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GOING CONCERN UNCERTAINTIES

9 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

GOING CONCERN UNCERTAINTIES

NOTE 2. GOING CONCERN UNCERTAINTIES

As disclosed in the Company’s unaudited condensed consolidated financial statements, the Company had recurring net losses of US$7,824,816 and US$20,033,826, and continuing cash outflow of US$2,853,387 and US$6,755,462 from operating activities for the nine months ended March 31, 2023 and 2022. Management believes these factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months. In assessing the Company’s going concern, management monitors and analyzes the Company’s cash on-hand and its ability to generate sufficient revenue sources in the future to support its operating and capital expenditure commitments. The Company’s liquidity needs are to meet its working capital requirements, operating expenses and capital expenditure obligations. Direct offering and debt financing have been utilized to finance the working capital requirements of the Company. In addition, the Company’s shareholders made pledges to provide continuous financial support to the Company whenever the Company has liquidity difficulty for at least next 12 months from the date of this filing.

Despite those negative financial trends, as of March 31, 2023, the Company had positive working capital due to the following measurements the management has taken to enhance the Company’s liquidity:

1)

On August 11, 2022, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain non-US investors (the “Investors”). Under the Purchase Agreement, the Company will sell to the Investors, up to 1,921,683 shares of its common stock at a per share purchase price of $0.915 for gross proceeds of up to US$1,758,340. As the date of this report, proceeds amounted to US$1.6 million has been received by the Company, and the remaining balance of the proceeds is expected to be fully collected by June 30, 2023.

2)	On January 12, 2023, the Board of the Company approved the sales of 722,222 shares of the Company’s common stock to the Company’s employees for gross proceeds of up to US$650,000, and the balance of the proceeds is expected to be fully collected by September 30, 2023.

3)	The Company financed from commercial banks. As of March 31, 2023, the Company had US$1.3 million in bank loans outstanding. The management expects that the Company will be able to renew its existing bank loans upon their maturity based on past experience and its good credit history.

4)	As of March 31, 2023, the Company had cash and cash equivalents in the amount of approximately US$15.4 million for the next operating cycle in next twelve months.

Management believes that the foregoing measures collectively will provide sufficient liquidity for the Company to meet its future liquidity needs 12 months from the date of this filing.