operations at the time management determines these accounts may become uncollectible.
The
Company establishes an individualized credit and collection policy based on each individual customer’s credit history. The Company
does not have a uniform policy that applies equally to all customers. The collection period usually ranges from three months to twelve
months. The Company grants extended payment terms only when the Company believes that the payment will be collectible at the end of the
term. The Company grants extended payment terms to customers based on the following factors: (a) whether or not the Company views a real
need, from the customer’s perspective for the extension, and (b) the Company’s relationship with the customer, and the Company’s
long-term business prospects.
The
Company reviews the accounts receivable on a periodic basis and based on its reviews, the Company recorded an allowance for doubtful
accounts of $685,725 and $1,640,389 as of March 31, 2022 and June 30, 2021, respectively.
Inventories
Inventory
is valued at the lower of cost or market. Inventories consist of finished goods. The Company reviews its inventories regularly for possible
obsolete goods and establishes reserves when determined necessary. As of March 31, 2022 and June 30, 2021, the Company had no reserve
for obsolete goods
Property
and Equipment
Property
and equipment are stated at cost. The straight-line depreciation method is used to compute depreciation over the estimated useful lives
of the assets, as follows:
Schedule of Estimated Useful Lives Of Assets
| Items |
|
Useful
life |
| Vehicles |
|
5
years |
Expenditures
for maintenance and repairs, which do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures
for major renewals and betterments which substantially extend the useful life of assets are capitalized. The cost and related accumulated
depreciation of assets retired or sold are removed from the respective accounts, and any gain or loss is recognized in the statement
of income in other income and expenses.
Long-lived
Assets
The
Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying
amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the
market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly
in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses
combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that
the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life. Recoverability
is assessed based on the carrying amount of the asset compared to the estimated future undiscounted cash flows expected to result from
the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss equal to the excess
of the carrying value over the assets fair market value is recognized when the carrying amount exceeds the undiscounted cash flows. The
impairment loss is recorded as an expense and a direct write-down of the asset. No impairment loss was recorded during the nine months
ended March 31, 2022 and 2021, respectively.
Leases
The
Company determines if an arrangement is a lease or contains a lease at inception. Operating lease right-of-use assets and lease liabilities
are recognized at commencement based on the present value of lease payments over the lease term. As the implicit rate is typically not
readily determinable in the Company’s lease agreements, the Company uses its incremental borrowing rate as of the lease commencement
date to determine the present value of the lease payments. The incremental borrowing rate is based on the Company’s specific rate
of interest to borrow on a collateralized basis, over a similar term and in a similar economic environment as the lease. Lease expense
is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recognized on the
balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Additionally, the
Company accounts for lease and non-lease components as a single lease component for its identified asset classes. As of March 31, 2022,
the Company did not have any finance lease.
Similar
to other long-lived assets, right-of-use assets are tested for impairment when events or conditions indicate that the carrying value
of an asset may not be fully recoverable from future cash flows. See Note 5, “Leases,” for additional information.
Revenue
Recognition
The
Company is engaged in generating revenue through online networking sales. Shengda Network Technology is neither involved in production
nor holding any inventory. The Company mainly sells products through a significant number of registered companies to members of its sales
portal. The Company intends to offer products through offline stores and customer service centers.
The
Company recognizes revenues when control of the promised goods or services is transferred to the customer, in an amount that reflects
the consideration the Company expects to be entitled to in exchange for those goods or services. In that determination, under ASC 606,
Revenue From Contracts With Customers, the Company follows a five-step model that includes: (1) determination of whether a contract,
an agreement between two or more parties that creates legally enforceable rights and obligations, exists; (2) identification of the performance
obligations in the contract; (3) determination of the transaction price; (4) allocation of the transaction price to the performance obligations
in the contract; and (5) recognition of revenue when (or as) the performance obligation is satisfied. The Company records the revenue
once all the above steps are completed.
