Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principle of consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Green New Jersey, Jinong, Gufeng, Tianjuyuan, and the VIE Companies. All significant inter-company accounts and transactions have been eliminated in consolidation.

For purposes of comparability, certain prior period amounts have been reclassified to conform to the current year presentation in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The Company’s consolidated financial statements have been presented with its former VIEs Xindeguo, Xinyulei, Xiangrong, Lishijie, Fengnong, Jinyangguang and Wangtian as a discontinued operation. See Note 21, “Discontinued Operations,” for more information.

Effective June 16, 2013, Yuxing was converted from being a wholly-owned foreign enterprise 100% owned by Jinong to a domestic enterprise 100% owned one natural person, who is not affiliated to the Company (“Yuxing’s Owner”). Effective the same day, Yuxing’s Owner entered into a series of contractual agreements with Jinong pursuant to which Yuxing became the VIE of Jinong.

VIE assessment

A VIE is an entity (1) that has total equity at risk that is not sufficient to finance its activities without additional subordinated financial support from other entities, (2) where the group of equity holders does not have the power to direct the activities of the entity that most significantly impact the entity’s economic performance, or the obligation to absorb the entity’s expected losses or the right to receive the entity’s expected residual returns, or both, or (3) where the voting rights of some investors are not proportional to their obligations to absorb the expected losses of the entity, their rights to receive the expected residual returns of the entity, or both, and substantially all of the entity’s activities either involve or are conducted on behalf of an investor that has disproportionately few voting rights. In order to determine if an entity is considered a VIE, the Company first performs a qualitative analysis, which requires certain subjective decisions regarding its assessments, including, but not limited to, the design of the entity, the variability that the entity was designed to create and pass along to its interest holders, the rights of the parties, and the purpose of the arrangement. If the Company cannot conclude after a qualitative analysis whether an entity is a VIE, it performs a quantitative analysis. The qualitative analysis considered the design of the entity, the risks that cause variability, the purpose for which the entity was created, and the variability that the entity was designed to pass along to its variable interest holders. When the primary beneficiary could not be identified through a qualitative analysis, we used internal cash flow models to compute and allocate expected losses or expected residual returns to each variable interest holder based upon the relative contractual rights and preferences of each interest holder in the VIE’s capital structure.

Use of estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to the recent outbreak of a novel strain of the COVID-19.

Leases

The Company determines if an arrangement is a lease or contains a lease at inception. Operating lease right-of-use assets and lease liabilities are recognized at commencement based on the present value of lease payments over the lease term. As the implicit rate is typically not readily determinable in the Company’s lease agreements, the Company uses its incremental borrowing rate as of the lease commencement date to determine the present value of the lease payments. The incremental borrowing rate is based on the Company’s specific rate of interest to borrow on a collateralized basis, over a similar term and in a similar economic environment as the lease. Lease expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less are not recognized on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Additionally, the Company accounts for lease and non-lease components as a single lease component for its identified asset classes. As of March 31, 2022, the Company does not have any material leases for the implementation of ASC 842.

Cash and cash equivalents and concentration of cash

For statement of cash flows purposes, the Company considers all cash on hand and in banks, certificates of deposit with state owned banks in the PRC and banks in the United States, and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. The Company maintains large sums of cash in three major banks in China. The aggregate cash in such accounts and on hand as of March 31, 2022 and June 30, 2021 were $44,645,026 and $18,515,829, respectively. There is no insurance securing these deposits in China. In addition, the Company also had $6,791,369 and $78,115 in cash in two banks in the United States as of March 31, 2022 and June 30, 2021, respectively. Cash overdraft as of balance sheet date will be reflected as liabilities in the balance sheet. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.

Accounts receivable

Management regularly reviews the composition of accounts receivable and analyzes customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves at each year-end. Accounts considered uncollectible are provisioned for /written off based upon management’s assessment. As of March 31, 2022, and June 30, 2021, the Company had accounts receivable of $40,158,928 and $102,783,004, net of allowance for doubtful accounts of $32,797,394 and $23,738,987, respectively. The company recorded bad debt expense in the amount of $ 40 million and $ 61 million for nine months ended March 31, 2022 and 2021, respectively. The Company adopts no policy to accept product returns after the sales delivery.

