UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the month of May 2023
Commission
File Number
(Translation of registrant’s name into English)
People’s
Republic of
(Address of principal executive offices)
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): ☐
EXPLANATORY NOTE
E-Home Household Service Holdings Limited (the “Company”) is furnishing this Form 6-K to provide the unaudited consolidated financial statements for the six months ended December 31, 2022 and 2021. This Form 6-K is hereby incorporated by reference into the registration statements of the Company on Form F-3 (Registration Number 333-259464) to the extent not superseded by documents or reports subsequently filed or furnished by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
FORWARD-LOOKING INFORMATION
This Report on Form 6-K contains forward-looking statements and information relating to us that are based on the current beliefs, expectations, assumptions, estimates and projections of our management regarding our company and industry. When used in this report, the words “may”, “will”, “anticipate”, “believe”, “estimate”, “expect”, “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management’s current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: significant legal and operational risks associated with having substantially all of our business operations in China, the Chinese government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of the securities or could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and could cause the value of such securities to significantly decline or be worthless, trading in our securities may be prohibited under the Holding Foreign Companies Accountable Act if the PCAOB subsequently determines our audit work is performed by auditors that the PCAOB is unable to inspect or investigate completely, the effects of the global Covid-19 pandemic, changes in domestic and foreign laws, regulations and taxes, uncertainties related to China’s legal system and economic, political and social events in China, the volatility of the securities markets; and other risks including, but not limited to, those that we discussed or referred to in the Company’s disclosure documents filed with the U.S. Securities and Exchange Commission (the “SEC”) available on the SEC’s website at www.sec.gov, including the Company’s most recent Annual Report on Form 20-F as well as in our other reports filed or furnished from time to time with the SEC. If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.
All forward-looking statements included herein attributable to us or other parties or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Except to the extent required by applicable laws and regulations, we undertake no obligations to update these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.
1
EXHIBIT INDEX
| Exhibit Number |
Description | |
| 99.1 | Unaudited Interim Consolidated Financial Statements as of December 31, 2022 and for the six months ended December 31, 2022 and 2021 | |
| 99.2 | Operating and Financial Review and Prospects in Connection with the Interim Consolidated Financial Statements for the six months ended December 31, 2022 | |
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
2
SIGNATURES
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.
| Date: May 25, 2023 | E-Home Household Service Holdings Limited | |
| By: | /s/ Wenshan Xie | |
| Wenshan Xie | ||
| Chief Executive Officer | ||
3
Exhibit 99.1
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
AS OF DECEMBER 31, 2022 AND JUNE 30, 2022
AND
FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 AND 2021
F-1
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-2
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2022 (UNAUDITED) AND JUNE 30, 2022
(IN U.S. DOLLARS, EXCEPT FOR NUMBER OF SHARES DATA)
| December 31, 2022 (unaudited) | June 30, 2022 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Advances to suppliers | ||||||||
| Inventories | ||||||||
| Prepayment, receivables and other current assets | ||||||||
| Due from related parties | ||||||||
| Loan receivables | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Long-term investment | ||||||||
| Operating lease - right-of-use assets, net | ||||||||
| Finance lease - right-of-use assets, net | ||||||||
| Long-term deposits and other non-current assets | ||||||||
| Deferred income tax assets | ||||||||
| Goodwill | ||||||||
| Total Non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Advances from customers | ||||||||
| Taxes payable | ||||||||
| Current maturities of operating lease liabilities | ||||||||
| Current maturities of finance lease liabilities | ||||||||
| Short-term loan | ||||||||
| Total current liabilities | ||||||||
| Long-term portion of operating lease liabilities | ||||||||
| Long-term portion of finance lease liabilities | ||||||||
| Convertible note | ||||||||
| Deferred tax liabilities, net | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total equity attributable to shareholders | ||||||||
| Non-controlling interest | ( | ) | ||||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-3
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER
COMPREHENSIVE (LOSS) INCOME
FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 AND 2021
(IN U.S. DOLLARS, EXCEPT SHARES DATA)
(UNAUDITED)
| For the six months ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Revenues | ||||||||
| Installation and maintenance | $ | $ | ||||||
| Housekeeping | ||||||||
| Senior care services | ||||||||
| Sales of pharmaceutical products | - | |||||||
| Educational consulting services | - | |||||||
| Total revenues | ||||||||
| Cost of revenues | ||||||||
| Installation and maintenance | ||||||||
| Housekeeping | ||||||||
| Senior care services | ||||||||
| Sales of pharmaceutical products | - | |||||||
| Educational consulting services | - | |||||||
| Total cost of revenues | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Sales and marketing expenses | ||||||||
| General and administrative expenses | ||||||||
| Total operating expenses | ||||||||
| (Loss) Income from operations | ( | ) | ||||||
| Other income (expenses) | ||||||||
| Interest income | ||||||||
| Interest expenses | ( | ) | ( | ) | ||||
| Amortization of financing cost | ( | ) | ( | ) | ||||
| Fair value loss – financial instruments | ( | ) | - | |||||
| Government subsidy | - | |||||||
| Foreign currency exchange gain (loss), net | ( | ) | ||||||
| Total other (expenses) income, net | ( | ) | ||||||
| (Loss) Income before income taxes | ( | ) | ||||||
| Income tax expense | ( | ) | ( | ) | ||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Including: | ||||||||
| Net loss attributable to the Company’s shareholders | ( | ) | ( | ) | ||||
| Net loss attributable to non-controlling interests | ( | ) | - | |||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive (loss) income | ||||||||
| Foreign currency translation adjustment, net of nil tax | ( | ) | ||||||
| Total comprehensive (loss) income | $ | ( | ) | $ | ||||
| ( | ) | ( | ) | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 AND 2021
(IN U.S. DOLLARS, EXCEPT SHARES DATA)
(UNAUDITED)
| Number of Shares | Ordinary Shares | Additional paid-in capital | Statutory reserve | Retained Earnings | Accumulated other comprehensive income (loss) | Equity attributable to the Company’s shareholders | Non-controlling interest | Total equity | ||||||||||||||||||||||||||||
| Balance at June 30, 2021 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | - | ( | ) | ||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | |||||||||||||||||||||||||||||||||||
| Acquisition of former non-controlling interest in HAPPY | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Disposal of | - | - | ||||||||||||||||||||||||||||||||||
| Issuance of the convertible note | - | - | - | |||||||||||||||||||||||||||||||||
| Balance at December 31, 2021 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Balance at June 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Acquisition of | ||||||||||||||||||||||||||||||||||||
| Acquisition of | ||||||||||||||||||||||||||||||||||||
| Acquisition of | ||||||||||||||||||||||||||||||||||||
| Shares issued to investors | ||||||||||||||||||||||||||||||||||||
| Shares issued under equity incentive plan | ||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of convertible notes | ||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-5
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2022 AND 2021
(IN U.S. DOLLARS)
(UNAUDITED)
| For the six months ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash provided by operating activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Deferred tax (benefit)/expense | ( | ) | ||||||
| Interest expense | ||||||||
| Depreciation and amortization | ||||||||
| Amortization of right-of-use assets | ||||||||
| Convertible note - Amortization of financing cost | ||||||||
| Equity incentive plan | ||||||||
| Fair value loss – financial instruments | ||||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivables, net | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Prepayment, receivables and other current assets | ( | ) | ||||||
| Long-term deposits and other non-current assets | ( | ) | ||||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Taxes payable | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash provided by operating activities | ||||||||
| Investing Activities | ||||||||
| Purchases of property, plant and equipment | ( | ) | ( | ) | ||||
| Purchases of intangible assets | ( | ) | ||||||
| Long-term investment | ( | ) | ||||||
| Consideration paid to former non-controlling shareholders of HAPPY | ( | ) | ||||||
| Due from related parties | ( | ) | ||||||
| Loan receivables | ( | ) | ||||||
| Refund for potential acquisitions | ||||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing Activities | ||||||||
| Proceeds from stock issuance | ||||||||
| Proceeds from short-term loan | ||||||||
| Payment of financial leases | ( | ) | ( | ) | ||||
| Proceeds from convertible note | ||||||||
| Payment of convertible note issuance cost | ( | ) | ||||||
| Net cash provided by financing activities | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| Effects of currency translation | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURES | ||||||||
| Income taxes paid | $ | $ | ||||||
| Interest paid | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-6
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS
E-Home Household Service Holdings Limited (the “Company”)
was incorporated as a limited company under the law of Cayman Islands on
Reorganization
In preparation of its initial public offering in the United States (“IPO”), the following transactions were undertaken to reorganize the legal structure of the Company. The reorganization involved (i) the incorporation of the Company in the Cayman Islands as a holding company; (ii) the establishment of E-Home Household Service Holdings Limited (“E-Home Hong Kong”) as a wholly-owned subsidiary in Hong Kong, PRC; (iii) the establishment of E-Home Household Service Technology Co., Ltd. (“WOFE”), as a wholly-owned subsidiary of E-Home Hong Kong in Fujian, PRC; (iv) the entry by WFOE into contractual arrangements with Pingtan Comprehensive Experimental Area E Home Service Co., Ltd. (“E-Home Pingtan”) and Fuzhou Bangchang Technology Co. Ltd. (“Fuzhou Bangchang”) and their shareholders. The Company, E-Home Hong Kong and WFOE are all holding companies and had not commenced operation until this reorganization was complete. A reorganization of the Company’s legal structure was completed in February 2019.
As all the entities involved in the process of the Reorganization are under common control before and after the Reorganization, the Reorganization is accounted for in a manner similar to a pooling-of-interest with the assets and liabilities of the parties to the Reorganization carried over at their historical amounts.
Dissolution of the Company’s variable interest entity structure
On October 18, 2021, E-Home WFOE entered into an equity transfer agreement with each of E-Home Pingtan and Fuzhou Bangchang and their respective shareholders, pursuant to which E-Home WFOE exercised the options to acquire all of the equity interests in each of E-Home Pingtan and Fuzhou Bangchang from their respective shareholders. Upon the registration of the equity transfers with the local governmental authorities as of October 27, 2021, the equity transfers were closed, the company’s VIE structure was dissolved and each of E-Home Pingtan and Fuzhou Bangchang became a wholly owned indirect subsidiary of the Company.
Equity transfer agreements
Acquisition of non-controlling interest in HAPPY
On August 10, 2021, the Company’s PRC subsidiary,
| In USD | ||||
| Purchase consideration | ||||
| Noncontrolling interests | ( | ) | ||
| Additional paid-in capital | ||||
F-7
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Reverse stock split
On October 3, 2022, the Company’s board of directors approved
to effect a one-for-twenty reverse stock split of its ordinary shares (the “one-for-twenty Reverse Stock Split”) with the
market effective on October 4, 2022, such that the number of the Company’s authorized preferred and ordinary shares remain unchanged,
and the par value of each ordinary share is increased from US$
On April 12, 2023, the Company announced the effect
of a one-for ten reverse stock split of its ordinary shares (the “one-for-ten Reverse Stock Split”) approved by the Company’s
Annual General Meeting of Shareholders held on March 28, 2023. As a result of the one-for-ten Reverse Stock Split, each ten pre-split
ordinary shares outstanding were automatically combined and converted to
The number of ordinary shares outstanding as of December 31, 2021, June 30, 2022 and 2021, and for the six months ended December 31, 2022 and 2021 were retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 13, 2023.
The Company’s major consolidated subsidiaries are as follows:
| Name | Date of Incorporation | Place of Organization | % of Ownership | |||||
| E-Home Household Service Holdings Limited | % | |||||||
| E-Home Household Service Technology Co., Ltd. | % | |||||||
| Pingtan Comprehensive Experimental Area E Home Service Co., Ltd. | % | |||||||
| Fuzhou Bangchang Technology Co. Ltd. | % | |||||||
| Fuzhou Yongheng Xin Electric Co., Ltd. (“YHX”) | % | |||||||
| Fujian Happiness Yijia Family Service Co., Ltd. | % | |||||||
| Yaxing Human Resource Management (Pingtan)Co., Ltd. | % | |||||||
| Fuzhou Gulou Jiajiale Family Service Co. Ltd. | % | |||||||
| Yaxin Human Resource Management (Fuzhou) Co., Ltd. | % | |||||||
| Putian Youyou Housekeeping Co., Ltd. (“Youyou”) | % | |||||||
| Zhongrun (Fujian) Pharmaceutical Co., Ltd. (“Zhongrun”) | % | |||||||
| Fujian Chuangying Business School Co., Ltd. (“Chuangying”) | % | |||||||
The accompanying condensed consolidated financial statements include the financial statements of the Company and its subsidiaries.
NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) for interim financial information and with the instructions to Form 6-K and Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended June 30, 2022 and notes thereto and other pertinent information contained in our Form 20-F the Company has filed with the Securities and Exchange Commission (the “SEC”) on November 4, 2022. The results of operations for the six months ended December 31, 2022, are not necessarily indicative of the results to be expected for the full fiscal year ending June 30, 2023.
F-8
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied. The accompanying consolidated financial statements include the financial statements of E-Home Household Service Holdings Limited and its subsidiaries. All inter-company balances and transactions have been eliminated upon consolidation.
Use of estimates
In preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, prepayments, and other receivables, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets, long-term investment and goodwill, and provision necessary for contingent liabilities. Actual results could differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, cash accounts, interest bearing savings accounts and time certificates of deposit with a maturity of three months or less when purchased. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company maintains most of the bank accounts in the PRC. Cash balances in bank accounts in PRC are not insured by the Federal Deposit Insurance Corporation or other programs.
Accounts receivable, net
Accounts receivable are recognized and carried
at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually determines the adequacy of reserves
for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful
receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s
best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on management
of customers’ credit and ongoing relationship, management makes conclusions whether any balances outstanding at the end of the period
will be deemed uncollectible on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables
balances, with a corresponding charge recorded in the consolidated statements of operations and other comprehensive (loss) income. Delinquent
account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection
is not probable. As of December 31, 2022 and June 30, 2022, the Company determined that all accounts receivable were collectible and thus
the allowance for doubtful accounts were $
Loan receivables
Loan receivables are recognized when cash is advanced
to the borrowers. Short-term loan receivables are carried at fair value when the fair value option is elected. The Company usually determines
the adequacy of reserves for doubtful loan receivables based on individual account analysis and establishes a provision for doubtful loan
receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s
best estimates of specific losses on individual exposure. As of December 31, 2022 and June 30, 2022, the Company determined that all loans
receivable were collectible and thus the allowance for loan receivables were $
Advances to suppliers
Advances to suppliers refer to advances for purchase of inventories or services, which are applied against accounts payable when the inventories or services are received.
The Company reviews
a supplier’s credit history and background information before advancing a payment. If the financial condition of its suppliers
were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Company would write off such
amount in the period when it is considered as impaired. The allowance for advances to suppliers recognized as of December 31, 2022 and
June 30, 2022 were $
Inventories
Inventories primarily include purchased accessories, appliances and E-watches for senior care services. Cost of inventories is based on purchase costs and is determined by the weighted-average method. Inventories are stated at the lower of cost or net realizable value. Net realizable value represents the anticipated selling price, net of distribution cost and other costs related to selling the inventories. For the six months ended December 31, 2022 and 2021, the Company recorded no impairment provision of inventories for lower of cost or net realizable value, respectively.
F-9
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Property, plant and equipment, net
Property, plant and equipment are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred. Depreciation is provided on the straight-line method based on the estimated useful lives of the assets as follows:
| Useful Lives | ||
| Buildings and improvements | ||
| Office and electronic equipment | ||
| Motor vehicles | ||
| Machinery |
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 betterment 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 consolidated statements of income and other comprehensive (loss) income in other income or expenses.
Intangible assets, net
Intangible assets consist of software acquired from third parties, customer relationships, copyrights and trademarks acquired from business combination and senior care service app developed by the Company. The Company has purchased software from third parties used for operation management and developed an app for its senior care service. Customer relationships include but are not limited to: (1) customer contracts and related customer relationships, (2) noncontractual customer relationships, (3) customer lists, and (4) order or production backlog acquired by the Company from business combination. In accordance with ASC 805-20-55, customer relationships should be recognized separately from goodwill if it meets either of the following criteria: (1) contractual-legal criterion: the intangible asset arises from contractual or other legal rights (regardless of whether those rights are transferable or separable from the acquired business or from other rights and obligations); or (2) separability criterion: the intangible asset is capable of being separated or divided from the acquired business and sold, transferred, licensed, rented, or exchanged.
Intangible assets with finite lives are carried at cost less accumulated amortization. All intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives. Software, senior care service app, copyrights, trademarks and customer relationships are amortized on a straight-line basis over the estimated economic useful lives of five to ten years.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in a business combination. The Company assesses goodwill for impairment in accordance with ASC Subtopic 350-20, Intangibles—Goodwill and Other: Goodwill (“ASC 350-20”), which requires that goodwill to be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events, as defined by ASC 350-20.
The Company has the option to assess qualitative factors first to determine whether it is necessary to perform the quantitative test in accordance with ASC 350-20. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. If the Company believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, the quantitative impairment test described above is required. Otherwise, no further testing is required. The quantitative impairment test compares the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess.
The Company performed qualitative assessments for the goodwill. Based on the requirements of ASC 350-20, the Company evaluated all relevant factors including, but not limited to, macroeconomic conditions, industry and market conditions, financial performance, and the share price of the Company. The Company weighed all factors in their entirety and concluded that it was not more-likely-than-not the fair value was less than the carrying amount of goodwill, and further impairment testing on goodwill was unnecessary as of December 31, 2022.
On disposal of a portion of reporting unit that constitutes a business, the attributable amount of goodwill is included in the determination of the amount of gain or loss recognized upon disposal. When the Group disposes of a business within the reporting unit, the amount of goodwill disposed is measured on the basis of the relative fair value of the business disposed and the portion of the reporting unit retained. This relative fair value approach is not used when the business to be disposed was not integrated into the reporting unit after its acquisition, in which case the current carrying amount of the acquired goodwill should be included in the carrying amount of the business to be disposed.
F-10
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Impairment of long-lived assets other than goodwill
Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Long-lived assets with carrying values that are not expected to be recovered through future cash flows are written down to their estimated fair values. The carrying value of a long-lived asset is deemed not recoverable if it exceeds the sum of undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the asset’s carrying value exceeds the sum of its undiscounted cash flows, a non-cash asset impairment charges equal to the excess of the asset’s carrying value over its estimated fair value is recorded. Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at a specified measurement date. We measure fair value using market price indicators or, in the absence of such data, appropriate valuation techniques.
Leases
Leases are classified at lease commencement date as either a finance lease or an operating lease. A lease is a finance lease if it meets any of the following criteria: (a) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term. (b) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (c) the lease term is for the major part of the remaining economic life of the underlying asset, (d) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset or (e) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. When none of the criteria meets, the lease shall be classified as an operating lease.
For lessee, a lease is recognized as a right-of-use asset with a corresponding liability at lease commencement date. The lease liability is calculated at the present value of the lease payments not yet paid by using the lease term and discount rate determined at lease commencement. The right-of-use asset is calculated as the lease liability, increased by any initial direct costs and prepaid lease payments, reduced by any lease incentives received before lease commencement. The right-of-use asset itself is amortized on a straight-line basis unless another systematic method better reflects how the underlying asset will be used by and benefits the lessee over the lease term.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). The amendments in this ASU require an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. The Company adopted ASC 842 for the year ended June 30, 2017 by using a modified retrospective transition approach in the accompanying financial statements of the Company. The adoption of this standard had a material impact on the Company’s financial position, with no material impact on the results of operations and cash flows (see Note 10 and Note 11).
Convertible note- cash conversion feature
ASC 470, Debt, requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. We measured the estimated fair value of the debt component of our convertible notes as of the issuance date based on our nonconvertible debt borrowing rate. The equity components of the convertible senior notes have been reflected within additional paid-in capital in our consolidated balance sheet, and the resulting debt discount is amortized over the period during which the convertible notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense.
Freestanding instruments-warrants
Per ASC 470-20-30-2, when detachable warrants (detachable call options) are issued in conjunction with a debt instrument as consideration in purchase transactions, the amounts attributable to each class of instrument issued shall be determined separately, based on values at the time of issuance.
(1) The first step in determining the proper accounting for warrants is to determine whether the equity-linked component is free standing financial instrument of embedded in a host instrument. According to the warrant agreement, the debt and warrant agreements were both entered into by the parties on December 20, 2021 and May 13, 2022 warrants were issued as part of the subscription agreement with the note holders. The holder can transfer the warrant to any person or entity in accordance with the warrant agreement as long as there is a registration statement effective. The warrants can be exercised any time after issuance dates and prior to the expiration date. The debt can remain outstanding even after the warrants are exercised. Based on the above facts, the warrants should be considered as a freestanding instrument.
(2) The next step is to determine whether the free-standing instrument is within the scope of ASC 480. The warrants are not within the scope of ASC 480 because the warrant is not considered a mandatorily redeemable financial instrument. The Company has no obligation to redeem the shares or settle the obligation by transferring assets.
(3) The last step is to determine if the freestanding instrument should be accounted for as an equity instrument or liability within the guidance of ASC 815-40. The Company determines the value of the warrants using the Black- Scholes Option Pricing Model (“Black-Scholes”) using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the volatility of the stock.
F-11
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Based on the above analysis, the Company concluded that the warrant shall be classified as equity and is recorded at fair value. Subsequent re-measurement is not required.
Convertible debt – derivative treatment
When the Company issues debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: a) one or more underlying, typically the price of our common stock; b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; c) no initial net investment, which typically excludes the amount borrowed; and d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked component that meets the definition of a derivative does not have to be separated from the host instrument if the component qualifies for the scope exception for certain contracts involving an issuer’s own equity. The scope exception applies if the contract is both a) indexed to its own stock; and b) classified in shareholders’ equity in its statement of financial position.
If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The convertible debt derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the debt. The Company did not identify any derivative in their convertible notes issued during the reporting period.
Fair value of financial instruments
The fair value of a financial instrument is defined as the exchange price that would be received from an asset or paid to transfer a liability (as exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, time deposits, accounts receivable, prepaid expenses and other current assets, accounts payable, and other current liabilities, approximate their fair values because of the short maturity of these instruments and market rates of interest.
ASC 820 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
| Level 1 – | Quoted prices in active markets for identical assets and liabilities. |
F-12
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Level 2 – | Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. |
| Level 3 – | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. |
The Company considers the carrying amount of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, advances to suppliers, prepayment, receivables and other current assets, due from related parties, loan receivables, accounts payable and advances from customers to approximate the fair value of the respective assets and liabilities as of December 31, 2022 and June 30, 2022 owing to their short-term or immediate nature.
Revenue recognition
The Company adopted Accounting Standards Codification No. 606, Revenue from Contracts with Customers (ASC 606) beginning January 1, 2018 and elected to adopt ASC 606 under the modified retrospective method. This guidance was applied retrospectively to the most current period presented in the Company’s consolidated financial statements. The adoption of ASC 606 did not have a material impact on the consolidated financial statements of the Company.
The Company generates revenues primarily from installation & maintenance, housekeeping services, senior care services, sales of pharmaceutical products and educational consulting services. The Company sells its installation & maintenance and housekeeping services through a third-party service provider WeChat platform. The Company’s revenues are subject to value added tax (“VAT”). To record VAT payable, the Company uses the gross presentation method, which presents the taxable services and the available input VAT amount (at the rate applicable to the supplier). Revenues are recorded net of VAT in accordance with the ASC 606. The recognition of revenues involves certain management judgments. The amount and timing of our revenues could be materially different for any period if management made different judgments or utilized different estimates.
The Company does not have amounts of contract
assets since revenue is recognized as control of goods or services is transferred. The contract liabilities consist of advance payments
from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period.
All contract liabilities are included in advance from customers in the condensed consolidated balance sheets. As of December 31, 2022
and June 30, 2022, the Company record advance from customers of $
Installation & maintenance
Installation and maintenance services mainly consist of the following services: technical home installation and repair, maintenance and other after sale services. Revenues from installation and maintenance services are recognized at a point in time once the service is transferred to the customer. For service arrangements that include multiple performance obligations, revenues are allocated to each performance obligation based on its standalone selling price. The Company allocates arrangement consideration in multiple-deliverable revenue arrangements at the inception of an arrangement to all deliverables based on the relative selling price method, generally based on the best estimate of selling price. The Company, acting as principal, contracts with third-party service providers (i.e., service outlets), acting as agents. The Company is responsible for market development and providing the customer information to the service provider, directing the outlet to provide services and coordination with the customer, while the service provider provides the door-to-door service. The price of services is set by the Company and the service provider is only responsible for collection of payments. When the Company’s end customers place orders online for services, they pay either a required visit fee or the estimated full amount of service fee through third-party payment platforms, such as WeChat Pay and Alipay. The Company chooses the service provider by the proximity principle. If the customer is not satisfied with the chosen provider, the service provider can be re-selected. Regardless of the service provider’s performance, the Company is still liable to complete the orders. If the end customer fails to pay after satisfactory service is provided and the service provider is unable to collect payment from the end customer, the Company will communicate directly with the end customer. The service provider is not obligated to pay the Company. To minimize our risk, the service provider will remit payment of any outstanding receivables each month.
F-13
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Housekeeping services
Housekeeping services refer to services including housecleaning, nanny service, maternity matron and personnel staffing. Revenues from housekeeping are recognized at a point in time upon completion of services to the customer based on the relative selling price method. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods or services itself (that is, the entity is a principal) or to arrange for the other party to provide those goods or services (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the services.
Senior care services
Senior care services refer to services including BP, heart rate test, daily steps count, location and track record, call for help by Wechat or phone, and other care services rendered to senior customers through an E-watch, which is given to the customers when they pay the annual fees. The customers sign a contract for the services with the Company. The contract term is normally one year. The revenues from senior care services are allocated into the revenue from the E-watch sold and the revenue of the services provided. Revenues from the E-watch sold are recognized at a point in time once customers receive the E-watch and the revenues from the services provided are recognized over the service period. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods or services itself (that is, the entity is a principal) or to arrange for the other party to provide those goods or services (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the services.
Disaggregation of revenue from contracts with customers
During the process of performing the installation and maintenance services, the Company also sells household appliance accessories such as air conditioner parts to its customers according to the customers’ needs. The Company did not sell these household appliance accessories separately. The senior care services consist of the sale of E-watch and the care services. The E-watch cannot be sold to the customers solely without the care services, and the care services should be rendered by the E-watch. Consequently, the Company regards these operating activities as operating in one material segment, being the revenue of senior care services.
Based on the above discussion, the Company disaggregated sales of household appliance accessories from installation and maintenance revenue and senior care services revenue into the sales of the E-watch and the care service. Sales of household appliance accessories and E-watches are recognized in revenue at a point in time while revenue from care service is recognized over a period.
Sales of pharmaceutical products
The Company also generates revenues from sales of pharmaceutical products to its customers, which are mainly pharmaceutical stores in PRC. Under the adoption of ASC 606, the Company recognized revenues in a manner to depict the transfer of goods to a customer at an amount that reflects the consideration expected to be received in exchange for those goods. The Company considers revenue realized or realizable and earned when all the five following criteria are met: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company considers customer purchase orders to be the contracts with a customer. As part of its consideration of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods itself (that is, the entity is a principal) or to arrange for the other party to provide those goods (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the goods. The Company controls the specified good before that good is transferred to its customers based on the following indicators: (1) the Company is primarily responsible for fulfilling the promise to provide the specified good, (2) the Company bears the inventory risk before or after (i.e., customer has a right of return) the specified good has been transferred to a customer, (3) the Company has discretion in setting the price for the specified good.
F-14
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company provide its customers with rights to return the sold goods for several days after the customers’ acceptance of the goods and can reasonably estimates return provision for the goods. The product return provisions are estimated based on (1) historical rates, (2) specific identification of outstanding returns not yet received from customers and outstanding discounts and claims and (3) estimated returns, discounts and claims expected, but not yet finalized with customers. The Company analyzed historical refund claims for defective products and concluded that they have been immaterial since the Company can return the goods returned from the customers to its suppliers.
Revenues are reported net of all VAT. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on their relative standalone selling price.
Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied at a point in time), which typically occurs at delivery. Prices are determined based on negotiations with the Company’s customers when signing the contracts and are not subject to adjustment.
Educational consulting services
The Company also generates revenues from providing educational consulting services to its customers. Revenues from educational consulting services are recognized at a point in time upon completion of services to the customer based on the relative selling price method. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods or services itself (that is, the entity is a principal) or to arrange for the other party to provide those goods or services (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the services.
Cost of revenues
Cost of revenues consists of service fees paid to staff, outlets, suppliers and the cost of products sold.
Government subsidies
Government subsidies as the compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related cost are recognized in profit or loss in the period in which they become receivable. Government subsidies are recognized when received and all the conditions for their receipt have been met.
For the six months ended December 31, 2022 and
2021, the Company received government subsidies of $
Income taxes
Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Any PRC tax paid by subsidiaries during the year is recorded. Deferred income taxes are recognized for all significant temporary differences at enacted rates and classified as current or non-current based upon the classification of the related asset or liability in the financial statements. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all, the deferred tax asset will not be realized.
