EDGAR 10-K Filing

Company CIK: 1528308
Filing Year: 2021
Filename: 1528308_10-K_2021_0001214659-21-009869.json

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ITEM 1. BUSINESS
Item 1. Business
Corporate Background
Ionix Technology, Inc. (the “Company”, formerly known as Cambridge Projects Inc.), a Nevada corporation, was formed on March 11, 2011. The Company was originally formed to pursue a business combination through the acquisition of, or merger with, an operating business. The Company filed a registration statement on Form 10 with the U.S. Securities and Exchange Commission (the “SEC”) on August 23, 2011, and focused on identifying a potential business combination opportunity.
On November 20, 2015, the Company’s former majority shareholder and chief executive offer, Locksley Samuels (“Seller”), completed a private common stock purchase agreement (the “SPA”) to sell his entire 21,600,000 shares of the Company’s common stock to Shining Glory Investments Limited (“Purchaser”). In connection with the SPA, the Board appointed Ms. Doris Zhou as the Company’s Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer, and director on November 20, 2015, and Seller concurrently resigned from all positions with the Company. As a result of the SPA, a change in control occurred as (i) Purchaser acquired approximately 65.45% of the Company’s common stock, and (ii) the Company’s sole officer and director after the SPA was Ms. Zhou, who has since resigned.
On November 30, 2015, the Company’s board of directors (the “Board”) and the majority of its shareholders approved that (i) the Company change its name from “Cambridge Projects Inc.” to “Ionix Technology, Inc.”, (ii) the Company voluntarily changed its ticker symbol in connection with the name change, and (iii) the Company execute a 3:1 forward stock split, which will increase the Company’s issued and outstanding shares of common stock from 33,001,000 to 99,003,000 (the “Corporate Actions). The Company filed an application with the Financial Industry Regulatory Authority (“FINRA”) to effectuate the Corporate Actions and filed a Form 8-K on December 10, 2015, in regards to the Corporate Actions. On February 3, 2016, FINRA approved the Corporate Actions, which took effect on the market on February 4, 2016. As a result, (i) the Company’s name is now “Ionix Technology, Inc.”, (ii) its new trading symbol is “IINX”, (iii) the 3:1 forward stock split is effective, payable upon surrender, and (iv) the Company’s new CUSIP number is 46222Q107.
On February 17, 2016, the Board ratified, approved, and authorized the Company’s acquisition of a wholly-owned subsidiary, Well Best International Investment Limited, a limited liability company formed under the laws of Hong Kong Special Administrative Region (“Well Best”) on September 14, 2015. Well Best was acquired by Qingchun Yang, its current director, on November 10, 2015. One hundred percent interest in Well Best was transferred to Ionix Technology on February 15, 2016.Well Best’s purpose is to act as an investment holding company and pursue new business ventures conducted in the Asia Pacific region excluding China. Well Best has had no activities since inception.
On November 7, 2016, the Company’s Board of Directors approved and ratified the incorporation of Lisite Science Technology (Shenzhen) Co., Ltd ("Lisite Science"), a limited liability company formed under the laws of China on June 20, 2016. Well Best is the sole shareholder of Lisite Science. As a result, Lisite Science is an indirect, wholly-owned subsidiary of the Company. Lisite Science focused on marketing the high-end intelligent electronic equipment, specifically a power bank which is a 5 volt 2 amp, 20000mAh lithium ion battery powered portable device offering charging time of 12-18 hours that is intended to be utilized as a power source for electronic devices such as the iphone, ipad, mp3/mp4 players, PSP gaming systems, and cameras. Lisite Science commenced operations in September of 2016.
On November 7, 2016, the Company’s Board of Directors approved and ratified the incorporation of Shenzhen Baileqi Electronic Technology Co., Ltd. ("Baileqi Electronic"), a limited liability company formed under the laws of China on August 8, 2016. Well Best is the sole shareholder of Baileqi Electronic. As a result, Baileqi Electronic is an indirect, wholly-owned subsidiary of the Company. Baileqi Electronic focused on marketing the LCD and module for civil electronic products. The module of new energy power system refers to an LCD screen that is manufactured for small devices such as video capable baby monitors, electronic devices such as tablets and cell phones, and for use in televisions or computer monitors. Baileqi Electronics commenced operations in September of 2016.On September 1, 2016, Baileqi Electronics entered into a manufacturing agreement with Shenzhen Baileqi Science and Technology Co., Ltd. ("Shenzhen Baileqi S&T") to manufacture products for Baileqi Electronics.
On December 29, 2016, the Company’s Board of Directors approved and ratified the acquisition of 99.9% of the issued and outstanding stock of Welly Surplus International Limited, a limited company formed under the laws of Hong Kong on January 18, 2016, in exchange for 99,999 HK dollars (the “Acquisition”). As a result of the Acquisition, the Company became the majority shareholder of Welly Surplus, owning 99.99% of the issued and outstanding stock of Welly Surplus, and Welly Surplus is now a majority owned subsidiary of the Company. As the closing of the Acquisition, Ms. Zhou was appointed as a member of the board of directors of Welly Surplus. Welly Surplus will act as the accounting and financial base for the Company and shall focus on assisting the Company with all of the Company’s financial affairs. Welly surplus had no activities since inception.
On April 7, 2017, Ben William Wong (“Wong”) and Yubao Liu, an individual (“Liu”) entered into a Stock Purchase Agreement (the “Agreement”) whereby Wong agreed to sell and Liu agreed to purchase 5,000,000 shares of the Company’s restricted preferred stock, representing 100% of the total issued and outstanding preferred stock (“Company Preferred Stock”). In consideration for the Company Preferred Stock, Liu agreed to pay to Wong a total of 5,000,000 RMB on or before April 30, 2017. The Agreement closed on April 20, 2017 (the “Closing”). Additionally, on April 5, 2017, Liu and Shining Glory Investments Limited, a British Virgin Islands company (“Shining Glory”), of which Wong is the sole officer and director, entered into a purchase agreement whereby Liu acquired 1 ordinary common stock share (the “Shining Glory Share”) representing approximately 100% of Shining Glory’s outstanding shares of common stock. In consideration for the Shining Glory Share, Liu paid to Wong a total of $1 USD and Wong resigned as a Director of Shining Glory. Concurrently, Liu was appointed as the sole director of Shining Glory. The agreement between Shining Glory and Liu closed on April 20, 2017.
On February 20, 2018, the Company ratified and approveda the appointment of Jialin Liang as President and a member of the board of directors of Changchun Fangguan Photoelectric Display Technology Co. Ltd ("Fangguan Photoelectric"). On February 20, 2018, the Company’s Board of Directors approved and ratified the incorporation of Fangguan Photoelectric. Fangguan Photoelectric is a wholly owned subsidiary of Well Best International Investment Limited and an indirect wholly-owned subsidiary of the Company. Fangguan Photoelectric focused on marketing LCDs for the Company. In October 2018, Jialin Liang resigned as President and Director of Fangguan Photoelectric. Mr Biao Shang became his successor.
On June 28, 2018, the Board of Directors of Ionix Technology, Inc. (the “Company”) approved and ratified the incorporation of Dalian Shizhe New Energy Technology Co., Ltd. (“Shizhe New Energy”) and the Company ratified and approved the appointment of Mr. Liang Zhang as President and a member of the board of directors of Shizhe New Energy . Shizhe New Energy is a wholly owned subsidiary of Well Best International Investment Limited and an indirect wholly-owned subsidiary of Ionix Technology, Inc. In May 2019, Liang Zhang resigned as President and Director of Shizhe New ENERGY. Mr Shikui Zhang became his successor.
On December 27, 2018, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with Jialin Liang and Xuemei Jiang, each of whom is shareholder (the “Shareholders”) of Changchun Fangguan Electronics Technology Co., Ltd. (PRC) (“Fangguan Electronics”). Pursuant to the terms of the Purchase Agreement, the Shareholders, who together own 95.14% of the ownership rights in Fangguan Electronics, agreed to execute and deliver the Business Operation Agreement dated December 27, 2018 (the “Business Operation Agreement”), the Equity Interest Pledge Agreement dated December 27, 2018 (the “Equity Interest Pledge Agreement”), the Equity Interest Purchase Agreement dated December 27, 2018 (the “Equity Interest Purchase Agreement”), the Exclusive Technical Support Service Agreement dated December 27, 2018 (the “Services Agreement”) and the Power of Attorney dated December 27, 2018 (the “Power of Attorney” and together with the Business Operation Agreement, the Equity Interest Pledge Agreement, the Equity Interest Pledge Agreement and the Services Agreement, the “VIE Transaction Documents”) to the Company in exchange for the issuance of an aggregate of 15,000,000 shares of the Company’s common stock, par value $.0001 per share (the “Common Stock”), thereby causing Fangguan Electronics to become the Company’s variable interest entity. Together with Purchase Agreement, in exchange of 15 million shares of the Company’s common stock, the Shareholders also agreed to convert shareholder loan of RMB 30 million (approximately $4.4 million) to capital and make cash contribution of RMB 9.7 million (approximately $1.4 million) to capital. The entirety of the transaction will hereafter be referred to as the “Transaction.”
On February 7, 2021, the Board of Directors of the Company approved and ratified the incorporation of Shijirun (Yixing) Technology Co., Ltd. (“Shijirun”), a limited liability company formed under the laws of the Peoples Republic of China (PRC) on February 7, 2021. Well Best International Investment Limited is the sole shareholder of Shijirun. As a result, Shijirun is an indirect, wholly-owned subsidiary of the Company. Shijirun focuses on developing and producing high-end intelligent new energy equipment in Yixing City, Jiangsu Province, China.
On March 30, 2021, the Board of Directors of Ionix Technology, Inc. approved and ratified the incorporation of Huixiang Energy Technology (Suzhou) Co., Ltd. (“Huixiang Energy”), a limited liability company formed under the laws of the Peoples Republic of China (PRC) on March 18, 2021. Well Best is the sole shareholder of Huixiang Energy. As a result, Huixiang Energy is an indirect, wholly-owned subsidiary of the Company. Huixiang Energy shall conduct research and development of next generation advanced battery technologies, manufacture and sales of relevant battery products, including the solid-state rechargeable lithium ion battery for next generation EV and energy storage systems. Huixiang Energy also focuses on the operation of battery packs, battery systems and electric vehicles sharing business with its own internet sharing platform relating to the electric vehicles (online EV hailing services) and its relevant batteries and battery systems. Huixiang Energy operates in Suzhou City, Jiangsu Province, China.
On May 6, 2021, the Board of Directors and the holders of the majority of issued and outstanding voting securities of the Company approved an amendment (the “Amendment”) to our Articles of Incorporation to increase the authorized number of shares of common stock from 200,000,000 to 400,000,000 shares consisting of: (i) 395,000,000 shares of common stock, par value $0.0001 per share (“Common Stock”); and (ii) 5,000,000 shares of preferred stock par value $0.0001 per share (“Preferred Stock”) (the “Authorized Share Increase”) and related Certificate of Amendment to Articles of Incorporation. The approval was made in accordance with Sections 78.320 and 78.390 of the Nevada Revised Statues, which provide that a corporation’s articles may be amended by written consent of the stockholders representing at least a majority of the voting power. The Amendment was filed with the Nevada Secretary of State on June 7, 2021.
Description of VIE Transaction Documents
The material contractual agreements between Changchun Fangguan Photoelectric Display Technology Co. Ltd. (PRC) (“Fangguan Photoelectric”), Fangguan Electronics and its shareholders consist of the following agreements:
Business Operation Agreement - This agreement allows Fangguan Photoelectric to manage and operate Fangguan Electronics. Under the terms of the Business Operation Agreement, Fangguan Photoelectric may direct the business operations of Fangguan Electronics, including, but not limited to, borrowing money from any third party, distributing dividends or profits to shareholders, adopting corporate policy regarding daily operations, financial management, and employment, and appointment of directors and senior officers.
Exclusive Technical Support Service Agreement - This agreement allows Fangguan Photoelectric to collect 100% of the net profits of Fangguan Electronics. Under the terms of the Service Agreement, Fangguan Photoelectric is the exclusive provider of equipment, advice and consultancy to Fangguan Electronics related to its general business operations, among other things. Fangguan Photoelectric owns all intellectual property rights arising from its performance under the Service Agreement.