Fair
Value Measurements
The
Company has established a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure
fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that
is significant to the fair value measurement. ASC 820 Fair Value Measurement, prioritizes the inputs into three levels that may
be used to measure fair value:
| ● |
Level
1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets. |
| ● |
Level
2 applies to assets or liabilities for which there are inputs other than quoted prices 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. If the asset or liability has a specified
(contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability. |
| |
|
| ● |
Level
3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants
would use in pricing the asset or liability. |
The
Company’s other current financial assets and current financial liabilities have fair values that approximate their carrying values.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash deposited with banks. Substantially
all of the Company’s cash is held in bank accounts in the PRC and is not protected by FDIC insurance or any other similar insurance.
The
Company’s bank account in the United States is protected by FDIC insurance. As of March 31, 2022 and June 30, 2021, the Company’s
bank account in the United States had no balances exceeding FDIC insurance of $250,000.
The
Company’s bank account in People’s Republic of China (“PRC”) is protected by FSD insurance. As of March 31, 2022
and June 30, 2021, the Company’s bank account in PRC had $0 and $140,277, balances exceeding FSD insurance of RMB 500,000.
Major
Customer
The
Company has three major customers that accounted for 37% of revenues totaling $1,015,827 for the nine months ended March 31, 2022. The
Company has no major customer that accounted for more than 10% of revenues for the three months ended March 31, 2022.
The
Company has one major customer that accounted for 62% of revenues totaling $5,233,559 for the nine months ended March 31, 2021. The Company
has one major customer that accounted for 19% of revenues totaling $145,293 for the three months ended March 31, 2021.
Major
Vendor
The
Company has three major vendors that accounted for 92%
of purchase amount totaling $2,343,379
for the nine months
ended March 31, 2022. The Company has two major vendors that accounted for 95%
of purchase amount totaling
$1,229,789
for the three months
ended March 31, 2022.
The
Company has two major vendors that accounted for 100%
of purchase amount totaling $6,958,811
for the nine months ended March 31, 2021. The
Company has one major vendor that accounted for around 100%
of purchase amount totaling around $658,856
for the three months ended March 31, 2021.
Commitment
and Contingencies
The
Company is committed to pay operating lease costs of $4,607 during the next twelve months.
Income
Tax
Income
tax returns are filed in federal, state, local and foreign jurisdictions as applicable. Provisions for current income tax liabilities
are calculated and accrued on income and expense amounts expected to be included in the income tax returns for the current year. Income
taxes reported in earnings also include deferred income tax provisions and provisions for uncertain tax positions.
Deferred
income tax assets and liabilities are computed on differences between the financial statement bases and tax bases of assets and liabilities
at the enacted tax rates. Changes in deferred income tax assets and liabilities associated with components of other comprehensive income
are charged or credited directly to other comprehensive income. Otherwise, changes in deferred income tax assets and liabilities are
included as a component of income tax expense. The effect on deferred income tax assets and liabilities attributable to changes in enacted
tax rates are charged or credited to income tax expense in the period of enactment. Valuation allowances are established for certain
deferred tax assets when realization is less than more likely than not.
Liabilities
are established for uncertain tax positions taken or positions expected to be taken in income tax returns when such positions, in our
judgment, do not meet a more-likely-than-not threshold based on the technical merits of the positions. Additionally, liabilities may
be established for uncertain tax positions when, in our judgment, the more-likely-than-not threshold is met, but the position does not
rise to the level of highly certain based upon the technical merits of the position. Estimated interest and penalties related to uncertain
tax positions are included as a component of income tax expense.
Currency
Translation
The
assets and liabilities of the Company’s subsidiaries outside the U.S. are translated into U.S. dollars at the rates of exchange
in effect at the balance sheet dates, primarily from RMB. Income and expense items are translated at the average exchange rates prevailing
during the period. Gains and losses resulting from currency transactions are recognized currently in income and those resulting from
translation of consolidated financial statements are included in accumulated other comprehensive income (loss).