Ordinary shares
The Company accounts for repurchased ordinary shares under the cost method and includes such treasury stock as a component of the common shareholders’ equity. Cancellation of treasury stock is recorded as a reduction of ordinary shares, additional paid-in capital and retained earnings, as applicable. An excess of purchase price over par value is allocated to additional paid-in capital first with any remaining excess charged entirely to retained earnings.
Related parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, shareholder, or a related corporation.
F-15
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Earnings per share
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average ordinary shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There were no potentially dilutive ordinary shares during the six months ended December 31, 2022 and 2021.
Comprehensive (loss) income
Foreign currency translation
The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. The consolidated financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments are included as a separate component of accumulated other comprehensive (loss) income.
The value of RMB against U.S. Dollar may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s consolidated financial condition in terms of U.S. Dollar reporting. The following table outlines the currency exchange rates that were used in the consolidated financial statements:
| December 31, 2022 |
June 30, 2022 |
December 31, 2021 |
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| Year-end spot rate | ||||||||||||
| Average rate | ||||||||||||
Segment reporting
Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the financial information provided regularly to the Company’s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Company’s various lines of business and geographical locations.
F-16
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria. The Company’s five segments are installation & maintenance, housekeeping, senior care services, sales of pharmaceutical products, and educational consulting services. The Company launched senior care services and started generating revenue from this new segment in August 2019. Segments of sales of pharmaceutical products and educational consulting services were acquired from business combination during the six months ended December 31, 2022.
Business combinations
The Company accounts for its business combinations using the purchase method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities the Company acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total of cost of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interests in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings.
In a business combination achieved in stages, the Company remeasures its previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the re-measurement gain or loss, if any, is recognized in “Others, net” in the consolidated statements of comprehensive (loss) income.
The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and noncontrolling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Company determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. There are no known commitments or contingencies as of December 31, 2022 and June 30, 2022.
Concentration of risks
Exchange rate risks
The Company’s Chinese subsidiaries may be
exposed to significant foreign currency risks from exchange rate fluctuations and the degree of volatility of foreign exchange rates between
the U.S. Dollar and the RMB. As of December 31, 2022 and June 30, 2022, the RMB denominated cash and cash equivalents amounted to $
Currency convertibility risks
Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with other information such as suppliers’ invoices, shipping documents and signed contracts.
F-17
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Concentration of credit risks
Financial instruments that potentially subject the Company to concentration of credit risks consist primarily of cash and cash equivalents and accounts receivable, the balances of which stated on the consolidated balance sheets represented the Company’s maximum exposure. The Company places its cash and cash equivalents in good credit quality financial institutions in China.
Risks and uncertainties
The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.
Recent accounting pronouncements
The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This amends guidelines on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 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 right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended the effective date of ASU 2016-13. The amendments in these ASUs are effective for the Company’s fiscal years, and interim periods within those fiscal years beginning April 1, 2022. Early adoption is permitted. The Company adopted this guidance on July 1, 2022 and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity, and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year, for public business entities that meet the definition of a SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company as a small reporting company expects to adopt this guidance on July 1, 2024 and the adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The new amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements.
In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820) – Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which stipulates that a contractual restriction on the sale of an equity security should not be considered part of the equity security’s unit of account and, therefore, should not be considered in measuring its fair value. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements.
The Company does not believe other recently issued but not yet effective accounting statements, if recently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of operations and other comprehensive (loss) income and statements of cash flows.
F-18
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – BUSINESS COMBINATIONS
For the six months ended December 31, 2022, the
Company completed several business combinations with total purchase consideration in aggregate was $
Goodwill, which is non-deductible for tax purposes, is primarily attributable to the synergies expected to be achieved from the acquisitions.
The valuations used in the purchase price allocation were determined by the Company with the assistance of independent third-party valuation firms. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches. As the acquirees are all private companies, the fair value estimates of pre-existing equity interests and debt investment or noncontrolling interests are based on significant inputs considered by market participants which mainly include (a) discount rate, (b) projected terminal value based on future cash flows, (c) equity multiples or enterprise value multiples of companies in the same industries and (d) adjustment for lack of control or lack of marketability.
According to the independent valuation reports, the purchase prices allocation to the assets acquired and liabilities assumed based on their fair values were as follows:
Acquisition of
| In USD | ||||
| Fair value of total consideration transferred: | ||||
| Equity instrument ( | ||||
| Cash consideration | ||||
| Total consideration | ||||
| Recognized amounts of identifiable assets acquired and liability assumed: | ||||
| Intangible assets - customer relationships | ||||
| Deferred tax liabilities | ( | ) | ||
| Total identifiable net assets | ||||
| Fair value of non-controlling interest | ||||
| Goodwill | ||||
Acquisition of
| In USD | ||||
| Fair value of total consideration transferred: | ||||
| Equity instrument ( | ||||
| Cash consideration | ||||
| Total consideration | ||||
| Recognized amounts of identifiable assets acquired and liability assumed: | ||||
| Total identifiable net assets | ||||
| Fair value of non-controlling interest | ||||
| Goodwill | ||||
Acquisition of
| In USD | ||||
| Fair value of total consideration transferred: | ||||
| Equity instrument ( | ||||
| Total consideration | ||||
| Recognized amounts of identifiable assets acquired and liability assumed: | ||||
| Intangible assets - customer relationships | ||||
| Intangible assets - copyrights and trademarks | ||||
| Deferred tax liabilities | ( | ) | ||
| Total identifiable net assets | ||||
| Fair value of non-controlling interest | - | |||
| Goodwill | ||||
F-19
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 – ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following as of December 31, 2022 and June 30, 2022:
| December 31, 2022 | June 30, 2022 | |||||||
| Accounts receivable, gross | $ | $ | ||||||
| Less: allowance for doubtful accounts | ||||||||
| Accounts receivable, net | $ | $ | ||||||
The Company recorded no allowance for doubtful
accounts as of December 31, 2022 and June 30, 2022. The Company gives its customers credit period of 30 days to 90 days and continually
assesses the recoverability of uncollected accounts receivable. As of December 31, 2022 and June 30, 2022, the balances of the Company’s
accounts receivable were all due within
NOTE 5 – PREPAYMENT, RECEIVABLES AND OTHER CURRENT ASSETS
Prepayments, receivables and other current assets as of December 31, 2022 and June 30, 2022, consisted of the following:
| December 31, 2022 | June 30, 2022 | |||||||
| Performance deposits* | $ | $ | ||||||
| Deposits for potential acquisitions** | ||||||||
| Prepaid for marketing fee*** | ||||||||
| Prepaid services fee | ||||||||
| Prepaid office deposit | ||||||||
| Receivable from equity transfer**** | ||||||||
| Other prepaid expenses and current assets | ||||||||
| Total prepayments, deposits and other current assets | $ | $ | ||||||
| * |
| ** |
On January 20, 2022, the Company and E-Home Pingtan
entered into an equity transfer agreement to acquire
On January 20, 2022, the Company and E-Home Pingtan entered into an
equity transfer agreement to acquire |
| *** |
| **** |
F-20
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 – LOAN RECEIVABLES
Loan receivables consisted of the following as of December 31, 2022 and June 30, 2022:
| December 31, 2022 | June 30, 2022 | |||||||
| Loan receivable – Jianping Guo | $ | $ | ||||||
| Loan receivable – Yuwin Group Limited | ||||||||
| Total loan receivables | $ | $ | ||||||
Loan receivables as of December 31, 2022 of $
NOTE 7 – PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consisted of the following as of December 31, 2022 and June 30, 2022:
| December 31, 2022 | June 30, 2022 | |||||||
| Building and improvements | $ | $ | ||||||
| Office and electronic equipment | ||||||||
| Motor vehicles | ||||||||
| Machinery | ||||||||
| Total property, plant and equipment, at cost | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property, plant and equipment, net | $ | $ | ||||||
As of December 31, 2022 and June 30, 2022, there
were not any pledged property, plant or equipment. The Company recorded depreciation expenses of $
For the six months ended December 31, 2022 and
2021, the Company purchased property, plant and equipment of $
NOTE 8 – INTANGIBLE ASSETS, NET
Intangible assets consisted of the following as of December 31, 2022 and June 30, 2022:
| December 31, 2022 | June 30, 2022 | |||||||
| Customer relationships | $ | $ | ||||||
| Copyrights and trademarks | ||||||||
| Software | ||||||||
| Senior care service app | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
On June 14, 2022
and December 20, 2022,
Based on the valuations report from
independent third-party valuation firms used in the purchase price allocation, the Company recorded customer relationships of
$
F-21
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On July 30, 2022, the Company’s board of
directors approved proposal per Mr. Xie to acquire
Based on the valuations report from independent
third-party valuation firms used in the purchase price allocation, the Company recorded customer relationships of $
As of December 31, 2022 and June 30, 2022, there
were no any pledged intangible assets to secure bank loans. The Company recorded amortization expense of $
Estimated future amortization expense is as follows as of December 31, 2022:
| Years ending December 31, | Amortization expense | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Years after | ||||
| $ | ||||
NOTE 9 – LONG-TERM INVESTMENT
The Company initiated the divestment process during
July 2021 and on September 15, 2021 formally reduced its ownership in Fuzhou Fumao from
In December 2022, the Company transferred its
NOTE 10 – OPERATING LEASE RIGHT-OF-USE ASSETS, NET
Operating lease right -of-use assets, net were as follows as of December 31, 2022 and June 30, 2022:
| June 30, 2022 | Increase/ (Decrease) | Exchange rate translation | December 31, 2022 | |||||||||||||
| Shou Hill Valley Area | $ | $ | $ | ( | ) | $ | ||||||||||
| Villas | ( | ) | ||||||||||||||
| Base Station Tower | ( | ) | ||||||||||||||
| Farmland* | ( | ) | ||||||||||||||
| Office | ( | ) | ( | ) | ||||||||||||
| Warehouse** | ||||||||||||||||
| Total right-of-use assets, at cost | ( | ) | ||||||||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||||||
| Right-of-use assets, net | $ | $ | $ | ( | ) | $ | ||||||||||
| * | |
| ** |
F-22
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The Company recognized lease expense for the operating lease right-of-use
assets Shou Hill Valley Area and Villas over the lease periods which are
NOTE 11 – FINANCE LEASE RIGHT-OF-USE ASSETS, NET
Finance lease right -of-use assets, net were as follows as of December 31, 2022 and June 30, 2022:
| June 30, 2022 | Increase/ (Decrease) | Exchange rate translation | December 31, 2022 | |||||||||||||
| Company vehicles | $ | $ | $ | ( | ) | $ | ||||||||||
| Total right-of-use assets, at cost | ( | ) | ||||||||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||||||
| Right-of-use assets, net | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
The finance lease right-of-use asset is amortized
over a
NOTE 12 – LONG-TERM DEPOSITS AND OTHER NON-CURRENT ASSETS
Long-term deposits and other current assets as of December 31, 2022 and June 30, 2022, consisted of the following:
| December 31, 2022 | June 30, 2022 | |||||||
| Deposits paid for leases | $ | $ | ||||||
| Performance deposits (Note 5) | ||||||||
| Total | $ | $ | ||||||
NOTE 13 – GOODWILL
For the six months ended December 31, 2022, the
Company completed several business combinations with total purchase consideration in aggregate was $
Goodwill, which is non-deductible for tax purposes, is primarily attributable to the synergies expected to be achieved from the acquisitions.
The valuations used in the purchase price allocation were determined by the Company with the assistance of independent third-party valuation firms. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches. As the acquirees are all private companies, the fair value estimates of pre-existing equity interests and debt investment or noncontrolling interests are based on significant inputs considered by market participants which mainly include (a) discount rate, (b) projected terminal value based on future cash flows, (c) equity multiples or enterprise value multiples of companies in the same industries and (d) adjustment for lack of control or lack of marketability.
The purchase prices allocation to the assets acquired and liabilities assumed based on their fair values were included in Note 3. Business Combinations.
NOTE 14 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
The following is a summary of accounts payable and accrued expenses as of December 31, 2022 and June 30, 2022:
| December 31, 2022 | June 30, 2022 | |||||||
| Payable to suppliers | $ | $ | ||||||
| Salary and welfare payables | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total | ||||||||
F-23
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 – ADVANCES FROM CUSTOMERS
Advance from customers as of December 31, 2022 and June 30, 2022 consisted of the following:
| December 31, 2022 | June 30, 2022 | |||||||
| Senior care services | $ | $ | ||||||
| Housekeeping services | ||||||||
| Total | $ | $ | ||||||
E-Home received annual fees from senior care services
customers and recognized revenues over the contract period. The amounts advanced from customers from senior care services were $
NOTE 16 – OPERATING LEASE LIABILITIES
Operating lease liabilities as of December 31, 2022 and June 30, 2022 consisted of the following:
| December 31, 2022 | June 30, 2022 | |||||||
| Villas* | $ | $ | ||||||
| Base Station Tower** | ||||||||
| Office*** | ||||||||
| Warehouse**** | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
Analyzed for reporting purposes as:
| December 31, 2022 | June 30, 2022 | |||||||
| Long-term portion of operating lease liabilities | $ | $ | ||||||
| Current maturities of operating lease liabilities | ||||||||
| Total | $ | $ | ||||||
The discount rates used for the Villas, Base Station Tower, Office
and Warehouse were
The Company recorded no operating lease liability for the operating
lease of Shou Hill Valley Area as of December 31, 2022 and June 30, 2022, respectively, since the Company prepaid the total lease expense
of $
For the six months ended December 31, 2022 and
2021, the operating lease costs were $
| * |
| ** |
| *** |
| **** |
F-24
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Maturity analysis of operating lease liabilities as of December 31, 2022 is as follows:
| Operating lease payment | Villas | Base station tower | Warehouse | Total undiscounted cash flows | ||||||||||||
| Discount rate at commencement | % | % | % | |||||||||||||
| One year | $ | $ | $ | $ | ||||||||||||
| Two years | ||||||||||||||||
| Three years | ||||||||||||||||
| Four years | ||||||||||||||||
| Five years | ||||||||||||||||
| Beyond five years | ||||||||||||||||
| Total undiscounted cash flows | $ | $ | $ | $ | ||||||||||||
| Total financing lease liabilities | ||||||||||||||||
| Difference between undiscounted cash flows and discounted cash flows | ||||||||||||||||
Maturity analysis of operating lease liabilities as of June 30, 2022 is as follows:
| Operating lease payment | Villas | Base station tower | Office | Total undiscounted cash flows | ||||||||||||
| Discount rate at commencement | % | % | % | |||||||||||||
| One year | $ | $ | $ | $ | ||||||||||||
| Two years | ||||||||||||||||
| Three years | ||||||||||||||||
| Four years | ||||||||||||||||
| Five years | ||||||||||||||||
| Beyond five years | ||||||||||||||||
| Total undiscounted cash flows | $ | $ | $ | |||||||||||||
| Total financing lease liabilities | ||||||||||||||||
| Difference between undiscounted cash flows and discounted cash flows | ||||||||||||||||
NOTE 17 – FINANCE LEASE LIABILITIES
Financing lease liabilities as of December 31, 2022 and June 30, 2022 consisted of the following:
| June 30, 2022 | Increase/ (Decrease) | Payment | Exchange rate translation | December 31, 2022 | ||||||||||||||||
| Company vehicles | $ | $ | $ | ( | ) | $ | $ | |||||||||||||
| Add: unrecognized finance expense | ( | ) | ||||||||||||||||||
| Total financing lease liabilities | $ | $ | $ | ( | ) | $ | $ | |||||||||||||
Analyzed for reporting purposes as:
| December 31, 2022 | June 30, 2022 | |||||||
| Long-term portion of finance lease liabilities | $ | $ | ||||||
| Current maturities of finance lease liabilities | ||||||||
| Total | $ | $ | ||||||
The lease agreement was entered into on September
11, 2017, bears interest at about
F-25
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Maturity analysis of financial lease liabilities as of December 31, 2022 is as follows:
| Financial lease payments | Company vehicles | |||
| Discount rate at commencement | % | |||
| One year | $ | |||
| Two years | ||||
| Three years | ||||
| Four years | ||||
| Five years | ||||
| Beyond five years | ||||
| Total undiscounted cash flows | $ | |||
| Total financing lease liabilities | ||||
| Difference between undiscounted cash flows and discounted cash flows | ||||
Maturity analysis of financial lease liabilities as of June 30, 2022 is as follows:
| Financial lease payments | Company vehicles | |||
| Discount rate at commencement | % | |||
| One year | $ | |||
| Two years | ||||
| Three years | ||||
| Four years | ||||
| Five years | ||||
| Beyond five years | ||||
| Total undiscounted cash flows | $ | |||
| Total financing lease liabilities | ||||
| Difference between undiscounted cash flows and discounted cash flows | ||||
NOTE 18 – CONVERTIBLE NOTE
On December 20, 2021, the Company entered into
a Securities Purchase Agreement with an institutional investor pursuant to which the Company issued an unsecured convertible promissory
note with a two-year maturity (the “Convertible Note 2021”) to Investor. The Convertible Note 2021 has the original principal
amount of $
Material Terms of the Convertible Note 2021:
| ● | Interest accrues on the outstanding balance of the Convertible Note at |
| ● | Upon the occurrence of a Trigger Event, Investor may increase the outstanding balance payable under the Convertible Note by |
| ● | Investor may convert all or any part of the outstanding balance of the Convertible Note, at any time after six months from the issue date, into ordinary shares of the Company at a price equal to |
| ● | Joseph Stone Capital, LLC (“JSC”) acted as the exclusive
placement agent in connection with the offering. The Company agreed to pay JSC a cash fee equal to |
| ● | Lender has the right at any time after the date that is six (6) months from the Purchase Price Date until the Outstanding Balance has been paid in full, at its election, to convert (“Conversion”) all or any portion of the Outstanding Balance into fully paid and non-assessable Ordinary Shares, par value $ |
F-26
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In accounting for the issuance of the Convertible
Note 2021, the Company separated the Convertible Note into liability and equity components. The carrying amount of the equity component
of the Convertible Note 2021 and the warrants was $
Debt issuance costs related to the original Convertible
Note 2021 comprised of commissions paid to third party placement agent and lawyers of $
On May 13, 2022, the Company entered into a Securities
Purchase Agreement with an institutional investor pursuant to which the Company issued an unsecured convertible promissory note with a
two-year maturity (the “Convertible Note 2022”) to Investor. The Convertible Note 2022 has the original principal amount of
$
Material Terms of the Convertible Note 2022:
| ● | Interest accrues on the outstanding balance of the Convertible Note at |
| ● | Upon the occurrence of a Trigger Event, Investor may increase the outstanding balance payable under the Convertible Note by |
| ● | Investor may convert all or any part of the outstanding balance of the Convertible Note, at any time after six months from the issue date, into ordinary shares of the Company at a price equal to |
| ● | Joseph Stone Capital, LLC (“JSC”) acted as the exclusive
placement agent in connection with the offering. The Company agreed to pay JSC a cash fee equal to |
| ● | Lender has the right at any time after the date that is six (6) months
from the Purchase Price Date until the Outstanding Balance has been paid in full, at its election, to convert (“Conversion”)
all or any portion of the Outstanding Balance into fully paid and non-assessable Ordinary Shares, par value $ |
F-27
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In accounting for the issuance of the Convertible
Note 2022, the Company separated the Convertible Note into liability and equity components. The carrying amount of the equity component
of the Convertible Note and the warrants was $
Debt issuance costs related to the original Convertible
Note 2022 comprised of commissions paid to third party placement agent and lawyers of $
Net carrying amount of the liability component Convertible Note 2021 dated as of December 31, 2022 was as follows:
| Principal outstanding | Unamortized issuance cost | Net carrying value | ||||||||||
| Convertible Note 2021 | ( | ) | ||||||||||
| Convertible Note 2022 | ( | ) | ||||||||||
| Convertible Notes - liability portion | $ | ( | ) | $ | ||||||||
Net carrying amount of the equity component of the Convertible Note as of December 31, 2022 was as follows:
| Amount allocated to conversion option | Issuance cost | Equity component, net | ||||||||||
| Convertible Note 2021 | $ | $ | ( | ) | $ | |||||||
| Convertible Note 2022 | ( | ) | ||||||||||
| Convertible Note – equity portion | $ | ( | ) | $ | ||||||||
Amortization of issuance cost, debt discount and interest cost for the six months ended December 31, 2022 were as follows:
| Issuance costs and debt discount | Convertible note interest | Total | ||||||||||
| Convertible Note 2021 | ||||||||||||
| Convertible Note 2022 | ||||||||||||
| Convertible Note | $ | $ | ||||||||||
The effective interest rates to derive the liability
component fair value were
F-28
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 19 - Warrants
On December 20, 2021 and May 13, 2022, the Company
issued warrants to settle the commission of the agent in connection with the issuance of the convertible notes during the year ended June
30, 2022.
As of December 31, 2022 and June 30, 2022,
The 2021 warrants were valued using the Black-Scholes
value option pricing model with the following inputs: volatility of
The 2022 warrants were valued using the Black-Scholes value option
pricing model with the following inputs: volatility of
NOTE 20 – TAXES
The Company is registered in the Cayman Islands. The Company generated substantially all of its income from its PRC operations for the six months ended December 31, 2022 and 2021.
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.
Hong Kong
E-Home Hong Kong is not subject to tax on income or capital gain since there has no operations in Hong Kong for the six months ended December 31, 2022 and 2021.
F-29
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PRC
Income Tax
On March 16, 2007, the National People’s
Congress of PRC enacted an Enterprise Income Tax Law (“EIT Law”), under which Foreign Investment Enterprises (“FIEs”)
and domestic companies would be subject to enterprise income tax (“EIT”) at a uniform rate of
The provision for income tax for the six months ended December 31, 2022 and 2021, consisted of the following:
| For six months ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Current income tax provision | $ | $ | ||||||
| Deferred income tax provision | ( | ) | ||||||
| Total | $ | $ | ||||||
The following table sets forth reconciliation between the statutory EIT rate and the effective tax for the six months ended December 31, 2022 and 2020, respectively:
| For six months ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Provision for income taxes at statutory tax rate in the PRC | $ | $ | ||||||
| Effect of expense for which no income tax is deductible | ||||||||
| Effect of assets recognized at fair value in business combinations | ( | ) | ||||||
| Effective income tax expense | $ | $ | ||||||
The significant components of deferred tax assets were as follows:
| December 31, 2022 | June 30, 2022 | |||||||
| Deferred tax assets | ||||||||
| Senior care services fees advanced from customers | $ | |||||||
| Total deferred tax assets | $ | |||||||
| Deferred tax liabilities | ||||||||
| Business combinations | $ | |||||||
| Total deferred tax liabilities | $ | |||||||
Value Added Tax (“VAT”)
Business tax changed to VAT in China since May
1, 2016. The Company’s revenue from installation is subject to a VAT rate of
According to the regulations (Fiscal and Tax [2016] 36), no VAT will be levied if an enterprise provides employee-based household services. E-Home Pingtan applied for the tax exemption in July 2017 and was approved by the State Administration of Taxation (China), so the VAT rate of installation, maintenance, after-sales and cleaning service is nil since July 2017.
F-30
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Taxes payable
The Company’s taxes payable as of December 31, 2022 and June 30, 2022, consisted of the following:
| December 31, 2022 | June 30, 2022 | |||||||
| Income tax payable | $ | $ | ||||||
| VAT payable | ||||||||
| Other tax payables | ||||||||
| Total | $ | $ | ||||||
NOTE 21 – EQUITY
Ordinary Shares
At the reorganization event described in Note
1, the Company issued
Prior to the reorganization, the Company had $
The reorganization has been accounted for at historical
cost and prepared on the basis as if the reorganization had become effective as of the beginning of the first period presented in the
accompanying financial statements of the Company. On May 23, 2019, the Company split its
On May 18, 2021, the Company completed the closing
of its initial public offering of
On October 18, 2021, E-Home WFOE entered into an equity transfer agreement with each of E-Home Pingtan and Fuzhou Bangchang and their respective shareholders, pursuant to which E-Home WFOE exercised the options to acquire all of the equity interests in each of E-Home Pingtan and Fuzhou Bangchang from their respective shareholders. Upon the registration of the equity transfers with the local governmental authorities as of October 27, 2021, the equity transfers were closed, the company’s VIE structure was dissolved and each of E-Home Pingtan and Fuzhou Bangchang became a wholly owned indirect subsidiary of the Company.
On June 21, 2021, the Company granted
On January 20, 2022, the Company and E-Home Pingtan
entered into an equity transfer agreement to acquire
On January 20, 2022, the Company and E-Home Pingtan
entered into an equity transfer agreement to acquire
On March 18, 2022, the Company granted
F-31
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On June 14, 2022, the Company and its wholly owned
subsidiary, E-Home Hong Kong, entered into an equity transfer agreement with Zhongrun, a limited liability company established in China
and Ms. Ling Chen, the sole shareholder of Zhongrun, pursuant to which Ms. Chen agreed to transfer
On July 30, 2022, the Company’s board of
directors approved proposal per Mr. Xie to acquire
On August 15, 2022, the Company’s board
of directors approved proposal per Mr.Xie regarding financing by the Company in the amount of $
On September 19, 2022, the Company’s board
of directors approved proposal per Mr.Xie for issuance and sale of the Company’s ordinary shares up to an aggregate offering price
of US$
Reverse stock split
On October 3, 2022, the Company’s board
of directors approved to effect a one-for-twenty reverse stock split of its ordinary shares (the “Reverse Stock Split”) with
the market effective on October 4, 2022, such that the number of the Company’s authorized preferred and ordinary shares remain unchanged,
and the par value of each ordinary share is increased from US$
On November 18, 2022, the Company entered into
a securities purchase agreement with certain investors, pursuant to which each of the investors agreed to purchase and the Company agreed
to issue and sell to the investors, an aggregation of
On December 20, 2022, the Company and its wholly
owned subsidiary, E-Home Hong Kong, entered into an equity transfer agreement with Zhongrun, a limited liability company established in
China and Ms. Ling Chen, pursuant to which Ms. Chen agreed to transfer
Statutory Reserve
The Company is required to make appropriations
to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income
determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory
surplus reserve are required to be at least
Dividends
Dividends declared by the Company are based on the distributable profits as reported in its statutory financial statements reported in accordance with PRC GAAP, which may differ from the results of operations reflected in the consolidated financial statements prepared in accordance with US GAAP. The Company’s ability to pay dividends is primarily from cash received from its operating activities in PRC. For the six months ended December 31, 2022 and 2021, there was no Company dividend declared.
F-32
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 22 – REVENUES
The Company disaggregated senior care services revenue into the sale of the E-watch and the care service. Sales of E-watches are recognized in revenue at a point in time while revenue from care service is recognized over a period of time. Deferred portion of care service is recorded as a liability (advances from customers) on the company’s balance sheet.
| For six months ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Installation and maintenance | $ | $ | ||||||
| Housekeeping | ||||||||
| Senior care services | ||||||||
| Sales of E-watch | ||||||||
| Sales of pharmaceutical products | ||||||||
| Educational consulting services | ||||||||
| Total | $ | $ | ||||||
NOTE 23 – SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the management for decision making. Management has identified five operating segments which are installation and maintenance, housekeeping, senior care services, sales of pharmaceutical products, and educational consulting services. Operations for senior care services began in August 2019. The Company started generating revenue from this new segment in August 2019. Segments of sales of pharmaceutical products and educational consulting services were acquired from business combination during the six months ended December 31, 2022.These operating segments are monitored and strategic decisions are made on the basis of segmental profit margins. Segment profit is defined as net sales reduced by cost of revenues and other related operating expenses. The results are shown as follows for the six months ended December 31, 2022 and 2021:
For
the six months ended | ||||||||
| Revenues | 2022 | 2021 | ||||||
| Installation and maintenance | $ | $ | ||||||
| Housekeeping | ||||||||
| Senior care services | ||||||||
| Sales of pharmaceutical products | ||||||||
| Educational consulting services | ||||||||
| Total | $ | $ | ||||||
For
the six months ended | ||||||||
| Gross Profit | 2022 | 2021 | ||||||
| Installation and maintenance | $ | $ | ||||||
| Housekeeping | ||||||||
| Senior care services | ||||||||
| Sales of pharmaceutical products | ||||||||
| Educational consulting services | ||||||||
| Total | $ | $ | ||||||
| Current Assets | December 31, 2022 | June
30, | ||||||
| Installation and maintenance | $ | $ | ||||||
| Housekeeping | ||||||||
| Senior care services | ||||||||
| Sales of pharmaceutical products | ||||||||
| Educational consulting services | ||||||||
| Unallocated current assets | ||||||||
| Total | $ | $ | ||||||
| Non-current Assets | December 31, 2022 | June
30, | ||||||
| Installation and maintenance | $ | $ | ||||||
| Housekeeping | ||||||||
| Senior care services | ||||||||
| Sales of pharmaceutical products | ||||||||
| Educational consulting services | ||||||||
| Unallocated non-current assets | ||||||||
| Total | $ | $ | ||||||
F-33
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On account of the Company’s business model, assets, operating expense, profit or loss, liabilities and other material items could not be separated into each operating segment. As the Company’s long-lived assets and revenue are substantially located in and derived from the PRC, no geographical segments are presented.