Power of Attorney - The Shareholders have each executed and delivered to Fangguan Photoelectric a Power of Attorney pursuant to which Fangguan Photoelectric has been granted the Shareholders’ voting power in Fangguan Electronics. Each Power of Attorney is irrevocable and does not have an expiration date.
Equity Interest Purchase Agreement - Fangguan Photoelectric and the Shareholders entered into an exclusive option agreement pursuant to which the Shareholders have granted Fangguan Photoelectric or its designee(s) the irrevocable right and option to acquire all or a portion of such Shareholders’ equity interests in Fangguan Electronics. Pursuant to the terms of the agreement, Fangguan Photoelectric and the Shareholders have agreed to certain restrictive covenants to safeguard the rights of Fangguan Photoelectric under the Equity Interest Purchase Agreement. Fangguan Photoelectric may terminate the Equity Interest Purchase Agreement upon prior written notice. The Option Agreement is valid for a period of five (5) years from the effective date, which may be extended by Fangguan Photoelectric.
Equity Interest Pledge Agreement - Fangguan Photoelectric and the Shareholders entered into an agreement pursuant to which the Shareholders have pledged all of their equity interests in Fangguan Electronics to Fangguan Photoelectric. The Equity Interest Pledge Agreement serves to guarantee the performance by Fangguan Electronics of its obligations under the VIE Transaction Documents. Pursuant to the terms of the Equity Interest Pledge Agreement, the Shareholders have agreed to certain restrictive covenants to safeguard the rights of Fangguan Photoelectric. Upon an event of default under the agreement, Fangguan Photoelectric may foreclose on the pledged equity interests.
As a result of the Transaction, the Company, through its subsidiaries and variable interest entity, is now engaged in the business of the research and development, manufacturing, and marketing of liquid crystal materials, displays and modules in the PRC. All business operations are conducted through our wholly-owned subsidiaries, including Fangguan Photoelectric, and through Fangguan Electronics, our variable interest entity. Fangguan Electronics is considered to be a variable interest entity because we do not have any direct ownership interest in it, but, as a result of a series of contractual agreements between Fangguan Photoelectric, our wholly-owned subsidiary, and Fangguan Electronics and its shareholders, we are able to exert effective control over Fangguan Electronics and receive 100% of the net profits or net losses derived from the business operations of Fangguan Electronics.
Prior Operations and Agreements
On August 19, 2016, the Board ratified, approved, and authorized the Company, as the sole member of Well Best, on the formation of Xinyu Ionix Technology Company Limited (“Xinyu Ionix”), a company formed under the laws of China on May 19, 2016. As a result Xinyu Ionix is a wholly-owned subsidiary of Well Best and an indirect wholly-owned subsidiary of the Company. The initial plan of Xinyu Ionix was about to focus on developing and designing lithium batteries as well as to act as an investment company that may acquire other businesses located in China. However, due to the high cost and low efficiency, since the approval date of May 19, 2016, Xinyu Ionix conducted no business.
On April 30, 2017, Well Best International Investment Limited (“Well Best”), a wholly-owned subsidiary of the Company, transferred all of its rights, title and interest to all 100% of the issued and outstanding common stock of Xinyu Ionix Technology Company Limited (“Xinyu Ionix”) to Zhengfu Nan for RMB 100($14.49) pursuant to a Share Transfer Agreement dated April 30, 2017 (the “Agreement”). Following the execution of the Agreement, Mr. Nan owns 100% of Xinyu Ionix and assumes all liabilities of Xinyu Ionix. As a result Xinyu Ionix is no longer a wholly-owned subsidiary of Well Best or an indirect wholly-owned subsidiary of the Company.
Business Summary
Since January 2016, the Company has shifted its focus to becoming an aggregator of energy cooperatives to achieve optimum price and efficiency in creating and producing technology and products that emphasize long life, high output, high energy density, and high reliability. By and through its wholly owned subsidiary, Well Best and the indirect subsidiaries, Baileqi Electronics, Lisite Science, Welly Surplus, Fangguan Photoelectric, Fangguan Electronics,Huixiang Energy, Shijirun and Shizhe New Energy, the Company has commenced its main operations of high-end intelligent electronic equipment and photoelectric display products, became the New energy service provider and IT solution provider, which are in the new-type rising industries.
The Company applied various operating approacehs. Baileqi Electronics, Lisite Science, Fangguan Photoelectric, Huixiang Energy, Shijirun and Shizhe New Energy focus on the sales of goods and the rendering of service while Fangguan Electronics has been engaged in the business of the research and development, manufacturing, and marketing of liquid crystal materials, displays and modules in the PRC.
The Company, Well Best, Welly Surplus, Baileqi Electronics, Lisite Science, Fangguan Photoelectric, Fangguan Electronics, Huixiang Energy, Shijirun and Shizhe New Energy are actively seeking additional new prospects for technology enhancements, design, manufacturing and production of the Company’s operation of high-end intelligent electronic equipment and more cutting-edge LCD technologies, such as Liquid Crystal Module (“LCM“), the portable power banks, the battery packs and the electric furnace used in firing for lithium battery.
We are engaged in the business of research and development, manufacturing, and marketing of liquid crystal materials, displays and modules, the battery packs and the electric furnace used in firing for lithium battery in the PRC. The Company operates through a corporate structure consisting of subsidiaries, variable interest entities (“VIE”), and contractual arrangements. A VIE is a term used by the U.S. Financial Accounting Standards Board to describe a legal business structure whose financial support comes from another corporation which exerts control over the VIE. All of the Company’s business operations are structured around a series of contractual agreements, the VIE Transaction Documents, including the ones between Fangguan Photoelectric, our wholly-owned subsidiary, and Fangguan Electronics and its shareholders. Through the VIE Transaction Documents, we are able to exert effective control over Fangguan Electronics and receive 100% of the net profits derived from the business operations of Fangguan Electronics.
Products and Projects
Civil Electronics
With the high-speed development in the new energy industry, the high-tech and relevant key accessories still play an essential role in the energy industry supply chain. LCD displays and lithium battery packs are widely used in the end products of the new energy industry.
Since the beginning of 2017, the Company has expanded its focus to development and production of LCD’s and modules for civil electronic products, lithium battery packs. By and through its wholly owned subsidiary, Well Best and the indirect wholly owned subsidiary, Baileqi Electronics and Fangguan Photoelectric, the Company has commenced its operations in China. Baileqi is working on an upgrade to traditional LCD screens with display modules that use the crystal method (“TCM”) and control muddle system integration for professional manufacturing. Today, TCM is widely used in many areas, including electronic operation data displays for renewable energy vehicles, BMS information feedback, HD projectors, communication equipment, and particularly in intelligent robots.
The LCD screens are manufactured for small devices such as video capable baby monitors, electronic devices such as tablets and cell phones, and for use in televisions or computer monitors.
Since the beginning of 2021, we has explored the business opportunities in lithium battery -related industry and have formulated a vertically integrated business model that will cover all important aspects of the value chain including deep processing of upstream Lithium Compounds, production and installation of midstream kun furnaces used in firing the lithium battery, and production of downstream LFP battery packs
The lithium battery packs and the electric furnace used in firing for lithium battery have been supplied by the subsidiaries of the Company.
The Company also provides service and IT solution for new energy industry.
1. Fanguguan Electronic
Products of Fanguguan Electronic
Product Model: FG814B-
001034B
Resolution: Segment LCD
LCD Active Area: 44*67
Outline Dimensions:
50.0*81.0*5.9
Display Colors: Black and
White
View Direction: 6 O’clock
Product Model: FG12832B-
002161A
Resolution: 128*32
LCD Active Area:
42.22*11.50
Outline
Dimensions:47.85*21.0*3.3
Display Colors: Black and
White
View Direction: 12 O’clock
Product Model: FG160100J-
000039P
Resolution: 160*100
LCD Active Area:
39.98*28.96
Outline Dimensions:
50.0*44.0*4.5
Display Colors: Black and
White
View Direction: 6 O’clock
2. Fangguan Photoelectric
Products of Fangguan Photoelectric
Product Model:
FG240160N-000666M
Resolution: 240*160
LCD Active Area:
77.58*51.6
Outline Dimensions:
85.00*62.80*4.5
Display Colors: Black and
White
Viewing Direction: 6
O’clock
Product Model:
FG12864D-001002X
Resolution: 128*64
LCD Active Area: 66*38
Outline Dimensions:
69*46*2.95
Display Colors: Black and
White
View Direction: 6 O’clock
Product Model:
FG12864E8-003744K
Resolution: 128*64
LCD Active Area:
26.58*14.86
Outline Dimensions:
28.47*19.48*4.45
Display Colors: Black and
White
View Direction: 6 O’clock
3. Lisite Science
Products of Lisite Science
Product Model: W200
Color(s): White\Black
Fire Rating: V0
Battery Type: 18650-2500mAh*8
Battery Capacity: 20000mAh / 3.7V
Rated Energy: 74Wh (TYP)
Rated Output: 5V / 2.1A (Max)
Input: Micro-USB、Lightning
Output: USB-A
Input Parameter: MAX10W
Micro-USB : DC5V A
Output Parameter: MAX10.5W
USB -A-1 : DC5V/1A
USB -A-1 : DC5V/2.1A Shared 2.1A
Size: 165.2*78*23MM
Weight: 437g
Product Model: T3
Color(s): white-grey\white-red
Fire Rating: V0
Battery Type: Polymer 805573*2
Battery Capacity: 10000mAh/3.8V
Rated Energy: 37W (TYP)
Rated Output: 5V/2.1A (Max)
Input: Micro-USB
Output: USB-A*2
Input Parameter: MAX10W
Micro-USB : DC5V / 2A
TYPE-C(USB-C): DC5V/2A
Output Parameter: MAX10.5W
USB-A-1 : DC5V/2.1A
USB-A-1:DC5V/1A
USB-A-2: DC5V/2.1A Shared 2.1A
Size: 100*62*22.5MM
Weight: 300g
4.Shijirun
Large atmosphere kun furnace
for firing lithium batteries
5.Huixiang Energy
Product Model: lithium iron phosphate ("LFP") battery packs
Specification:：16S1P General Use type
Unit： NH-33138-HE_15Ah_LFP
6.Baileqi Electronic:
Products of Baileqi Electronic
Module No.: Y50029N00T
Size:5.0 inch
Resolution:800(H)*3(RGB)*480(V)TFT LCD
Active Area:108.00*64.80mm
Outline
Dimensions:120.70(H)x75.80(V)x4.25(T)
Interface Type:24BITRGBInterface
Display Colors:16.7M
Brightness:300cd/mm
View Direction:12O’clock
Module No.:Y43001N04N
Size:4.3 inch
Resolution:480RGB×272
LCD Active Area:95.04(H)×53.86(V)
Outline Dimensions:
105.4(H)×67.10(V)×2.95(D)
Interface Type: RGB 24 BIT
Display Colors:16.7M
Brightness:480cd/mm(7S)
View Direction:12O’clock
Module No.:Y10108M00N Size:10.1 inch
Resolution:1280RGB×800
LCD Active Area:216.96(H)×135.60(V)
Outline Dimensions: 229.46(H)×
149.10(V)×3.00(D)
Interface Type: LVDS (Low Voltage
Differential Signal)
Display Colors:16.7M
Brightness:300cd/mm(3S-13P)
View Direction:6O’clock
Industry Overview
Synergies throughout the lithium battery Industry Value Chain
In China, the current explosive growth in the new energy vehicle industry has led to a significant increase in demand for lithium iron phosphate batteries and the corresponding increase in demand for lithium compounds, with the industry gradually shifting from a balanced supply and demand to a tight supply situation. Under the dual stimulation of the gradually weakening impact of policies and the rising industry demand, the price of lithium compound is gradually rebounding. As a "rising star" start-up player in the lithium battery-related business, we endeavor to capitalize on the opportunities arising from industry reshuffle, continue to enhance our competitiveness and further improve our industrial position.
We have a vertically integrated business model that will cover all important aspects of the value chain including deep processing of upstream Lithium Compounds, production and installation of midstream kun furnaces used in firing the lithium battery, and production of downstream LFP battery packs. We started as a supplier of the midstream kun furnaces used in firing the lithium battery and has been striving for expanding to the upstream and downstream of the industrial value chain to obtain a competitive supply of LFP battery packs, thereby ensuring cost and operational efficiency, synergy among multiple business lines, and access to the latest market information and development of cutting-edge technologies.