Earnings
(Loss) Per Share
The
Company computes net earnings (loss) per share in accordance with ASC 260, “Earnings per Share”. ASC 260 requires
presentation of both basic and diluted net earnings per share (“EPS”) on the face of the statement of operations. Basic EPS
is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding
(denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using
the treasury stock method and convertible preferred stock using the if-converted method. Diluted EPS excludes all dilutive potential
shares if their effect is anti-dilutive.
Recent
Accounting Pronouncements
In
December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”),
ASU 2019-12, “Simplifying the Accounting for Income Taxes.” ASU 2019-12 eliminates certain exceptions within ASC 740,
“Income Taxes,” and clarifies certain aspects of ASC 740 to promote consistency among reporting entities. ASU 2019-12
is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. Most amendments
within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or
modified retrospective basis. The Company evaluated the impact that with the adoption of ASU 2019-12, and it did not have any impact
on its consolidated financial statements.
In
August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts
in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required
under current GAAP. The ASU also removes certain settlement conditions that are required for equity contracts to qualify for the derivative
scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective
for annual and interim periods beginning after December 15, 2023, although early adoption is permitted. The Company is in the process
of evaluating the impact of this new guidance on its financial statements.
Note
3 - Advance to Suppliers
Advance
to suppliers – current, net of allowance amounted $3,097,902
and $0
as of March 31, 2022
and June 30, 2021, respectively. The Company has recorded an allowance for uncollectible amount of $1,017,490
as of March 31, 2022.
Advance to suppliers – non-current amounted $6,257,263
and $0
as of March 31, 2022
and June 30, 2021, respectively. Advance to suppliers are mainly prepayment for suppliers. On February 2, 2022, the Company entered into
a purchase agreement with an unrelated party, which is also the Company’s major supplier. The Company agreed to purchase $28,394,302
(RMB 18,000
million) from the unrelated
party over next three years. As of March 31, 2022, the Company has made advance payment of $9,385,894
(RMB 5,950
million) to the unrelated
party, of which $6,257,263 (RMB
39,666,667)
are recorded as advance to suppliers – non-current. The payment is interest free and without collateral. The reasons for making
such advance are that the Company started to provide products to clients who are in the internet live broadcasting business. The company has no inventory, and the supplier directly delivers the goods to customers according
to the order.
Note
4 - Loan Receivable
On
October 25, 2020, the Company signed an agreement with an unrelated party, which is also the Company’s major customer. The Company
agreed to loan the customer the $9,415,309 (RMB60,000,000) at an annual interest rate of 7.2%. The actual loan amount shall prevail within
the total amount. The loan is guaranteed by a Company’s supplier 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 Company has recorded an allowance for uncollectible amount
of $0 as of March 31, 2022. The total loan receivable, net of allowance amounted $0 and $6,417,350 as of March 31, 2022 and June 30,
2021, respectively. The principal and the relevant interest in full amount have been paid off in February 2022.
The
Company assessed the implication on ASC 606, Revenue from Contracts with Customers, and determined that the terms of the loan
are at the fair market value and does not impact the revenue recognition of the Company.
Note
5 – Property and Equipment
Property
and equipment consisted of the cost of a vehicle. As of March 31, 2022 and June 30, 2021, property and equipment costs were $81,370
and $79,892,
and accumulated depreciation of $23,191
and $11,384,
respectively. For the nine months ended March 31, 2022 and 2021, depreciation expense including amortization of right of use assets amounted
to $14,341
and $8,215,
respectively.
Note
6 – Leases
The
Company has an operating lease for the rental of office space. Rent expense for the operating lease amounted to $0 and $3,321 for nine
months ended March 31, 2022 and 2021, respectively. The lease term was from May 11, 2020 and expired on December 10, 2020. The Company
had paid rent up until December 10, 2020.
