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Disposal of Subsidiary

3 Months Ended

Sep. 30, 2023

NOTE 13 – DISPOSAL OF SUBSIDIARY

On July 20, 2023, the Company’s shareholders decided to sell Zhangxun to a third party at a price of RMB 2 (US $0.28). There was no material transactions for Zhangxun for the period from July 1, 2023 through July 20, 2023, and for the purpose of complying with the Company’s monthly accounting cut-off date, the Company used Zhangxun’s financial statements as of June 30, 2023 as the date of disposal. The Company recorded $0.83 million gain on disposal of the subsidiary, which was the difference between the selling price of US$0.28 and the carrying value of the negative net assets of $2.35 million of the disposal entity, which includes $1.52 million of inter-company payables. The gain is calculated after netting off these inter-company receivables from Zhangxun of $1.52 million, due to uncertainty of the repayment from Zhangxun. The following table summarizes the carrying value of the assets and liabilities of Zhangxun at June 30, 2023.

Cash	$	34
Accounts receivable		254,988
Other current assets		50,406
Fixed assets, net		10,012
Intangible assets, net		344,629

Total assets		660,069

Accounts payable		530,260
Advance from customers		94,126
Accrued liability and other payables		749,156
Loan payables		153,045

Total liabilities		1,526,587

The following tables shows the results of operations relating to discontinued operations Zhangxun for the three months ended September 30, 2023 and 2022, respectively.

	THREE MONTHS ENDED SEPTEMBER 30,
	2023		2022

Revenues	$	-	$	1,164,305
Cost of goods sold		-		1,014,108

Gross profit		-		150,197

Operating expenses
Selling		-		188,950
General and administrative		-		165,485
Research and development		-		156,704

Total operating expenses		-		511,139

Loss from operations		-		(360,942	)
Gain on disposal		833,546		0
Other income, net		-		23,880

Gain (loss) before income tax		833,546		(337,062	)

Income tax		-		-

Gain (loss) before noncontrolling interest		833,546		(337,062	)

Less: loss attributable to noncontrolling interest		-		(101,759	)

Net gain (loss) to the Company	$	833,546	$	(235,303	)