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LEASES

9 Months Ended

Mar. 31, 2023

NOTE 11 - LEASES

The Company leases offices space and warehouse under non-cancelable operating leases, with terms ranging from one to seven and a half years. In addition, the Zhisheng VIEs and Guangyuan entered into several farmland lease contracts with farmer cooperatives to lease farmland in order to plant and grow organic vegetables, fruit, and Chinese yew trees, fast-growing bamboo willows and scenic greening trees. The lease terms vary from 3 years to 24 years. The Company considers those renewal or termination options that are reasonably certain to be exercised in the determination of the lease term and initial measurement of ROU assets and lease liabilities. Lease expenses for lease payment are recognized on a straight-line basis over the lease term. Leases with initial terms of 12 months or less are not recorded on the balance sheet.

When available, the Company uses the rate implicit in the lease to discount lease payments to present value; however, most of the Company’s leases do not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The table below presents the operating lease related assets and liabilities recorded on the balance sheets.

	March 31, 2023		June 30, 2022

ROU lease assets	$	1,022,097	$	2,088,149

Operating lease liabilities – current		369,870		959,909
Operating lease liabilities – non-current		605,420		1,025,967
Total operating lease liabilities	$	975,290	$	1,985,876

The weighted average remaining lease terms and discount rates for all of operating leases were as follows as of March 31, 2023 and June 30, 2022:

	March 31, 2023			June 30, 2022

Remaining lease term and discount rate:
Weighted average remaining lease term (years)		8.82			6.88
Weighted average discount rate		5.24	%		5.30	%

Rent expenses totaled US$512,862 and US$693,684 for the nine months ended March 31, 2023 and 2022, respectively. Rent expenses totaled US$126,717 and US$229,477 for the three months ended March 31, 2023 and 2022, respectively.

During the year ended June 30, 2022, the management performed evaluation on the impairment of ROU lease assets, and impairment loss for the ROU lease assets of US$2,268,344 was recorded for the year ended June 30, 2022. Due to the continuous impact from the COVID-19 pandemic, the Company’s Zhisheng VIEs have not been able to grow and cultivate green agricultural produce on the leased farmland, and based on the management estimation, these farmlands are unlikely to generate enough future profit and cashflow. Therefore, the Company decided to record full impairment of leased farmland during the year ended June 30, 2022.

The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2023:


Remainder of 2023	$	260,391
2024		271,049
2025		196,744
2026		21,840
2027		21,840
Thereafter		444,087
Total lease payments		1,215,951
Less: imputed interest		(240,661	)
Present value of lease liabilities	$	975,290