NOTE 24 – COMMITMENTS AND CONTINGENCIES
As of December 31, 2022, the Company had following lease commitments under non-cancelable agreements:
| Future Lease Payments | Operating Lease | Finance Lease | Total | |||||||||
| January 2022 to December 2022 | $ | $ | $ | |||||||||
| January 2023 to December 2023 | ||||||||||||
| January 2024 to December 2024 | ||||||||||||
| January 2025 to December 2025 | ||||||||||||
| January 2026 to December 2026 | ||||||||||||
| Thereafter | ||||||||||||
| Total | $ | $ | $ | |||||||||
NOTE 25 – CUSTOMER AND SUPPLIER CONCENTRATION
Significant customers and suppliers are those
that account for greater than
The Company’s sales are made to customers
that are located primarily in China. For the six months ended December 31, 2022 and 2021, no individual customer or supplier accounted
for more than
NOTE 26 – RELATED PARTY BALANCES AND TRANSACTIONS
As of December 31, 2022 and June 30, 2022, the
Company had $
For the six months ended December 31, 2022, Mr.
Xie made payment of $
As of December 31, 2022, the Company had $
NOTE 27 – SUBSEQUENT EVENTS
On January 6, 2023, the Company entered into a
securities purchase agreement with
On January 27, 2023, the Company entered into
a securities purchase agreement (the “2023 January Securities Purchase Agreement”) with certain investors, pursuant to which
each of the investors agreed to purchase and the Company agreed to issue and sell to the investors an aggregate of
Reverse stock split
On April 12, 2023, the Company announced the effect of a one-for ten reverse stock split of its ordinary shares (the “one-for-ten Reverse Stock Split”) approved by the Company’s Annual General Meeting of Shareholders held on March 28, 2023. As a result of the one-for-ten Reverse Stock Split, each ten pre-split ordinary shares outstanding were automatically combined and converted to one issued and outstanding ordinary share without any action on the part of the shareholder. No fractional ordinary shares were issued to any shareholders in connection with the reverse stock split.
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2022 to the date these financial statements were issued, and has determined that, it does not have any material subsequent events to disclose in these financial statements.
F-34
Exhibit 99.2
OPERATING AND FINANCIAL REVIEW AND PROSPECTS IN CONNECTION WITH THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED DECEMBER 31, 2022
The following discussion and analysis of our results of operations and financial condition should be read together with our unaudited condensed consolidated financial statements and the notes thereto and other financial information, which are included elsewhere in this Form 6-K. Our unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). In addition, our unaudited financial statements and the financial information included in this Form 6-K reflect our organizational transactions and have been prepared as if our current corporate structure had been in place throughout the relevant periods.
This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those identified elsewhere in this report on Form 6-K, and those listed in our Annual Report on Form 20-F for the fiscal year ended June 30, 2022 filed with the Securities and Exchange Commission (the “2022 Form 20- F”) under “Item 3. Key Information-D. Risk Factors” or in other parts of the 2022 Form 20-F.
Unless otherwise indicated or the context requires otherwise, “we”, “us” or the “Company” in this prospectus are to E-Home Household Service Holdings Limited and its subsidiaries in the context of describing our business, operations and consolidated financial information.
Overview
We are a household service company based in Fuzhou, China. We provide integrated household services through our website and WeChat platform, “e家快服”, across 21 provinces in China. Currently, these services primarily include home appliance services and housekeeping services. For our home appliance services, we partner with individuals and service stores which provide the technicians to deliver the on-site services. We have partnerships with more than 2,300 individuals and service stores providing these services in China. For our housekeeping services, we primarily partner with individual service providers who serve as independent contractors. We currently have more than 2,800 cleaners and nannies in our network providing our housekeeping services. Our online platform integrates these offline service providers, which helps them to gain a larger customer base, and provides professional and reliable one-stop household services to our customers.
In July 2015, we successfully transitioned from an outsourcing after-market service provider of home appliances and building materials to an operator of home appliance services. In January 2018, we officially became an integrated household service provider after expanding our service portfolio from distribution, installation, repair and maintenance of home appliances to delivery, installation, repair and maintenance of home appliances, home-moving, house cleaning, nanny and maternity matron. We have also launched and are actively promoting our senior care services, but so far we have only generated a limited amount of revenue from these services. We plan to further expand our business to include smart community services, as well as sales of smart home supplementary merchandise. We currently have approximately 526 employees to support our operations.
During the six months ended December 31, 2022, we acquired three new subsidiaries by business combination and expanded our business into the field of distributing and selling pharmaceutical products and educational consulting services. We expect to achieve significant synergies from such acquisitions to complement our existing businesses.
Due to the impact of the lifting of quarantine and lockdown measures in China by the government in late 2022, our overall revenue increased by 14.1% to approximately $38.88 million for the six months ended December 31, 2022, as compared to approximately $34.08 million for the six months ended December 31, 2021. Our revenue from installation and maintenance services increased by 10.6% to approximately $24.30 million for the six months ended December 31, 2022, as compared to $21.98 million for the six months ended December 31, 2021. Our revenue from housekeeping services increased by 12.3% to approximately $8.99 million for the six months ended December 31, 2022, as compared to $8.01 million for the six months ended December 31, 2021. We generated approximately $3.56 million of revenue from our senior care services for the six months ended December 31, 2022, representing a decrease of 13.0% as compared to $4.09 million for the six months ended December 31, 2021. For the six months ended December 31, 2022, we also generated revenues from sales of pharmaceutical products and educational consulting services of approximately $1.38 million and $0.65 million, respectively.
For the six months ended December 31, 2022, we generated a net loss of approximately $3.32 million, representing an increase in net loss of approximately $2.71 million compared with net loss of approximately $0.61 million for the six months ended December 31, 2021.
Principal Factors Affecting Our Financial Performance
Our operating results are primarily affected by the following factors:
| ● | growth in the Chinese economy; |
| ● | industry demand; |
| ● | contract pricing and terms; |
| ● | competition in the home appliance services and in-home care and other household services industries; |
| ● | strategic acquisitions and investments; |
| ● | changes to government policies; |
| ● | market conditions and our market position; and |
| ● | our ability to broaden service offerings and diversify our customer base. |
Taxation
Cayman Islands
We are incorporated in the Cayman Islands. The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is currently no estate duty, inheritance tax or gift tax. There are no other taxes likely to be material to us levied by the government of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after execution brought within the jurisdiction of the Cayman Islands. The Cayman Islands is not party to any double tax treaties that are applicable to any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.
Payments of dividends and capital in respect of the shares will not be subject to taxation in the Cayman Islands and no withholding will be required on the payment of a dividend or capital to any holder of our ordinary shares, nor will gains derived from the disposal of our ordinary shares be subject to Cayman Islands income or corporation tax.
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Hong Kong
Our subsidiary incorporated in Hong Kong is subject to Hong Kong profit tax at a rate of 16.5%. No Hong Kong profit tax has been levied as we did not have assessable profit that was earned in or derived from our Hong Kong subsidiary during the periods presented. Hong Kong does not impose a withholding tax on dividends.
PRC
Enterprise Income Tax
Generally, our PRC subsidiaries, which are considered PRC resident enterprises under PRC tax law, are subject to enterprise income tax on their worldwide taxable income as determined under PRC tax laws and accounting standards at a rate of 25%. If our holding company in the Cayman Islands or any of our subsidiaries outside the PRC is considered as a PRC resident enterprise for tax purposes, then our global income will be subject to PRC enterprise income tax at the rate of 25%. See “Risk Factors—Risks Related to Doing Business in China— We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore be subject to PRC income tax on our global income.”
Value Added Tax
Our revenue from installation services is subject to a value added tax, or VAT, rate of 11% and our revenue from maintenance services and sales of goods was subject to a VAT rate of 17% prior to May 1, 2018, which was subsequently reduced to 16%.
According to PRC regulations, no VAT will be levied if an enterprise provides employee-based household services. E-Home Pingtan applied for the tax exemption in July 2017 and was approved by the PRC State Administration of Taxation, so the VAT rate for installation, maintenance, after-sales and cleaning service is 0% since July 2017.
Withholding Tax on Dividends
Dividends paid by E-Home Household Service Technology Co., Ltd. (“E-Home WFOE”) to our intermediary holding company in Hong Kong will be subject to a withholding tax rate of 10%, unless the relevant Hong Kong entity satisfies all the requirements under the Arrangement between the PRC and the Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income and Capital and receives approval from the relevant tax authority. If our Hong Kong subsidiary satisfies the requirements under the tax arrangement and receives approval from the relevant tax authority, then the dividends paid to the Hong Kong subsidiary would be subject to withholding tax at a reduced tax rate of 5%. See “Risk Factors—Risks Related to Doing Business in China—There are significant uncertainties under the PRC Enterprise Income Tax Law relating to the withholding tax liabilities of our PRC subsidiaries, and dividends payable by our PRC subsidiaries to our offshore subsidiaries may not qualify to enjoy certain treaty benefits.”
Our Reportable Segments
As of December 31, 2022, our operations are organized into five reportable segments: installation and maintenance, housekeeping, senior care services, sales of pharmaceutical products, and educational consulting services. Operating segments are reported in a manner consistent with the internal reporting provided to management for decision making. These operating segments are monitored, and strategic decisions are made on the basis of segmental profit margins.
Critical Accounting Policies
The preparation of consolidated financial statements in conformity with U.S. GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. The SEC has defined a company’s critical accounting policies as the ones that are most important to the portrayal of the company’s financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results. Although we believe that our estimates, assumptions and judgments are reasonable, they are based upon information presently available. Actual results may differ significantly from these estimates under different assumptions, judgments or conditions.
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Basis of consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied. The accompanying consolidated financial statements include the financial statements of E-Home Household Service Holdings Limited and its subsidiaries. All inter-company balances and transactions have been eliminated upon consolidation.
Use of estimates
In preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, prepayments, and other receivables, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets and provision necessary for contingent liabilities. Actual results could differ from those estimates.
Leases
Leases are classified at lease commencement date as either a finance lease or an operating lease. A lease is a finance lease if it meets any of the following criteria: (a) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term. (b) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (c) the lease term is for the major part of the remaining economic life of the underlying asset, (d) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset or (e) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. When none of the criteria meets, the lease shall be classified as an operating lease.
For lessee, a lease is recognized as a right-of-use asset with a corresponding liability at lease commencement date. The lease liability is calculated at the present value of the lease payments not yet paid by using the lease term and discount rate determined at lease commencement. The right-of-use asset is calculated as the lease liability, increased by any initial direct costs and prepaid lease payments, reduced by any lease incentives received before lease commencement. The right-of-use asset itself is amortized on a straight-line basis unless another systematic method better reflects how the underlying asset will be used by and benefits the lessee over the lease term.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). The amendments in this ASU require an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. The Company adopted ASC 842 effective as of the beginning of the first period presented by using a modified retrospective transition approach in the accompanying financial statements of the Company. The adoption of this standard had a material impact on the Company’s financial position, with no material impact on the results of operations and cash flows.
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Convertible note, net
ASC 470, Debt, requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. We measured the estimated fair value of the debt component of our convertible notes as of the issuance date based on our nonconvertible debt borrowing rate. The equity components of the convertible senior notes have been reflected within additional paid-in capital in our audited consolidated balance sheet, and the resulting debt discount is amortized over the period during which the convertible notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense.
Revenue recognition
The Company adopted Accounting Standards Codification No. 606, Revenue from Contracts with Customers (ASC 606) beginning January 1, 2018 and elected to adopt ASC 606 under the modified retrospective method. This guidance was applied retrospectively to the most current period presented in the Company’s consolidated financial statements. The adoption of ASC 606 did not have a material impact on the consolidated financial statements of the Company.
The Company generates revenues primarily from installation & maintenance, housekeeping services, senior care services, sales of pharmaceutical products, and educational consulting services. The Company sells its installation & maintenance and housekeeping services through a third-party service provider WeChat platform. The Company’s revenues are subject to value added tax (“VAT”). To record VAT payable, the Company uses the gross presentation method, which presents the taxable services and the available input VAT amount (at the rate applicable to the supplier). Revenues are recorded net of VAT in accordance with the ASC 606. The recognition of revenues involves certain management judgments. The amount and timing of our revenues could be materially different for any period if management made different judgments or utilized different estimates.
Installation& maintenance
Installation and maintenance services mainly consisting of the following services: technical home installation and repair, maintenance and other after sale services. Revenues from installation and maintenance services are recognized at a point in time once the service is transferred to the customer. For service arrangements that include multiple performance obligations, revenues are allocated to each performance obligation based on its standalone selling price. The Company allocates arrangement consideration in multiple-deliverable revenue arrangements at the inception of an arrangement to all deliverables based on the relative selling price method, generally based on the best estimate of selling price. The Company, acting as principal, contracts with third-party service providers (i.e., service outlets), acting as agents. The Company is responsible for market development and providing the customer information to the service provider, directing the outlet to provide services and coordination with the customer, while the service provider provides the door-to-door service. The price of services is set by the Company and the service provider is only responsible for collection of payments. When the Company’s end customers place orders online for services, they pay either a required visit fee or the estimated full amount of service fee through third-party payment platforms, such as WeChat Pay and Alipay. The Company chooses the service provider by the proximity principle. If the customer is not satisfied with the chosen provider, the service provider can be re-selected. Regardless of the service provider’s performance, the Company is still liable to complete the orders. If the end customer fails to pay after satisfactory service is provided and the service provider is unable to collect payment from the end customer, the Company will communicate directly with the end customer. The service provider is not obligated to pay the Company. To minimize our risk, the service provider will remit payment of any outstanding receivables each month.
Housekeeping services
Housekeeping services refer to services including housecleaning, nanny service, maternity matron and personnel staffing. Revenues from housekeeping are recognized at a point in time upon completion of services to the customer based on the relative selling price method.
Senior care services
Senior care services refer to services including BP, heart rate test, daily steps count, location and track record, call for help by Wechat or phone, and other care services rendered to senior customers through an E-watch, which is given to the customers when they pay the annual fees. The customers sign a contract for the services with the Company. The contract term is normally one year. The revenues from senior care services are allocated into the revenue from the E-watch sold and the revenue of the services provided. Revenues from the E-watch sold are recognized at a point in time once customers receive the E-watch and the revenues of the services provided are recognized over the service period.
5
Disaggregation of revenue from contracts with customers
During the process of performing the installation and maintenance services, the Company also sells household appliance accessories such as air conditioner parts to its customers according to the customers’ needs. The Company did not sell these household appliance accessories separately. Consequently, the Company regards sales of household appliance accessories as a component of its installation and maintenance segment, but separates revenue generated from sale of household appliance accessories as a disaggregated revenue stream. The senior care services consist of the sale of E-watch and the care services. The E-watch cannot be sold to the customers solely without the care services, and the care services should be rendered by the E-watch. Consequently, the Company regards these operating activities as operating in one material segment, being the revenue of senior care services.
Based on the above discussion, the Company disaggregated sales of household appliance accessories from installation and maintenance revenue and senior care services revenue into the sales of the E-watch and the care service. Sales of household appliance accessories and E-watches are recognized in revenue at a point in time while revenue from care service is recognized over a period.
Sales of pharmaceutical products
The Company also generates revenues from sales of pharmaceutical products to its customers, which are mainly pharmaceutical stores in PRC. Under the adoption of ASC 606, the Company recognized revenues in a manner to depict the transfer of goods to a customer at an amount that reflects the consideration expected to be received in exchange for those goods. The Company considers revenue realized or realizable and earned when all the five following criteria are met: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company considers customer purchase orders to be the contracts with a customer. As part of its consideration of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods itself (that is, the entity is a principal) or to arrange for the other party to provide those goods (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the goods. The Company controls the specified good before that good is transferred to its customers based on the following indicators: (1) the Company is primarily responsible for fulfilling the promise to provide the specified good, (2) the Company bears the inventory risk before or after (i.e., customer has a right of return) the specified good has been transferred to a customer, (3) the Company has discretion in setting the price for the specified good.
In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company provide its customers with rights to return the sold goods for several days after the customers’ acceptance of the goods and can reasonably estimates return provision for the goods. The product return provisions are estimated based on (1) historical rates, (2) specific identification of outstanding returns not yet received from customers and outstanding discounts and claims and (3) estimated returns, discounts and claims expected, but not yet finalized with customers. The Company analyzed historical refund claims for defective products and concluded that they have been immaterial since the Company can return the goods returned from the customers to its suppliers.
Revenues are reported net of all VAT. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on their relative standalone selling price.
Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied at a point in time), which typically occurs at delivery. Prices are determined based on negotiations with the Company’s customers and are not subject to adjustment.
Educational consulting services
The Company also generates revenues from providing educational consulting services to its customers. Revenues from educational consulting services are recognized at a point in time upon completion of services to the customer based on the relative selling price method.
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Business combinations
The Company accounts for its business combinations using the purchase method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities the Company acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total of cost of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interests in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings.
In a business combination achieved in stages, the Company remeasures its previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the re-measurement gain or loss, if any, is recognized in “Others, net” in the consolidated statements of comprehensive (loss) income.
The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and noncontrolling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Company determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons.
Recent Accounting Pronouncements
The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This amends guidelines on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 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 right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended the effective date of ASU 2016-13. The amendments in these ASUs are effective for the Company’s fiscal years, and interim periods within those fiscal years beginning April 1, 2022. Early adoption is permitted. The Company adopted this guidance on July 1, 2022 and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
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In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity, and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year, for public business entities that meet the definition of a SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company as a small reporting company expects to adopt this guidance on July 1, 2024 and the adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.
The Company does not believe other recently issued but not yet effective accounting statements, if recently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of operations and other comprehensive (loss) income and statements of cash flows.
Results of Operations
Comparison of Six Months Ended December 31, 2022 and 2021
The following table shows key components of our results of operations during the six months ended December 31, 2022 and 2021, in dollars and as a percentage of our total revenues.
| Six months Ended December 31, 2022 | Six months Ended December 31, 2021 | |||||||||||||||
| Amount | % of Revenues | Amount | % of Revenues | |||||||||||||
| Revenues | ||||||||||||||||
| Installation and maintenance services | $ | 24,301,679 | 62.5 | $ | 21,979,399 | 72.7 | ||||||||||
| Housekeeping services | 8,990,258 | 23.1 | 8,009,015 | 21.8 | ||||||||||||
| Senior care services | 3,557,245 | 9.2 | 4,091,068 | 5.5 | ||||||||||||
| Sales of pharmaceutical products | 1,380,344 | 3.6 | - | - | ||||||||||||
| Educational consulting services | 647,442 | 1.6 | - | - | ||||||||||||
| Total revenues | 38,876,968 | 100.0 | 34,079,482 | 100.0 | ||||||||||||
| Total cost of revenues | 27,738,882 | 71.4 | 23,408,079 | 64.2 | ||||||||||||
| Operating expenses | ||||||||||||||||
| Sales and marketing expenses | 8,340,234 | 21.5 | 4,357,836 | 6.9 | ||||||||||||
| General and administrative expenses | 3,359,946 | 8.6 | 5,602,754 | 2.1 | ||||||||||||
| Total operating expenses | 11,700,180 | 30.1 | 9,960,590 | 9.0 | ||||||||||||
| (Loss) Income from operations | (562,094 | ) | (1.4 | ) | 710,813 | 26.9 | ||||||||||
| Other income (expenses) | ||||||||||||||||
| Interest income | 96,111 | 0.2 | 90,907 | 0.1 | ||||||||||||
| Interest expenses | (375,846 | ) | (1.0 | ) | (23,793 | ) | (0.0 | ) | ||||||||
| Amortization of financing cost | (641,576 | ) | (1.7 | ) | (20,322 | ) | - | |||||||||
| Fair value loss | (1,621,836 | ) | (4.2 | ) | - | - | ||||||||||
| Government subsidy | 43,616 | 0.1 | - | - | ||||||||||||
| Foreign currency exchange loss | 8,725 | - | (6,920 | ) | - | |||||||||||
| Total other (expenses) income | (2,490,806 | ) | (6.4 | ) | 39,872 | 0.1 | ||||||||||
| Income before income taxes | (3,052,900 | ) | (7.9 | ) | 750,685 | 26.9 | ||||||||||
| Income tax expense | (263,228 | ) | (0.7 | ) | (1,356,819 | ) | (6.7 | ) | ||||||||
| Net loss | $ | (3,316,128 | ) | (8.5 | ) | $ | (606,134 | ) | 20.2 | |||||||
8
Revenues. We generate revenues from providing installation and maintenance services, housekeeping services and senior care services, sales of pharmaceutical products and providing educational consulting services. Our total revenue was $38,876,968 for the six months ended December 31, 2022, compared to $34,079,482 for the six months ended December 31, 2021, representing an increase of $4,797,486, or 14.1%. Such increase was due to the increase of $2,322,280 in revenue from installation and maintenance and the increase of $981,243 in revenue from our housekeeping services, $1,380,344 the newly acquired segments of sales of pharmaceutical products and $647,442 educational consulting services, offsetting by a decrease of $533,823 in revenue from our senior care services, which we began providing in the fiscal year ended June 30, 2020.
Revenue from installation and maintenance services increased by $2,322,280, or 10.6%, to $24,301,679 for the six months ended December 31, 2022 from $21,979,399 for the six months ended December 31, 2021. Installation and maintenance services accounted for 62.5% of our total revenue for the six months ended December 31, 2022, as compared to 64.5% for the six months ended December 31, 2021. Revenue from housekeeping services amounted to $8,990,258, or 23.1% of our total revenue for the six months ended December 31, 2022, representing an increase of $981,243, or 12.3%, from $8,009,015 for the six months ended December 31, 2021. Such decreases were primarily due to the lift of lockdown in China. During the six months ended December 31, 2022, we have partnerships with over 2,300 individuals and service stores providing these services in China, which remain stable comparing to the six months ended December 31, 2021.
For the six months ended December 31, 2022, we generated revenue from senior care services in an amount of $3,557,245, or 9.2% of our total revenue, which represents a decrease of $533,823, or 13.0%, from $4,091,068 for the six months ended December 31, 2021. For the six months ended December 31, 2022, we also generated revenue from sales of pharmaceutical products and educational consulting services, our new business segments, of $1,380,344 and $647,442, respectively.
Cost of revenues. Our cost of revenues includes service fees paid to staff, outlets and suppliers for the services rendered and the cost of accessories sold. Our cost of revenue increased by $4,330,803, or 18.5%, to $27,738,882 for the six months ended December 31, 2022 from $23,408,079 for the six months ended December 31, 2021. Such increase was in line with our decreased revenue.
Sales and marketing expenses. Our sales and marketing expenses consist primarily of remuneration for staff involved in selling and marketing efforts, advertising cost, depreciation, travel and leasing expenses. Our sales and marketing expenses increased by $3,982,398, or 91.4%, to $8,340,234 for the six months ended December 31, 2022 from $4,357,836 for the six months ended December 31, 2021. Such increase was primarily due to the increased marketing and promotion costs, which were mainly caused by our efforts to increase our revenue for the six months ended December 31, 2022. As a percentage of revenue, sales and marketing expenses increased to 21.5% for the six months ended December 31, 2022 from 12.8% for the six months ended December 31, 2021.
General and administrative expenses. Our general and administrative expenses consist primarily of employee remuneration, professional fees, insurance, benefits, office leases, general office expenses and depreciation. Our general and administrative expenses decreased by $2,242,808, or 52.7%, to $3,359,946 for the six months ended December 31, 2022 from $5,602,754 for the six months ended December 31, 2021. Such decrease was due to the decrease in consulting services expenses. As a percentage of revenue, general and administrative expenses decreased to 8.6% for the six months ended December 31, 2022 from 16.4% for the six months ended December 31, 2021.
9
(Loss) Income from operations. As a result of the foregoing, we recorded loss from operations of $562,094 for the six months ended December 31, 2022, representing a decrease of $1,272,907 in income from operations, or 78.9%, compared to $710,813 for the six months ended December 31, 2021.
Total other (expenses) income. We had $2,490,806 in total other expenses for the six months ended December 31, 2022, as compared to $39,872 in total other income for the six months ended December 31, 2021. Total other income (expenses), net, for the six months ended December 31, 2022 consisted of interest income in the amount of $96,111, government subsidy of $43,616 and foreign currency exchange income of $8,725, offset by interest expenses in the amount of $375,846, amortization of financing cost of the convertible note of $641,576 and fair value loss of financial instruments of $1,621,836. Total other income (expenses), net, for the six months ended December 31, 2021 consisted of interest income in the amount of $90,907, offset by interest expenses in the amount of $23,793, amortization of financing cost of the convertible note of $20,322 and foreign currency exchange loss of $6,920.
Income tax expense. We recorded income tax expenses of $263,228 for the six months ended December 31, 2022, representing a decrease of $1,093,591, or 80.6%, as compared to $1,356,819 for the six months ended December 31, 2021. The decrease in the income tax expense mainly resulted from the decrease in the income before income taxes from our PRC subsidiaries. See also “—Taxation” above.
Net loss. As a result of the cumulative effect of the factors described above, we generated a net loss of $3,316,128 for the six months ended December 31, 2022, representing an increase in net loss of $2,709,994 from net loss of $606,134 for the six months ended December 31, 2021.
Liquidity and Capital Resources
As of December 31, 2022 and June 30, 2022, we had cash and cash equivalents of $62,470,005 and $54,842,052, respectively. We finance our operations, working capital needs and strategic investments from cash generated through operations and through debt and equity financing.
We believe that our current levels of cash and cash flows from operations and equity financing will be sufficient to meet our anticipated cash needs for our operations and expansion plans for at least the next 12 months. We may, however, in the future require additional cash resources due to changing business conditions, implementation of our strategy to expand our business, or other investments or acquisitions we may decide to pursue. If our own financial resources are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain additional credit facilities. The sale of additional equity securities could result in dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.
The following table sets forth a summary of our cash flows for the periods presented:
| For the Six Months Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Net cash provided by operating activities | $ | 3,805,834 | $ | 1,784,209 | ||||
| Net cash used in investing activities | (3,468,043 | ) | (121,856 | ) | ||||
| Net cash provided by financing activities | 9,167,098 | 4,607,080 | ||||||
| Net increase in cash and cash equivalents | 9,504,891 | 6,269,433 | ||||||
| Effect of currency translation | $ | (1,876,938 | ) | $ | 642,077 | |||
| Cash and cash equivalents at beginning of the period | 54,842,052 | 52,410,472 | ||||||
| Cash and cash equivalents at end of the period | 62,470,005 | 59,321,982 | ||||||
10
Operating Activities
For the six months ended December 31, 2022, net cash provided by operating activities was $3,805,834, representing an increase of $2,021,625 compared to net cash provided by operating activities of $1,784,209 for the six months ended December 31, 2021. Net cash provided by operating activities for the six months ended December 31, 2022 consisted of the net loss of $3,316,128, income tax expense in the amount of $233,797, interest expense in the amount of $375,847, depreciation and amortization in the amount of $1,330,221, amortization of right-of-use assets in the amount of $430,914, amortization of financing cost of the convertible note of $641,576, fair value loss of financial instruments of $1,621,836, change in accounts payable and accrued expenses in the amount of $6,901,987, offset by change in account receivables in the amount of $1,245,352, change in inventory in the amount of $159,286, change in prepayments, receivables and other current assets in the amount of $1,899,177, change in long-term deposits and other non-current assets in the amount of $55,177, change in tax payable in the amount of $7,921, and change in operating lease liabilities of $685,709.
For the six months ended December 31, 2021, net cash provided by operating activities was $1,784,209. Net cash provided by operating activities for the six months ended December 31, 2022 consisted of the net loss of $606,134, deferred income tax expense in the amount of $187,553, interest expense in the amount of $23,793, depreciation and amortization in the amount of $40,411, amortization of right-of-use assets in the amount of $248,518, amortization of financing cost of the convertible note of $20,322, change in inventory in the amount of $213,049, change in prepayments, receivables and other current assets in the amount of $2,684,643, change in long-term deposits and other non-current assets in the amount of $1,556,045, and change in tax payable in the amount of $235,060, offset by change in account receivables in the amount of $43,555 and accounts payable and accrued expenses in the amount of $2,370,396.
Investing Activities
For the six months ended December 31, 2022, net cash used in investing activities was $3,468,043. Net cash used in investing activities for the six months ended December 31, 2022 consisted of cash paid for due from related parties of $3,100,000, cash paid for loan receivables from unaffiliated company and individual of $1,250,000, cash paid for property, plant and equipment of $885,343 and cash paid for intangible assets in the amount of $32,700, offset by refund of prepaid deposit for potential acquisition in the amount of $1,800,000.