We adhere to the development strategy of “upstream and downstream integration of the LFP battery-related industry” given the features of LFP (higher value for money and safer than other kinds of lithium batteries)
Our products as below are expected to be widely used in the manufacturing of electric vehicles, aerospace products, and functional materials in the future. And we will focus on developing the major players in their respective industries aforementioned as our customers.
We strive for offering our customers the comprehensive suite of product as below to effectively address the unique and diverse needs of our customers.
Furnace used in firing for lithium battery: At the core of our "throughout value chain" business model is the furnace used in firing for lithium battery, mainly including (1) large atmosphere kun furnace for firing lithium batteries (2) Atmosphere kun furnace for firing lithium batteries(3) Push plate furnace used in ferrite firing. Such furnaces are widely used in manufacturing lithium battery fields. Our customers are expected to be primarily global lithium battery manufacturers.
Lithium compounds: Our lithium compounds are expected to be mainly including (1) battery-grade lithium hydroxide; (2) battery-grade lithium carbonate; (3)lithium nickel cobalt manganate. Such lithium compounds are widely used as lithium battery materials for electric vehicles, portable electronics, as well as in chemical and pharmaceutical fields. Our customers are expected to primarily consist of global battery cathode materials manufacturers, battery suppliers.
Lithium batteries: The Company produces lithium battery. Such batteries are mainly used in electric vehicles, a variety of energy storage equipment and all kinds of consumer electronic devices, such as mobile phones, tablets, and laptops. Meanwhile, we will also proactively carries forward the research, development, production and commercial application of solid-state lithium batteries. As per the electric vehicles, our most important end- users, the monthly sales in China’s electric vehicle market has continued to show a significant year-on-year growth since July 2020. In 2020, the production and sales amounted to 1.366 million and 1.367 million respectively, representing a year-on-year increase of 7.5% and 10.9% respectively, and hitting a record high. With reference to the target of 20% sales of new electric vehicles as mentioned in the Electric Vehicle Industry Development Plan (2021-2035), there still exists broad development space for the electric vehicle industry, and remains high certainty on the long-term growth trend of the electric vehicle industry chain.
Our vertically integrated business model contributes to the constant launches of new products and services, which allows us to solidify the strategic relationships with our customers and end-users.
Development trend of photoelectric display products:
IINX is active in promoting the worldwide application of green energy solutions. We are always pursuing more optimized green energy solutions together with our customers. Recently, we confronted the rapid growth of the new energy industry, however, high and new technology and its relevant accessories still play pivotal roles in the existing industrial chain. In the meantime, we have also chosen a more extensive applied terminal product in new energy industry- the Liquid Crystal Displays (LCD), as an important composition part of our business.
LCD-From Global Perspective
The global demand of LCD panels is continually increasing. The output area of global LCD panels achieved 181 million square meters in 2017, this figure was tripled compared to 2007, and the average annual growth is approximately 13 million square meters. According to the prediction, the global demand of LCD panels will be 215 million square meters in 2021.From 2017 to 2021, the compound average growth rate (CAGR) of such demand will be about 4.37%, though the growth seems to slow down compared with the CAGR of 5% for the most recent 3 years, however, without considering base effect, the demand will maintain an average increase of approximately 8.5 million square meters per annum.
The demand of twisted nematic (TN) and supper twisted nematic (STN) liquid crystal materials remains generally stable. Due to their characteristics such as low cost, wide range of applications, the low-end TN and STN liquid crystal materials will still take a certain portion of market for terminal products which require a relatively low level of display. Basically, since 2004, the market demand of TN and STN liquid crystal materials has been stable, with the annual quantity demand maintaining at approximately between 60 and 70 tons, to compute based on the average price of about 5000 Yuan/kg for TN and STN liquid crystal materials, the predicted market scale for TN and STN liquid crystal materials would be approximately 300 million to 350 million Yuan.
There is a strong demand of thin film transistor (TFT) liquid crystal materials in the global market as well. TFT liquid crystal materials account for over 80% of total output value in the global liquid crystal materials market. With the rapid development of LCD television, laptop, desktop display and mobile communication, the demand of TFT liquid crystal panel keeps increasing. To measure and calculate on the basis of 80% of effective display area, a liquid crystal material usage of 4.5kg per square meter area of panel and an average price of 15,000 Yuan per kilogram for mixed liquid crystal materials, the quantity demand of global TFT mixed liquid crystals in 2016 was about 617 tons and market scale was around 9.3 billion Yuan. The global quantity of TFT mixed liquid crystals is estimated to be about 666 tons and the market scale will be about 10 billion Yuan in 2021.
LCD-From China’s Perspective
China is one of the largest display panel producers in the world, according to the data provided by China Optics and Optoelectronics Industry Association LCB. Recently, the liquid crystal panels in mainland China reached the top rank in the world in terms of both revenue and output area. China is and has been a big display manufacturing country, however, China is now at a crucial time for change and attempting to evolve from a big country to a powerful display manufacturing country. China is developing out of a “catch up” position into a phase of advance or equal footing with other competing countries and has an opportunity to become an industrial leader in the near future. It is understood that in the past year, there were multiple panel manufacturing lines have been put into production or started construction in China, especially the Gen 10.5/11 panel manufacturing lines and many Gen 6 AMOLED manufacturing lines were under construction, which just brings China closer and closer to the position of being one of, if not the largest production regions for display panels in the world. China has a number of OLED panel lines put into production or expansion. The scale of investment in OLED is expected to reach $30 billion to $50 billion over the next 3-5 years. BOE, CSOT, Visionox, Tianma and many other manufacturers have launched products such as flexible display, full-screen display, special-shaped display and so on, the domestic high-end displays in China are developing rapidly. The capacity of display panels of China is expected to become the first among all the countries in 2022.
LCD-From Industrial Perspective
At present, the OLED panel Market for mobile phones is almost monopolized by South Korea, with Samsung display accounting for 93.5% and LGD accounting for 2.1%. The influence of Chinese manufacturers is very small, with 2.0% of VINSIONOX, 1.4% of EverDisplay Optronics (EDO) and 0.6% of BOE, which together are less than 5%. From 2019, China began to exert influence on the OLED market. It is estimated that BOE's shipment will reach 50 million pieces (with an annual increase of 1900%), EDO 30 million (with an annual increase of 417%), Vinsionox's 20 million pieces (with an annual increase of 150%), and Tianma's 10 million pieces (with an annual increase of 1011%).
Distribution Methods of Products
The Company’s products are currently directly shipped from the manufacturers to the distributors and retailers. Marketing and sales departments were established through the Company’s indirect subsidiaries to cope with the growth of the Company. We explore the potential customer bases using internal resources. Currently, we have both the long-term contracts with our customers and manufacture according to the purchase orders received. In the future, we will continue to seek additional channels of distribution for our products to include wholesale stores and mass retailers. The Company plans to focus primarily on distributing its products regionally, starting in Greater China, and will then seek to expand its distribution channels across the U.S. and internationally.
Suppliers of Materials
The elements necessary for our products are and will be sourced from several different suppliers located primarily in China on an order-by-order basis. These materials include ITO coated conductive glasses, liquid crystals, lithium material for battery, integrated circuits and etc. Some of the materials in our products are not readily available in large quantities or are available on a limited basis only. Further, the limited availability of some of these materials could cause significant fluctuations in their costs.
The Company, Baileqi Electronics, Fangguan Electronics, Huixiang Energy and Shijirun acquire materials from the following list of principal suppliers, dependent on availability and price points:
· Panshi Tengfei Electronics Ltd
· Shenzhen Yonglitong Electric Technology Ltd
· Yixing Weifeng Regong Technology Ltd
· Shenzhen Huachuang Zhongwei Electric Ltd.
*This list of suppliers is subject to change at any time.
Our management researches and develops our sources of materials used in the manufacturing of our products. The materials that we source are and will be sent to our manufacturer in China to create our products. The Company does not have any long-term contracts with our suppliers and we cannot be assured that they will be able to meet our demands.
Intellectual Property
As part of our business, we will seek to protect our intellectual property rights in various ways, including through trademarks, copyrights, trade secrets, including know-how, patents, patent applications, employee and third-party nondisclosure agreements, intellectual property licenses and other contractual rights.
Government Regulations Affecting Our Business
At this stage in our business, we are unaware of any government regulations that are directly affecting our business, however, as we grow our business activities may become subject to various governmental regulations in different countries in which we operates, including regulations relating to: various business/investment approvals; trade affairs, including customs, import and export control; competition and antitrust; anti-bribery; advertising and promotion; intellectual property; broadcasting, consumer and business taxation; foreign exchange controls; personal information protection; product safety; labor; human rights; conflict; occupational health and safety; environmental; and recycling requirements.
Employees of the Company
The Company has no significant employees other than our officers and directors. As of June 30, 2021, the Company has no employees, however, our indirect subsidiary Baileqi Electronic has four employees, Lisite Science has three employees, Fangguan Photoelectric has 2 employees, Shijirun has 6 employees, Fangguan Electronics has about 207 employees and Dalian Shizhe New Energy has 6 employees. We intend to increase the size of our management team and hire additional employees in the future to manage the continued growth of our company and to increase our sales force and marketing efforts.
WHERE YOU CAN GET ADDITIONAL INFORMATION
We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy our reports or other filings made with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, DC 20549. You can obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SEC’s web site, www.sec.gov.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments
None.

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ITEM 2. PROPERTIES
Item 2. Properties
Our mailing address in the US is that of our registered agent, at 3773 Howard Hughes Pkwy, Suite 500S, Las Vegas, NV 89169. Our address in China is Rm 608, Block B, Times Square, No. 50 People Road Zhongshan District, Dalian City, Liaoning Province, China.
Lisite Science，one of our subsidiaries’leases office and warehouse space from Keenest, a related party, with annual rent of approximately $1,500 (RMB10,000) for one year until July 20, 2021.On July 20, 2021, Lisite Science further extended the lease with Keenest for one more year until July 20, 2022 with annual rent of approximately $295 (RMB2,000).
We believe that this space is adequate for our current and immediately foreseeable operating needs.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings
We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosure
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities
Market Information
Our common stock is currently quoted on OTCQB. Our common stock commenced quotation on the OTCQB under the trading symbol “CPJT”. On February 4, 2016, our symbol was changed to “IINX” to reflect the Company’s name change to Ionix Technology, Inc. Our common stock began trading in April 2015. Because we are quoted on the OTCQB, our common stock may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if it were listed on a national securities exchange.
The following table sets forth the high and low bid prices for our Common Stock per quarter as reported by the OTCQB for the quarterly periods indicated below based on our fiscal year end June 30. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission and may not represent actual transactions.
Fiscal Quarter High Low
First Quarter (Jul. 1, 2018- Sept. 30, 2018) $ 2.50 $ 1.75
Second Quarter (Oct. 1, 2018 - Dec. 31, 2018) 2.47 2.05
Third Quarter (Jan. 1, 2019- Mar. 31, 2019) 3.00 2.50
Fourth Quarter (Apr. 1, 2019- Jun. 30, 2019) 2.70 2.11
First Quarter (Jul. 1, 2019- Sept. 30, 2019) $ 2.00 $ 1.70
Second Quarter (Oct. 1, 2019- Dec. 31, 2019) 1.93 $ 1.33
Third Quarter (Jan. 1, 2020 - Mar. 31, 2020) 1.85 $ 0.95
Fourth Quarter (Apr. 1, 2020 - Jun. 30, 2020) 1.91 $ 0.975
First Quarter (Jul. 1, 2020- Sept. 30, 2020) $ 0.975 $ 0.045
Second Quarter (Oct. 1, 2020- Dec. 31, 2020) 0.18 0.02
Third Quarter (Jan. 1, 2021- Mar. 31, 2021) 0.403 0.11
Fourth Quarter (Apr. 1, 2021 - Jun. 30, 2021) 0.301 0.40
Record Holders
As of June 30, 2021, the approximate number of registered holders of our common stock was 214. As of June 30, 2021, there were 164,041,058 shares of common stock issued and outstanding and there were 5,000,000 shares of preferred stock issued and outstanding. There were no shares of common stock subject to outstanding warrants, and there were no shares of common stock subject to outstanding stock options.