On
January 5, 2021, Zhejiang Jingmai Electronic Commerce Ltd. leased an office in Zhejiang, China. The lease term of the office is from
January 5, 2021 to April 5, 2022. There is rent-free period which is from January 5, 2021 to April 5, 2021. On
March 20, 2022, the company renewed the one-year lease contract until March 30, 2023. The monthly
rent is approximately $394.
The
operating lease is listed as a separate line item on the Company’s consolidated financial statements. The operating lease represents
the Company’s right to use the underlying asset for the lease term. The Company’s obligation to make lease payments are also
listed as a separate line item on the Company’s consolidated financial statements.
Operating
lease right-of-use assets and liabilities commencing after January 1, 2021 are recognized at commencement date based on the present value
of lease payments over the lease term. For the nine months ended March 31, 2022, the Company recorded $2,923 in total lease operating
costs. The Company had paid rent up until April 5, 2022.
Because
the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present
value of the lease payments.
Information
related to the Company’s operating right of use assets and related lease liabilities are as follows:
Schedule
of Operating ROU Assets and Lease Liability
| | |
Nine months ended March 31,
2022 | |
| Cash paid for operating lease liabilities | |
$ | 4,872 | |
| Weighted-average remaining lease term | |
| 1.00 | |
| Weighted-average discount rate | |
| 5 | % |
| Minimum future lease payments | |
$ | 4,607 | |
The
following table presents the amortization of the Company’s lease liabilities under ASC 842 for each of the following years ending
March 31:
SCHEDULE OF AMORTIZATION OF LEASE LIABILITIES
| | |
| | |
| 2023 | |
$ | 4,732 | |
| 2024 | |
| - | |
| 2025 | |
| - | |
| 2026 | |
| - | |
| 2027 and thereafter | |
| - | |
| Total undiscounted lease liabilities | |
| 4,732 | |
| Less: Amount representing interest | |
| (126 | ) |
| Total present value of minimum lease payments | |
$ | 4,607 | |
Note
7 – Advances and Deposits
Advances
and deposits amounted to $0 and $30,976 as of March 31, 2022 and June 30, 2021, respectively. Advances are received from the customers
for the sale of products in the normal course of business and adjusted against the payments due to them.
Note
8 – Accrued Expenses and Other Payables
As
of March 31, 2022 and June 30, 2021, accrued expenses and other payables amounted to $269,069
and $98,354,
respectively.
Note
9 – Stockholders’ Equity
The
Company’s capitalization at March 31, 2022 was 1,000,000,000 authorized common shares with a par value of $0.001 per share, and
20,000,000 authorized preferred shares with a par value of $0.001 per share.
Common
Stock
On
July 1, 2021, the former President and Director of the Company agreed to forgive the working capital advance of $19,974 given to the
Company as a loan on March 20, 2020 (Note 9). The forgiveness of loan was credited to the additional paid in capital as of March 31,
2022.
The
Company did not issue any common stock during the nine months ended March 31, 2022. The total issued and outstanding shares of common
stock were 14,009,945 shares and 14,009,945 shares as of March 31, 2022 and June 30, 2021, respectively.
Preferred
Stock
On
November 10, 2020, the Company adopted a resolution to designate 1,000,000 shares as Series A Preferred Stock. The original issue price
of each share of Series A preferred Stock shall be $1.00.
Right
to Receive Dividends
The
holders of Series A Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors of the
corporation. The right to dividends on shares of Series A Preferred Stock shall be non-cumulative and no right shall accrue to holders
of Series A Preferred Stock by reason of the fact that dividends on said shares are not declared in any prior period.
Liquidation
Preference
In
the event of any liquidation, dissolution, or winding up of the corporation, either voluntary or involuntary, the holders of Series A
Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the
Corporation to the holders of Junior Securities but after distribution of such assets among, or payment thereof to holders of any Senior
Preferred Stock, an amount equal to the Series A original issue price for each share of Series A Preferred Stock plus an amount equal
to all declared but unpaid dividends on Series A Preferred Stock (the “Series A Liquidation Preference”).