For the six months ended December 31, 2021, net cash used in investing activities was $121,856. Net cash used in investing activities for the six months ended December 31, 2021 consisted of right-of-use-assets costs in the amount of $103,641, cash paid for equipment and vehicles in the amount of $22,680, long-term investment of $941,073, and cash paid to former non-controlling shareholders of our subsidiary, Fujian Happiness Yijia Family Service Co., Ltd. in acquisition of the non-controlling interest of $54,462, offset by refund of prepaid deposit for potential acquisition in the amount of $1,000,000.
Financing Activities
Net cash provided by financing activities was $9,167,098 for the six months ended December 31, 2022, which consisted of proceed from the issuance of shares in the amount of $7,844,757 and proceed from short term loan of $1,398,262, offset by cash paid for financial lease of $75,921.
Net cash provided by financing activities was $4,607,080 for the six months ended December 31, 2021, which consisted of proceed from the convertible note in the amount of $5,275,000, offset by issuance cost of the convertible note paid in cash in the amount of $667,920.
Capital Expenditures
We made capital expenditures of $918,043 and $963,753 for the six months ended December 31, 2022 and 2021, respectively. In these periods, our capital expenditures were mainly used for purchases of property and equipment, including office equipment, electronic equipment and motor vehicles, and the. We plan to continue to make capital expenditures to meet the needs that result from the expected growth of our business.
Holding Company Structure
E-Home Household Service Holdings Limited is a Cayman Islands holding company with no material operations of its own. We conduct our operations primarily through E-Home WFOE and its subsidiaries in China. As a result, our ability to pay dividends depends upon dividends paid by E-Home WFOE. If E-Home WFOE or our other PRC subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, E-Home WFOE is permitted to pay dividends to E-Home Household Service Holdings Limited only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, E-Home WFOE and its PRC subsidiaries are required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of their registered capital. In addition, each may allocate a portion of their after-tax profits based on PRC accounting standards to enterprise expansion funds and staff bonus and welfare funds at their discretion, and these entities may allocate a portion of their after-tax profits based on PRC accounting standards to a discretionary surplus fund at their discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. Remittance of dividends by a wholly foreign-owned company out of China is subject to examination by the banks designated by the State Administration of Foreign Exchange. E-Home WFOE has not paid dividends and will not be able to pay dividends until it meets the requirements for statutory reserve funds.
11
Document And Entity Information |
6 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Document Information Line Items | |
| Entity Registrant Name | E-Home Household Service Holdings Ltd |
| Document Type | 6-K |
| Current Fiscal Year End Date | --06-30 |
| Amendment Flag | false |
| Entity Central Index Key | 0001769768 |
| Document Period End Date | Dec. 31, 2022 |
| Document Fiscal Year Focus | 2023 |
| Document Fiscal Period Focus | Q2 |
| Entity File Number | 001-40375 |
| Entity Address, Address Line One | E-Home, 18/F, East Tower, Building B |
| Entity Address, Address Line Two | Dongbai Center, Yangqiao Road |
| Entity Address, Address Line Three | Gulou District |
| Entity Address, City or Town | Fuzhou City |
| Entity Address, Postal Zip Code | 350001 |
| Entity Address, Country | CN |
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Ordinary shares, par value (in Dollars per share) | $ 0.02 | $ 0.02 |
| Ordinary shares, authorized | 500,000,000 | 500,000,000 |
| Ordinary shares, issued | 1,527,507 | 221,159 |
| Ordinary shares, outstanding | 1,527,507 | 221,159 |
Condensed Consolidated Statements of Operations and Other Comprehensive (Loss) Income (Unaudited) (Parentheticals) - $ / shares |
6 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Income Statement [Abstract] | ||
| Net income per share—diluted | $ (5.31) | $ (3.61) |
| Weighted average number of ordinary shares outstanding—diluted | 623,993 | 167,908 |
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) - USD ($) |
Ordinary Shares |
Additional paid-in capital |
Statutory reserve |
Retained Earnings |
Accumulated other comprehensive income (loss) |
Equity attributable to the Company’s shareholders |
Non-controlling interest |
Total |
|---|---|---|---|---|---|---|---|---|
| Balance at Jun. 30, 2021 | $ 3,359 | $ 25,542,531 | $ 664,100 | $ 36,804,282 | $ 1,298,015 | $ 64,312,287 | $ (47,041) | $ 64,265,246 |
| Balance (in Shares) at Jun. 30, 2021 | 167,908 | |||||||
| Net loss | (606,134) | (606,134) | (606,134) | |||||
| Foreign currency translation adjustment | 696,050 | 696,050 | 696,050 | |||||
| Acquisition of former non-controlling interest in HAPPY | (481,447) | (481,447) | 14,558 | (466,889) | ||||
| Disposal of 47% ownership in Fuzhou Fumao | 12,530 | 12,530 | ||||||
| Issuance of the convertible note | 1,124,752 | 1,124,752 | 1,124,752 | |||||
| Balance at Dec. 31, 2021 | $ 3,358 | 26,185,836 | 664,100 | 36,198,148 | 1,994,065 | 65,045,508 | (19,953) | 65,025,555 |
| Balance (in Shares) at Dec. 31, 2021 | 167,908 | |||||||
| Balance at Jun. 30, 2022 | $ 4,425 | 33,452,332 | 664,100 | 31,374,073 | (945,093) | 64,549,837 | (19,953) | 64,529,884 |
| Balance (in Shares) at Jun. 30, 2022 | 221,159 | |||||||
| Net loss | (3,202,169) | (3,202,169) | (113,959) | (3,316,128) | ||||
| Foreign currency translation adjustment | (2,104,002) | (2,104,002) | (27,491) | (2,131,493) | ||||
| Acquisition of 75% ownership in Zhongrun | $ 12,124 | 11,338,195 | 11,350,319 | 2,156,098 | 13,506,417 | |||
| Acquisition of 75% ownership in Zhongrun (in Shares) | 606,223 | |||||||
| Acquisition of 60% ownership in Youyou | 131,890 | 131,890 | ||||||
| Acquisition of 60% ownership in Youyou (in Shares) | ||||||||
| Acquisition of 100% ownership in Chuangying | $ 1,444 | 5,591,605 | 5,593,049 | 5,593,049 | ||||
| Acquisition of 100% ownership in Chuangying (in Shares) | 72,193 | |||||||
| Shares issued to investors | $ 9,630 | 7,835,127 | 7,844,757 | 7,844,757 | ||||
| Shares issued to investors (in Shares) | 481,534 | |||||||
| Shares issued under equity incentive plan | $ 200 | 105,800 | 106,000 | 106,000 | ||||
| Shares issued under equity incentive plan (in Shares) | 10,000 | |||||||
| Shares issued for conversion of convertible notes | $ 2,728 | 2,192,272 | 2,195,000 | 2,195,000 | ||||
| Shares issued for conversion of convertible notes (in Shares) | 136,398 | |||||||
| Balance at Dec. 31, 2022 | $ 30,551 | $ 60,515,331 | $ 664,100 | $ 28,171,904 | $ (3,049,095) | $ 86,332,791 | $ 2,126,585 | $ 88,459,376 |
| Balance (in Shares) at Dec. 31, 2022 | 1,527,507 |
Condensed Consolidated Statements of Changes in Shareholders’ Equity (Unaudited) (Parentheticals) |
6 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Fuzhou Fumao | ||
| Disposal of ownership, percentage | 47.00% | |
| Zhongrun | ||
| Acquisition of ownership percentage | 75.00% | |
| Youyou | ||
| Acquisition of ownership percentage | 60.00% | |
| Chuangying | ||
| Acquisition of ownership percentage | 100.00% | |
Organization and Nature of Operations |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ORGANIZATION AND NATURE OF OPERATIONS | NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS
E-Home Household Service Holdings Limited (the “Company”) was incorporated as a limited company under the law of Cayman Islands on September 24, 2018. The Company does not conduct any substantive operations on its own but instead conducts its business operations through its subsidiaries. The Company and its subsidiaries are hereinafter collectively referred to as “the Company”. The Company is principally engaged in providing household services, e.g. installation and maintenance of home appliances, housekeeping and senior care in the People’s Republic of China (the “PRC”) through on-line APP platform or call center, distributing and selling of pharmaceutical products and providing educational consulting services. As described below, the Company, through a series of transactions which is accounted for as a reorganization of entities under common control (the “Reorganization”), became the ultimate parent entity of its subsidiaries. Accordingly, these consolidated financial statements reflect the historical operations of the Company as if the current organization structure had been in existence throughout the periods presented.
Reorganization
In preparation of its initial public offering in the United States (“IPO”), the following transactions were undertaken to reorganize the legal structure of the Company. The reorganization involved (i) the incorporation of the Company in the Cayman Islands as a holding company; (ii) the establishment of E-Home Household Service Holdings Limited (“E-Home Hong Kong”) as a wholly-owned subsidiary in Hong Kong, PRC; (iii) the establishment of E-Home Household Service Technology Co., Ltd. (“WOFE”), as a wholly-owned subsidiary of E-Home Hong Kong in Fujian, PRC; (iv) the entry by WFOE into contractual arrangements with Pingtan Comprehensive Experimental Area E Home Service Co., Ltd. (“E-Home Pingtan”) and Fuzhou Bangchang Technology Co. Ltd. (“Fuzhou Bangchang”) and their shareholders. The Company, E-Home Hong Kong and WFOE are all holding companies and had not commenced operation until this reorganization was complete. A reorganization of the Company’s legal structure was completed in February 2019.
As all the entities involved in the process of the Reorganization are under common control before and after the Reorganization, the Reorganization is accounted for in a manner similar to a pooling-of-interest with the assets and liabilities of the parties to the Reorganization carried over at their historical amounts.
Dissolution of the Company’s variable interest entity structure
On October 18, 2021, E-Home WFOE entered into an equity transfer agreement with each of E-Home Pingtan and Fuzhou Bangchang and their respective shareholders, pursuant to which E-Home WFOE exercised the options to acquire all of the equity interests in each of E-Home Pingtan and Fuzhou Bangchang from their respective shareholders. Upon the registration of the equity transfers with the local governmental authorities as of October 27, 2021, the equity transfers were closed, the company’s VIE structure was dissolved and each of E-Home Pingtan and Fuzhou Bangchang became a wholly owned indirect subsidiary of the Company.
Equity transfer agreements
Acquisition of non-controlling interest in HAPPY
On August 10, 2021, the Company’s PRC subsidiary, E-Home Pingtan entered into an equity transfer agreement to acquire the remaining 33% equity interests of Fujian Happiness Yijia Family Service Co., Ltd. (“HAPPY”) in consideration of $466,889 (RMB 3,000,000), with $54,462 (RMB 350,000) paid in August 2021 and $412,427 (RMB 2,650,000) paid in March 2022. The transaction to acquire the remaining 33% equity interests of HAPPY was closed in August 2021 and after the acquisition, E-Home Pingtan owns 100% of the equity interest of HAPPY.
Reverse stock split
On October 3, 2022, the Company’s board of directors approved to effect a one-for-twenty reverse stock split of its ordinary shares (the “one-for-twenty Reverse Stock Split”) with the market effective on October 4, 2022, such that the number of the Company’s authorized preferred and ordinary shares remain unchanged, and the par value of each ordinary share is increased from US$0.0001 to US$0.002. As a result of the one-for-twenty Reverse Stock Split, each twenty pre-split ordinary shares outstanding were automatically combined and converted to one issued and outstanding ordinary share without any action on the part of the shareholder. No fractional ordinary shares were issued to any shareholders in connection with the reverse stock split. Each shareholder was entitled to receive one ordinary share in lieu of the fractional share that would have resulted from the reverse stock split. As of October 3, 2022 (immediately prior to the effective date), there were 121,270,556 ordinary shares outstanding, and the number of ordinary shares outstanding after the Reverse Stock Split was 6,062,762 shares, taking into account of the effect of rounding fractional shares into whole shares. In addition, all options and any other securities of the Company outstanding immediately prior to the one-for-twenty Reverse Stock Split (to the extent they don’t provide otherwise) have been appropriately adjusted by dividing the number of ordinary shares into which the options and other securities are exercisable by 20 and multiplying the exercise price thereof by 20, as a result of the one-for-twenty Reverse Stock Split.
On April 12, 2023, the Company announced the effect of a one-for ten reverse stock split of its ordinary shares (the “one-for-ten Reverse Stock Split”) approved by the Company’s Annual General Meeting of Shareholders held on March 28, 2023. As a result of the one-for-ten Reverse Stock Split, each ten pre-split ordinary shares outstanding were automatically combined and converted to one issued and outstanding ordinary share without any action on the part of the shareholder. No fractional ordinary shares were issued to any shareholders in connection with the reverse stock split.
The number of ordinary shares outstanding as of December 31, 2021, June 30, 2022 and 2021, and for the six months ended December 31, 2022 and 2021 were retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 13, 2023.
The Company’s major consolidated subsidiaries are as follows:
The accompanying condensed consolidated financial statements include the financial statements of the Company and its subsidiaries. |
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Significant Accounting Policies |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements
These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) for interim financial information and with the instructions to Form 6-K and Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended June 30, 2022 and notes thereto and other pertinent information contained in our Form 20-F the Company has filed with the Securities and Exchange Commission (the “SEC”) on November 4, 2022. The results of operations for the six months ended December 31, 2022, are not necessarily indicative of the results to be expected for the full fiscal year ending June 30, 2023.
Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied. The accompanying consolidated financial statements include the financial statements of E-Home Household Service Holdings Limited and its subsidiaries. All inter-company balances and transactions have been eliminated upon consolidation.
Use of estimates
In preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, prepayments, and other receivables, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets, long-term investment and goodwill, and provision necessary for contingent liabilities. Actual results could differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, cash accounts, interest bearing savings accounts and time certificates of deposit with a maturity of three months or less when purchased. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company maintains most of the bank accounts in the PRC. Cash balances in bank accounts in PRC are not insured by the Federal Deposit Insurance Corporation or other programs.
Accounts receivable, net
Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on management of customers’ credit and ongoing relationship, management makes conclusions whether any balances outstanding at the end of the period will be deemed uncollectible on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of operations and other comprehensive (loss) income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of December 31, 2022 and June 30, 2022, the Company determined that all accounts receivable were collectible and thus the allowance for doubtful accounts were $0 and $0, respectively.
Loan receivables
Loan receivables are recognized when cash is advanced to the borrowers. Short-term loan receivables are carried at fair value when the fair value option is elected. The Company usually determines the adequacy of reserves for doubtful loan receivables based on individual account analysis and establishes a provision for doubtful loan receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposure. As of December 31, 2022 and June 30, 2022, the Company determined that all loans receivable were collectible and thus the allowance for loan receivables were $0 and $0, respectively.
Advances to suppliers
Advances to suppliers refer to advances for purchase of inventories or services, which are applied against accounts payable when the inventories or services are received.
The Company reviews a supplier’s credit history and background information before advancing a payment. If the financial condition of its suppliers were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Company would write off such amount in the period when it is considered as impaired. The allowance for advances to suppliers recognized as of December 31, 2022 and June 30, 2022 were $0 and $0, respectively.
Inventories
Inventories primarily include purchased accessories, appliances and E-watches for senior care services. Cost of inventories is based on purchase costs and is determined by the weighted-average method. Inventories are stated at the lower of cost or net realizable value. Net realizable value represents the anticipated selling price, net of distribution cost and other costs related to selling the inventories. For the six months ended December 31, 2022 and 2021, the Company recorded no impairment provision of inventories for lower of cost or net realizable value, respectively.
Property, plant and equipment, net
Property, plant and equipment are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred. Depreciation is provided on the straight-line method based on the estimated useful lives of the assets as follows:
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 betterment 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 consolidated statements of income and other comprehensive (loss) income in other income or expenses.
Intangible assets, net
Intangible assets consist of software acquired from third parties, customer relationships, copyrights and trademarks acquired from business combination and senior care service app developed by the Company. The Company has purchased software from third parties used for operation management and developed an app for its senior care service. Customer relationships include but are not limited to: (1) customer contracts and related customer relationships, (2) noncontractual customer relationships, (3) customer lists, and (4) order or production backlog acquired by the Company from business combination. In accordance with ASC 805-20-55, customer relationships should be recognized separately from goodwill if it meets either of the following criteria: (1) contractual-legal criterion: the intangible asset arises from contractual or other legal rights (regardless of whether those rights are transferable or separable from the acquired business or from other rights and obligations); or (2) separability criterion: the intangible asset is capable of being separated or divided from the acquired business and sold, transferred, licensed, rented, or exchanged.
Intangible assets with finite lives are carried at cost less accumulated amortization. All intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives. Software, senior care service app, copyrights, trademarks and customer relationships are amortized on a straight-line basis over the estimated economic useful lives of five to ten years.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in a business combination. The Company assesses goodwill for impairment in accordance with ASC Subtopic 350-20, Intangibles—Goodwill and Other: Goodwill (“ASC 350-20”), which requires that goodwill to be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events, as defined by ASC 350-20.
The Company has the option to assess qualitative factors first to determine whether it is necessary to perform the quantitative test in accordance with ASC 350-20. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. If the Company believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, the quantitative impairment test described above is required. Otherwise, no further testing is required. The quantitative impairment test compares the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess.
The Company performed qualitative assessments for the goodwill. Based on the requirements of ASC 350-20, the Company evaluated all relevant factors including, but not limited to, macroeconomic conditions, industry and market conditions, financial performance, and the share price of the Company. The Company weighed all factors in their entirety and concluded that it was not more-likely-than-not the fair value was less than the carrying amount of goodwill, and further impairment testing on goodwill was unnecessary as of December 31, 2022.
On disposal of a portion of reporting unit that constitutes a business, the attributable amount of goodwill is included in the determination of the amount of gain or loss recognized upon disposal. When the Group disposes of a business within the reporting unit, the amount of goodwill disposed is measured on the basis of the relative fair value of the business disposed and the portion of the reporting unit retained. This relative fair value approach is not used when the business to be disposed was not integrated into the reporting unit after its acquisition, in which case the current carrying amount of the acquired goodwill should be included in the carrying amount of the business to be disposed.
Impairment of long-lived assets other than goodwill
Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Long-lived assets with carrying values that are not expected to be recovered through future cash flows are written down to their estimated fair values. The carrying value of a long-lived asset is deemed not recoverable if it exceeds the sum of undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the asset’s carrying value exceeds the sum of its undiscounted cash flows, a non-cash asset impairment charges equal to the excess of the asset’s carrying value over its estimated fair value is recorded. Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at a specified measurement date. We measure fair value using market price indicators or, in the absence of such data, appropriate valuation techniques.
Leases
Leases are classified at lease commencement date as either a finance lease or an operating lease. A lease is a finance lease if it meets any of the following criteria: (a) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term. (b) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (c) the lease term is for the major part of the remaining economic life of the underlying asset, (d) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset or (e) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. When none of the criteria meets, the lease shall be classified as an operating lease.
For lessee, a lease is recognized as a right-of-use asset with a corresponding liability at lease commencement date. The lease liability is calculated at the present value of the lease payments not yet paid by using the lease term and discount rate determined at lease commencement. The right-of-use asset is calculated as the lease liability, increased by any initial direct costs and prepaid lease payments, reduced by any lease incentives received before lease commencement. The right-of-use asset itself is amortized on a straight-line basis unless another systematic method better reflects how the underlying asset will be used by and benefits the lessee over the lease term.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). The amendments in this ASU require an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. The Company adopted ASC 842 for the year ended June 30, 2017 by using a modified retrospective transition approach in the accompanying financial statements of the Company. The adoption of this standard had a material impact on the Company’s financial position, with no material impact on the results of operations and cash flows (see Note 10 and Note 11).
Convertible note- cash conversion feature
ASC 470, Debt, requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. We measured the estimated fair value of the debt component of our convertible notes as of the issuance date based on our nonconvertible debt borrowing rate. The equity components of the convertible senior notes have been reflected within additional paid-in capital in our consolidated balance sheet, and the resulting debt discount is amortized over the period during which the convertible notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense.
Freestanding instruments-warrants
Per ASC 470-20-30-2, when detachable warrants (detachable call options) are issued in conjunction with a debt instrument as consideration in purchase transactions, the amounts attributable to each class of instrument issued shall be determined separately, based on values at the time of issuance.
(1) The first step in determining the proper accounting for warrants is to determine whether the equity-linked component is free standing financial instrument of embedded in a host instrument. According to the warrant agreement, the debt and warrant agreements were both entered into by the parties on December 20, 2021 and May 13, 2022 warrants were issued as part of the subscription agreement with the note holders. The holder can transfer the warrant to any person or entity in accordance with the warrant agreement as long as there is a registration statement effective. The warrants can be exercised any time after issuance dates and prior to the expiration date. The debt can remain outstanding even after the warrants are exercised. Based on the above facts, the warrants should be considered as a freestanding instrument.
(2) The next step is to determine whether the free-standing instrument is within the scope of ASC 480. The warrants are not within the scope of ASC 480 because the warrant is not considered a mandatorily redeemable financial instrument. The Company has no obligation to redeem the shares or settle the obligation by transferring assets.
(3) The last step is to determine if the freestanding instrument should be accounted for as an equity instrument or liability within the guidance of ASC 815-40. The Company determines the value of the warrants using the Black- Scholes Option Pricing Model (“Black-Scholes”) using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the volatility of the stock.
Based on the above analysis, the Company concluded that the warrant shall be classified as equity and is recorded at fair value. Subsequent re-measurement is not required.
Convertible debt – derivative treatment
When the Company issues debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: a) one or more underlying, typically the price of our common stock; b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; c) no initial net investment, which typically excludes the amount borrowed; and d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked component that meets the definition of a derivative does not have to be separated from the host instrument if the component qualifies for the scope exception for certain contracts involving an issuer’s own equity. The scope exception applies if the contract is both a) indexed to its own stock; and b) classified in shareholders’ equity in its statement of financial position.
If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The convertible debt derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the debt. The Company did not identify any derivative in their convertible notes issued during the reporting period.
Fair value of financial instruments
The fair value of a financial instrument is defined as the exchange price that would be received from an asset or paid to transfer a liability (as exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, time deposits, accounts receivable, prepaid expenses and other current assets, accounts payable, and other current liabilities, approximate their fair values because of the short maturity of these instruments and market rates of interest.
ASC 820 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
The Company considers the carrying amount of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, advances to suppliers, prepayment, receivables and other current assets, due from related parties, loan receivables, accounts payable and advances from customers to approximate the fair value of the respective assets and liabilities as of December 31, 2022 and June 30, 2022 owing to their short-term or immediate nature.
Revenue recognition
The Company adopted Accounting Standards Codification No. 606, Revenue from Contracts with Customers (ASC 606) beginning January 1, 2018 and elected to adopt ASC 606 under the modified retrospective method. This guidance was applied retrospectively to the most current period presented in the Company’s consolidated financial statements. The adoption of ASC 606 did not have a material impact on the consolidated financial statements of the Company.
The Company generates revenues primarily from installation & maintenance, housekeeping services, senior care services, sales of pharmaceutical products and educational consulting services. The Company sells its installation & maintenance and housekeeping services through a third-party service provider WeChat platform. The Company’s revenues are subject to value added tax (“VAT”). To record VAT payable, the Company uses the gross presentation method, which presents the taxable services and the available input VAT amount (at the rate applicable to the supplier). Revenues are recorded net of VAT in accordance with the ASC 606. The recognition of revenues involves certain management judgments. The amount and timing of our revenues could be materially different for any period if management made different judgments or utilized different estimates.
The Company does not have amounts of contract assets since revenue is recognized as control of goods or services is transferred. The contract liabilities consist of advance payments from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. All contract liabilities are included in advance from customers in the condensed consolidated balance sheets. As of December 31, 2022 and June 30, 2022, the Company record advance from customers of $2,213,847 and $2,251,072, respectively
Installation & maintenance
Installation and maintenance services mainly consist of the following services: technical home installation and repair, maintenance and other after sale services. Revenues from installation and maintenance services are recognized at a point in time once the service is transferred to the customer. For service arrangements that include multiple performance obligations, revenues are allocated to each performance obligation based on its standalone selling price. The Company allocates arrangement consideration in multiple-deliverable revenue arrangements at the inception of an arrangement to all deliverables based on the relative selling price method, generally based on the best estimate of selling price. The Company, acting as principal, contracts with third-party service providers (i.e., service outlets), acting as agents. The Company is responsible for market development and providing the customer information to the service provider, directing the outlet to provide services and coordination with the customer, while the service provider provides the door-to-door service. The price of services is set by the Company and the service provider is only responsible for collection of payments. When the Company’s end customers place orders online for services, they pay either a required visit fee or the estimated full amount of service fee through third-party payment platforms, such as WeChat Pay and Alipay. The Company chooses the service provider by the proximity principle. If the customer is not satisfied with the chosen provider, the service provider can be re-selected. Regardless of the service provider’s performance, the Company is still liable to complete the orders. If the end customer fails to pay after satisfactory service is provided and the service provider is unable to collect payment from the end customer, the Company will communicate directly with the end customer. The service provider is not obligated to pay the Company. To minimize our risk, the service provider will remit payment of any outstanding receivables each month.
Housekeeping services
Housekeeping services refer to services including housecleaning, nanny service, maternity matron and personnel staffing. Revenues from housekeeping are recognized at a point in time upon completion of services to the customer based on the relative selling price method. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods or services itself (that is, the entity is a principal) or to arrange for the other party to provide those goods or services (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the services.
Senior care services
Senior care services refer to services including BP, heart rate test, daily steps count, location and track record, call for help by Wechat or phone, and other care services rendered to senior customers through an E-watch, which is given to the customers when they pay the annual fees. The customers sign a contract for the services with the Company. The contract term is normally one year. The revenues from senior care services are allocated into the revenue from the E-watch sold and the revenue of the services provided. Revenues from the E-watch sold are recognized at a point in time once customers receive the E-watch and the revenues from the services provided are recognized over the service period. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods or services itself (that is, the entity is a principal) or to arrange for the other party to provide those goods or services (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the services.
Disaggregation of revenue from contracts with customers
During the process of performing the installation and maintenance services, the Company also sells household appliance accessories such as air conditioner parts to its customers according to the customers’ needs. The Company did not sell these household appliance accessories separately. The senior care services consist of the sale of E-watch and the care services. The E-watch cannot be sold to the customers solely without the care services, and the care services should be rendered by the E-watch. Consequently, the Company regards these operating activities as operating in one material segment, being the revenue of senior care services.
Based on the above discussion, the Company disaggregated sales of household appliance accessories from installation and maintenance revenue and senior care services revenue into the sales of the E-watch and the care service. Sales of household appliance accessories and E-watches are recognized in revenue at a point in time while revenue from care service is recognized over a period.
Sales of pharmaceutical products
The Company also generates revenues from sales of pharmaceutical products to its customers, which are mainly pharmaceutical stores in PRC. Under the adoption of ASC 606, the Company recognized revenues in a manner to depict the transfer of goods to a customer at an amount that reflects the consideration expected to be received in exchange for those goods. The Company considers revenue realized or realizable and earned when all the five following criteria are met: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company considers customer purchase orders to be the contracts with a customer. As part of its consideration of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods itself (that is, the entity is a principal) or to arrange for the other party to provide those goods (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the goods. The Company controls the specified good before that good is transferred to its customers based on the following indicators: (1) the Company is primarily responsible for fulfilling the promise to provide the specified good, (2) the Company bears the inventory risk before or after (i.e., customer has a right of return) the specified good has been transferred to a customer, (3) the Company has discretion in setting the price for the specified good.
In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company provide its customers with rights to return the sold goods for several days after the customers’ acceptance of the goods and can reasonably estimates return provision for the goods. The product return provisions are estimated based on (1) historical rates, (2) specific identification of outstanding returns not yet received from customers and outstanding discounts and claims and (3) estimated returns, discounts and claims expected, but not yet finalized with customers. The Company analyzed historical refund claims for defective products and concluded that they have been immaterial since the Company can return the goods returned from the customers to its suppliers.
Revenues are reported net of all VAT. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on their relative standalone selling price.
Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied at a point in time), which typically occurs at delivery. Prices are determined based on negotiations with the Company’s customers when signing the contracts and are not subject to adjustment.
Educational consulting services
The Company also generates revenues from providing educational consulting services to its customers. Revenues from educational consulting services are recognized at a point in time upon completion of services to the customer based on the relative selling price method. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods or services itself (that is, the entity is a principal) or to arrange for the other party to provide those goods or services (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the services.
Cost of revenues
Cost of revenues consists of service fees paid to staff, outlets, suppliers and the cost of products sold.
Government subsidies
Government subsidies as the compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related cost are recognized in profit or loss in the period in which they become receivable. Government subsidies are recognized when received and all the conditions for their receipt have been met.
For the six months ended December 31, 2022 and 2021, the Company received government subsidies of $43,616 and $0, respectively. The grants were recorded as other income in the consolidated financial statements.
Income taxes
Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Any PRC tax paid by subsidiaries during the year is recorded. Deferred income taxes are recognized for all significant temporary differences at enacted rates and classified as current or non-current based upon the classification of the related asset or liability in the financial statements. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all, the deferred tax asset will not be realized.