Dividends
On November 30, 2015, the Company’s board of directors and majority of its shareholders approved a 3:1 forward stock split which increased the Company’s issued and outstanding shares of common stock from 33,001,000 to 99,003,000 (the “Forward Split”). The Forward Split was approved by FINRA and took effect on the market on February 4, 2016. The Forward Split shares were payable upon surrender of certificates to the Company’s transfer agent.
We have not declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.
Securities Authorized for Issuance under Equity Compensation Plans
None.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
The following sets forth certain information concerning securities which were sold or issued by us without the registration of the securities under the Securities Act of 1933 in reliance on exemptions from such registration requirements within the past three years:
On February 17, 2016, the Company entered into a subscription agreement to sell 5,000,000 preferred shares (the “Preferred Shares”) for $50,000 in cash ($0.01 per share). No commissions were paid to any broker or third party for this transaction.
On January 31, 2020, the Company issued a total of 12,775 shares of common stock to Power Up Lending Group Ltd for the conversion of debt in the principal amount of $12,000 according to the conditions of the convertible note dated as July 25, 2019.
In December 2019, the Company engaged Maxim Group LLC (“Maxim”) for financial advisory and investment banking services to assist the Company in articulating its growth strategy to the investment community and up-list its securities to a National Securities Exchange. On February 10, 2020, the Company issued 150,000 shares of common stock valued at $262,500 to Maxim Group LLC as a part of its compensation for the services. On May 19, 2020, the Company and Maxim mutually agreed to terminate all rights and obligations under their agreements and in May 2020, Maxim returned 75,000 shares of common stock shares to the Company for cancellation.
On February 18, 2020, the Company issued a total of 11,834 shares of common stock to Power Up Lending Group Ltd for the conversion of debt in the principal amount of $10,000 according to the conditions of the convertible note dated as July 25, 2019.
On February 28, 2020, the Company issued a total of 15,448 shares of common stock to Power Up Lending Group Ltd for the conversion of debt in the principal amount of $12,000 according to conditions of the convertible note dated as July 25, 2019.
On May 19, 2020, the Company issued a total of 16,484 shares of common stock to Power Up Lending Group Ltd for the conversion of debt in the principal amount of $15,000 according to the conditions of the convertible note dated as July 25, 2019.
On May 29 2020, the Company issued a total of 19,724 shares of common stock to Power Up Lending Group Ltd for the conversion of debt in the principal amount of $15,000 according to the conditions of the convertible note dated as July 25, 2019.
On June 18, 2020, the Company issued a total of 20,000 shares of common stock to Crown Bridge Partners, LLC for the conversion of debt in the principal amount of $3,615.6 according to the conditions of the convertible note dated as November 12, 2019.
On July 9, 2020, the Company issued a total of 42,079 shares of common stock to Power Up Lending Group Ltd for the conversion of debt in the principal amount of $20,000 according to the conditions of the convertible note dated as July 25, 2019.
On July 13, 2020, the Company issued a total of 68,500 shares of common stock to Labrys Fund, LP for the conversion of debt in the principal amount of $37,503.75 according to the conditions of the convertible note dated as January 10, 2020.
On August 19, 2020, the Company issued a total of 222,891 shares of common stock to Power Up Lending Group Ltd for the conversion of debt in $19,000.00 of the principal amount of the Note together with $4,916.22 of accrued and unpaid interest thereto, totaling $23,916.22 according to the conditions of the convertible note dated as July 25, 2019.
On August 20,2020, the Company issued a total of 600,000 shares of common stock to Labrys Fund, LP for the conversion of debt in the principal amount of $54,180 according to the conditions of the convertible note dated as January 10, 2020. The remaining principal balance due under this convertible note after these conversions is $55,166.
On September 1, 2020, the Company issued a total of 75,000 shares of common stock to Firstfire Global Opportunities Fund LLC for the conversion of debt in the principal amount of $10,200 according to the conditions of the convertible note dated as September 11, 2019.
On September 14, 2020, the Company issued a total of 350,000 shares of common stock to Firstfire Global Opportunities Fund LLC for the conversion of debt in the principal amount of $13,550 according to the conditions of the convertible note dated as September 11, 2019.The remaining principal balance due under this convertible note after these conversions is $141,250.
On September 24, 2020, the Company issued a total of 568,182 shares of common stock to Morningview Financial, LLC for the conversion of debt in the principal amount of $15,000 according to the conditions of the convertible note dated as November 20, 2019.The remaining principal balance due under this convertible note after these conversions is $150,000.
On September 24, 2020, the Company issued a total of 400,000 shares of common stock to Labrys Fund, LP for the conversion of debt in the principal amount of $6,065.11 according to the conditions of the convertible note dated as January 10, 2020.
On October 12, 2020, the Company issued a total of 650,000 shares of common stock to Labrys Fund, LP for the conversion of debt in the principal amount of $14,844.39 according to the conditions of the convertible note dated as January 10, 2020.
On October 16, 2020, the Company issued a total of 181,500 shares of common stock to Labrys Fund, LP for the conversion of debt in the principal amount of $2,722.5 according to the conditions of the convertible note dated as January 10, 2020.
On October 16, 2020, the Company issued a total of 1,200,000 shares of common stock to Firstfire Global Opportunities Fund LLC for the conversion of debt in the principal amount of $14,100 according to the conditions of the convertible note dated as September 11, 2019.
On October 16, 2020, the Company issued a total of 500,000 shares of common stock to Crown Bridge Partners, LLC for the conversion of debt in the principal amount of $3,500 according to the conditions of the convertible note dated as November 12, 2019.
On October 19, 2020, the Company issued a total of 2,112,478 shares of common stock to Labrys Fund, LP for the conversion of debt in the principal amount of $31,674.16 according to the conditions of the convertible note dated as January 10, 2020.
On October 29, 2020, the Company issued a total of 2,500,000 shares of common stock to Firstfire Global Opportunities Fund LLC for the conversion of debt in the principal amount of $31,000 according to the conditions of the convertible note dated as September 11, 2019.
On December 5, 2020, the Company issued a total of 20,370,000 shares of common stock to five Chinese citizen subscribers for an aggregate purchase price of $305,500 at $0.015 per share, according to the conditions of the five subscription agreements dated as November 20, 2020 signed by the between the Company and the subscribers.
On December 21, 2020, the Company issued a total of 1,500,000 shares of common stock to FirstFire Global Opportunities Fund, LLC for the full exercise of the warrants, according to the conditions of the convertible note dated as September 11, 2019.
On December 29, 2020, the Company issued a total of 8,499,999 shares of common stock to four Chinese citizen subscribers for an aggregate purchase price of $127,500 at $0.015 per share, according to the conditions of the four subscription agreements dated as December 9, 2020 and December 28, 2020 signed by the between the Company and the subscribers.
On December 31, 2020, the Company issued a total of 447,762 shares of common stock (the “First Commitment Shares”) and 1,119,402 shares of common stock (the “Second Commitment Shares”) to Labrys Fund, LLP related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date.
On January 13, 2021, the Company issued a total of 7,000,000 shares of common stock to a Chinese citizen subscriber for an aggregate purchase price of $105,000 at $0.015 per share, according to the conditions of the subscription agreement dated as January 13, 2021 between the Company and the subscriber.
On March 10, 2021, the Company issued 417,000 shares of common stock (the “First Commitment Shares”) and 1,042,000 shares of common stock (the “Second Commitment Shares”) to Labrys Fund, LLP related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date.
On July 8, 2021, the Company issued 300,000 shares of common stock (the “First Commitment Shares”) and 1,042,000 shares of common stock (the “Second Commitment Shares”) to FirstFire Global Opportunities Fund, LLC related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date.
The sales of the above securities were exempt from registration under the Securities Act of 1933, as amended (Securities Act), in reliance upon Section 4(2) of the Securities Act, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.
Exemption From Registration. The shares of Common Stock and Preferred Stock referenced herein were issued in reliance upon one of the following exemptions:
(a)The shares of Common Stock referenced herein were issued in reliance upon the exemption from securities registration afforded by the provisions of Section 4(2) of the Securities Act of 1933, as amended, ("Securities Act"), based upon the following: (a) each of the persons to whom the shares of Common Stock were issued (each such person, an "Investor") confirmed to the Company that it or he is an "accredited investor," as defined in Rule 501 of Regulation D promulgated under the Securities Act and has such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities, (b) there was no public offering or general solicitation with respect to the offering of such shares, (c) each Investor was provided with certain disclosure materials and all other information requested with respect to the Company, (d) each Investor acknowledged that all securities being purchased were being purchased for investment intent and were "restricted securities" for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act and (e) a legend has been, or will be, placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.
(b)The shares of common stock referenced herein were issued pursuant to and in accordance with Rule 506 of Regulation D and Section 4(2) of the Securities Act. We made this determination in part based on the representations of the Investor(s), which included, in pertinent part, that such Investor(s) was an “accredited investor” as defined in Rule 501(a) under the Securities Act, and upon such further representations from the Investor(s) that (a) the Investor is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the Investor agrees not to sell or otherwise transfer the purchased securities unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the Investor either alone or together with its representatives has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, and (d) the Investor has no need for the liquidity in its investment in us and could afford the complete loss of such investment. Our determination is made based further upon our action of (a) making written disclosure to each Investor prior to the closing of sale that the securities have not been registered under the Securities Act and therefore cannot be resold unless they are registered or unless an exemption from registration is available, (b) making written descriptions of the securities being offered, the use of the proceeds from the offering and any material changes in the Company’s affairs that are not disclosed in the documents furnished, and (c) placement of a legend on the certificate that evidences the securities stating that the securities have not been registered under the Securities Act and setting forth the restrictions on transferability and sale of the securities, and upon such inaction of the Company of any general solicitation or advertising for securities herein issued in reliance upon Rule 506 of Regulation D and Section 4(2) of the Securities Act.
(c) The shares of Common Stock referenced herein were issued pursuant to and in accordance with Rule 903 of Regulation S of the Act. We completed the offering of the shares pursuant to Rule 903 of Regulation S of the Act on the basis that the sale of the shares was completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the shares. Each investor represented to us that the investor was not a "U.S. person", as defined in Regulation S, and was not acquiring the shares for the account or benefit of a U.S. person. The agreement executed between us and each investor included statements that the securities had not been registered pursuant to the Act and that the securities may not be offered or sold in the United States unless the securities are registered under the Act or pursuant to an exemption from the Act. Each investor agreed by execution of the agreement for the shares: (i) to resell the securities purchased only in accordance with the provisions of Regulation S, pursuant to registration under the Act or pursuant to an exemption from registration under the Act; (ii) that we are required to refuse to register any sale of the securities purchased unless the transfer is in accordance with the provisions of Regulation S, pursuant to registration under the Act or pursuant to an exemption from registration under the Act; and (iii) not to engage in hedging transactions with regards to the securities purchased unless in compliance with the Act. All certificates representing the shares were or upon issuance will be endorsed with a restrictive legend confirming that the securities had been issued pursuant to Regulation S of the Act and could not be resold without registration under the Act or an applicable exemption from the registration requirements of the Act.
Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers
None.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. Selected Financial Data
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
The following discussion should be read in conjunction with our audited financial statements and notes thereto included herein. We caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or our behalf. We disclaim any obligation to update forward-looking statements.
Results of Operation for the Years Ended June 30, 2021 and 2020
Calendar year 2020 and the first half of 2021 was challenging and disruptive for the world, with the COVID-19 pandemic adding to the headwind of an already challenging global economy. Almost no industry was unaffected by the pandemic. The unprecedentedly adverse global operating environment had a major impact on our business and reversed the Company's continuous growth.
The operations of the Company During the year ended June 30, 2021 experienced some minor delays and were adversely affected by the COVID-19 travel restrictions and lockdowns implemented nationwide. Decreases in revenue and operating profits during the year ended June 30, 2021 were a result of the unprecedented adverse market condition caused by the outbreak of COVID-19 pandemic since January 2020.