Inventories

Inventory is valued at the lower of cost (determined on a weighted average basis) or market. Inventories consist of raw materials, work in process, finished goods and packaging materials. The Company reviews its inventories regularly for possible obsolete goods and establishes reserves when determined necessary. As of March 31, 2022, and 2021, the Company had no reserve for obsolete goods. The company confirmed the loss of $4 million and $11 million of inventories for nine months ended March 31, 2022 and 2021, respectively.

Intangible Assets

The Company records intangible assets acquired individually or as part of a group at fair value. Intangible assets with definitive lives are amortized over the useful life of the intangible asset, which is the period over which the asset is expected to contribute directly or indirectly to the entity’s future cash flows. The Company evaluates intangible assets for impairment at least annually and more often whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company has not recorded impairment of intangible assets as of March 31, 2022 and 2021, respectively.

Customer deposits

Payments received before all the relevant criteria for revenue recognition are satisfied are recorded as customer deposits. When all revenue recognition criteria are met, the customer deposits are recognized as revenue. As of March 31, 2022, and June 30, 2021, the Company had customer deposits of $5,803,179 and $6,257,215, respectively.

Earnings per share

Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and stock awards.

The components of basic and diluted earnings per share consist of the following:

	Three Months Ended
	March 31,
	2022			2021
(Loss) from continuing operations for Basic Earnings Per Share	$	(30,595,680	)	$	(15,838,043	)
(Loss) from discontinued operations for Basic Earnings Per Share		(7,483,147	)		1,023,254
(Loss) for Basic Earnings Per Share		(38,078,827	)		(14,814,789	)
Basic Weighted Average Number of Shares		8,487,629			6,350,129
(Loss) from continuing operations Per Share – Basic	$	(3.60	)	$	(2.49	)
(Loss) Income from discontinued operations Per Share – Basic	$	(0.88	)	$	0.16
Net (Loss) Per Share – Basic	$	(4.49	)	$	(2.33	)
(Loss) from continuing operations for Diluted Earnings Per Share	$	(30,595,680	)	$	(15,838,043	)
(Loss) Income from discontinued operations for Diluted Earnings Per Share	$	(7,483,147	)		1,023,254
(Loss) for Diluted Earnings Per Share	$	(38,078,827	)		(14,814,789	)
Diluted Weighted Average Number of Shares		8,487,629			6,350,129
(Loss) from continuing operations Per Share – Diluted	$	(3.60	)	$	(2.49	)
(Loss) Income from discontinued operations Per Share – Diluted	$	(0.88	)	$	0.16
Net (Loss) Per Share – Diluted	$	(4.49	)	$	(2.33	)

	Nine Months Ended
	March 31,
	2022			2021
(Loss) from continuing operations for Basic Earnings Per Share	$	(67,155,404	)		(85,093,611	)
(Loss) from discontinued operations for Basic Earnings Per Share		(17,983,567	)		(710,755	)
(Loss) for Basic Earnings Per Share		(85,138,971	)		(85,804,366	)
Basic Weighted Average Number of Shares		8,487,629			6,350,129
(Loss) from continuing operations Per Share – Basic	$	(7.91	)	$	(13.40	)
(Loss) Income from discontinued operations Per Share – Basic	$	(2.12	)	$	(0.11	)
Net (Loss) Per Share – Basic	$	(10.03	)	$	(13.51	)
(Loss) from continuing operations for Diluted Earnings Per Share	$	(67,155,404	)	$	(85,093,611	)
(Loss) Income from discontinued operations for Diluted Earnings Per Share	$	(17,983,567	)		(710,755	)
(Loss) for Diluted Earnings Per Share	$	(85,138,971	)		(85,804,366	)
Diluted Weighted Average Number of Shares		8,487,629			6,350,129
(Loss) from continuing operations Per Share – Diluted	$	(7.91	)	$	(13.40	)
(Loss) Income from discontinued operations Per Share – Diluted	$	(2.12	)	$	(0.11	)
Net (Loss) Per Share – Diluted	$	(10.03	)	$	(13.51	)

Recent accounting pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”), ASU 2019-12, “Simplifying the Accounting for Income Taxes.” ASU 2019-12 eliminates certain exceptions within ASC 740, “Income Taxes,” and clarifies certain aspects of ASC 740 to promote consistency among reporting entities. ASU 2019-12 is effective for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The Company evaluated the impact that with the adoption of ASU 2019-12, and it did not have any impact on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. The amendments in this ASU are effective for annual and interim periods beginning after December 15, 2023, although early adoption is permitted. The Company is in the process of evaluating the impact of this new guidance on its financial statements.