Ordinary shares
The Company accounts for repurchased ordinary shares under the cost method and includes such treasury stock as a component of the common shareholders’ equity. Cancellation of treasury stock is recorded as a reduction of ordinary shares, additional paid-in capital and retained earnings, as applicable. An excess of purchase price over par value is allocated to additional paid-in capital first with any remaining excess charged entirely to retained earnings.
Related parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, shareholder, or a related corporation.
Earnings per share
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average ordinary shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There were no potentially dilutive ordinary shares during the six months ended December 31, 2022 and 2021.
Comprehensive (loss) income
Comprehensive (loss) income is defined as the change in equity of the Company during a period arising from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Comprehensive income or loss is reported in the consolidated statements of operations and other comprehensive (loss) income. Accumulated other comprehensive (loss) income, as presented on the accompanying consolidated balance sheets, consists of accumulated foreign currency translation adjustments.
Foreign currency translation
The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. The consolidated financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments are included as a separate component of accumulated other comprehensive (loss) income.
The value of RMB against U.S. Dollar may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s consolidated financial condition in terms of U.S. Dollar reporting. The following table outlines the currency exchange rates that were used in the consolidated financial statements:
Segment reporting
Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the financial information provided regularly to the Company’s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Company’s various lines of business and geographical locations.
Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria. The Company’s five segments are installation & maintenance, housekeeping, senior care services, sales of pharmaceutical products, and educational consulting services. The Company launched senior care services and started generating revenue from this new segment in August 2019. Segments of sales of pharmaceutical products and educational consulting services were acquired from business combination during the six months ended December 31, 2022.
Business combinations
The Company accounts for its business combinations using the purchase method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities the Company acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total of cost of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interests in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings.
In a business combination achieved in stages, the Company remeasures its previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the re-measurement gain or loss, if any, is recognized in “Others, net” in the consolidated statements of comprehensive (loss) income.
The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and noncontrolling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Company determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons.
Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. There are no known commitments or contingencies as of December 31, 2022 and June 30, 2022.
Concentration of risks
Exchange rate risks
The Company’s Chinese subsidiaries may be exposed to significant foreign currency risks from exchange rate fluctuations and the degree of volatility of foreign exchange rates between the U.S. Dollar and the RMB. As of December 31, 2022 and June 30, 2022, the RMB denominated cash and cash equivalents amounted to $62,458,602 and $53,946,205, respectively.
Currency convertibility risks
Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with other information such as suppliers’ invoices, shipping documents and signed contracts.
Concentration of credit risks
Financial instruments that potentially subject the Company to concentration of credit risks consist primarily of cash and cash equivalents and accounts receivable, the balances of which stated on the consolidated balance sheets represented the Company’s maximum exposure. The Company places its cash and cash equivalents in good credit quality financial institutions in China.
Risks and uncertainties
The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.
Recent accounting pronouncements
The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This amends guidelines on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 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 right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended the effective date of ASU 2016-13. The amendments in these ASUs are effective for the Company’s fiscal years, and interim periods within those fiscal years beginning April 1, 2022. Early adoption is permitted. The Company adopted this guidance on July 1, 2022 and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity, and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year, for public business entities that meet the definition of a SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company as a small reporting company expects to adopt this guidance on July 1, 2024 and the adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The new amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements.
In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820) – Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which stipulates that a contractual restriction on the sale of an equity security should not be considered part of the equity security’s unit of account and, therefore, should not be considered in measuring its fair value. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements.
The Company does not believe other recently issued but not yet effective accounting statements, if recently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of operations and other comprehensive (loss) income and statements of cash flows. |
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Business Combination |
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| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| BUSINESS COMBINATION | NOTE 3 – BUSINESS COMBINATIONS
For the six months ended December 31, 2022, the Company completed several business combinations with total purchase consideration in aggregate was $19,948,542, among which $11,223,456 was allocated to goodwill. The Company expects to achieve significant synergies from such acquisitions which it plans to complement its existing businesses. Results of the acquired entities’ operations have been included in the Company’s consolidated financial statements since the acquisition date.
Goodwill, which is non-deductible for tax purposes, is primarily attributable to the synergies expected to be achieved from the acquisitions.
The valuations used in the purchase price allocation were determined by the Company with the assistance of independent third-party valuation firms. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches. As the acquirees are all private companies, the fair value estimates of pre-existing equity interests and debt investment or noncontrolling interests are based on significant inputs considered by market participants which mainly include (a) discount rate, (b) projected terminal value based on future cash flows, (c) equity multiples or enterprise value multiples of companies in the same industries and (d) adjustment for lack of control or lack of marketability.
According to the independent valuation reports, the purchase prices allocation to the assets acquired and liabilities assumed based on their fair values were as follows:
Acquisition of 75% ownership in Zhongrun
Acquisition of 60% ownership in Youyou
Acquisition of 100% ownership in Chuangying
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Accounts Receivable, Net |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||
| ACCOUNTS RECEIVABLE, NET | NOTE 4 – ACCOUNTS RECEIVABLE, NET
Accounts receivable consisted of the following as of December 31, 2022 and June 30, 2022:
The Company recorded no allowance for doubtful accounts as of December 31, 2022 and June 30, 2022. The Company gives its customers credit period of 30 days to 90 days and continually assesses the recoverability of uncollected accounts receivable. As of December 31, 2022 and June 30, 2022, the balances of the Company’s accounts receivable were all due within 3 months. The Company expects the balances of accounts receivable will be collected in full. |
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Prepayment, Receivables and Other Current Assets |
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| Prepayment and Other Current Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PREPAYMENT, RECEIVABLES AND OTHER CURRENT ASSETS | NOTE 5 – PREPAYMENT, RECEIVABLES AND OTHER CURRENT ASSETS
Prepayments, receivables and other current assets as of December 31, 2022 and June 30, 2022, consisted of the following:
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Loan Receivables |
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||
| LOAN RECEIVABLES | NOTE 6 – LOAN RECEIVABLES
Loan receivables consisted of the following as of December 31, 2022 and June 30, 2022:
Loan receivables as of December 31, 2022 of $5,181,680 represented short-term loans the Company lent to one unaffiliated company and one affiliated individual. The loans were lent to Jianping Guo in July 2022 with maturity date on June 30, 2023. and Yuwin Group Limited in August 2022 with maturity date on February 28, 2023 These loans were unsecured and interest free lent for short-term liquidity needs. The Company collected the balance of loan receivable from Yuwin Group Limited in February 2023 and expected to collect balance of the loan receivable from Jianping Guo before June 30, 2023. |
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Property, Plant and Equipment, Net |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY, PLANT AND EQUIPMENT, NET | NOTE 7 – PROPERTY, PLANT AND EQUIPMENT, NET
Property, plant and equipment consisted of the following as of December 31, 2022 and June 30, 2022:
As of December 31, 2022 and June 30, 2022, there were not any pledged property, plant or equipment. The Company recorded depreciation expenses of $613,247 and $34,814 for the six months ended December 31, 2022 and 2021, respectively. For the six months ended December 31, 2022 and 2021, the Company recorded no impairment losses for property, plant and equipment.
For the six months ended December 31, 2022 and 2021, the Company purchased property, plant and equipment of $885,343 and $22,680 in cash, respectively. For the six months ended December 31, 2022, the Company acquired property, plant and equipment of $126,449 (cost of $551,389 and accumulated depreciation of $424,940) from business combinations. For the six months ended December 31, 2022, the Company disposed no property, plant and equipment. |
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Intangible Assets, Net |
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| Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INTANGIBLE ASSETS, NET | NOTE 8 – INTANGIBLE ASSETS, NET
Intangible assets consisted of the following as of December 31, 2022 and June 30, 2022:
On June 14, 2022 and December 20, 2022, the Company and its wholly owned subsidiary, E-Home Hong Kong, entered into equity transfer agreements with Zhongrun, a limited liability company established in China and Ms. Ling Chen, pursuant to which Ms. Chen agreed to transfer 55% and 20% of the equity interests in Zhongrun to E-Home Hong Kong, in consideration for the sum of (i) RMB3 million (approximately $0.453 million, not paid) in cash and (ii) 28,041,992 ordinary shares of the Company. On July 8, 2022, the Company issued 28,041,992 ordinary shares (140,210 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) according to the equity transfer agreement at a fair value of $8,496,724 (par value of $2,804 and additional paid-in capital of $8,493,919). On December 20, 2022, the Company issued 4,660,129 ordinary shares (466,013 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) at an aggregate fair value of $2,853,596 (par value of $9,320 and additional paid-in capital of $2,844,276).
Based on the valuations report from independent third-party valuation firms used in the purchase price allocation, the Company recorded customer relationships of $6,321,792 with useful life of five years as intangible assets. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches. Customer relationships recorded by the Company includes Zhongrun’s practice of establishing relationships with its customers through contracts and regular contact by sales and representatives.
On July 30, 2022, the Company’s board of directors approved proposal per Mr. Xie to acquire 100% of the equity interests of Chuangying and its subsidiaries from Lin Jianying, in consideration for an aggregate of 14,438,584 ordinary shares (72,193 ordinary shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) of the Company valued at RMB39.2 million (approximately $5.59 million) with a per share issuance price equal to 130% of the average of the Nasdaq closing price for the consecutive twenty trading days preceding July 26, 2022, or $0.39.
Based on the valuations report from independent third-party valuation firms used in the purchase price allocation, the Company recorded customer relationships of $1,426,798 with useful life of ten years and copyrights and trademarks of $242,556 with useful life of five years as intangible assets. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches. Customer relationships recorded by the Company includes Chuangying’s practice of establishing relationships with its customers through contracts and regular contact by sales and representatives.
As of December 31, 2022 and June 30, 2022, there were no any pledged intangible assets to secure bank loans. The Company recorded amortization expense of $716,974 and $5,597 for the six months ended December 31, 2022 and 2021. For the six months ended December 31, 2022 and 2021, the Company recorded no impairment losses for intangible assets. For the six months ended December 31, 2022 and 2021, the Company recorded no disposal of intangible assets.
Estimated future amortization expense is as follows as of December 31, 2022:
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Long-Term Investment |
6 Months Ended |
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Dec. 31, 2022 | |
| Debt Disclosure [Abstract] | |
| LONG-TERM INVESTMENT | NOTE 9 – LONG-TERM INVESTMENT
The Company initiated the divestment process during July 2021 and on September 15, 2021 formally reduced its ownership in Fuzhou Fumao from 67% to 20% by completing the registration process with local governmental authorities. As part of the divesture process, the Company made an investment in Fuzhou Fumao of RMB 6,000,000 to retain an equity percentage of 20%. As of September 15, 2021, Fuzhou Fumao had nominal operations and the Company had no significant influence, as the Company does not participate in Fuzhou Fumao’s management or daily operations.
In December 2022, the Company transferred its 20% ownership in Fuzhou Fumao to an unaffiliated individual at cost value by completing the registration process with local governmental authorities on December 24, 2022. As of December 31, 2022, the carrying amount of long-term investment is $0 and the Company recorded the receivable amount of equity transfer of $861,500 (RMB 6,000,000) in “prepayment, receivables and other current assets”. |
Operating Lease Right-of-Use Assets, Net |
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| Operating Lease Right-of-Use Assets, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPERATING LEASE RIGHT-OF-USE ASSETS, NET | NOTE 10 – OPERATING LEASE RIGHT-OF-USE ASSETS, NET
Operating lease right -of-use assets, net were as follows as of December 31, 2022 and June 30, 2022:
The Company recognized lease expense for the operating lease right-of-use assets Shou Hill Valley Area and Villas over the lease periods which are 20 years. The Company recognized lease expense for the operating lease right-of-use asset Base Station Tower over the lease period which is 10 years. The Company recognized lease expense for the operating lease right-of-use asset Farmland over the lease period which is 12.5 years. The Company recognized lease expense for the operating lease right-of-use asset Office over the lease period which is 3 years. The Company recognized lease expense for the operating lease right-of-use asset Warehouse over the lease contract period, which was nine years. |
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Finance Lease Right-of-Use Assets, Net |
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| Finance Lease Right of Use Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FINANCE LEASE RIGHT-OF-USE ASSETS, NET | NOTE 11 – FINANCE LEASE RIGHT-OF-USE ASSETS, NET
Finance lease right -of-use assets, net were as follows as of December 31, 2022 and June 30, 2022:
The finance lease right-of-use asset is amortized over a 10-year period. The amortization period is 10 years and the discount rate used is 4.9%. |
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Long-Term Deposits and Other Non-Current Assets |
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| Long-Term Prepayments and Other Non-Current Assets [Abstract] | |||||||||||||||||||||||||||||||||||||
| LONG-TERM DEPOSITS AND OTHER NON-CURRENT ASSETS | NOTE 12 – LONG-TERM DEPOSITS AND OTHER NON-CURRENT ASSETS
Long-term deposits and other current assets as of December 31, 2022 and June 30, 2022, consisted of the following:
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Goodwill |
6 Months Ended |
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Dec. 31, 2022 | |
| Goodwill [Abstract] | |
| GOODWILL | NOTE 13 – GOODWILL
For the six months ended December 31, 2022, the Company completed several business combinations with total purchase consideration in aggregate was $19,374,209, among which $11,223,456 was allocated to goodwill. The Company expects to achieve significant synergies from such acquisitions which it plans to complement its existing businesses. Results of the acquired entities’ operations have been included in the Company’s consolidated financial statements since the acquisition date.
Goodwill, which is non-deductible for tax purposes, is primarily attributable to the synergies expected to be achieved from the acquisitions.
The valuations used in the purchase price allocation were determined by the Company with the assistance of independent third-party valuation firms. The valuation reports considered generally accepted valuation methodologies such as the income, market and cost approaches. As the acquirees are all private companies, the fair value estimates of pre-existing equity interests and debt investment or noncontrolling interests are based on significant inputs considered by market participants which mainly include (a) discount rate, (b) projected terminal value based on future cash flows, (c) equity multiples or enterprise value multiples of companies in the same industries and (d) adjustment for lack of control or lack of marketability.
The purchase prices allocation to the assets acquired and liabilities assumed based on their fair values were included in Note 3. Business Combinations. |
Accounts Payable and Accrued Expenses |
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| Accounts Payable and Accrued Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| ACCOUNTS PAYABLE AND ACCRUED EXPENSES | NOTE 14 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
The following is a summary of accounts payable and accrued expenses as of December 31, 2022 and June 30, 2022:
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Advances from Customers |
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| Advances from Customers [Abstract] | |||||||||||||||||||||||||||||||||||||
| ADVANCES FROM CUSTOMERS | NOTE 15 – ADVANCES FROM CUSTOMERS
Advance from customers as of December 31, 2022 and June 30, 2022 consisted of the following:
E-Home received annual fees from senior care services customers and recognized revenues over the contract period. The amounts advanced from customers from senior care services were $1,950,352 and $1,769,289 as of December 31, 2022 and June 30, 2022, respectively, which will be recognized as senior care services revenue within 12 months. E-Home received advance from housekeeping services customers and recognized revenues when services are provided. The amounts advanced from customers from housekeeping services were $263,495 and $481,783 as of December 31, 2022 and June 30, 2022, respectively, which will be recognized as housekeeping services revenue within 12 months. |
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Operating Lease Liabilities |
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| Operating Lease Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| OPERATING LEASE LIABILITIES | NOTE 16 – OPERATING LEASE LIABILITIES
Operating lease liabilities as of December 31, 2022 and June 30, 2022 consisted of the following:
Analyzed for reporting purposes as:
The discount rates used for the Villas, Base Station Tower, Office and Warehouse were 4.1239%, 3.1365%, 2.4584% and 3.95%, respectively. The weighted average discount rate used for operating leases was 4.06%. The weighted average remaining lease terms for operating leases was 16.00 years. The incremental borrowing rate for the Company ranged from 3.7% to 4.8%.
The Company recorded no operating lease liability for the operating lease of Shou Hill Valley Area as of December 31, 2022 and June 30, 2022, respectively, since the Company prepaid the total lease expense of $2,319,791 (RMB 15,000,000) in December 2017. The Company recorded no operating lease liability for the operating lease of Farmland as of December 31, 2022 and June 30, 2022, since the Company paid the total lease expense of $2,321,945 (RMB 15,000,000) in October 2021.
For the six months ended December 31, 2022 and 2021, the operating lease costs were $234,404 and $155,155, respectively. For the six months ended December 31, 2022 and 2021, the short-term operating lease expense were $1,284,118 and $855,825, respectively.
Maturity analysis of operating lease liabilities as of December 31, 2022 is as follows:
Maturity analysis of operating lease liabilities as of June 30, 2022 is as follows:
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Finance Lease Liabilities |
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| Finance Lease Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FINANCE LEASE LIABILITIES | NOTE 17 – FINANCE LEASE LIABILITIES
Financing lease liabilities as of December 31, 2022 and June 30, 2022 consisted of the following:
Analyzed for reporting purposes as:
The lease agreement was entered into on September 11, 2017, bears interest at about 4.9% and will be matured on December 31, 2027. For the six months ended December 31, 2022 and 2021, the amortization expense of financial lease right-of-use assets were $85,608 and $93,363, respectively. For the six months ended December 31, 2022 and 2021, the interest expense for financial lease were $9,709 and $12,059, respectively.
Maturity analysis of financial lease liabilities as of December 31, 2022 is as follows:
Maturity analysis of financial lease liabilities as of June 30, 2022 is as follows:
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Convertible Note |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONVERTIBLE NOTE | NOTE 18 – CONVERTIBLE NOTE
On December 20, 2021, the Company entered into a Securities Purchase Agreement with an institutional investor pursuant to which the Company issued an unsecured convertible promissory note with a two-year maturity (the “Convertible Note 2021”) to Investor. The Convertible Note 2021 has the original principal amount of $5,275,000 including the original issue discount of $250,000 and Investor’s legal and other transaction costs of $25,000. The Company anticipates using the proceeds for general working capital purposes.
Material Terms of the Convertible Note 2021:
In accounting for the issuance of the Convertible Note 2021, the Company separated the Convertible Note into liability and equity components. The carrying amount of the equity component of the Convertible Note 2021 and the warrants was $1,304,565 (equity component $1,092,460, warrants value $212,105). Equity component was determined by deducting the fair value of the liability component from the par value of the original Convertible Note 2021. Warrants value was determined with the Black Scholes model. Equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense over the term of the Convertible Note 2021.
Debt issuance costs related to the original Convertible Note 2021 comprised of commissions paid to third party placement agent and lawyers of $667,920 which included original issue discount of $250,000, Investor’s legal and other transaction costs of $25,000 and commission of $392,920. The Company allocated the total amount incurred to the liability and equity components of the original Convertible Note 2021 based on their relative values. Issuance costs attributable to the liability component were $697,771 and will be amortized to interest expense using the effective interest method over the contractual term. Issuance costs attributable to the equity component were $182,255 and netted with the equity component in stockholders’ equity of $1,092,460 and warrant value of $212,105.
On May 13, 2022, the Company entered into a Securities Purchase Agreement with an institutional investor pursuant to which the Company issued an unsecured convertible promissory note with a two-year maturity (the “Convertible Note 2022”) to Investor. The Convertible Note 2022 has the original principal amount of $3,170,000 including the original issue discount of $150,000 and Investor’s legal and other transaction costs of $20,000. The Company anticipates using the proceeds for general working capital purposes.
Material Terms of the Convertible Note 2022:
In accounting for the issuance of the Convertible Note 2022, the Company separated the Convertible Note into liability and equity components. The carrying amount of the equity component of the Convertible Note and the warrants was $816,765 (equity component $683,393, warrants value $133,372). Equity component was determined by deducting the fair value of the liability component from the par value of the original Convertible Note 2022. Warrants value was determined with the Black Scholes model. Equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense over the term of the Convertible Note 2022.
Debt issuance costs related to the original Convertible Note 2022 comprised of commissions paid to third party placement agent and lawyers of $426,095 which includes original issue discount of $150,000, Investor’s legal and other transaction costs of $20,000 and commission of $256,095. The Company allocated the total amount incurred to the liability and equity components of the original Convertible Note 2022 based on their relative values. Issuance costs attributable to the liability component were $438,856 and will be amortized to interest expense using the effective interest method over the contractual term. Issuance costs attributable to the equity component were $120,611 and netted with the equity component in stockholders’ equity of $683,393 and warrant value of $133,372.
Net carrying amount of the liability component Convertible Note 2021 dated as of December 31, 2022 was as follows:
Net carrying amount of the equity component of the Convertible Note as of December 31, 2022 was as follows:
Amortization of issuance cost, debt discount and interest cost for the six months ended December 31, 2022 were as follows:
The effective interest rates to derive the liability component fair value were 33.10% and 34.51% for Convertible Note 2021 and Convertible Note 2022, respectively. |
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Warrants |
6 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Warrants [Abstract] | |
| Warrants | Note 19 - Warrants
On December 20, 2021 and May 13, 2022, the Company issued warrants to settle the commission of the agent in connection with the issuance of the convertible notes during the year ended June 30, 2022. The warrants entitle the holder to purchase 157,934 ordinary shares (790 shares retrospectively adjusted for effect of the Company’s common reverse stock split on October 4, 2022 and April 12, 2023) at an exercise price equal to $2 per share ($400 per share retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) and 386,585 ordinary shares (1,933 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) of the Company’s common stock at an exercise price equal to $0.49 per share ($98 per share retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023), respectively, at any time within a term of five year after issuance. The Company determined that these warrants are free standing financial instruments that are legally detachable and separately exercisable from the common stock of the Company. In accordance with the accounting guidance, the outstanding warrants are recognized as additional paid in capital on the balance sheet and are measured at their inception date fair value.
As of December 31, 2022 and June 30, 2022, the Company had approximately 544,529 and 544,529 warrants outstanding, (2,723 retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) respectively at an average exercise price between $0.49 and $2 ($98 per share and $400 per share retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) and there were zero warrants exercised or repurchased.
The 2021 warrants were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 117%; risk-free interest rate of 2.04%; expected term of 5 years; exercise price $0.49 and 0% dividend yield.
The 2022 warrants were valued using the Black-Scholes value option pricing model with the following inputs: volatility of 129%; risk-free interest rate of 0.27%; expected term of 5 years; exercise price $2 and 0% dividend yield. |
Taxes |
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| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| TAXES | NOTE 20 – TAXES
The Company is registered in the Cayman Islands. The Company generated substantially all of its income from its PRC operations for the six months ended December 31, 2022 and 2021.
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.
Hong Kong
E-Home Hong Kong is not subject to tax on income or capital gain since there has no operations in Hong Kong for the six months ended December 31, 2022 and 2021.
PRC
Income Tax
On March 16, 2007, the National People’s Congress of PRC enacted an Enterprise Income Tax Law (“EIT Law”), under which Foreign Investment Enterprises (“FIEs”) and domestic companies would be subject to enterprise income tax (“EIT”) at a uniform rate of 25%. The EIT Law became effective on January 1, 2008. 25% tax rates apply to all the PRC operation subsidiaries in the Company.
The provision for income tax for the six months ended December 31, 2022 and 2021, consisted of the following:
The following table sets forth reconciliation between the statutory EIT rate and the effective tax for the six months ended December 31, 2022 and 2020, respectively:
The significant components of deferred tax assets were as follows:
Value Added Tax (“VAT”)
Business tax changed to VAT in China since May 1, 2016. The Company’s revenue from installation is subject to a VAT rate of 11%. The maintenance and accessories sales were subject to a VAT rate of 17% before May 1, 2018 and were reduced to 16% since then. The VAT rate was reduced to 13% since April 1, 2019.
According to the regulations (Fiscal and Tax [2016] 36), no VAT will be levied if an enterprise provides employee-based household services. E-Home Pingtan applied for the tax exemption in July 2017 and was approved by the State Administration of Taxation (China), so the VAT rate of installation, maintenance, after-sales and cleaning service is nil since July 2017.
Taxes payable
The Company’s taxes payable as of December 31, 2022 and June 30, 2022, consisted of the following:
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Equity |
6 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Stockholders' Equity Note [Abstract] | |
| EQUITY | NOTE 21 – EQUITY
Ordinary Shares
At the reorganization event described in Note 1, the Company issued 50,000 ordinary shares with par value of $1 to exchange for the ownership in E-Home Pingtan from the former shareholders to WFOE.
Prior to the reorganization, the Company had $3,620,757 and $3,885,586 in contributed ownership as of June 30, 2019 and 2018, respectively.
The reorganization has been accounted for at historical cost and prepared on the basis as if the reorganization had become effective as of the beginning of the first period presented in the accompanying financial statements of the Company. On May 23, 2019, the Company split its 50,000 ordinary shares into 500,000,000 ordinary shares. The authorized ordinary shares became 500,000,000 shares and the par value changed from US$1 to US$0.0001. As part of its reorganization and on May 23, 2019, the Company surrendered 472,000,000 ordinary shares. As a result, the Company has 28,000,000 ordinary shares issued and outstanding (1,400,000 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023).
On May 18, 2021, the Company completed the closing of its initial public offering of 5,575,556 ordinary shares at a public offering price of $4.50 per ordinary share (278,778 shares of $900 per share retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023). The total gross proceed from the initial public offering was approximately $25.1 million before underwriting commissions and offering expenses. The total net proceed from the initial public offering was $21,661,293 (ordinary shares of $558 and additional paid-in capital of $21,660,735) after deducting the financing expenses directly related to the initial public offering.
On October 18, 2021, E-Home WFOE entered into an equity transfer agreement with each of E-Home Pingtan and Fuzhou Bangchang and their respective shareholders, pursuant to which E-Home WFOE exercised the options to acquire all of the equity interests in each of E-Home Pingtan and Fuzhou Bangchang from their respective shareholders. Upon the registration of the equity transfers with the local governmental authorities as of October 27, 2021, the equity transfers were closed, the company’s VIE structure was dissolved and each of E-Home Pingtan and Fuzhou Bangchang became a wholly owned indirect subsidiary of the Company.
On June 21, 2021, the Company granted 6,000 ordinary (30 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) to three of its independent directors (2,000 shares for each director, 10 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) as their compensations at a fair value of $213,840 (ordinary shares of $1 and additional paid-in capital of $213,839).
On January 20, 2022, the Company and E-Home Pingtan entered into an equity transfer agreement to acquire 60% equity interests in Youyou in consideration of in consideration for the sum of (i) RMB4 million (approximately $0.60 million) in cash and (ii) 2,702,826 ordinary shares of the Company (13,514 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023). On February 3, 2022, the Company issued 2,702,826 ordinary shares to the former controlling shareholders of Youyou at a fair value of $2,000,091 (par value of $270 and additional paid-in capital of $1,999,821).
On January 20, 2022, the Company and E-Home Pingtan entered into an equity transfer agreement to acquire 40% equity interests in Lianbao in consideration of in consideration for 5,823,363 ordinary shares of the Company (29,117 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023). On March 2, 2022, the Company issued 5,823,363 ordinary shares to the former controlling shareholders of Lianbao.
On March 18, 2022, the Company granted 400,000 ordinary shares (2,000 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) to its consultants as their compensations at a fair value of $308,000 (par value of $40 and additional paid-in capital of $307,960). On June 22, 2022, the Company granted 1,000,000 ordinary shares (5,000 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) to its directors as their compensations at a fair value of $322,500 (par value of $100 and additional paid-in capital of $322,400).
On June 14, 2022, the Company and its wholly owned subsidiary, E-Home Hong Kong, entered into an equity transfer agreement with Zhongrun, a limited liability company established in China and Ms. Ling Chen, the sole shareholder of Zhongrun, pursuant to which Ms. Chen agreed to transfer 55% of the equity interests in Zhongrun to E-Home Hong Kong, in consideration for the sum of (i) RMB3 million (approximately $0.45 million) in cash and (ii) 28,041,992 ordinary shares of the Company. On July 8, 2022, the Company issued 28,041,992 ordinary shares (140,210 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) according to the equity transfer agreement at a fair value of $8,496,724 (par value of $2,804 and additional paid-in capital of $8,493,919).
On July 30, 2022, the Company’s board of directors approved proposal per Mr. Xie to acquire 100% of the equity interests of Chuangying and its subsidiaries from Lin Jianying, in consideration for an aggregate of 14,438,584 ordinary shares (72,193 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) of the Company valued at RMB389.2 million (approximately $5.59 million) with a per share issuance price equal to 130% of the average of the Nasdaq closing price for the consecutive twenty trading days preceding July 26, 2022, or $0.39. Beijing Ningbanghonghe Assets Valuation Firm, a third-party appraiser based in Beijing, China, rendered a valuation report, in which the value of total shareholder equity in Chuangying was determined to be approximately RMB39.2 million.
On August 15, 2022, the Company’s board of directors approved proposal per Mr.Xie regarding financing by the Company in the amount of $3,600,000 through the issuance and sale to Multi Rise Holdings Limited, a British Virgin Islands company, of 16,363,636 ordinary shares (81,818 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) of the Company, par value $0.0001 per share, at a per share purchase price of $0.22, pursuant to a securities purchase agreement.