During the year ended June 30, 2021, the significant decrease in sales revenue is mainly attributable to the adverse impact of COVID-19 in various ways, from the continuous weakening demand in the PRC consumer market and continuous competition from other brands against the goods which the Company has been trading coupled with the unfavorable and ongoing adverse trading environment and the disruptions caused by COVID-19, limitation of marketing efforts, disruptions of product delivery to the Company’s customers due to certain customers 's reducing their budgets or delaying their procurement plans, leading to a decrease in the new orders placed with the Company. The Company believes that such effect is temporary and will not have major impact on the long-term performance of the Company.
During the year ended June 30, 2021, the gross profit decreases were mainly attributable to: (1) the drop in production volume of the Company as a result of the adverse impact of the COVID-19; (2) in certain areas in Northeast of China, the PRC government, as a preventive measure in response to the COVID-19, had implemented the movement control order which involved prohibition of movement of people which adversely affected the Company’s supply chain in raw materials. And the poor market sentiment has led to the significant drop in demand and selling prices of the Company’s products, while the prices of glass, which is the raw material for the Company's production, have increased substantially due to tightened supply of glass from the supply chain reform in the PRC; and (3) in addition to the economic contraction caused by prolonged outbreak of COVID-19, the fact that Changchun City where Fangguan Electronics was located had endured dozens of blizzards in November and December 2020, also led to the slow-down of the businesses of the Company.
Nevertheless, the Company survived and thrived against all odds: besides carrying out a more stringent cost control through the Company’s persistent effort in cost reduction, the Company implemented the workplace safety measures as per government guidelines, including work from home arrangements whenever appropriate, and protected the client relationships by maintaining communication and working with them to deal with the delaying or canceling orders. With the gradual stabilization of the domestic photoelectric display industry, the Company would anticipate a steady increase in the sales of LCM and LCD.
Based on the Company’s well-established reputation in the market, management of the Company believes that the demand for the Company's products would increase during the economic rebounding and the overall financial and business positions of the Company would remain sound, and the Company is well positioned to take advantage of any upturn in the market.
Considering that such effects of COVID-19 is temporary and will not have major impact on the long-term performance of the Company, the Company believes that the increase in turnover and gross profit margin of the Company as caused by the gradual recovery of the economy of PRC would maintain in the future. As such, the Company remains cautiously optimistic about its sustainable development.
During the first half of calendar year 2021, the anticipated recovery in the economy of PRC realized gradually while the negative impact of COVID-19 remains. The Company maintains optimistic cautious and is paying close attention to the evolving development of, and the disruption to business and economic activities caused by the COVID-19 outbreak and evaluates its impact on the financial position, cash flows and operating results of the Company. Given the dynamic nature of the COVID-19 outbreak, it is not practicable to provide a reasonable estimate of its impacts on the Company’s financial position, cash flows and operating results at the present.
Revenues
During the year ended June 30, 2021, COVID-19 continued to affect the operational and financial performance of the Company. However, the gradual recovery of revenue that was ever expected previously already realized.
During the year ended June 30, 2021 and 2020, total revenues were $14,328,326 and $20,599,228 respectively. The total revenues decreased by $6,270,902 or 30% from the year ended June 30, 2020 to the year ended June 30, 2021.
Among the significant decrease of $6,270,902 in total revenues for the year ended June 30, 2021, the decrease of $3,998,841 came from the decrease in revenue of Fangguan Electronics which was acquired on December 27, 2018 The decrease during the year ended June 30, 2021 can be directly attributed to the fact that in certain cities and provinces the continuous outbreak of COVID-19 induced the numerous shutdowns and commercial activities suspensions which have made the significantly adverse effects on the business of the Company. In addition, the decrease in total revenues during the year ended June 30, 2021 was partially attributed to the decreases of $2,374,200 in service contract and smart energy segments as compared with the year ended June 30, 2020.as under the negative impact of COVID-19 on service contract business, none of any new contracts were signed while majority of the existing contracts in this business segment had been completed.
The decrease in total revenues during the year ended June 30, 2021 was partially offset by the increase in revenues of $1,084,083 sourced from lithium battery - related business which was the new business segment established by the Company in 2021.
Cost of Revenue
Cost of revenues included the cost of raw materials, labor, depreciation, overhead and finished products purchased.
During the year ended June 30, 2021 and 2020, the total cost of revenues was $12,050,402 and $17,506,433 respectively. The total cost of revenues decreased by $5,456,031 or 31% from the year ended June 30, 2020 to the year ended June 30, 2021.
Among the significant decrease of $5,456,031 in total cost of revenues for the year ended June 30, 2021, the decrease of $3,649,199 came from the decrease in cost of revenue of Fangguan Electronics which was acquired on December 27, 2018. In addition, the decrease in total cost of revenues during the year ended June 30, 2021 was partially attributed to the decreases of $2,065,078 in cost of revenue of service contract and smart energy segments as compared with the year ended June 30, 2020.
The decrease in cost of revenues can be directly attributed to the decrease of revenues.
The decrease in total cost of revenues during the year ended June 30, 2021 was partially offset by the increase in cost of revenues of $982,814 sourced from lithium battery - related business which was the new business segment established by the Company in 2021.
Gross Profit
During the year ended June 30, 2021 and 2020, the gross profit was $2,277,924 and $3,092,795, respectively.
The gross profit decreased by 26% from the year ended June 30, 2020 to the year ended June 30, 2021. Our gross profit margin maintained stable as it was 15.9% during the year ended June 30, 2021 as compared to 15.0% for the year ended June 30, 2020.
Selling, General and Administrative Expenses
Our selling, general and administrative expenses are mainly comprised of payroll expenses, transportation, office expense, professional fees, freight and shipping costs, rent, and other miscellaneous expenses.
During the year ended June 30, 2021 and 2020, selling, general and administrative expenses were $1,372,589 and $1,937,054 respectively.
The decrease in selling, general and administrative expenses can be attributed to the stricter cost control during the year ended June 30, 2021.
Research and Development Expenses
Our research and development expenses are mainly comprised of payroll expenses of research staff, costs of materials used for research and other miscellaneous expenses.
During the year ended June 30, 2021 and 2020, research and development expenses were $598,338 and $805,570 respectively. All research and development expenses were incurred by Fangguan Electronics (a variable interest entity of the Company since December 27, 2018).
The decrease in research and development expenses during the year ended June 30, 2021 can be attributed to the decrease of materials expenditures used for research during the year ended June 30, 2021.
Other Incomes (Expenses)
Other expenses consisted of interest expense, net of interest income. Other incomes consisted primarily of subsidy income and gain on extinguishment of debt, net of loss on extinguishment of debt. Change in fair value of derivative liability was an expense for the year ended June 30, 2021 and an income for the year ended June 30, 2020.
During the year ended June 30, 2021 and 2020, other incomes (expenses) were $(731,080) and $(455,040) respectively. The other expenses increased by $276,040 or 61% from the year ended June 30, 2020 to the year ended June 30, 2021.
The difference of interest expense was mainly due to the decrease of debt discount as the convertible notes either approached the maturity date or were settled during the year ended June 30, 2021 as compared with the corresponding period of 2020.
The subsidy income was government subsidies received by Fangguan Electronics and Baileqi Electronic during the year ended June 30, 2021 and 2020.
The change in fair value of derivative liability can be attributed to the fact that stock price of the Company were more volatile during the year ended June 30, 2021 as compared with corresponding period of 2020.
The gain on extinguishment of debt of $202,588 during the year ended June 30, 2021 can be primarily attributed to the gain of $459,227 from settlement of four convertible notes (including warrants and all accrued and unpaid interests), offset by loss of $256,639 from the conversion of convertible notes to 9,470,630 common shares in the principal amount of $273,200 for the year ended June 30, 2021. The loss on extinguishment of debt can be attributed to the conversion of convertible notes in the principal amount of $170,516 during the year ended June 30, 2020.
Net Income (Loss)
During the year ended June 30, 2021 and 2020, our net income (loss) was $(406,607) and $(277,668), respectively. The total net loss increased by $128,939 or 46% from the year ended June 30, 2020 to the year ended June 30, 2021.
The significant increase in net loss from the year ended June 30, 2020 to the year ended June 30, 2021 is primarily attributed to: (1) a decrease in the Company’s revenue by approximately 30% resulting from the disruption of the Company’s business operations caused by the COVID-19; (2) a significant increase in non-recurring other expenses such as change in fair value of derivative liability; and offset by (3) a decrease in the Company’s operating expenses by approximately 28% resulting from cost saving measures including the reduction in salary, rent and R&D expenditures etc. Excluding the aforementioned non-recurring change in fair value of derivative liability, the increase (decrease) of the net income from the year ended June 30, 2020 to the year ended June 30, 2021 would be changed from ($ 0.1) million into approximately $0.7 million instead.
Liquidity and Capital Resources
Cash Flow from Operating Activities
During the year ended June 30, 2021, net cash used in operating activities was $578,073 compared to the cash provided by operating activities of $936,479 for the year ended June 30, 2020. The change was mainly due to a decrease of $128,939 in net income and an increase of $1,496,437 in cash outflow from changes in operating assets and liabilities in the year ended June 30, 2021 compared to the year ended June 30, 2020.
Cash Flow from Investing Activities
During the year ended June 30, 2021, net cash used in investing activities was $189,974 compared to net cash provided by investing activities of $50,492 during the year ended June 30, 2020. The change was primarily due to the fact that there were proceeds from sale of equipment at the amount of $244,189 during the year ended June 30, 2020 while proceeds from sale of equipment was merely $15,687 during the year ended June 30, 2021.
Cash Flow from Financing Activities
During the year ended June 30, 2021, cash provided by financing activities was $38,557 compared to net cash used in financing activities of $190,591 during the year ended June 30, 2020. The change was primarily due to the further advances from the major shareholders of the Company, the proceeds from issuance of promissory notes ,and the proceeds from issuance of common stock for private placement during the year ended June 30, 2021.
As of June 30, 2021, we have a working capital of $3,009,020.
Our total current liabilities as of June 30, 2021 were $9,886,398 and mainly consisted of $904,832 for short-term bank loans, $4,942,881 in accounts payable, the amount due to related parties of $3,053,818 advance from customers of $334,101 and the self-amortized promissory notes of $533,316. The Company’s major shareholder is committed to providing for our minimum working capital needs for the next 12 months, and we do not expect the previous related party loan be payable for the next 12 months. However, we do not have a formal agreement that states any of these facts. The remaining balance of our current liabilities relates to audit and consulting fees and such payments are due on demand and we expect to settle such amounts on a timely basis based upon shareholder loans to be granted to us in the next 12 months.
Future Financings
We consider taking on long-term or short-term debt from financial institutions in the immediate future. Besides for the bank funding, we are dependent upon our director and the major shareholder to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, we may not be able to implement our plan of operations. The financial statements do not include any adjustments related to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.
We will require approximately $430,000 to fund our working capital needs as follows:
Audit and accounting 220,000
Legal Consulting fees 70,000
Salary and wages 100,000
Edgar/XBRL filing, transfer agent and miscellaneous 40,000
Total $ 430,000
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies
While our significant accounting policies are more fully described in Note 2 to our financial statements, we believe the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis
Revenue recognition
The Company adopted the new accounting standard, ASC 606, Revenue from Contracts with Customers, and all the related amendments (new revenue standard) to all contracts using the modified retrospective method beginning on July 1, 2018. The adoption did not result in an adjustment to the retained earnings as of June 30, 2018. The comparative information was not restated and continued to be reported under the accounting standards in effect for those periods. The adoption of the new revenue standard has no impact on either reported sales to customers or net earnings.
The Company bases its estimates of return on historical results, taking into consideration the type of customers, the type of transactions and the specifics of each arrangement.
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
· identify the contract with a customer;
· identify the performance obligations in the contract;
· determine the transaction price;
· allocate the transaction price to performance obligations in the contract; and
· recognize revenue as the performance obligation is satisfied.
Under these criteria, for revenues from sale of products, the Company generally recognizes revenue when its products are delivered to customers in accordance with the written sales terms. For service revenue, the Company recognizes revenue when services are performed and accepted by customers.
Comprehensive income
ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.
Accounts receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer’s financial condition, the customer’s credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers.