After
the payment of the full Series A Liquidation Preference, the remaining assets of the corporation legally available for distribution,
if any, shall be distributed ratably to the holders of the Common Stock in an amount equal to the Series A Liquidation Preference; after
such distribution to the holders of the Common Stock, the remaining assets of the corporation legally available for distribution, if
any, shall be distributed ratably among the Series A Preferred Stock and the Common Stock. If the assets and funds legally available
for distribution among the holders of Series A Preferred Stock shall be insufficient to permit the payment to the holders of the full
Series A Liquidation Preference, then the assets and funds shall be distributed ratably among holders of Series A Preferred Stock in
proportion to the number of shares of Series A Preferred Stock owned by each holder.
Voting
Rights
Except
as otherwise provided in the Certificate of Designation or required by law, the holders of the Series A Preferred Stock shall be entitled
to vote, in the same manner and with the same effect as the holders of Common Stock, voting together with the holders of Common Stock
as a single class. For this purpose, the holders of Series A Preferred Stock shall be given notice of any meeting of stockholders as
to which the holders of Common Stock are given notice in accordance with the bylaws of the Corporation. As to any matter on which the
holders of Series A Preferred Stock shall be entitled to vote, the holders of the outstanding Series A Preferred Stock shall have voting
rights equal to an aggregate of seventy-five percent (75%) of the total shares entitled to vote by both (i) the holders of all of the
then outstanding shares of Common Stock (whether or not such holders vote) and (ii) the holders of all of the then outstanding shares
of voting shares of the Company.
Redemption
The
Company shall have the right to redeem the Series A Preferred Stock, plus any accrued and unpaid dividends, in whole but not in part,
at any time or from time to time (the “Redemption”), at a cash redemption price equal to the aggregate Series A original
issue price the Series A Preferred Stock being redeemed (the “Redemption Amount”) plus an amount equal to the amount of the
accrued and unpaid dividend thereon.
The
total issued and outstanding shares of Preferred Stock were 50,000 shares and 50,000 shares, at March 31, 2022 and June 30, 2021, respectively.
Note
10 – Related Party Transactions
Related
parties with whom the Company had transactions are:
Schedule
of Related Party Transaction
| Related
Parties |
|
Relationship |
| HangJin
Chen |
|
President/CEO/CFO/Secretary/Director |
| Youcheng
Chen |
|
Father
of CEO HangJin Chen |
| Li
Weiwei |
|
President/CEO/CFO/Secretary/Director
(Former) |
Related
party loans represent working capital advances to the Company by former President and Director in the amount of $0 and $19,974 as of
March 31, 2022 and June 30, 2021, respectively. The loan is unsecured, non-interest bearing and due on demand. The Company has not recorded
any imputed interest expense for the nine months ended March 31, 2022 and 2021. On July 1, 2021, the former President and Director agreed
to forgive the working capital advance of $19,974 given to the Company on March 20, 2020 (Note 9).
Note
11 – Subsequent Events
In
accordance with ASC 855-10, the Company has analyzed its operations subsequent to March 31, 2022 to the date these condensed consolidated
financial statements were available to be issued and has determined that the following subsequent events or transactions that
would require recognition or disclosure in the consolidated financial statements.
On April 22, 2022, the Company acquired 99% ownership
of Yiwu Tianqi Enterprise Management Co., Ltd for no consideration.
On April 22, 2022, the Company acquired 99% ownership
of Zhejiang Jingmai e-commerce Co., Ltd for no consideration.
On April 22, 2022, the Company acquired 99% ownership
of Zhejiang Jingtao Supply Chain Co., Ltd for no consideration.
On August 28, 2020, the Company
set up a 99% owned subsidiary Zhejiang Xiaojing e-commerce Co., Ltd.