On September 19, 2022, the Company’s board of directors approved proposal per Mr.Xie for issuance and sale of the Company’s ordinary shares up to an aggregate offering price of US$12,300,000 that the Company may sell to White Lion Capital LLC from time to time at the Company’s sole discretion over the commitment period, plus an aggregate of 1,329,729 of Ordinary Shares issuable to the Investor as commitment fee pursuant to the Purchase Agreement. On September 14, 2022, the Company issued 10,343,064 ordinary shares (51,715 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) to White Lion Capital LLC for the aggregated consideration of $783,303.
Reverse stock split
On October 3, 2022, the Company’s board of directors approved to effect a one-for-twenty reverse stock split of its ordinary shares (the “Reverse Stock Split”) with the market effective on October 4, 2022, such that the number of the Company’s authorized preferred and ordinary shares remain unchanged, and the par value of each ordinary share is increased from US$0.0001 to US$0.002. As a result of the Reverse Stock Split, each twenty pre-split ordinary shares outstanding were automatically combined and converted to one issued and outstanding ordinary share without any action on the part of the shareholder. No fractional ordinary shares were issued to any shareholders in connection with the reverse stock split. Each shareholder was entitled to receive one ordinary share in lieu of the fractional share that would have resulted from the reverse stock split. As of October 3, 2022 (immediately prior to the effective date), there were 121,270,556 ordinary shares outstanding, and the number of ordinary shares outstanding after the Reverse Stock Split was 6,062,762 shares, taking into account of the effect of rounding fractional shares into whole shares. In addition, all options and any other securities of the Company outstanding immediately prior to the Reverse Stock Split (to the extent they don’t provide otherwise) were appropriately adjusted by dividing the number of ordinary shares into which the options and other securities are exercisable by 20 and multiplying the exercise price thereof by 20, as a result of the Reverse Stock Split.
On November 18, 2022, the Company entered into a securities purchase agreement with certain investors, pursuant to which each of the investors agreed to purchase and the Company agreed to issue and sell to the investors, an aggregation of 3,480,000 ordinary shares (348,000 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) of the Company at the subscription price of US$1.00 per share for the aggregated consideration of US$3,480,000.
On December 20, 2022, the Company and its wholly owned subsidiary, E-Home Hong Kong, entered into an equity transfer agreement with Zhongrun, a limited liability company established in China and Ms. Ling Chen, pursuant to which Ms. Chen agreed to transfer 20% of the equity interests in Zhongrun to E-Home Hong Kong, in consideration for RMB20 million. On December 20, 2022, the Company issued 4,660,129 ordinary shares (466,013 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) at a fair value of $2,853,596 (par value of $9,320 and additional paid-in capital of $2,844,276).
Statutory Reserve
The Company is required to make appropriations to certain reserve funds, comprising the statutory surplus reserve and the discretionary surplus reserve, based on after-tax net income determined in accordance with generally accepted accounting principles of the PRC (“PRC GAAP”). Appropriations to the statutory surplus reserve are required to be at least 10% of the after-tax net income determined in accordance with PRC GAAP until the reserve is equal to 50% of the entity’s registered capital. Appropriations to the discretionary surplus reserve are made at the discretion of the Board of Directors. The reserved amounts as determined pursuant to PRC statutory laws totaled $664,100 and $664,100 as of December 31, 2022 and June 30, 2022.
Dividends
Dividends declared by the Company are based on the distributable profits as reported in its statutory financial statements reported in accordance with PRC GAAP, which may differ from the results of operations reflected in the consolidated financial statements prepared in accordance with US GAAP. The Company’s ability to pay dividends is primarily from cash received from its operating activities in PRC. For the six months ended December 31, 2022 and 2021, there was no Company dividend declared. |
Revenues |
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| REVENUES | NOTE 22 – REVENUES
The Company disaggregated senior care services revenue into the sale of the E-watch and the care service. Sales of E-watches are recognized in revenue at a point in time while revenue from care service is recognized over a period of time. Deferred portion of care service is recorded as a liability (advances from customers) on the company’s balance sheet.
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Segment Information |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT INFORMATION | NOTE 23 – SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the management for decision making. Management has identified five operating segments which are installation and maintenance, housekeeping, senior care services, sales of pharmaceutical products, and educational consulting services. Operations for senior care services began in August 2019. The Company started generating revenue from this new segment in August 2019. Segments of sales of pharmaceutical products and educational consulting services were acquired from business combination during the six months ended December 31, 2022.These operating segments are monitored and strategic decisions are made on the basis of segmental profit margins. Segment profit is defined as net sales reduced by cost of revenues and other related operating expenses. The results are shown as follows for the six months ended December 31, 2022 and 2021:
On account of the Company’s business model, assets, operating expense, profit or loss, liabilities and other material items could not be separated into each operating segment. As the Company’s long-lived assets and revenue are substantially located in and derived from the PRC, no geographical segments are presented. |
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Commitments and Contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| COMMITMENTS AND CONTINGENCIES | NOTE 24 – COMMITMENTS AND CONTINGENCIES
As of December 31, 2022, the Company had following lease commitments under non-cancelable agreements:
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Customer and Supplier Concentration |
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Dec. 31, 2022 | |
| Customer and Supplier Concentration [Abstract] | |
| CUSTOMER AND SUPPLIER CONCENTRATION | NOTE 25 – CUSTOMER AND SUPPLIER CONCENTRATION
Significant customers and suppliers are those that account for greater than 10% of the Company’s revenues and purchase.
The Company’s sales are made to customers that are located primarily in China. For the six months ended December 31, 2022 and 2021, no individual customer or supplier accounted for more than 10% of the Company’s total revenues or purchase. As of December 31, 2022 and June 30, 2022, no individual customer or supplier accounted for more than 10% of the total outstanding accounts receivable or accounts payable balance. |
Related Party Balances and Transactions |
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Dec. 31, 2022 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY BALANCES AND TRANSACTIONS | NOTE 26 – RELATED PARTY BALANCES AND TRANSACTIONS
As of December 31, 2022 and June 30, 2022, the Company had $429,720 and $108,761 payable to its major shareholder and CEO, Mr. Wenshan Xie for purchase of goods and services, respectively. These balances were included in accounts payable and accrued expenses presented on the Company’s balance sheet.
For the six months ended December 31, 2022, Mr. Xie made payment of $298,113 for purchase of goods and services for the Company and the Company repaid $22,846 to Mr. Xie. For the six months ended December 31, 2021, the Company repaid $190,840 to Mr. Xie for purchase of goods and services for the Company.
As of December 31, 2022, the Company had $2,600,000 and $500,000 receivable balances from E-Home Group Limited (a company controlled by its major shareholder and CEO, Mr. Wenshan Xie) and its consistent voter Lucky Max Global Limited for temporary lending, respectively. These balances were included in due from related parties presented on the Company’s balance sheet. The Company fully collected the balances of due from related parties in March 2023. For the six months ended December 31, 2022, the Company transferred $2,600,000 and $500,000 to E-Home Group Limited and its consistent voter Lucky Max Global Limited for temporary lending, respectively. |
Subsequent Events |
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Dec. 31, 2022 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | NOTE 27 – SUBSEQUENT EVENTS
On January 6, 2023, the Company entered into a securities purchase agreement with eleven investors, including two entities and nine individuals, pursuant to which the investors agreed to purchase an aggregate of 40,650,406 ordinary shares (4,065,041 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) of the Company for the purchase price of $0.492 per ordinary share, which is the average of the closing prices of the Company’s ordinary shares for the six consecutive trading days prior to January 3, 2023. The Company has received an aggregate of US$20 million proceeds in connection with the investment.
On January 27, 2023, the Company entered into a securities purchase agreement (the “2023 January Securities Purchase Agreement”) with certain investors, pursuant to which each of the investors agreed to purchase and the Company agreed to issue and sell to the investors an aggregate of 183,077,333 ordinary shares (18,307,733 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) at a purchase price of US$0.383 per ordinary share for the aggregate gross proceeds of US$70,118,618 before deducting offering expenses. On January 31, 2023, pursuant to the 2023 January Securities Purchase Agreement, the Company consummated such offering of its ordinary shares, which have been registered under the registration statement on Form F-3 (File Number 333-259464).
Reverse stock split
On April 12, 2023, the Company announced the effect of a one-for ten reverse stock split of its ordinary shares (the “one-for-ten Reverse Stock Split”) approved by the Company’s Annual General Meeting of Shareholders held on March 28, 2023. As a result of the one-for-ten Reverse Stock Split, each ten pre-split ordinary shares outstanding were automatically combined and converted to one issued and outstanding ordinary share without any action on the part of the shareholder. No fractional ordinary shares were issued to any shareholders in connection with the reverse stock split.
In accordance with ASC 855-10, the Company has analyzed its operations subsequent to December 31, 2022 to the date these financial statements were issued, and has determined that, it does not have any material subsequent events to disclose in these financial statements. |
Accounting Policies, by Policy (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||
| Interim Financial Statements | Interim Financial Statements
These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“US GAAP”) for interim financial information and with the instructions to Form 6-K and Regulation S-X. Accordingly, the condensed consolidated financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and such adjustments are of a normal recurring nature. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements for the year ended June 30, 2022 and notes thereto and other pertinent information contained in our Form 20-F the Company has filed with the Securities and Exchange Commission (the “SEC”) on November 4, 2022. The results of operations for the six months ended December 31, 2022, are not necessarily indicative of the results to be expected for the full fiscal year ending June 30, 2023.
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| Principles of Consolidation | Principles of Consolidation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and have been consistently applied. The accompanying consolidated financial statements include the financial statements of E-Home Household Service Holdings Limited and its subsidiaries. All inter-company balances and transactions have been eliminated upon consolidation.
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| Use of estimates | Use of estimates
In preparing the consolidated financial statements in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable, prepayments, and other receivables, useful lives of property and equipment and intangible assets, the recoverability of long-lived assets, long-term investment and goodwill, and provision necessary for contingent liabilities. Actual results could differ from those estimates.
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| Cash and cash equivalents | Cash and cash equivalents
Cash and cash equivalents include cash on hand, cash accounts, interest bearing savings accounts and time certificates of deposit with a maturity of three months or less when purchased. The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase to be cash equivalents. The Company maintains most of the bank accounts in the PRC. Cash balances in bank accounts in PRC are not insured by the Federal Deposit Insurance Corporation or other programs.
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| Accounts receivable, net | Accounts receivable, net
Accounts receivable are recognized and carried at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually determines the adequacy of reserves for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on management of customers’ credit and ongoing relationship, management makes conclusions whether any balances outstanding at the end of the period will be deemed uncollectible on an individual basis and on aging analysis basis. The provision is recorded against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of operations and other comprehensive (loss) income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood of collection is not probable. As of December 31, 2022 and June 30, 2022, the Company determined that all accounts receivable were collectible and thus the allowance for doubtful accounts were $0 and $0, respectively.
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| Loan receivables | Loan receivables
Loan receivables are recognized when cash is advanced to the borrowers. Short-term loan receivables are carried at fair value when the fair value option is elected. The Company usually determines the adequacy of reserves for doubtful loan receivables based on individual account analysis and establishes a provision for doubtful loan receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based on management’s best estimates of specific losses on individual exposure. As of December 31, 2022 and June 30, 2022, the Company determined that all loans receivable were collectible and thus the allowance for loan receivables were $0 and $0, respectively.
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| Advance to suppliers | Advances to suppliers
Advances to suppliers refer to advances for purchase of inventories or services, which are applied against accounts payable when the inventories or services are received.
The Company reviews a supplier’s credit history and background information before advancing a payment. If the financial condition of its suppliers were to deteriorate, resulting in an impairment of their ability to deliver goods or provide services, the Company would write off such amount in the period when it is considered as impaired. The allowance for advances to suppliers recognized as of December 31, 2022 and June 30, 2022 were $0 and $0, respectively.
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| Inventories | Inventories
Inventories primarily include purchased accessories, appliances and E-watches for senior care services. Cost of inventories is based on purchase costs and is determined by the weighted-average method. Inventories are stated at the lower of cost or net realizable value. Net realizable value represents the anticipated selling price, net of distribution cost and other costs related to selling the inventories. For the six months ended December 31, 2022 and 2021, the Company recorded no impairment provision of inventories for lower of cost or net realizable value, respectively.
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| Property, plant and equipment, net | Property, plant and equipment, net
Property, plant and equipment are stated at cost less accumulated depreciation. Maintenance and repairs are charged to expense as incurred. Depreciation is provided on the straight-line method based on the estimated useful lives of the assets as follows:
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 betterment 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 consolidated statements of income and other comprehensive (loss) income in other income or expenses.
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| Intangible assets, net | Intangible assets, net
Intangible assets consist of software acquired from third parties, customer relationships, copyrights and trademarks acquired from business combination and senior care service app developed by the Company. The Company has purchased software from third parties used for operation management and developed an app for its senior care service. Customer relationships include but are not limited to: (1) customer contracts and related customer relationships, (2) noncontractual customer relationships, (3) customer lists, and (4) order or production backlog acquired by the Company from business combination. In accordance with ASC 805-20-55, customer relationships should be recognized separately from goodwill if it meets either of the following criteria: (1) contractual-legal criterion: the intangible asset arises from contractual or other legal rights (regardless of whether those rights are transferable or separable from the acquired business or from other rights and obligations); or (2) separability criterion: the intangible asset is capable of being separated or divided from the acquired business and sold, transferred, licensed, rented, or exchanged.
Intangible assets with finite lives are carried at cost less accumulated amortization. All intangible assets with finite lives are amortized using the straight-line method over their estimated useful lives. Software, senior care service app, copyrights, trademarks and customer relationships are amortized on a straight-line basis over the estimated economic useful lives of five to ten years.
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| Goodwill | Goodwill
Goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired in a business combination. The Company assesses goodwill for impairment in accordance with ASC Subtopic 350-20, Intangibles—Goodwill and Other: Goodwill (“ASC 350-20”), which requires that goodwill to be tested for impairment at the reporting unit level at least annually and more frequently upon the occurrence of certain events, as defined by ASC 350-20.
The Company has the option to assess qualitative factors first to determine whether it is necessary to perform the quantitative test in accordance with ASC 350-20. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. If the Company believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, the quantitative impairment test described above is required. Otherwise, no further testing is required. The quantitative impairment test compares the fair value of the reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess.
The Company performed qualitative assessments for the goodwill. Based on the requirements of ASC 350-20, the Company evaluated all relevant factors including, but not limited to, macroeconomic conditions, industry and market conditions, financial performance, and the share price of the Company. The Company weighed all factors in their entirety and concluded that it was not more-likely-than-not the fair value was less than the carrying amount of goodwill, and further impairment testing on goodwill was unnecessary as of December 31, 2022.
On disposal of a portion of reporting unit that constitutes a business, the attributable amount of goodwill is included in the determination of the amount of gain or loss recognized upon disposal. When the Group disposes of a business within the reporting unit, the amount of goodwill disposed is measured on the basis of the relative fair value of the business disposed and the portion of the reporting unit retained. This relative fair value approach is not used when the business to be disposed was not integrated into the reporting unit after its acquisition, in which case the current carrying amount of the acquired goodwill should be included in the carrying amount of the business to be disposed.
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| Impairment of long-lived assets other than goodwill | Impairment of long-lived assets other than goodwill
Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Long-lived assets with carrying values that are not expected to be recovered through future cash flows are written down to their estimated fair values. The carrying value of a long-lived asset is deemed not recoverable if it exceeds the sum of undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the asset’s carrying value exceeds the sum of its undiscounted cash flows, a non-cash asset impairment charges equal to the excess of the asset’s carrying value over its estimated fair value is recorded. Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at a specified measurement date. We measure fair value using market price indicators or, in the absence of such data, appropriate valuation techniques.
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| Leases | Leases
Leases are classified at lease commencement date as either a finance lease or an operating lease. A lease is a finance lease if it meets any of the following criteria: (a) the lease transfers ownership of the underlying asset to the lessee by the end of the lease term. (b) the lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise, (c) the lease term is for the major part of the remaining economic life of the underlying asset, (d) the present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset or (e) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. When none of the criteria meets, the lease shall be classified as an operating lease.
For lessee, a lease is recognized as a right-of-use asset with a corresponding liability at lease commencement date. The lease liability is calculated at the present value of the lease payments not yet paid by using the lease term and discount rate determined at lease commencement. The right-of-use asset is calculated as the lease liability, increased by any initial direct costs and prepaid lease payments, reduced by any lease incentives received before lease commencement. The right-of-use asset itself is amortized on a straight-line basis unless another systematic method better reflects how the underlying asset will be used by and benefits the lessee over the lease term.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). The amendments in this ASU require an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain quantitative and qualitative disclosures about leasing arrangements. The Company adopted ASC 842 for the year ended June 30, 2017 by using a modified retrospective transition approach in the accompanying financial statements of the Company. The adoption of this standard had a material impact on the Company’s financial position, with no material impact on the results of operations and cash flows (see Note 10 and Note 11).
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| Convertible note- cash conversion feature | Convertible note- cash conversion feature
ASC 470, Debt, requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. We measured the estimated fair value of the debt component of our convertible notes as of the issuance date based on our nonconvertible debt borrowing rate. The equity components of the convertible senior notes have been reflected within additional paid-in capital in our consolidated balance sheet, and the resulting debt discount is amortized over the period during which the convertible notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense.
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| Freestanding instruments-warrants | Freestanding instruments-warrants
Per ASC 470-20-30-2, when detachable warrants (detachable call options) are issued in conjunction with a debt instrument as consideration in purchase transactions, the amounts attributable to each class of instrument issued shall be determined separately, based on values at the time of issuance.
(1) The first step in determining the proper accounting for warrants is to determine whether the equity-linked component is free standing financial instrument of embedded in a host instrument. According to the warrant agreement, the debt and warrant agreements were both entered into by the parties on December 20, 2021 and May 13, 2022 warrants were issued as part of the subscription agreement with the note holders. The holder can transfer the warrant to any person or entity in accordance with the warrant agreement as long as there is a registration statement effective. The warrants can be exercised any time after issuance dates and prior to the expiration date. The debt can remain outstanding even after the warrants are exercised. Based on the above facts, the warrants should be considered as a freestanding instrument.
(2) The next step is to determine whether the free-standing instrument is within the scope of ASC 480. The warrants are not within the scope of ASC 480 because the warrant is not considered a mandatorily redeemable financial instrument. The Company has no obligation to redeem the shares or settle the obligation by transferring assets.
(3) The last step is to determine if the freestanding instrument should be accounted for as an equity instrument or liability within the guidance of ASC 815-40. The Company determines the value of the warrants using the Black- Scholes Option Pricing Model (“Black-Scholes”) using the stock price on the date of issuance, the risk-free interest rate associated with the life of the debt, and the volatility of the stock.
Based on the above analysis, the Company concluded that the warrant shall be classified as equity and is recorded at fair value. Subsequent re-measurement is not required.
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| Convertible debt – derivative treatment | Convertible debt – derivative treatment
When the Company issues debt with a conversion feature, we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: a) one or more underlying, typically the price of our common stock; b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; c) no initial net investment, which typically excludes the amount borrowed; and d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked component that meets the definition of a derivative does not have to be separated from the host instrument if the component qualifies for the scope exception for certain contracts involving an issuer’s own equity. The scope exception applies if the contract is both a) indexed to its own stock; and b) classified in shareholders’ equity in its statement of financial position.
If the conversion feature within convertible debt meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative upon the date of issuance. If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The convertible debt derivative is revalued at the end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount is amortized through interest expense over the life of the debt. The Company did not identify any derivative in their convertible notes issued during the reporting period.
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| Fair value of financial instruments | Fair value of financial instruments
The fair value of a financial instrument is defined as the exchange price that would be received from an asset or paid to transfer a liability (as exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. The carrying amounts of financial assets and liabilities, such as cash and cash equivalents, time deposits, accounts receivable, prepaid expenses and other current assets, accounts payable, and other current liabilities, approximate their fair values because of the short maturity of these instruments and market rates of interest.
ASC 820 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
The Company considers the carrying amount of its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, advances to suppliers, prepayment, receivables and other current assets, due from related parties, loan receivables, accounts payable and advances from customers to approximate the fair value of the respective assets and liabilities as of December 31, 2022 and June 30, 2022 owing to their short-term or immediate nature.
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| Revenue recognition | Revenue recognition
The Company adopted Accounting Standards Codification No. 606, Revenue from Contracts with Customers (ASC 606) beginning January 1, 2018 and elected to adopt ASC 606 under the modified retrospective method. This guidance was applied retrospectively to the most current period presented in the Company’s consolidated financial statements. The adoption of ASC 606 did not have a material impact on the consolidated financial statements of the Company.
The Company generates revenues primarily from installation & maintenance, housekeeping services, senior care services, sales of pharmaceutical products and educational consulting services. The Company sells its installation & maintenance and housekeeping services through a third-party service provider WeChat platform. The Company’s revenues are subject to value added tax (“VAT”). To record VAT payable, the Company uses the gross presentation method, which presents the taxable services and the available input VAT amount (at the rate applicable to the supplier). Revenues are recorded net of VAT in accordance with the ASC 606. The recognition of revenues involves certain management judgments. The amount and timing of our revenues could be materially different for any period if management made different judgments or utilized different estimates.
The Company does not have amounts of contract assets since revenue is recognized as control of goods or services is transferred. The contract liabilities consist of advance payments from customers. The contract liabilities are reported in a net position on a customer-by-customer basis at the end of each reporting period. All contract liabilities are included in advance from customers in the condensed consolidated balance sheets. As of December 31, 2022 and June 30, 2022, the Company record advance from customers of $2,213,847 and $2,251,072, respectively
Installation & maintenance
Installation and maintenance services mainly consist of the following services: technical home installation and repair, maintenance and other after sale services. Revenues from installation and maintenance services are recognized at a point in time once the service is transferred to the customer. For service arrangements that include multiple performance obligations, revenues are allocated to each performance obligation based on its standalone selling price. The Company allocates arrangement consideration in multiple-deliverable revenue arrangements at the inception of an arrangement to all deliverables based on the relative selling price method, generally based on the best estimate of selling price. The Company, acting as principal, contracts with third-party service providers (i.e., service outlets), acting as agents. The Company is responsible for market development and providing the customer information to the service provider, directing the outlet to provide services and coordination with the customer, while the service provider provides the door-to-door service. The price of services is set by the Company and the service provider is only responsible for collection of payments. When the Company’s end customers place orders online for services, they pay either a required visit fee or the estimated full amount of service fee through third-party payment platforms, such as WeChat Pay and Alipay. The Company chooses the service provider by the proximity principle. If the customer is not satisfied with the chosen provider, the service provider can be re-selected. Regardless of the service provider’s performance, the Company is still liable to complete the orders. If the end customer fails to pay after satisfactory service is provided and the service provider is unable to collect payment from the end customer, the Company will communicate directly with the end customer. The service provider is not obligated to pay the Company. To minimize our risk, the service provider will remit payment of any outstanding receivables each month.
Housekeeping services
Housekeeping services refer to services including housecleaning, nanny service, maternity matron and personnel staffing. Revenues from housekeeping are recognized at a point in time upon completion of services to the customer based on the relative selling price method. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods or services itself (that is, the entity is a principal) or to arrange for the other party to provide those goods or services (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the services.
Senior care services
Senior care services refer to services including BP, heart rate test, daily steps count, location and track record, call for help by Wechat or phone, and other care services rendered to senior customers through an E-watch, which is given to the customers when they pay the annual fees. The customers sign a contract for the services with the Company. The contract term is normally one year. The revenues from senior care services are allocated into the revenue from the E-watch sold and the revenue of the services provided. Revenues from the E-watch sold are recognized at a point in time once customers receive the E-watch and the revenues from the services provided are recognized over the service period. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods or services itself (that is, the entity is a principal) or to arrange for the other party to provide those goods or services (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the services.
Disaggregation of revenue from contracts with customers
During the process of performing the installation and maintenance services, the Company also sells household appliance accessories such as air conditioner parts to its customers according to the customers’ needs. The Company did not sell these household appliance accessories separately. The senior care services consist of the sale of E-watch and the care services. The E-watch cannot be sold to the customers solely without the care services, and the care services should be rendered by the E-watch. Consequently, the Company regards these operating activities as operating in one material segment, being the revenue of senior care services.
Based on the above discussion, the Company disaggregated sales of household appliance accessories from installation and maintenance revenue and senior care services revenue into the sales of the E-watch and the care service. Sales of household appliance accessories and E-watches are recognized in revenue at a point in time while revenue from care service is recognized over a period.
Sales of pharmaceutical products
The Company also generates revenues from sales of pharmaceutical products to its customers, which are mainly pharmaceutical stores in PRC. Under the adoption of ASC 606, the Company recognized revenues in a manner to depict the transfer of goods to a customer at an amount that reflects the consideration expected to be received in exchange for those goods. The Company considers revenue realized or realizable and earned when all the five following criteria are met: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
The Company considers customer purchase orders to be the contracts with a customer. As part of its consideration of the contract, the Company evaluates certain factors including the customer’s ability to pay (or credit risk). For each contract, the Company considers the promise to transfer products, each of which is distinct, to be the identified performance obligations. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods itself (that is, the entity is a principal) or to arrange for the other party to provide those goods (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the goods. The Company controls the specified good before that good is transferred to its customers based on the following indicators: (1) the Company is primarily responsible for fulfilling the promise to provide the specified good, (2) the Company bears the inventory risk before or after (i.e., customer has a right of return) the specified good has been transferred to a customer, (3) the Company has discretion in setting the price for the specified good.
In determining the transaction price, the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which the Company expects to be entitled. The Company provide its customers with rights to return the sold goods for several days after the customers’ acceptance of the goods and can reasonably estimates return provision for the goods. The product return provisions are estimated based on (1) historical rates, (2) specific identification of outstanding returns not yet received from customers and outstanding discounts and claims and (3) estimated returns, discounts and claims expected, but not yet finalized with customers. The Company analyzed historical refund claims for defective products and concluded that they have been immaterial since the Company can return the goods returned from the customers to its suppliers.
Revenues are reported net of all VAT. As the Company’s standard payment terms are less than one year, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. The Company allocates the transaction price to each distinct product based on their relative standalone selling price.
Revenue is recognized when control of the product is transferred to the customer (i.e., when the Company’s performance obligation is satisfied at a point in time), which typically occurs at delivery. Prices are determined based on negotiations with the Company’s customers when signing the contracts and are not subject to adjustment.
Educational consulting services
The Company also generates revenues from providing educational consulting services to its customers. Revenues from educational consulting services are recognized at a point in time upon completion of services to the customer based on the relative selling price method. The Company considers whether the nature of its promise is a performance obligation to provide the specified goods or services itself (that is, the entity is a principal) or to arrange for the other party to provide those goods or services (that is, the entity is an agent). The Company determines it is a principal and recognizes revenues at the gross amount received for the services.
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| Cost of revenues | Cost of revenues
Cost of revenues consists of service fees paid to staff, outlets, suppliers and the cost of products sold.
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| Government subsidies | Government subsidies
Government subsidies as the compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related cost are recognized in profit or loss in the period in which they become receivable. Government subsidies are recognized when received and all the conditions for their receipt have been met.
For the six months ended December 31, 2022 and 2021, the Company received government subsidies of $43,616 and $0, respectively. The grants were recorded as other income in the consolidated financial statements.
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| Income taxes | Income taxes
Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Any PRC tax paid by subsidiaries during the year is recorded. Deferred income taxes are recognized for all significant temporary differences at enacted rates and classified as current or non-current based upon the classification of the related asset or liability in the financial statements. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all, the deferred tax asset will not be realized.
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| Ordinary shares | Ordinary shares
The Company accounts for repurchased ordinary shares under the cost method and includes such treasury stock as a component of the common shareholders’ equity. Cancellation of treasury stock is recorded as a reduction of ordinary shares, additional paid-in capital and retained earnings, as applicable. An excess of purchase price over par value is allocated to additional paid-in capital first with any remaining excess charged entirely to retained earnings.
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| Related parties | Related parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, shareholder, or a related corporation.
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| Earnings per share | Earnings per share
The Company computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies with complex capital structures to present basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average ordinary shares outstanding for the period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential ordinary shares (e.g., convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted EPS. There were no potentially dilutive ordinary shares during the six months ended December 31, 2022 and 2021.
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| Comprehensive income/(loss) | Comprehensive (loss) income Comprehensive (loss) income is defined as the change in equity of the Company during a period arising from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Comprehensive income or loss is reported in the consolidated statements of operations and other comprehensive (loss) income. Accumulated other comprehensive (loss) income, as presented on the accompanying consolidated balance sheets, consists of accumulated foreign currency translation adjustments |
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| Foreign currency translation | Foreign currency translation
The Company’s principal country of operations is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency. The consolidated financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments are included as a separate component of accumulated other comprehensive (loss) income.
The value of RMB against U.S. Dollar may fluctuate and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially affect the Company’s consolidated financial condition in terms of U.S. Dollar reporting. The following table outlines the currency exchange rates that were used in the consolidated financial statements:
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| Segment reporting | Segment reporting
Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the financial information provided regularly to the Company’s most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Company’s various lines of business and geographical locations.