Use of Estimates
The Company’s consolidated financial statements have been prepared in accordance with US GAAP. This 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 reported amounts of revenue and expenses during the reporting period. The significant areas requiring the use of management estimates include, but are not limited to, the allowance for doubtful accounts receivable, estimated useful life of intangible assets, provision for staff benefits, recognition and measurement of deferred income taxes and valuation allowance for deferred tax assets. Although these estimates are based on management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately differ from those estimates and such differences may be material to our consolidated financial statements.
Foreign currencies translation
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.
The reporting currency of the Company is the United States Dollar ("US$"). The Company’s subsidiaries in the People’s Republic of China (“PRC”) maintain their books and records in their local currency, the Renminbi Yuan ("RMB"), which is the functional currency as being the primary currency of the economic environment in which these entities operate.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. Stockholders’ equity is translated at historical rates. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.
The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the consolidated financial statements are as follows:
Balance sheet items, except for equity accounts 6.4601 7.0795
Items in statements of comprehensive income (loss) and cash flows 6.7698 7.0307
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). Under this guidance, lessees will be required to recognize on the balance sheet a lease liability and a right-of-use asset for all leases, with the exception of short-term leases. The lease liability represents the lessee’s obligation to make lease payments arising from a lease, and will be measured as the present value of the lease payments. The right-of-use asset represents the lessee’s right to use a specified asset for the lease term, and will be measured at the lease liability amount, adjusted for lease prepayment, lease incentives received and the lessee’s initial direct costs. The standard also requires a lessee to recognize a single lease cost allocated over the lease term, generally on a straight-line basis. The new guidance is effective for fiscal years beginning after December 15, 2018. ASU 2016-02 is required to be applied using the modified retrospective approach for all leases existing as of the effective date and provides for certain practical expedients. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this new standard on its consolidated statements and related disclosures.
In February 2018, FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. ASU 2018-02 provides entities the option to reclassify certain "stranded tax effects" resulting from the recent US tax reform from accumulated other comprehensive income ("AOCI") to retained earnings. Under the ASU, reporting entities will select an accounting policy to either reclassify all stranded tax effects caused by tax reform from AOCI to retained earnings, or continue recycling stranded effects (including those caused by tax reform) through earnings in future periods. Further, disclosure of either policy is required in all cases. The reclassification from AOCI to retained earnings is presented in the statement of shareholders equity. The ASU is effective for all entities in fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted for public business entities for which financial statements have not yet been issued, and for all other entities for which financial statements have not yet been made available for issuance. Entities have the option to record the reclassification either retrospectively to each period in which the income tax effects of tax reform are recognized, or at the beginning of the annual or interim period in which the amendments are adopted. The Company determined that the adoption of this new standard has no material impact on its consolidated statements and related disclosures.
Compensation-Stock Compensation. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvement to Nonemployee Share-based Payment Accounting to amend the accounting for share-based payment awards issued to nonemployees. Under the revised guidance, the accounting for awards issued to nonemployees will be similar to the model for employee awards. The update is effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company adopted this new standard effective on January 1, 2019. The adoption of ASU 2018-07 did not have a material impact on the Group’s consolidated financial statements.
Fair Value Measurement. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. Under the guidance, public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The guidance is effective for all entities for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years, but entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The Company is currently in the process of evaluating the impact of the adoption of this guidance on its consolidated financial statements.
Contractual Obligations
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data
IONIX TECHNOLOGY, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Statements
Page
Reports of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of June 30, 2021 and 2020
Consolidated Statements of Comprehensive Income for the years ended June 30, 2021 and
Consolidated Statements of Stockholders’ Equity for the years ended June 30, 2021 and 2020
Consolidated Statements of Cash Flows for the years ended June 30, 2021 and 2020
Notes to Consolidated Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
To the Stockholders and Board of Directors of
Ionix Technology, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Ionix Technology, Inc. and subsidiaries ("the Company") as of June 30, 2021 and the related consolidated statements of comprehensive income (loss), stockholders' equity and cash flows for each of the year ended June 30, 2021 and related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2021, and the results of its operations and its cash flows for the year ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Valuation of Derivative Liabilities for Conversion Features in Convertible Debt
Description of the Matter: At June 30, 2021, the Company’s derivative liability was $nil. As described in Note 2 to the consolidated financial statements, the Company records a derivative liability for embedded conversion features by performing a valuation of the conversion features using the Black-Scholes model. The use of the Black-Scholes model requires the Company to determine appropriate inputs to put into the model. Auditing the valuation of the derivative liability requires testing and analysis of the underlying estimates and assumptions the Company used as inputs in the Black-Scholes model.
How We Addressed the Matter: Our audit procedures consisted of testing the key inputs that were used in the Black-Scholes model by calculating our own internal valuation of the derivative liability and comparing to what was recorded by the Company.
/s/ TAAD, LLP.
We have served as the Company's auditor since 2021.
Diamond Bar, California
September 29, 2021
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Ionix Technology, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Ionix Technology, Inc. and subsidiaries ("the Company") as of June 30, 2020, and the related consolidated statements of comprehensive loss, stockholders' equity and cash flows for the year ended June 30, 2020 and related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020, and the results of its operations and its cash flows for the year ended June 30, 2020, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ Prager Metis CPAs, LLC
We have served as the Company's auditor since 2018.
Hackensack, New Jersey
September 29, 2020
IONIX TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2021 June 30, 2020
ASSETS
Current Assets:
Cash and cash equivalents $ 731,819 $ 1,285,373
Notes receivable 76,743 125,798
Accounts receivable 4,936,974 3,273,141
Inventory 5,454,371 3,263,850
Advances to suppliers - non-related parties 782,481 540,259
- related parties 434,200 357,577
Prepaid expenses and other current assets 478,830 320,296
Total Current Assets 12,895,418 9,166,294
Property, plant and equipment, net 6,792,315 6,573,937
Intangible assets, net 1,508,583 1,424,404
Long-term prepaid expenses 491,015
Deferred tax assets 50,105 20,743
Total Assets $ 21,737,436 $ 17,185,378
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term bank loan $ 904,832 $ 2,034,735
Accounts payable 4,942,881 2,637,792
Advance from customers 334,101 43,077
Promissory notes payable, net of debt discount and loan cost 533,316
Convertible notes payable, net of debt discount and loan cost 514,390
Derivative liability 276,266
Due to related parties 3,053,818 1,716,919
Accrued expenses and other current liabilities 117,450 359,577
Total Current Liabilities 9,886,398 7,582,756
Total Liabilities 9,886,398 7,582,756
COMMITMENT AND CONTINGENCIES
Stockholders’ Equity:
Preferred stock, $.0001 par value, 5,000,000 shares authorized,
5,000,000 shares issued and outstanding
Common stock, $.0001 par value, 395,000,000 and 195,000,000 shares authorized
as of June 30, 2021 and 2020 respectively,
164,041,058 and 114,174,265 shares issued and outstanding as of June 30, 2021
and 2020 respectively 16,404 11,417
Additional paid in capital 10,786,792 9,243,557
Retained earnings (accumulated deficit) (144,409 ) 262,198
Accumulated other comprehensive income (loss) 749,790 (357,011 )
Total Stockholders' Equity attributable to the Company 11,409,077 9,160,661
Noncontrolling interest 441,961 441,961
Total Stockholders’ Equity 11,851,038 9,602,622
Total Liabilities and Stockholders’ Equity $ 21,737,436 $ 17,185,378
The accompanying notes are an integral part of these consolidated financial statements.
IONIX TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
For the Years Ended
June 30,
Revenues (See Note 2 and Note 10 for related party amounts) $ 14,328,326 $ 20,599,228
Cost of Revenues (See Note 10 for related party amounts) 12,050,402 17,506,433
Gross profit 2,277,924 3,092,795
Operating expenses
Selling, general and administrative expense 1,372,589 1,937,054
Research and development expense 598,338 805,570
Total operating expenses 1,970,927 2,742,624
Income (loss) from operations 306,997 350,171
Other income (expense):
Interest expense, net of interest income (346,404 ) (666,976 )
Subsidy income 60,368 105,995
Change in fair value of derivative liability (647,632 ) 151,899
Gain (loss) on extinguishment of debt 202,588 (45,958 )
Total other income (expense) (731,080 ) (455,040 )
Income (loss) before income tax expense (benefit) (424,083 ) (104,869 )
Income tax expense (benefit) (17,476 ) 172,799
Net income (loss) (406,607 ) (277,668 )
Other comprehensive income (loss)
Foreign currency translation adjustment 1,106,801 (311,171 )
Comprehensive income (loss) 700,194 (588,839 )
Less: Comprehensive income attributable to noncontrolling interest
Comprehensive income (loss) attributable to common stockholders of the Company $ 700,194 $ (588,839 )
Earnings (Loss) Per Share - Basic $ (0.00 ) $ (0.00 )
Weighted average number of common shares outstanding - Basic 138,654,876 114,077,157
Earnings (Loss) Per Share - Diluted $ (0.00 ) $ (0.00 )
Weighted average number of common shares outstanding - Diluted 138,336,691 113,928,477
The accompanying notes are an integral part of these consolidated financial statements.
IONIX TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Preferred Stock Common Stock Additional Retained
Earnings Accumulated Other
Number of
Shares Amount Number of
Shares Amount Paid-in
Capital (Accumulated
Deficit) Comprehensive
Income (loss) Non-controlling
interest Total
Balance at June 30, 2020 5,000,000 $ 500 114,174,265 $ 11,417 $ 9,243,557 $ 262,198 $ (357,011 ) $ 441,961 $ 9,602,622
Issuance of common stock for conversion of
convertible notes 9,470,630 846,197 847,144
Issuance of common stock for exercise
of warrants 1,500,000 66,878 67,028
Issuance of common stock as commitment
shares for promissory note 3,026,164 154,910 155,213
Issuance of common stock for private
placement 35,869,999 3,587 534,413 538,000
Settlement of warrants in relation to
extinguishment of debt 0 (59,163 ) (59,163 )
Net income (loss) 0 (406,607 ) (406,607 )
Foreign currency translation adjustment 0 1,106,801 1,106,801
Balance at June 30, 2021 5,000,000 $ 500 164,041,058 $ 16,404 $ 10,786,792 $ (144,409 ) $ 749,790 $ 441,961 $ 11,851,038
Preferred Stock Common Stock Additional
Accumulated Other
Number of
Shares Amount Number of
Shares Amount Paid-in
Capital Retained
Earnings Comprehensive
Income (loss) Non-controlling
interest Total
Balance at June 30, 2019 5,000,000 $ 500 114,003,000 $ 11,400 $ 8,829,487 $ 539,866 $ (45,840 ) $ 441,961 $ 9,777,374
Stock warrants issued with convertible notes 0 147,492 147,492
Issuance of common stock for advisory
services 75,000 131,243 131,250
Issuance of common stock for conversion of
convertible notes 96,265 135,335 135,345
Net loss 0 (277,668 ) (277,668 )
Foreign currency translation adjustment 0 (311,171 ) (311,171 )
Balance at June 30, 2020 5,000,000 $ 500 114,174,265 $ 11,417 $ 9,243,557 $ 262,198 $ (357,011 ) $ 441,961 $ 9,602,622
The accompanying notes are an integral part of these consolidated financial statements.
