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COMMITMENTS AND CONTINGENCY

12 Months Ended

Jun. 30, 2022

COMMITMENTS AND CONTINGENCY

COMMITMENTS AND CONTINGENCY

NOTE 24. COMMITMENTS AND CONTINGENCY

(a) Contingency

Severance payments

The Labor Contract Law of the PRC requires employers to assure the liability of severance payments if employees are terminated and have been working for the employers for at least two years prior to January 1, 2008. The employers will be liable for one month of severance pay for each year of the service provided by the employees. As of June 30, 2022, the Company estimated its severance payments of approximately ¥7.1 million ($1.1 million) which has not been reflected in its consolidated financial statements, because management cannot predict what the actual payment, if any, will be in the future.

Legal contingencies

On December 1, 2021, Henan Puxinfangfu Construction Engineering Co., Ltd. (“the Plaintiff”) submitted a Civil Complaint to the People’s Court of Suzhou District, Jiuquan City, Gansu Province (the “Court”) against Gan Su BHD. The complaint requested that Gan Su BHD shall make the compensation to the Plaintiff for the outstanding trade payable plus the interest, and the litigation fee in this case shall be borne by Gan Su BHD. The Plaintiff also applied for property preservation before litigation to preserve the bank account of the Company. On December 1, 2021, the Court issued a judgement and approximately ¥0.7 million ($0.1 million) of Gan Su BHD’s bank balance was became restricted for one year. On April 7, 2022 and June 9, 2022, the Court issued first and second judgement which stated that the case to transfer to Yumen People's Court for jurisdiction. As of June 30, 2022, Gan Su BHD recorded ¥1.82 million ($271,734) trade account payable due to the Plaintiff, and the compensation claimed by the Plaintiff was approximately ¥2.0 million (approximately $0.3 million). As the date of this report, the outcome of this legal proceeding is uncertain at this point because of the many questions of fact and law that may arise, and Gan Su BHD will vigorously defend itself and seek for less settlement payment in the next trail of this litigation

(b) Purchase commitment

The total future minimum purchase commitment under the non-cancellable purchase contracts as of June 30, 2022 are payable as follows:


Twelve months ending June 30,		Minimum purchase commitment
2023		¥	26,967,803		$	4,026,414
2024			300,000			44,791
2025			300,000			44,791
2026			150,000			22,396
Thereafter			—			—
Total minimum payments required		¥	27,717,803		$	4,138,392

(c) Office Leases Commitment - short term

The Company entered into several non-cancellable operating lease agreements for office spaces and factories. Future payments under such leases were included in lease liabilities as disclosed in Note 11, other than those within under lease agreements within one year which are disclosed as follows as of June 30, 2022:


Twelve months ending June 30,		RMB			U.S. Dollars
2023		¥	549,219		$	82,001
Total		¥	549,219		$	82,001