Individually material operating segments are not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material may be aggregated if they share a majority of these criteria. The Company’s five segments are installation & maintenance, housekeeping, senior care services, sales of pharmaceutical products, and educational consulting services. The Company launched senior care services and started generating revenue from this new segment in August 2019. Segments of sales of pharmaceutical products and educational consulting services were acquired from business combination during the six months ended December 31, 2022.
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| Business combinations | Business combinations
The Company accounts for its business combinations using the purchase method of accounting in accordance with ASC Topic 805, Business Combinations. The purchase method of accounting requires that the consideration transferred to be allocated to the assets, including separately identifiable assets and liabilities the Company acquired, based on their estimated fair values. The consideration transferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued as well as the contingent considerations as of the acquisition date. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of (i) the total of cost of acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interests in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings.
In a business combination achieved in stages, the Company remeasures its previously held equity interest in the acquiree immediately before obtaining control at its acquisition-date fair value and the re-measurement gain or loss, if any, is recognized in “Others, net” in the consolidated statements of comprehensive (loss) income.
The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and noncontrolling interests is based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significant variables in these valuations are discount rates, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. The Company determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons.
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| Commitments and contingencies | Commitments and contingencies
The Company follows subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment. There are no known commitments or contingencies as of December 31, 2022 and June 30, 2022.
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| Concentration of risks | Concentration of risks
Exchange rate risks
The Company’s Chinese subsidiaries may be exposed to significant foreign currency risks from exchange rate fluctuations and the degree of volatility of foreign exchange rates between the U.S. Dollar and the RMB. As of December 31, 2022 and June 30, 2022, the RMB denominated cash and cash equivalents amounted to $62,458,602 and $53,946,205, respectively.
Currency convertibility risks
Substantially all of the Company’s operating activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions requires submitting a payment application form together with other information such as suppliers’ invoices, shipping documents and signed contracts.
Concentration of credit risks
Financial instruments that potentially subject the Company to concentration of credit risks consist primarily of cash and cash equivalents and accounts receivable, the balances of which stated on the consolidated balance sheets represented the Company’s maximum exposure. The Company places its cash and cash equivalents in good credit quality financial institutions in China.
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| Risks and uncertainties | Risks and uncertainties
The operations of the Company are located in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic, and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed in Note 1, this may not be indicative of future results.
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| Recent accounting pronouncements | Recent accounting pronouncements
The Company considers the applicability and impact of all ASUs. Management periodically reviews new accounting standards that are issued.
In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This amends guidelines on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 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 right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended the effective date of ASU 2016-13. The amendments in these ASUs are effective for the Company’s fiscal years, and interim periods within those fiscal years beginning April 1, 2022. Early adoption is permitted. The Company adopted this guidance on July 1, 2022 and the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.
In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity, and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year, for public business entities that meet the definition of a SEC filer, excluding entities eligible to be smaller reporting companies as defined by the SEC. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted. The Company as a small reporting company expects to adopt this guidance on July 1, 2024 and the adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The new amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements.
In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820) – Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions, which stipulates that a contractual restriction on the sale of an equity security should not be considered part of the equity security’s unit of account and, therefore, should not be considered in measuring its fair value. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. The Company is currently evaluating the impact of the new guidance on our consolidated financial statements.
The Company does not believe other recently issued but not yet effective accounting statements, if recently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of operations and other comprehensive (loss) income and statements of cash flows. |
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| Schedule of major consolidated subsidiaries |
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Significant Accounting Policies (Tables) |
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Business Combination (Tables) |
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| Schedule of acquisition ownership |
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Prepayment, Receivables and Other Current Assets (Tables) |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prepayment and Other Current Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of prepayments, deposits and other current assets |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loan Receivables (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of loan receivable |
|
||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property, plant and equipment, net |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets, Net (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of intangible assets, net |
|
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| Schedule of estimated future amortization expense |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Lease Right-of-Use Assets, Net (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Lease Right-of-Use Assets, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of operating lease right -of-use assets |
|
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Finance Lease Right-of-Use Assets, Net (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Finance Lease Right of Use Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of finance lease right -of-use assets |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-Term Deposits and Other Non-Current Assets (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||
| Long-Term Prepayments and Other Non-Current Assets [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of long-term deposits and other non-current assets |
|
||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Expenses (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Accounts Payable and Accrued Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accounts payable and accrued expenses |
|
|||||||||||||||||||||||||||||||||||||||||||||
Advances from Customers (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||
| Advances from Customers [Abstract] | |||||||||||||||||||||||||||||||||||||
| Schedule of advance from customer |
|
||||||||||||||||||||||||||||||||||||
Operating Lease Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Operating Lease Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of operating lease liabilities |
|
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| Schedule of analyzed for reporting purposes |
|
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| Schedule of maturity analysis of operating lease liabilities |
|
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Finance Lease Liabilities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Finance Lease Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of financing lease liabilities |
|
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| Schedule of financing lease liabilities for reporting purposes |
|
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| Schedule of maturity analysis of financial lease liabilities |
|
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Convertible Note (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of net carrying amount of the liability component convertible Note |
|
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| Schedule of net carrying amount of the equity component |
|
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| Schedule of amortization of issuance cost, debt discount and interest cost |
|
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Taxes (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of provision for income tax |
|
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| Schedule of statutory EIT rate and the effective tax |
|
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| Schedule of deferred tax asset |
|
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| Schedule of taxes payable |
|
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Revenues (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of revenue |
|
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Segment Information (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of operating segments information |
|
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of future lease payments |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Nature of Operations (Details) - Schedule of acquisition of non-controlling interest |
Dec. 31, 2022
USD ($)
|
|---|---|
| Schedule Of Acquisition Of Non Controlling Interest Abstract | |
| Purchase consideration | $ 466,889 |
| Noncontrolling interests | (14,558) |
| Additional paid-in capital | 481,447 |
| Total | $ 466,889 |
Significant Accounting Policies (Details) - USD ($) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Jun. 30, 2022 |
|
| Accounting Policies [Abstract] | |||
| Allowance for doubtful accounts | $ 0 | $ 0 | |
| Allowance for loan receivable | 0 | 0 | |
| Advance to suppliers | 0 | 0 | |
| Advance from customer | 2,213,847 | 2,251,072 | |
| Company Received Government Subsidies | 43,616 | $ 0 | |
| Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Tax | $ 62,458,602 | $ 53,946,205 | |
Significant Accounting Policies (Details) - Schedule of outlines the currency exchange rates |
Dec. 31, 2022 |
Jun. 30, 2022 |
Dec. 31, 2021 |
|---|---|---|---|
| Schedule Of Outlines The Currency Exchange Rates Abstract | |||
| Year-end spot rate | US$1= 6.9646 RMB | US$1= 6.7114 RMB | US$1= 6.3757 RMB |
| Average rate | US$1= 7.0087 RMB | US$1= 6.4661 RMB | US$1= 6.4266 RMB |
Business Combination (Details) |
6 Months Ended |
|---|---|
|
Dec. 31, 2022
USD ($)
| |
| Business Combination (Details) [Line Items] | |
| Purchase consideration amount (in Dollars) | $ 19,948,542 |
| Allocated goodwill amount (in Dollars) | $ 11,223,456 |
| Zhongrun [Member] | |
| Business Combination (Details) [Line Items] | |
| Ownership percentage | 75.00% |
| Youyou [Member] | |
| Business Combination (Details) [Line Items] | |
| Ownership percentage | 60.00% |
| Chuangying [Member] | |
| Business Combination (Details) [Line Items] | |
| Ownership percentage | 100.00% |
Business Combination (Details) - Schedule of acquisition ownership (Parentheticals) - shares |
Apr. 12, 2023 |
Oct. 04, 2022 |
Jun. 30, 2022 |
|---|---|---|---|
| Zhongrun [Member] | |||
| Business Acquisition [Line Items] | |||
| Ordinary shares issued | 32,702,121 | ||
| Reverse stock split | 606,223 | 606,223 | |
| Youyou [Member] | |||
| Business Acquisition [Line Items] | |||
| Ordinary shares issued | 2,702,826 | ||
| Reverse stock split | 13,514 | 13,514 | |
| Chuangying [Member] | |||
| Business Acquisition [Line Items] | |||
| Ordinary shares issued | 14,438,584 | ||
| Reverse stock split | 72,193 | 72,193 |
Accounts Receivable, Net (Details) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
|
| Receivables [Abstract] | ||
| Accounts receivable due month | 3 months | 3 months |
Accounts Receivable, Net (Details) - Schedule of accounts receivable - Accounts Receivable [Member] - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2020 |
|---|---|---|
| Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
| Accounts receivable, gross | $ 2,099,251 | $ 877,931 |
| Less: allowance for doubtful accounts | ||
| Accounts receivable, net | $ 2,099,251 | $ 877,931 |
Prepayment, Receivables and Other Current Assets (Details) - Schedule of prepayments, deposits and other current assets - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
||||||
|---|---|---|---|---|---|---|---|---|
| Schedule of Prepayments, Deposits and Other Current Assets [Abstract] | ||||||||
| Performance deposits | [1] | $ 2,086,003 | ||||||
| Deposits for potential acquisitions | [2] | 125,173 | 6,011,058 | |||||
| Prepaid for marketing fee | [3] | 1,865,219 | ||||||
| Prepaid services fee | 545,732 | |||||||
| Prepaid office deposit | 14,006 | |||||||
| Receivable from equity transfer | 861,500 | |||||||
| Other prepaid expenses and current assets | 622,620 | 743,392 | ||||||
| Total prepayments, deposits and other current assets | $ 1,609,293 | $ 11,265,410 | ||||||
| ||||||||
Loan Receivables (Details) |
Dec. 31, 2022
USD ($)
|
|---|---|
| Receivables [Abstract] | |
| short-term loans | $ 5,181,680 |
Loan Receivables (Details) - Schedule of loan receivable - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Loan Receivable [Abstract] | ||
| Total loan receivables | $ 5,181,680 | |
| Loan receivable – Jianping Guo [Member] | ||
| Schedule of Loan Receivable [Abstract] | ||
| Total loan receivables | 3,931,680 | |
| Loan receivable – Yuwin Group Limited [Member] | ||
| Schedule of Loan Receivable [Abstract] | ||
| Total loan receivables | $ 1,250,000 |
Property, Plant and Equipment, Net (Details) - USD ($) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Jun. 30, 2022 |
|
| Property, Plant and Equipment [Abstract] | |||
| Depreciation expense | $ 613,247 | $ 34,814 | |
| Property, plant and equipment | 885,343 | $ 22,680 | |
| Acquired property, plant and equipment | 126,449 | ||
| Accumulated cost | 551,389 | ||
| Accumulated depreciation | $ 424,940 | ||
Property, Plant and Equipment, Net (Details) - Schedule of property, plant and equipment, net - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Total property, plant and equipment, at cost | $ 6,095,812 | $ 4,825,342 |
| Less: accumulated depreciation | (838,998) | (230,238) |
| Property, plant and equipment, net | 5,256,814 | 4,595,104 |
| Building and improvements [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property, plant and equipment, at cost | 5,150,077 | 4,416,120 |
| Office and electronic equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property, plant and equipment, at cost | 412,837 | 85,732 |
| Motor vehicles [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property, plant and equipment, at cost | 349,849 | 323,490 |
| Machinery [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Total property, plant and equipment, at cost | $ 183,048 |
Intangible Assets, Net (Details) |
1 Months Ended | 6 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
|
Apr. 12, 2023
shares
|
Oct. 04, 2022
shares
|
Oct. 03, 2022
shares
|
Jul. 08, 2022
USD ($)
shares
|
Jun. 14, 2022 |
Dec. 20, 2022
USD ($)
shares
|
Jul. 30, 2022
USD ($)
$ / shares
shares
|
Jul. 30, 2022
CNY (¥)
shares
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
|
| Intangible Assets, Net (Details) [Line Items] | ||||||||||
| Transfer agreement description | the Company and its wholly owned subsidiary, E-Home Hong Kong, entered into equity transfer agreements with Zhongrun, a limited liability company established in China and Ms. Ling Chen, pursuant to which Ms. Chen agreed to transfer 55% and 20% of the equity interests in Zhongrun to E-Home Hong Kong, in consideration for the sum of (i) RMB3 million (approximately $0.453 million, not paid) in cash and (ii) 28,041,992 ordinary shares of the Company. | the Company and its wholly owned subsidiary, E-Home Hong Kong, entered into equity transfer agreements with Zhongrun, a limited liability company established in China and Ms. Ling Chen, pursuant to which Ms. Chen agreed to transfer 55% and 20% of the equity interests in Zhongrun to E-Home Hong Kong, in consideration for the sum of (i) RMB3 million (approximately $0.453 million, not paid) in cash and (ii) 28,041,992 ordinary shares of the Company. | ||||||||
| Ordinary shares issued (in Shares) | shares | 28,041,992 | 4,660,129 | ||||||||
| Adjusted reserve stock spilit (in Shares) | shares | 6,062,762 | |||||||||
| Agreement fair value | $ | $ 8,496,724 | $ 2,853,596 | ||||||||
| Ordinary share par value | $ | 2,804 | 9,320 | ||||||||
| Additional paid-in capital | $ | $ 8,493,919 | $ 2,844,276 | ||||||||
| Intangible asset | $ | $ 6,321,792 | |||||||||
| Useful life | 5 years | |||||||||
| Equity interest percentage | 100.00% | |||||||||
| Aggregate shares (in Shares) | shares | 14,438,584 | 14,438,584 | ||||||||
| Stock spilit value | $ 5.59 | ¥ 39.2 | ||||||||
| Issuance price pecentage | 130.00% | |||||||||
| Average closing price (in Dollars per share) | $ / shares | $ 0.39 | |||||||||
| Amortization expenses of intangible assets | $ | $ 716,974 | $ 5,597 | ||||||||
| Customer Relationships [Member] | ||||||||||
| Intangible Assets, Net (Details) [Line Items] | ||||||||||
| Useful life | 10 years | |||||||||
| Purchase price amount | $ | $ 1,426,798 | |||||||||
| Copyrights and trademarks [Member] | ||||||||||
| Intangible Assets, Net (Details) [Line Items] | ||||||||||
| Useful life | 5 years | |||||||||
| Purchase price amount | $ | $ 242,556 | |||||||||
| E-Home Hong Kong, [Member] | ||||||||||
| Intangible Assets, Net (Details) [Line Items] | ||||||||||
| Adjusted reserve stock spilit (in Shares) | shares | 140,210 | |||||||||
| E-Home Hong Kong, [Member] | Forecast [Member] | ||||||||||
| Intangible Assets, Net (Details) [Line Items] | ||||||||||
| Adjusted reserve stock spilit (in Shares) | shares | 140,210 | |||||||||
| E-Home Hong Kong, One [Member] | Forecast [Member] | ||||||||||
| Intangible Assets, Net (Details) [Line Items] | ||||||||||
| Adjusted reserve stock spilit (in Shares) | shares | 466,013 | |||||||||
| Mr. Xie [Member] | ||||||||||
| Intangible Assets, Net (Details) [Line Items] | ||||||||||
| Adjusted reserve stock spilit (in Shares) | shares | 72,193 | 72,193 | ||||||||
Intangible Assets, Net (Details) - Schedule of intangible assets, net - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Finite-Lived Intangible Assets [Line Items] | ||
| Less: accumulated amortization | $ (754,136) | $ (38,530) |
| Intangible assets, net | 7,330,138 | 23,963 |
| Copyrights and trademarks [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible assets, gross | 242,556 | |
| Software [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible assets, gross | 50,053 | 17,793 |
| Senior care service App [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible assets, gross | 43,075 | 44,700 |
| Customer Relationships [Member] | ||
| Finite-Lived Intangible Assets [Line Items] | ||
| Intangible assets, gross | $ 7,748,590 |
Intangible Assets, Net (Details) - Schedule of estimated future amortization expense |
Dec. 31, 2022
USD ($)
|
|---|---|
| Schedule of estimated future amortization expense [Abstract] | |
| 2023 | $ 1,465,813 |
| 2024 | 1,465,813 |
| 2025 | 1,465,813 |
| 2026 | 1,465,813 |
| 2027 | 1,455,549 |
| Years after | 11,337 |
| Total | $ 7,330,138 |
Long-Term Investment (Details) |
Dec. 31, 2022
USD ($)
|
Dec. 31, 2022
CNY (¥)
|
Sep. 15, 2021 |
|---|---|---|---|
| Long-Term Investment (Details) [Line Items] | |||
| Ownership percentage | 20.00% | 20.00% | 20.00% |
| Long term investment amount (in Dollars) | $ | $ 0 | ||
| Receivable amount | $ 861,500 | ¥ 6,000,000 | |
| Fuzhou Fumao [Member] | |||
| Long-Term Investment (Details) [Line Items] | |||
| Ownership percentage | 67.00% | ||
| Fuzhou Fumao [Member] | |||
| Long-Term Investment (Details) [Line Items] | |||
| Ownership percentage | 20.00% | 20.00% | |
| Investment amount (in Yuan Renminbi) | ¥ | ¥ 6,000,000 |
Finance Lease Right-of-Use Assets, Net (Details) |
6 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Finance Lease Right of Use Assets [Abstract] | |
| Term of right of use asset of financial lease | 10 years |
| Percentage discount rate | 4.90% |
| Amortization period | 10 years |
Finance Lease Right-of-Use Assets, Net (Details) - Schedule of finance lease right -of-use assets |
6 Months Ended |
|---|---|
|
Dec. 31, 2022
USD ($)
| |
| Finance Lease Right-of-Use Assets, Net (Details) - Schedule of finance lease right -of-use assets [Line Items] | |
| Beginning balance of total right-of-use assets, at cost | $ 1,788,003 |
| Increase /(Decrease) of total right-of-use assets, at cost | |
| Exchange Rate Translation of total right-of-use assets, at cost | (65,004) |
| Ending balance of total right-of-use assets, at cost | 1,722,999 |
| Beginning balance of accumulated amortization | (670,501) |
| Increase /(Decrease) of accumulated amortization | (85,608) |
| Exchange Rate Translation of accumulated amortization | 23,835 |
| Ending balance of accumulated amortization | (732,274) |
| Beginning balance of right-of-use assets, net | 1,117,502 |
| Increase /(Decrease) of right-of-use assets, net | (85,608) |
| Exchange Rate Translation of right-of-use assets, net | (41,169) |
| Ending balance of right-of-use assets, net | 990,725 |
| Company vehicles [Member] | |
| Finance Lease Right-of-Use Assets, Net (Details) - Schedule of finance lease right -of-use assets [Line Items] | |
| Beginning balance of total right-of-use assets, at cost | 1,788,003 |
| Increase /(Decrease) of total right-of-use assets, at cost | |
| Exchange Rate Translation of total right-of-use assets, at cost | (65,004) |
| Ending balance of total right-of-use assets, at cost | $ 1,722,999 |
Long-Term Deposits and Other Non-Current Assets (Details) - Schedule of long-term deposits and other non-current assets - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Long Term Prepayments and Other Non Current Assets [Abstract] | ||
| Deposits paid for leases | $ 1,036,296 | $ 372,501 |
| Performance deposits (Note 5) | 2,010,166 | |
| Total | $ 3,046,462 | $ 372,501 |
Goodwill (Details) |
6 Months Ended |
|---|---|
|
Dec. 31, 2022
USD ($)
| |
| Goodwill (Details) [Line Items] | |
| Allocated goodwill | $ 11,223,456 |
| Business Combination [Member] | |
| Goodwill (Details) [Line Items] | |
| Purchase consideration amount | $ 19,374,209 |
Accounts Payable and Accrued Expenses (Details) - Schedule of accounts payable and accrued expenses - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Accounts Payable and Accrued Expenses [Abstract] | ||
| Payable to suppliers | $ 4,539,730 | $ 3,486,600 |
| Salary and welfare payables | 2,317,972 | 412,444 |
| Accrued expenses and other current liabilities | 2,412,824 | 699,032 |
| Total | $ 9,270,526 | $ 4,598,076 |
Advances from Customers (Details) - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Senior Care Services [Member] | ||
| Advances from Customers (Details) [Line Items] | ||
| Advances from customers | $ 1,950,352 | $ 1,769,289 |
| Housekeeping Services [Member] | ||
| Advances from Customers (Details) [Line Items] | ||
| Advances from customers | $ 263,495 | $ 481,783 |
Advances from Customers (Details) - Schedule of advance from customer - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Advance From Customer [Abstract] | ||
| Advance from customers total | $ 2,213,847 | $ 2,251,072 |
| Senior care services [Member] | ||
| Schedule of Advance From Customer [Abstract] | ||
| Advance from customers total | 1,950,352 | 1,769,289 |
| Housekeeping services [Member] | ||
| Schedule of Advance From Customer [Abstract] | ||
| Advance from customers total | $ 263,495 | $ 481,783 |
Operating Lease Liabilities (Details) |
1 Months Ended | 5 Months Ended | 6 Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 01, 2022 |
Oct. 31, 2021
USD ($)
|
Oct. 31, 2021
CNY (¥)
|
Nov. 25, 2019 |
Dec. 31, 2017
USD ($)
|
Dec. 31, 2017
CNY (¥)
|
Dec. 22, 2017 |
Dec. 31, 2021
USD ($)
|
Dec. 31, 2022
USD ($)
|
Jun. 30, 2022
USD ($)
|
Dec. 31, 2021
USD ($)
|
|
| Operating Lease Liabilities (Details) [Line Items] | |||||||||||
| Discount rate of lease liabilities | 3.95% | ||||||||||
| Weighted average discount rate | 4.06% | ||||||||||
| Weighted average remaining operating leases | 16 years | ||||||||||
| Prepaid total lease expense | $ 2,321,945 | ¥ 15,000,000 | $ 2,319,791 | ¥ 15,000,000 | |||||||
| Operating lease expense (in Dollars) | $ 234,404 | $ 155,155 | |||||||||
| Short-term operating lease expense (in Dollars) | $ 855,825 | $ 1,284,118 | |||||||||
| Operating lease liabilities interest rate | 2.4584% | 3.1365% | 4.1239% | ||||||||
| Lease matured date | Dec. 31, 2024 | Nov. 24, 2029 | Dec. 31, 2037 | ||||||||
| Lease amount of first installment (in Dollars) | $ 696,584 | ||||||||||
| Lease amount (in Dollars) | $ 61,919 | ||||||||||
| Remaining lease term | 3 years 5 months 1 day | ||||||||||
| Minimum [Member] | |||||||||||
| Operating Lease Liabilities (Details) [Line Items] | |||||||||||
| Incremental borrowing rate | 3.70% | ||||||||||
| Maximum [Member] | |||||||||||
| Operating Lease Liabilities (Details) [Line Items] | |||||||||||
| Incremental borrowing rate | 4.80% | ||||||||||
| Villas [Member] | |||||||||||
| Operating Lease Liabilities (Details) [Line Items] | |||||||||||
| Discount rate of lease liabilities | 4.1239% | ||||||||||
| Base Station Tower [Member] | |||||||||||
| Operating Lease Liabilities (Details) [Line Items] | |||||||||||
| Discount rate of lease liabilities | 3.1365% | ||||||||||
| Office [Member] | |||||||||||
| Operating Lease Liabilities (Details) [Line Items] | |||||||||||
| Discount rate of lease liabilities | 2.4584% | ||||||||||
| Warehouse [Member] | |||||||||||
| Operating Lease Liabilities (Details) [Line Items] | |||||||||||
| Discount rate of lease liabilities | 3.95% | ||||||||||
Operating Lease Liabilities (Details) - Schedule of operating lease liabilities - USD ($) |
6 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
|||||||||
| Schedule of Operating Lease Liabilities [Abstract] | ||||||||||
| Total operating lease liabilities | $ 2,121,053 | $ 2,251,835 | ||||||||
| Villas [Member] | ||||||||||
| Schedule of Operating Lease Liabilities [Abstract] | ||||||||||
| Operating lease liabilities | [1] | 1,212,882 | 1,956,260 | |||||||
| Base Station Tower [Member] | ||||||||||
| Schedule of Operating Lease Liabilities [Abstract] | ||||||||||
| Operating lease liabilities | [2] | 155,261 | 188,069 | |||||||
| Office [Member] | ||||||||||
| Schedule of Operating Lease Liabilities [Abstract] | ||||||||||
| Operating lease liabilities | [3] | 107,506 | ||||||||
| Warehouse [Member] | ||||||||||
| Schedule of Operating Lease Liabilities [Abstract] | ||||||||||
| Operating lease liabilities | [4] | $ 752,910 | ||||||||
| ||||||||||
Operating Lease Liabilities (Details) - Schedule of analyzed for reporting purposes - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Analyzed for Reporting Purposes [Abstract] | ||
| Long-term portion of operating lease liabilities | $ 1,849,902 | $ 1,473,093 |
| Current maturities of operating lease liabilities | 271,151 | 778,742 |
| Total | $ 2,121,053 | $ 2,251,835 |
Operating Lease Liabilities (Details) - Schedule of maturity analysis of operating lease liabilities - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Operating Lease Liabilities (Details) - Schedule of maturity analysis of operating lease liabilities [Line Items] | ||
| One year | $ 304,450 | $ 822,421 |
| Two years | 304,450 | 84,870 |
| Three years | 258,492 | 29,800 |
| Four years | 28,717 | 29,800 |
| Five years | 28,717 | 29,800 |
| Beyond five years | 1,670,520 | 1,763,343 |
| Total undiscounted cash flows | 2,618,326 | 2,760,034 |
| Total financing lease liabilities | 2,121,053 | 2,251,835 |
| Difference between undiscounted cash flows and discounted cash flows | $ 497,273 | $ 508,199 |
| Villas [Member] | ||
| Operating Lease Liabilities (Details) - Schedule of maturity analysis of operating lease liabilities [Line Items] | ||
| Discount rate at commencement | 4.1239% | 4.1239% |
| One year | $ 737,551 | |
| Two years | ||
| Three years | ||
| Four years | ||
| Five years | ||
| Beyond five years | 1,641,803 | 1,703,743 |
| Total undiscounted cash flows | 1,641,803 | 2,441,294 |
| Total financing lease liabilities | 1,212,882 | 1,956,260 |
| Difference between undiscounted cash flows and discounted cash flows | $ 428,921 | $ 485,034 |
| Base station tower [Member] | ||
| Operating Lease Liabilities (Details) - Schedule of maturity analysis of operating lease liabilities [Line Items] | ||
| Discount rate at commencement | 3.1365% | 3.1365% |
| One year | $ 28,717 | $ 29,800 |
| Two years | 28,717 | 29,800 |
| Three years | 28,717 | 29,800 |
| Four years | 28,717 | 29,800 |
| Five years | 28,717 | 29,800 |
| Beyond five years | 28,717 | 59,600 |
| Total undiscounted cash flows | 172,302 | 208,600 |
| Total financing lease liabilities | 155,261 | 188,069 |
| Difference between undiscounted cash flows and discounted cash flows | $ 17,041 | $ 20,531 |
| Total undiscounted cash flows [Member] | ||
| Operating Lease Liabilities (Details) - Schedule of maturity analysis of operating lease liabilities [Line Items] | ||
| Discount rate at commencement | 3.90% | 2.4584% |
| One year | $ 275,733 | $ 55,070 |
| Two years | 275,733 | 55,070 |
| Three years | 252,755 | |
| Four years | ||
| Five years | ||
| Beyond five years | ||
| Total undiscounted cash flows | 804,221 | 110,140 |
| Total financing lease liabilities | 752,910 | 107,506 |
| Difference between undiscounted cash flows and discounted cash flows | $ 51,311 | $ 2,634 |
Finance Lease Liabilities (Details) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Sep. 11, 2017 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Finance Lease Liabilities [Abstract] | |||
| Rate of financial lease liability interest | 4.90% | ||
| Maturity date | Dec. 31, 2027 | ||
| Amortization expense of financial lease right-of-use assets | $ 85,608 | $ 93,363 | |