IONIX TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended
June 30,
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (406,607 ) $ (277,668 )
Adjustments required to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization 706,896 752,251
Deferred taxes (26,121 ) 32,268
Stock compensation for advisory services 131,250
Change in fair value of derivative liability 647,632 (151,899 )
Loss (gain) on extinguishment of debt (202,588 ) 45,958
Non-cash interest 253,863 500,675
Gain on disposal of property and equipment (9,724 ) (51,369 )
Changes in operating assets and liabilities:
Accounts receivable - non-related parties (1,288,243 ) 262,427
Accounts receivable - related parties 383,031 332,483
Inventory (1,791,686 ) 17,664
Advances to suppliers - non-related parties (181,710 ) (417,459 )
Advances to suppliers - related parties (40,401 ) (96,541 )
Prepaid expenses and other current assets (590,529 ) (59,004 )
Accounts payable 1,958,294 (15,600 )
Advance from customers 273,770 (68,248 )
Accrued expenses and other current liabilities (263,950 ) (709 )
Net cash provided by (used in) operating activities (578,073 ) 936,479
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment (203,308 ) (193,697 )
Acquisition of intangible assets (2,353 )
Proceeds received from sale of equipment 15,687 244,189
Net cash provided by (used in) investing activities (189,974 ) 50,492
CASH FLOWS FROM FINANCING ACTIVITIES
Notes receivable 58,322 (9,156 )
Proceeds from bank loans (2,034,735 ) 2,760,036
Repayment of bank loans 770,355 (3,271,381 )
Proceeds from issuance of convertible notes payable 722,190
Proceeds from issuance of promissory notes 508,918
Proceeds from issuance of common stock for private placement 538,000
Repayment of convertible notes payable (537,922 ) (46,374 )
Proceeds from (repayment of) loans from related parties 735,619 (345,816 )
Net cash provided by (used in) financing activities 38,557 (190,501 )
Effect of exchange rate changes on cash 175,936 (20,712 )
Net increase (decrease) in cash and cash equivalents (553,554 ) 775,758
Cash and cash equivalents, beginning of year 1,285,373 509,615
Cash and cash equivalents, end of year $ 731,819 $ 1,285,373
Supplemental disclosure of cash flow information
Cash paid for income tax $ 14,483 $ 170,543
Cash paid for interests $ 66,820 $ 140,330
Non-cash investing and financing activities
Issuance of common stock for conversion of convertible notes $ 847,144 $ 135,345
Issuance of 1,500,000 shares of common stock for exercise of warrants $ 67,028 $ 0
Issuance of 3,026,164 shares of common stock as commitment shares for promissory note $ 155,213 $ 0
Issuance of common stock for advisory services $ 0 $ 131,250
The accompanying notes are an integral part of these consolidated financial statements.
IONIX TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2021
NOTE 1 - NATURE OF OPERATIONS
Ionix Technology, Inc. (the “Company” or “Ionix”), formerly known as Cambridge Projects Inc., is a Nevada corporation that was formed on March 11, 2011. By and through its wholly owned subsidiaries and an entity controlled through VIE agreements in China, the Company sells the high-end intelligent electronic equipment, which includes the furnace used in firing for lithium battery , the lithium battery packs,the portable power banks for electronic devices, LCM and LCD screens and provides IT and solution-oriented services in China.
New subsidiaries
On February 7, 2021, the Board of Directors of the Company approved and ratified the incorporation of Shijirun (Yixing) Technology Co., Ltd. (“Shijirun”), a limited liability company formed under the laws of the Peoples Republic of China (PRC) on February 7, 2021. Well Best International Investment Limited, a limited liability company formed under the laws of Hong Kong Special Administrative Region (“Well Best”), and a wholly owned subsidiary of the Company, is the sole shareholder of Shijirun. As a result, Shijirun is an indirect, wholly-owned subsidiary of the Company. Shijirun will head up the Company’s advance into the new energy industry focusing on developing and producing high-end intelligent new energy equipment from Yixing City, Jiangsu Province, China.
On March 30, 2021, the Board of Directors of Ionix Technology, Inc. approved and ratified the incorporation of Huixiang Energy Technology (Suzhou) Co., Ltd. (“Huixiang Energy”), a limited liability company formed under the laws of the Peoples Republic of China (PRC) on March 18, 2021. Well Best is the sole shareholder of Huixiang Energy. As a result, Huixiang Energy is an indirect, wholly-owned subsidiary of the Company. Huixiang Energy conducts research and development of next generation advanced battery technologies, manufacture and sales of relevant battery products, including the solid-state rechargeable lithium ion battery for next generation energy storage systems. Huixiang Energy also on the operation of battery packs, battery systems and electric vehicles sharing business with its own internet sharing platform relating to the electric vehicles (online EV hailing services) and its relevant batteries and battery systems. Huixiang Energy will operate in Suzhou City, Jiangsu Province, China.
Authorized share increase
On May 6, 2021, the Board of Directors and the holders of the majority of issued and outstanding voting securities of the Company approved an amendment (the “Amendment”) to our Articles of Incorporation to increase the authorized number of shares of common stock from 200,000,000 to 400,000,000 shares consisting of: (i) 395,000,000 shares of common stock, par value $0.0001 per share (“Common Stock”); and (ii) 5,000,000 shares of preferred stock par value $0.0001 per share (“Preferred Stock”) (the “Authorized Share Increase”) and related Certificate of Amendment to Articles of Incorporation. The approval was made in accordance with Sections 78.320 and 78.390 of the Nevada Revised Statues, which provide that a corporation’s articles may be amended by written consent of the stockholders representing at least a majority of the voting power. The Amendment was filed with the Nevada Secretary of State on June 7, 2021.
Acquisition
On December 27, 2018, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with Jialin Liang and Xuemei Jiang, each of whom are shareholders (the “Shareholders”) of Changchun Fangguan Electronics Technology Co., Ltd. (“Fangguan Electronics”). Pursuant to the terms of the Purchase Agreement, the Shareholders, who together own 95.14% of the ownership rights in Fangguan Electronics, agreed to execute and deliver the Business Operation Agreement, the Equity Interest Pledge Agreement, the Equity Interest Purchase Agreement, the Exclusive Technical Support Service Agreement (the “Services Agreement”) and the Power of Attorney, all together dated December 27, 2018 are referred to the “VIE Agreements”, to the Company in exchange for the issuance of an aggregate of 15,000,000 shares of the Company’s common stock, par value $.0001 per share, thereby causing Fangguan Electronics to become the Company’s variable interest entity. Together with VIE agreements, the Shareholders also agreed to convert shareholder loan of RMB 30 million (approximately $4.4 million) to capital and make cash contribution of RMB 9.7 million (approximately $1.4 million) to capital. The entirety of the transaction will hereafter be referred to as the “Transaction”. As a result of the Transaction, the Company is able to exert effective control over Fangguan Electronics and receive 100% of the net profits or net losses derived from the business operations of Fangguan Electronics. Fangguan Electronics manufactures and sells Liquid Crystal Module (" LCM") and LCD screens in China based in Changchun City, Jilin Province, People’s Republic of China. (See Note 4).
The Transaction was accounted for as a business combination using the acquisition method of accounting. The assets, liabilities and the operations of Fangguan Electronics subsequent to the Transaction date were included in the Company’s consolidated financial statements.
NOTE 2- BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s audited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Basis of consolidation
The consolidated financial statements include the accounts of Ionix, its wholly owned subsidiaries and an entity which the Company controls 95.14% and receives 100% of net income or net loss through VIE agreements. All significant inter-company balances and transactions have been eliminated upon consolidation.
The subsidiaries of ionix are as follows:
Well Best International Investment Limited
Welly Surplus International Limite
Shijirun (Yixing) Technology Co., Ltd
Huixiang Energy Technology (Suzhou) Co., Ltd
Changchun Fangguan Photoelectric Display Technology Co. Ltd
Dalian Shizhe New Energy Technology Co., Ltd
Shenzhen Baileqi Electronic Technology Co., Ltd
Lisite Science Technology (Shenzhen) Co., Ltd
Changchun Fangguan Electronics Technology Co., Ltd(VIE)
Noncontrolling Interests
The Company follows FASB ASC Topic 810, “Consolidation,” governing the accounting for and reporting of noncontrolling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of this standard indicate, among other things, that NCIs (previously referred to as minority interests) be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially-owned consolidated subsidiary be allocated to NCIs even when such allocation might result in a deficit balance.
The net income (loss) attributed to NCIs was separately designated in the accompanying statements of comprehensive income (loss). Losses attributable to NCIs in a subsidiary may exceed an NCI’s interests in the subsidiary’s equity. The excess attributable to NCIs is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCI balance. The primary beneficiary receives 100% of the income and losses of the VIE as disclosed in Note 4, therefore no income or loss is allocated to NCI.
Use of Estimates
The Company’s consolidated financial statements have been prepared in accordance with US GAAP and this 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 reported amounts of revenue and expenses during the reporting period. The significant areas requiring the use of management estimates include, but are not limited to, the allowance for doubtful accounts receivable and advance to suppliers, the valuation of inventory, provision for staff benefit, the useful lives of property and equipment and intangible assets, the impairment of long-lived assets, recognition and measurement of deferred income taxes and valuation allowance for deferred tax assets. Although these estimates are based on management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately differ from those estimates and such differences may be material to our consolidated financial statements.
Cash and cash equivalents
Cash consists of cash on hand and cash in bank. Cash equivalents represent investment securities that are short-term, have high credit quality and are highly liquid. Cash equivalents are carried at fair market value and consist primarily of money market funds.
Accounts Receivable
Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer's financial condition, the customer’s credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions may be taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of June 30, 2021 and June 30, 2020, the Company has accounts receivable balance from non-related party of $4,936,974 and $3,273,141, net of allowance for doubtful accounts of $152,995 and $139,609, respectively. No bad debt expense was recorded during the year ended June 30, 2021 and 2020.
Inventories
Inventories consist of raw materials, working-in-process and finished goods. Inventories are valued at the lower of cost or net realizable value. We determine cost on the basis of the weighted average method. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are written down or written off. Although we believe that the assumptions we use to estimate inventory write-downs are reasonable, future changes in these assumptions could provide a significantly different result.
Advances to suppliers
Advances to suppliers represent prepayments for merchandise, which were purchased but had not been received. The balance of the advances to suppliers is reduced and reclassified to inventories when the raw materials are received and pass quality inspection.
Property, plant and equipment
Property, plant and equipment are recorded at cost less accumulated depreciation and any impairment. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and location for its intended use. Repairs and maintenance costs are normally expensed as incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the asset, the expenditure is capitalized as an additional cost of the asset.
When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the statement of comprehensive income (loss) in the reporting period of disposition.
Depreciation is calculated on a straight-line basis over the estimated useful life of the assets after taking into account their respective estimated residual value. The estimated useful life of the assets is as follows:
Buildings
10 - 20 years
Machinery and equipment
5 - 10 years
Office equipment
3 - 5 years
Automobiles
5 years
Intangible assets
Land use right is recorded as cost less accumulated amortization. Land use rights represent the prepayments for the use of the parcels of land in the PRC where the Company’s production facilities are located, and are charged to expense over their respective lease periods of 50 years. According to the laws of the PRC, the government owns all of the land in the PRC. Company or individuals are authorized to use the land only through land use rights granted by the PRC government for a certain period (usually 50 years).
Purchased intangible assets are recognized and measured at fair value upon acquisition. Intangible assets acquired separately and with finite useful lives are carried at costs less accumulated amortization and any accumulated impairment losses. Amortization for intangible assets with finite useful lives is provided on a straight-line basis over their estimated useful lives. Alternatively, intangible assets with indefinite useful lives are carried at cost less any subsequent accumulated impairment losses. The estimated useful lives of the intangible assets are as follows:
Land use right
50 years
Computer software
2-5 years
Gains or losses arising from derecognition of the intangible asset are measured at the difference between the net disposal proceeds and the carrying amount of the assets and are recognized in the statement of comprehensive income (loss) when the asset is disposed.
Impairment of long-lived assets
In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.
Revenue recognition
The Company adopted the new accounting standard, ASC 606, Revenue from Contracts with Customers, and all the related amendments (new revenue standard) to all contracts using the modified retrospective method beginning on July 1, 2018. The adoption did not result in an adjustment to the retained earnings as of June 30, 2018. The comparative information was not restated and continued to be reported under the accounting standards in effect for those periods. The adoption of the new revenue standard has no impact on either reported sales to customers or net earnings.
The Company estimates return based on historical results, taking into consideration the type of customers, the type of transactions and the specifics of each arrangement.
Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:
· identify the contract with a customer;
· identify the performance obligations in the contract;
· determine the transaction price;
· allocate the transaction price to performance obligations in the contract; and
· recognize revenue as the performance obligation is satisfied.
Under these criteria, for revenues from sale of products, the Company generally recognizes revenue when its products are delivered to customers in accordance with the written sales terms. The control of the products is transferred to the customer upon receipt of goods by the customer. For service revenue, the Company recognizes revenue when services are performed and accepted by customers.
The following tables disaggregate our revenue by major source for the year ended June 30, 2021 and 2020, respectively:
For the Year Ended June 30,
Sales of LCM and LCD screens - Non-related parties $ 13,203,190 $ 17,470,966
Sales of LCM and LCD screens - Related parties 713,008
Sales of batteries and battery-related equipments 1,084,082
Sales of portable power banks 1,709,799
Service contracts 41,054 705,455
Total $ 14,328,326 $ 20,599,228
All the operating entities of the Company are domiciled in the PRC. All the Company’s revenues are derived in the PRC during the year ended June 30, 2021 and 2020.