| Interest expense for financial lease | $ 9,709 | $ 12,059 | |
Finance Lease Liabilities (Details) - Schedule of financing lease liabilities |
6 Months Ended |
|---|---|
|
Dec. 31, 2022
USD ($)
| |
| Finance Lease Liabilities (Details) - Schedule of financing lease liabilities [Line Items] | |
| Beginning balance of finance lease liabilities | $ 426,095 |
| Increase /(Decrease) of finance lease liabilities | 9,709 |
| Payment of finance lease liabilities | (75,921) |
| Exchange Rate Translation of finance lease liabilities | 22,291 |
| Ending balance of finance lease liabilities | 382,174 |
| Beginning balance of unrecognized finance expense | 97,611 |
| Increase /(Decrease) of unrecognized finance expense | 9,709 |
| Payment of unrecognized finance expense | |
| Exchange Rate Translation of unrecognized finance expense | (3,487) |
| Ending balance of unrecognized finance expense | 103,833 |
| Company vehicles [Member] | |
| Finance Lease Liabilities (Details) - Schedule of financing lease liabilities [Line Items] | |
| Beginning balance of finance lease liabilities | 328,484 |
| Increase /(Decrease) of finance lease liabilities | |
| Payment of finance lease liabilities | (75,921) |
| Exchange Rate Translation of finance lease liabilities | 25,778 |
| Ending balance of finance lease liabilities | $ 278,341 |
Finance Lease Liabilities (Details) - Schedule of financing lease liabilities for reporting purposes - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Financing Lease Liabilities for Reporting Purposes [Abstract] | ||
| Long-term portion of finance lease liabilities | $ 323,185 | $ 366,359 |
| Current maturities of finance lease liabilities | 58,989 | 59,736 |
| Total | $ 382,174 | $ 426,095 |
Finance Lease Liabilities (Details) - Schedule of maturity analysis of financial lease liabilities - Company vehicles [Member] - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Maturity Analysis of Financial Lease Liabilities [Abstract] | ||
| Discount rate at commencement | 4.90% | 4.90% |
| One year | $ 76,402 | $ 79,285 |
| Two years | 76,402 | 79,285 |
| Three years | 76,402 | 79,285 |
| Four years | 76,402 | 79,285 |
| Five years | 76,402 | 79,285 |
| Beyond five years | 57,302 | 99,106 |
| Total undiscounted cash flows | 439,312 | 495,531 |
| Total financing lease liabilities | 382,174 | 426,095 |
| Difference between undiscounted cash flows and discounted cash flows | $ 57,138 | $ 69,436 |
Convertible Note (Details) - USD ($) |
1 Months Ended | 6 Months Ended | ||||
|---|---|---|---|---|---|---|
Apr. 12, 2023 |
Oct. 04, 2022 |
Oct. 03, 2022 |
May 13, 2022 |
Dec. 20, 2021 |
Dec. 31, 2022 |
|
| Convertible Note (Details) [Line Items] | ||||||
| Outstanding balance per annum percentage | 8.00% | |||||
| Ordinary shares price equal percentage | 85.00% | |||||
| Adjusted shares for effect of reverse stock split (in Shares) | 6,062,762 | |||||
| Exercisable price per share (in Dollars per share) | $ 2 | |||||
| Reverse stock split amount | $ 400 | |||||
| Equity component | $ 1,092,460 | |||||
| Warrants value | 212,105 | |||||
| Liability component | $ 120,611 | |||||
| Warrant [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Adjusted shares for effect of reverse stock split (in Shares) | 1,933 | |||||
| Exercisable price per share (in Dollars per share) | $ 0.49 | |||||
| Reverse stock split amount | $ 98 | |||||
| Warrants value | $ 133,372 | |||||
| Convertible Note 2021 [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Liability component fair value percentage | 33.10% | |||||
| Convertible Note 2022 [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Liability component fair value percentage | 34.51% | |||||
| Forecast [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Reverse stock split amount | $ 400 | |||||
| Forecast [Member] | Warrant [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Adjusted shares for effect of reverse stock split (in Shares) | 1,933 | |||||
| Reverse stock split amount | $ 98 | |||||
| Trigger Event [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Accrue lesser per annum percentage | 22.00% | |||||
| Trigger Event [Member] | Maximum [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Outstanding balance payable percentage | 12.00% | |||||
| Trigger Event [Member] | Minimum [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Outstanding balance payable percentage | 5.00% | |||||
| Joseph Stone Capital, LLC [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Cash fee equal | 6.50% | |||||
| Purchase ordinary shares (in Shares) | 157,934 | |||||
| Adjusted shares for effect of reverse stock split (in Shares) | 790 | |||||
| Joseph Stone Capital, LLC [Member] | Forecast [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Adjusted shares for effect of reverse stock split (in Shares) | 790 | |||||
| Investor [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Original principal amount | $ 5,275,000 | |||||
| Original issue discount | 250,000 | |||||
| Other transaction costs | $ 25,000 | |||||
| Convertible Note 2021 [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Ordinary shares, par value (in Dollars per share) | $ 0.0001 | |||||
| Equity component | $ 1,304,565 | |||||
| Warrants value | 212,105 | |||||
| Commissions amount | 667,920 | |||||
| Original issue discount | 250,000 | |||||
| Transaction cost | 25,000 | |||||
| Commission fees | 392,920 | |||||
| Liability component | 697,771 | |||||
| Stockholders’ equity | $ 1,092,460 | |||||
| Convertible Note 2021 [Member] | Maximum [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Outstanding balance payable percentage | 12.00% | |||||
| Convertible Note 2021 [Member] | Minimum [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Outstanding balance payable percentage | 5.00% | |||||
| Convertible Note 2021 [Member] | Debt Discount [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Liability component | $ 182,255 | |||||
| Convertible Note 2022 [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Original principal amount | $ 3,170,000 | |||||
| Accrue lesser per annum percentage | 22.00% | |||||
| Ordinary shares price equal percentage | 85.00% | |||||
| Cash fee equal | 6.50% | |||||
| Purchase ordinary shares (in Shares) | 386,585 | |||||
| Ordinary shares, par value (in Dollars per share) | $ 0.0001 | |||||
| Equity component | $ 816,765 | |||||
| Warrants value | 133,372 | |||||
| Commissions amount | 426,095 | |||||
| Original issue discount | 150,000 | 150,000 | ||||
| Transaction cost | $ 20,000 | 20,000 | ||||
| Commission fees | 256,095 | |||||
| Liability component | 438,856 | |||||
| Stockholders’ equity | $ 683,393 | |||||
| Percentage of purchase price | 8.00% | |||||
| Convertible Note 2022 [Member] | Warrant [Member] | ||||||
| Convertible Note (Details) [Line Items] | ||||||
| Equity component | $ 683,393 |
Convertible Note (Details) - Schedule of net carrying amount of the liability component convertible Note |
Dec. 31, 2022
USD ($)
|
|---|---|
| Principal Outstanding [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the liability component convertible Note [Line Items] | |
| Convertible Notes - liability portion | $ 5,796,148 |
| Unamortized Issuance Cost [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the liability component convertible Note [Line Items] | |
| Convertible Notes - liability portion | (1,167,899) |
| Net carrying value [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the liability component convertible Note [Line Items] | |
| Convertible Notes - liability portion | 4,628,249 |
| Convertible Note 2021 [Member] | Principal Outstanding [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the liability component convertible Note [Line Items] | |
| Convertible Notes - liability portion | 2,626,148 |
| Convertible Note 2021 [Member] | Unamortized Issuance Cost [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the liability component convertible Note [Line Items] | |
| Convertible Notes - liability portion | (284,052) |
| Convertible Note 2021 [Member] | Net carrying value [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the liability component convertible Note [Line Items] | |
| Convertible Notes - liability portion | 2,342,096 |
| Convertible Note 2022 [Member] | Principal Outstanding [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the liability component convertible Note [Line Items] | |
| Convertible Notes - liability portion | 3,170,000 |
| Convertible Note 2022 [Member] | Unamortized Issuance Cost [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the liability component convertible Note [Line Items] | |
| Convertible Notes - liability portion | (883,847) |
| Convertible Note 2022 [Member] | Net carrying value [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the liability component convertible Note [Line Items] | |
| Convertible Notes - liability portion | $ 2,286,153 |
Convertible Note (Details) - Schedule of net carrying amount of the equity component |
Dec. 31, 2022
USD ($)
|
|---|---|
| Amount allocated to conversion option [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the equity component [Line Items] | |
| Convertible Note – equity portion | $ 1,775,853 |
| Amount allocated to conversion option [Member] | Convertible Note 2021 [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the equity component [Line Items] | |
| Convertible Note – equity portion | 1,092,460 |
| Amount allocated to conversion option [Member] | Convertible Note 2022 [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the equity component [Line Items] | |
| Convertible Note – equity portion | 683,393 |
| Issuance cost [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the equity component [Line Items] | |
| Convertible Note – equity portion | (302,866) |
| Issuance cost [Member] | Convertible Note 2021 [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the equity component [Line Items] | |
| Convertible Note – equity portion | (182,255) |
| Issuance cost [Member] | Convertible Note 2022 [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the equity component [Line Items] | |
| Convertible Note – equity portion | (120,611) |
| Equity component, net [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the equity component [Line Items] | |
| Convertible Note – equity portion | 1,472,987 |
| Equity component, net [Member] | Convertible Note 2021 [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the equity component [Line Items] | |
| Convertible Note – equity portion | 910,205 |
| Equity component, net [Member] | Convertible Note 2022 [Member] | |
| Convertible Note (Details) - Schedule of net carrying amount of the equity component [Line Items] | |
| Convertible Note – equity portion | $ 562,782 |
Convertible Note (Details) - Schedule of amortization of issuance cost, debt discount and interest cost |
Dec. 31, 2022
USD ($)
|
|---|---|
| Debt Conversion [Line Items] | |
| Convertible Note | $ 995,753 |
| Convertible note interest [Member] | |
| Debt Conversion [Line Items] | |
| Convertible Note | 640,284 |
| Convertible Note 2022 [Member] | |
| Debt Conversion [Line Items] | |
| Convertible Note | 355,469 |
| Issuance costs and debt discount [Member] | |
| Debt Conversion [Line Items] | |
| Convertible Note | 641,576 |
| Issuance costs and debt discount [Member] | Convertible note interest [Member] | |
| Debt Conversion [Line Items] | |
| Convertible Note | 415,750 |
| Issuance costs and debt discount [Member] | Convertible Note 2022 [Member] | |
| Debt Conversion [Line Items] | |
| Convertible Note | 225,826 |
| Convertible note interest [Member] | |
| Debt Conversion [Line Items] | |
| Convertible Note | 354,177 |
| Convertible note interest [Member] | Convertible note interest [Member] | |
| Debt Conversion [Line Items] | |
| Convertible Note | 224,534 |
| Convertible note interest [Member] | Convertible Note 2022 [Member] | |
| Debt Conversion [Line Items] | |
| Convertible Note | $ 129,643 |
Warrants (Details) - $ / shares |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
Jun. 30, 2021 |
|
| Warrants (Details) [Line Items] | |||
| Volatility | 129.00% | 117.00% | |
| Risk-free interest rate | 0.27% | 2.04% | |
| Expected term | 5 years | 5 years | |
| Exercise price (in Dollars per share) | $ 2 | $ 0.49 | |
| Dividend yield | 0.00% | 0.00% | |
| Warrant description | The warrants entitle the holder to purchase 157,934 ordinary shares (790 shares retrospectively adjusted for effect of the Company’s common reverse stock split on October 4, 2022 and April 12, 2023) at an exercise price equal to $2 per share ($400 per share retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) and 386,585 ordinary shares (1,933 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) of the Company’s common stock at an exercise price equal to $0.49 per share ($98 per share retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023), respectively, at any time within a term of five year after issuance. | the Company had approximately 544,529 and 544,529 warrants outstanding, (2,723 retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) respectively at an average exercise price between $0.49 and $2 ($98 per share and $400 per share retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) and there were zero warrants exercised or repurchased. | |
| Warrant [Member] | |||
| Warrants (Details) [Line Items] | |||
| Warrant description | the Company had approximately 544,529 and 544,529 warrants outstanding, (2,723 retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) respectively at an average exercise price between $0.49 and $2 ($98 per share and $400 per share retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) and there were zero warrants exercised or repurchased | ||
Taxes (Details) |
1 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
May 01, 2016 |
Jan. 01, 2008 |
Mar. 16, 2007 |
Dec. 31, 2022 |
|
| Taxes (Details) [Line Items] | ||||
| VAT percentage | 11.00% | |||
| Value added tax, description | The maintenance and accessories sales were subject to a VAT rate of 17% before May 1, 2018 and were reduced to 16% since then. The VAT rate was reduced to 13% since April 1, 2019. | |||
| EIT [Member] | ||||
| Taxes (Details) [Line Items] | ||||
| Percentage of uniform rate | 25.00% | |||
| Effective tax rate | 25.00% |
Taxes (Details) - Schedule of provision for income tax - USD ($) |
6 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Schedule Of Provision For Income Tax [Abstract] | ||
| Current income tax provision | $ 497,025 | $ 1,169,266 |
| Deferred income tax provision | (233,797) | 187,553 |
| Total | $ 263,228 | $ 1,356,819 |
Taxes (Details) - Schedule of statutory EIT rate and the effective tax - USD ($) |
6 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Schedule of Statutory Eit Rate and the Effective Tax [Abstract] | ||
| Provision for income taxes at statutory tax rate in the PRC | $ 415,251 | $ 1,334,938 |
| Effect of expense for which no income tax is deductible | 25,937 | 21,881 |
| Effect of assets recognized at fair value in business combinations | (177,960) | |
| Effective income tax expense | $ 263,228 | $ 1,356,819 |
Taxes (Details) - Schedule of deferred tax asset - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Deferred Tax Asset Abstract | ||
| Senior care services fees advanced from customers | $ 482,432 | $ 442,322 |
| Total deferred tax assets | 482,432 | 442,322 |
| Business combination | 1,819,826 | |
| Total deferred tax liabilities | $ 1,819,826 |
Taxes (Details) - Schedule of taxes payable - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Taxes Payable [Abstract] | ||
| Income tax payable | $ 442,495 | $ 495,009 |
| VAT payable | 9,371 | 9,725 |
| Other tax payables | 27,454 | 940 |
| Total | $ 479,320 | $ 505,674 |
Equity (Details) $ / shares in Units, ¥ in Millions |
1 Months Ended | 6 Months Ended | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jan. 27, 2023 |
Jan. 06, 2023 |
Oct. 03, 2022
shares
|
Sep. 14, 2022
USD ($)
shares
|
Aug. 15, 2022
USD ($)
$ / shares
shares
|
Jul. 08, 2022
USD ($)
shares
|
Jun. 14, 2022
USD ($)
shares
|
Feb. 03, 2022
USD ($)
shares
|
Dec. 20, 2022
USD ($)
shares
|
Dec. 20, 2022
CNY (¥)
shares
|
Nov. 18, 2022
USD ($)
$ / shares
shares
|
Jul. 30, 2022
USD ($)
shares
|
Jul. 26, 2022
CNY (¥)
$ / shares
|
Jun. 22, 2022
USD ($)
shares
|
Feb. 18, 2022
USD ($)
shares
|
Jan. 20, 2022
USD ($)
shares
|
Jun. 21, 2021
USD ($)
shares
|
May 18, 2021
USD ($)
$ / shares
shares
|
May 23, 2019
$ / shares
shares
|
Dec. 31, 2022
USD ($)
$ / shares
shares
|
Oct. 04, 2022
$ / shares
|
Sep. 19, 2022
USD ($)
|
Jul. 30, 2022
CNY (¥)
|
Jun. 30, 2022
USD ($)
$ / shares
shares
|
Jun. 14, 2022
CNY (¥)
|
Mar. 02, 2022
shares
|
Jan. 20, 2022
CNY (¥)
shares
|
Dec. 31, 2021
$ / shares
shares
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2018
USD ($)
|
|
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Ordinary, shares issued (in Shares) | 1,527,507 | 221,159 | ||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ / shares | $ 0.02 | $ 0.02 | ||||||||||||||||||||||||||||
| Contributed ownership | $ | $ 3,620,757 | $ 3,885,586 | ||||||||||||||||||||||||||||
| Ordinary shares authorized (in Shares) | 500,000,000 | 500,000,000 | ||||||||||||||||||||||||||||
| Ordinary shares outstanding (in Shares) | 1,527,507 | 221,159 | ||||||||||||||||||||||||||||
| Description of reverse stock split | (18,307,733 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) | (4,065,041 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) | (51,715 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (81,818 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (140,210 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (466,013 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) | (466,013 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) | (348,000 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) | (72,193 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (5,000 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (2,000 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (29,117 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (30 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (1,400,000 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | ||||||||||||||||
| Ordinary shares value | $ | $ 2,804 | $ 270 | $ 9,320 | $ 100 | ||||||||||||||||||||||||||
| Additional paid in capital | $ | $ 8,493,919 | 1,999,821 | $ 2,844,276 | 322,400 | $ 60,515,331 | $ 33,452,332 | ||||||||||||||||||||||||
| Ordinary shares were granted (in Shares) | 6,000 | |||||||||||||||||||||||||||||
| Compensations at a fair value | $ | $ 213,840 | |||||||||||||||||||||||||||||
| Shares issued to directors | $ | 1 | $ 7,844,757 | ||||||||||||||||||||||||||||
| Equity interest percentage | 20.00% | 40.00% | 40.00% | |||||||||||||||||||||||||||
| Cash | $ 450,000 | $ 600,000 | ¥ 3.0 | ¥ 4.0 | ||||||||||||||||||||||||||
| Ordinary shares issued (in Shares) | 10,343,064 | 16,363,636 | 28,041,992 | 28,041,992 | 4,660,129 | 4,660,129 | 3,480,000 | 14,438,584 | ||||||||||||||||||||||
| Shareholders fair value | $ | $ 8,496,724 | $ 2,000,091 | $ 2,853,596 | $ 322,500 | ||||||||||||||||||||||||||
| Ordinary share granted (in Shares) | 400,000 | |||||||||||||||||||||||||||||
| Fair value | $ | $ 308,000 | |||||||||||||||||||||||||||||
| Par value | $ | 40 | |||||||||||||||||||||||||||||
| Granted ordinary shares (in Shares) | 1,000,000 | |||||||||||||||||||||||||||||
| Issuance cost | $ 3,600,000 | $ 5.59 | ¥ 389.2 | |||||||||||||||||||||||||||
| Issuance price | 130.00% | |||||||||||||||||||||||||||||
| Closing price (in Dollars per share) | $ / shares | $ 0.39 | |||||||||||||||||||||||||||||
| Due from Officers or Stockholders (in Yuan Renminbi) | ¥ | $ 39.2 | |||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ / shares | $ 0.0001 | |||||||||||||||||||||||||||||
| Purchase price shares (in Dollars per share) | $ / shares | $ 0.22 | |||||||||||||||||||||||||||||
| Aggregate cost | $ | $ 783,303 | $ 12,300,000 | ||||||||||||||||||||||||||||
| Aggregate ordinary shares (in Shares) | 1,329,729 | |||||||||||||||||||||||||||||
| Common stock shares outstanding (in Shares) | 121,270,556 | |||||||||||||||||||||||||||||
| Subscription price (in Dollars per share) | $ / shares | $ 1 | |||||||||||||||||||||||||||||
| Aggregate consideration amount | $ | $ 3,480,000 | |||||||||||||||||||||||||||||
| Consideration amount (in Yuan Renminbi) | ¥ | ¥ 20.0 | |||||||||||||||||||||||||||||
| Reserve capital percentage | 50.00% | |||||||||||||||||||||||||||||
| Statutory surplus reserve | $ | $ 664,100 | $ 664,100 | ||||||||||||||||||||||||||||
| Additional Paid-in Capital [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Shares issued to directors | $ | $ 213,839 | 7,835,127 | ||||||||||||||||||||||||||||
| Ordinary Shares [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Additional paid in capital | $ | $ 307,960 | |||||||||||||||||||||||||||||
| Shares issued to directors | $ | $ 9,630 | |||||||||||||||||||||||||||||
| Minimum [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ / shares | $ 0.0001 | |||||||||||||||||||||||||||||
| Ordinary stock split (in Shares) | 50,000 | |||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ / shares | $ 0.0001 | |||||||||||||||||||||||||||||
| Maximum [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ / shares | $ 1 | |||||||||||||||||||||||||||||
| Ordinary stock split (in Shares) | 500,000,000 | |||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ / shares | $ 0.002 | |||||||||||||||||||||||||||||
| E-Home Pingtan [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Ordinary, shares issued (in Shares) | 5,823,363 | 5,823,363 | 5,823,363 | 50,000 | ||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ / shares | $ 1 | |||||||||||||||||||||||||||||
| Equity interest percentage | 60.00% | 60.00% | ||||||||||||||||||||||||||||
| Youyou [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Description of reverse stock split | (13,514 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | |||||||||||||||||||||||||||||
| Ordinary shares issued (in Shares) | 2,702,826 | 2,702,826 | ||||||||||||||||||||||||||||
| Equity [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Common stock shares outstanding (in Shares) | 121,270,556 | |||||||||||||||||||||||||||||
| Reverse stock split (in Shares) | 6,062,762 | |||||||||||||||||||||||||||||
| Initial Public Offering [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Ordinary, shares issued (in Shares) | 5,575,556 | |||||||||||||||||||||||||||||
| Ordinary shares par value (in Dollars per share) | $ / shares | $ 4.5 | |||||||||||||||||||||||||||||
| Description of reverse stock split | (278,778 shares of $900 per share retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | |||||||||||||||||||||||||||||
| Total gross proceed | $ | $ 25,100,000 | |||||||||||||||||||||||||||||
| Net proceed | $ | 21,661,293 | |||||||||||||||||||||||||||||
| Ordinary shares value | $ | 558 | |||||||||||||||||||||||||||||
| Additional paid in capital | $ | $ 21,660,735 | |||||||||||||||||||||||||||||
| Ordinary shares [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Ordinary, shares issued (in Shares) | 28,000,000 | |||||||||||||||||||||||||||||
| Ordinary shares authorized (in Shares) | 500,000,000 | |||||||||||||||||||||||||||||
| Ordinary shares surrendered (in Shares) | 472,000,000 | |||||||||||||||||||||||||||||
| Ordinary shares outstanding (in Shares) | 28,000,000 | |||||||||||||||||||||||||||||
| Ms. Chen [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Equity interest percentage | 55.00% | 55.00% | ||||||||||||||||||||||||||||
| Mr. Xie [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Equity interest percentage | 100.00% | 100.00% | ||||||||||||||||||||||||||||
| Three Directors [Member] | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Description of reverse stock split | (2,000 shares for each director, 10 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | |||||||||||||||||||||||||||||
| Statutory reserve | ||||||||||||||||||||||||||||||
| Equity (Details) [Line Items] | ||||||||||||||||||||||||||||||
| Tax rate | 10.00% | |||||||||||||||||||||||||||||
Revenues (Details) - Schedule of revenue - USD ($) |
6 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Disaggregation of Revenue [Line Items] | ||
| Total | $ 38,876,968 | $ 34,079,482 |
| Installation and maintenance [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Total | 24,301,679 | 21,979,399 |
| Housekeeping [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Total | 8,990,258 | 8,009,015 |
| Senior care services [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Total | 1,590,075 | 3,040,664 |
| Sales of E-watch [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Total | 1,967,170 | 1,050,404 |
| Sales of pharmaceutical products [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Total | 1,380,344 | |
| Educational consulting services [Member] | ||
| Disaggregation of Revenue [Line Items] | ||
| Total | $ 647,442 | |
Segment Information (Details) - Schedule of operating segments information - Segment Information [Member] - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Jun. 30, 2022 |
|
| Segment Reporting Information [Line Items] | |||
| Total Revenue | $ 38,876,968 | $ 34,079,482 | |
| Total Gross profit | 11,138,086 | 10,671,403 | |
| Total Current assets | 76,301,154 | $ 66,996,451 | |
| Total Non-current assets | 33,997,901 | 13,495,858 | |
| Installation and maintenance [Member] | |||
| Segment Reporting Information [Line Items] | |||
| Total Revenue | 24,301,679 | 21,979,399 | |
| Total Gross profit | 8,226,464 | 7,286,334 | |
| Total Current assets | |||
| Total Non-current assets | |||
| Housekeeping [Member] | |||
| Segment Reporting Information [Line Items] | |||
| Total Revenue | 8,990,258 | 8,009,015 | |
| Total Gross profit | 1,227,427 | 1,321,638 | |
| Total Current assets | 1,202,230 | ||
| Total Non-current assets | 2,407,814 | ||
| Senior care services [Member] | |||
| Segment Reporting Information [Line Items] | |||
| Total Revenue | 3,557,245 | 4,091,068 | |
| Total Gross profit | 1,381,314 | 2,063,431 | |
| Total Current assets | |||
| Total Non-current assets | 5,512,272 | 4,301,543 | |
| Sales of pharmaceutical products [Member] | |||
| Segment Reporting Information [Line Items] | |||
| Total Revenue | 1,380,344 | ||
| Total Gross profit | 128,938 | ||
| Total Current assets | 5,852,374 | ||
| Total Non-current assets | 11,801,444 | ||
| Educational consulting services [Member] | |||
| Segment Reporting Information [Line Items] | |||
| Total Revenue | 647,441 | ||
| Total Gross profit | 173,943 | ||
| Total Current assets | 922,887 | ||
| Total Non-current assets | 5,146,418 | ||
| Unallocated current assets [Member] | |||
| Segment Reporting Information [Line Items] | |||
| Total Current assets | 68,323,663 | 66,996,451 | |
| Unallocated non-current assets [Member] | |||
| Segment Reporting Information [Line Items] | |||
| Total Non-current assets | $ 9,129,953 | $ 9,194,315 | |
Commitments and Contingencies (Details) - Schedule of future lease payments |
Dec. 31, 2022
USD ($)
|
|---|---|
| Operating Lease [Member] | |
| Commitments and Contingencies (Details) - Schedule of future lease payments [Line Items] | |
| January 2022 to December 2022 | $ 304,450 |
| January 2023 to December 2023 | 304,450 |
| January 2024 to December 2024 | 258,492 |
| January 2025 to December 2025 | 28,717 |
| January 2026 to December 2026 | 28,717 |
| Thereafter | 1,670,520 |
| Total | 2,618,326 |
| Finance Lease [Member] | |
| Commitments and Contingencies (Details) - Schedule of future lease payments [Line Items] | |
| January 2022 to December 2022 | 76,402 |
| January 2023 to December 2023 | 76,402 |
| January 2024 to December 2024 | 76,402 |
| January 2025 to December 2025 | 76,402 |
| January 2026 to December 2026 | 76,402 |
| Thereafter | 57,302 |
| Total | 439,312 |
| Capital Expenditure [Member] | |
| Commitments and Contingencies (Details) - Schedule of future lease payments [Line Items] | |
| January 2022 to December 2022 | 380,852 |
| January 2023 to December 2023 | 380,852 |
| January 2024 to December 2024 | 334,894 |
| January 2025 to December 2025 | 105,119 |
| January 2026 to December 2026 | 105,119 |
| Thereafter | 1,727,822 |
| Total | $ 3,057,638 |
Customer and Supplier Concentration (Details) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Jun. 30, 2022 |
|
| Customer and Supplier Concentration (Details) [Line Items] | |||
| Concentration risk, percentage | 10.00% | 10.00% | |
| Accounts Receivable [Member] | |||
| Customer and Supplier Concentration (Details) [Line Items] | |||
| Concentration risk, percentage | 10.00% | 10.00% | |
| Revenue [Member] | |||
| Customer and Supplier Concentration (Details) [Line Items] | |||
| Concentration risk, percentage | 10.00% | ||
Related Party Balances and Transactions (Details) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
Dec. 31, 2021 |
|
| Related Party Balances and Transactions (Details) [Line Items] | |||
| Amount payable | $ 429,720 | $ 108,761 | |
| E-Home Group Limited [Member] | |||
| Related Party Balances and Transactions (Details) [Line Items] | |||
| Receivable balances | 2,600,000 | ||
| Transferred amount | 2,600,000 | ||
| Lucky Max Global Limited [Member] | |||
| Related Party Balances and Transactions (Details) [Line Items] | |||
| Receivable balances | 500,000 | ||
| Transferred amount | 500,000 | ||
| Mr. Xie [Member] | |||
| Related Party Balances and Transactions (Details) [Line Items] | |||
| Purchase of goods and services | 298,113 | ||
| Repaid amount | $ 22,846 | $ 190,840 |
Subsequent Events (Details) |
1 Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Jan. 27, 2023
USD ($)
$ / shares
shares
|
Jan. 06, 2023
USD ($)
$ / shares
shares
|
Sep. 14, 2022 |
Aug. 15, 2022 |
Jul. 08, 2022 |
Dec. 20, 2022 |
Nov. 18, 2022 |
Jul. 30, 2022 |
Jun. 22, 2022 |
Feb. 18, 2022 |
Jan. 20, 2022 |
Jun. 21, 2021 |
May 23, 2019 |
|
| Subsequent Events (Details) [Line Items] | |||||||||||||
| Description of reverse stock split | (18,307,733 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) | (4,065,041 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) | (51,715 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (81,818 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (140,210 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (466,013 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) | (348,000 shares retrospectively adjusted for effect of reverse stock split on April 12, 2023) | (72,193 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (5,000 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (2,000 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (29,117 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (30 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) | (1,400,000 shares retrospectively adjusted for effect of reverse stock split on October 4, 2022 and April 12, 2023) |
| Subsequent Event [Member] | |||||||||||||
| Subsequent Events (Details) [Line Items] | |||||||||||||
| Number of investors | 11 | ||||||||||||
| Shares purchased | shares | 183,077,333 | 40,650,406 | |||||||||||
| Purchase price per unit | $ / shares | $ 0.383 | $ 0.492 | |||||||||||
| Proceeds in connection with the investment | $ | $ 70,118,618 | $ 20,000,000 | |||||||||||