Cost of revenues
Cost of revenues includes cost of raw materials purchased, inbound freight cost, cost of direct labor, depreciation expense and other overhead. Write-down of inventory for lower of cost or net realizable value adjustments is also recorded in cost of revenues.
Related parties and transactions
The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, "Related Party Disclosures" and other relevant ASC standards.
Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.
Transactions between related parties commonly occurring in the normal course of business are considered to be related party transactions. Transactions between related parties are also considered to be related party transactions even though they may not be given accounting recognition. While ASC does not provide accounting or measurement guidance for such transactions, it requires their disclosure nonetheless.
Income taxes
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and discloses in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
As of June 30, 2021 and June 30, 2020, the Company did not have any significant unrecognized uncertain tax positions.
Comprehensive income (loss)
Comprehensive income (loss) is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. Comprehensive income (loss) for the periods presented includes net income (loss), change in unrealized gains (losses) on marketable securities classified as available-for-sale (net of tax), foreign currency translation adjustments, and share of change in other comprehensive income of equity investments one quarter in arrears.
Leases
In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on balance sheet and disclose key information about the leasing arrangements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months.
The new standard is effective for us on July 1, 2019, with early adoption permitted. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company adopted the new standard on July 1, 2019 and use the effective date as our date of initial application. Consequently, financial information is not provided for the dates and periods before July 1, 2019. The new standard provides a number of optional expedients in transition. The Company elected the package of practical expedients which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs.
The new standard has no material effect on our consolidated financial statements as the Company does not have a lease with a term longer than 12 months as of June 30, 2021 (See Note 5).
Earnings (losses) per share
Basic earnings (losses) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings (losses) per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental shares issuable upon exercise of stock options and warrants and conversion of convertible debt. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share or increase a net income per share.
The reconciliation of our basic to diluted weighted average common shares follows:
For the Years Ended
June 30
Basic weighted average common shares 138,654,876 114,077,157
Effect of potentially dilutive securities
- Warrants (318,185 ) (148,680 )
- Convertible notes
Diluted weighted average common shares 138,336,691 113,928,477
During the year ended June 30, 2021,the Company had outstanding convertible notes and warrants which represent 1,096,705 shares of commons stock respectively. These shares of common stock were excluded from the computation of diluted earnings per share since their effect would have been antidilutive.
During the year ended June 30, 2020, the Company had outstanding convertible notes and warrants which represent 899,753 shares of commons stock, among which 670,587 shares of common stock for convertible notes were excluded from the computation of diluted earnings per share since their effect would have been antidilutive.
Foreign currencies translation
The reporting currency of the Company is the United States Dollar (“US$”). The Company’s subsidiaries in the People’s Republic of China (“PRC”) maintain their books and records in their local currency, the Renminbi Yuan (“RMB”), which is the functional currency as being the primary currency of the economic environment in which these entities operate.
In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. Stockholders’ equity is translated at historical rates. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of stockholders’ equity.
Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of comprehensive income (loss).
The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the consolidated financial statements are as follows:
June 30, 2021 June 30, 2020
Balance sheet items, except for equity accounts 6.4601 7.0795
Year Ended June 30,
Items in statements of comprehensive income (loss) and cash flows 6.7698 7.0307
Fair Value of Financial Instruments
The carrying value of the Company’s financial instruments: cash and cash equivalents, accounts receivable, inventory, prepayments and other receivables, accounts payable, income tax payable, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.
The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:
Level 1: Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;
Level 2: Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and
Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.
Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
The Company has the derivative liabilities measured at fair value on a recurring basis which are valued at level 3 measurement (See Note 13).
Convertible Instruments
The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”.
Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.
The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.
The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.
Common Stock Purchase Warrants
The Company classifies as equity any contracts that require physical settlement or net-share settlement or provide a choice of net-cash settlement or settlement in the Company’s own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC 815-40 ("Contracts in Entity's Own Equity"). The Company classifies as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).
Recent accounting pronouncements
The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting standards that are issued.
Fair Value Measurement. In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. Under the guidance, public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The guidance is effective for all entities for Calendar years beginning after December 15, 2019 and for interim periods within those Calendar years, but entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The Company is currently in the process of evaluating the impact of the adoption of this guidance on its consolidated financial statements.
In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (“ASU 2020-01”), which is intended to clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The guidance is effective for public entities for Calendar years beginning after December 15, 2020 and interim periods within those Calendar years and all other entities for Calendar years beginning after December 15, 2021 and interim periods within those Calendar years, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on the Company’s consolidated financial statements.
COVID-19
The Company’s operations are affected by the recent and ongoing outbreak of the coronavirus disease 2019 (COVID-19) which in March 2020, was declared a pandemic by the World Health Organization. The COVID-19 outbreak is causing lockdowns, travel restrictions, and closures of businesses. The Company’s business has been negatively impacted by the COVID-19 coronavirus outbreak to certain extent.
From late January 2020 to the middle of March 2020, the Company had to temporarily suspend our manufacturing activities due to government restrictions. During the temporary business closure period, our employees had very limited access to our manufacturing facilities and the shipping companies were not available and as a result, the Company experienced difficulty delivering our products to the customers on a timely basis. In addition, due to the COVID-19 outbreak, some of the customers or suppliers may experience financial distress, delay or default on their payments, reduce the scale of their business, or suffer disruptions in their business due to the outbreak.
As of the date of this filing, the COVID-19 coronavirus outbreak in China appears to have slowed down and most provinces and cities have resumed business activities under the guidance and support of the government. However, there is still significant uncertainty regarding the possibility of a second wave of infections, and the breadth and duration of business disruptions related to COVID-19, which could continue to have material impact to the Company’s operations. Moreover, the COVID-19 resurgence which occurred early May 2021 would cause one and off traffic restrictions and lockdowns and put numerous business negotiations and sales contracts signing on hold. It would also have adverse impacts on our supply chains. Currently we keep our continuous attention on the situation of the COVID-19, assess and react actively to its impacts on our future business continuity plans or whether material resource constraints in implementing these plans. Up to the date of this report, the assessment is still in progress.
NOTE 3 - VARIABLE INTEREST ENTITY
The VIE contractual arrangements
On December 27, 2018, the Company entered into VIE agreements with two shareholders of Fangguan Electronics to control 95.14% of the ownership rights and receive 100% of the net profit or net losses derived from the business operations of Fangguan Electronics. In exchange for VIE agreements and additional capital contribution, the Company issued 15 million shares of common stock to two shareholders of Fangguan Electronics. (See Note 1).
The transaction was accounted for as a business combination using the acquisition method of accounting. The assets, liabilities and the operations of Fangguan Electronics subsequent to the acquisition date were included in the Company’s consolidated financial statements.
Through power of attorney, equity interest purchase agreement, and equity interest pledge agreement, 95.14% of the voting rights of Fangguan Electronics’ shareholders have been transferred to the Company so that the Company has effective control over Fangguan Electronics and have the power to direct the activities of Fangguan Electronics that most significantly impact its economic performance.
Through business operation agreement with the shareholders of VIE, the Company shall direct the business operations of Fangguan Electronics, including, but not limited to, adopting corporate policy regarding daily operations, financial management, and employment, and appointment of directors and senior officers.
Through the exclusive technical support service agreement with the shareholders of VIE, the Company shall provide VIE with necessary technical support and assistance as the exclusive provider. And at the request of the Company, VIE shall pay the performance fee, the depreciation and the service fee to the Company. The performance fee shall be equivalent to 5% of the total revenue of VIE in any Calendar year. The depreciation amount on equipment shall be determined by accounting rules of China. The Company has the right to set and revise annually this service fee unilaterally with reference to the performance of VIE.
The service fee that the Company is entitled to earn shall be the total business incomes of the whole year minus performance fee and equipment depreciation. This agreement allows the Company to collect 100% of the net profits of the VIE. Except for technical support, the Company did not provide, nor does it intend to provide, any financial or other support either explicitly or implicitly during the periods presented to its variable interest entity.
If facts and circumstances change such that the conclusion to consolidate the VIE has changed, the Company shall disclose the primary factors that caused the change and the effect on the Company’s financial statements in the periods when the change occurs.
There are no restrictions on the consolidated VIE’s assets and on the settlement of its liabilities and all carrying amounts of VIE’s assets and liabilities are consolidated with the Company’s financial statements. In addition, the net income of Fangguan Electronics after Fangguan Electronics became the VIE of the Company is free of restrictions for payment of dividends to the shareholders of the Company.
Assets of Fangguan Electronics that are collateralized or pledged are not restricted to settle its own obligations. The creditors of Fangguan Electronics do not have recourse to the primary beneficiary’s general credit.
Risks associated with the VIE structure
The Company believes that the contractual arrangements with its VIE and respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:
· revoke the business and operating licenses of the Company’s PRC subsidiary and its VIE;
· discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and its VIE;
· limit the Company’s business expansion in China by way of entering into contractual arrangements;
· impose fines or other requirements with which the Company’s PRC subsidiary and its VIE may not be able to comply;
· require the Company or the Company’s PRC subsidiary and its VIE to restructure the relevant ownership structure or operations; or
· restrict or prohibit the Company’s use of the proceeds from public offering to finance the Company’s business and operations in China.
The Company’s ability to conduct its business through its VIE may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate its VIE in its consolidated financial statements as it may lose the ability to exert effective control over its VIE and its respective shareholders and it may lose the ability to receive economic benefits from its VIE. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiary and its VIE. There has been no change in facts and circumstances to consolidate the VIE. The following financial statement amounts and balances of its VIE were included in the accompanying consolidated financial statements after elimination of intercompany transactions and balances:
Balance as of
June 30, 2021 Balance as of
June 30, 2020
Cash and cash equivalents $ 702,979 $ 1,266,426
Notes receivable 76,743 125,798
Accounts receivable - non-related parties 3,638,354 3,069,629
Inventory 4,899,831 2,639,839
Advances to suppliers - non-related parties 749,975 530,670
Prepaid expenses and other current assets 62,251 58,103
Total Current Assets 10,130,133 7,690,465
Property, plant and equipment, net 6,787,525 6,568,874
Intangible assets, net 1, 508,583 1,424,404
Deferred tax assets 50,105 20,743
Total Assets $ 18,476,346 $ 15,704,486
Short-term bank loan $ 904,832 $ 2,034,735
Accounts payable 3,960,792 2,637,792
Advance from customers 150,110 27,501
Due to related parties 2,349,518 1,407,145
Accrued expenses and other current liabilities 49,968 61,856
Total Current Liabilities 7,415,220 6,169,029
Total Liabilities $ 7,415,220 $ 6,169,029
NOTE 4 - INVENTORIES
Inventories are stated at the lower of cost (determined using the weighted average cost) or net realizable value. Inventories consist of the following:
June 30, 2021 June 30, 2020
Raw materials $ 1,314,020 $ 666,981
Work-in-process 3,367,716 500,331
Finished goods 772,635 2,096,538
Total Inventories $ 5,454,371 $ 3,263,850
The Company recorded no inventory markdown for the years ended June 30, 2021 and 2020.
NOTE 5- OPERATING LEASE
For the year ended June 30, 2021, the Company had two real estate operating leases for office and warehouse under the terms of one year. For the year ended June 30, 2020, the Company had three real estate operating leases for office, warehouses, manufacturing facilities and two boat operating leases under the terms from four months to three years.
Lisite Science Technology (Shenzhen) Co., Ltd ("Lisite Science") leases office and warehouse space from Shenzhen Keenest Technology Co., Ltd. (“Keenest”), a related party, with annual rent of approximately $1,500 (RMB10,000) for one year until July 20, 2020. On July 20, 2020, Lisite Science further extended the lease with Keenest for one more year until July 20, 2021 with annual rent of approximately $1,500 (RMB10,000). (See Note 10).On July 20, 2021, Lisite Science further extended the lease with Keenest for one more year until July 20, 2022 with annual rent of approximately $295 (RMB2,000).
Shenzhen Baileqi Electronic Technology Co., Ltd. ("Baileqi Electronic") leases office and warehouse space from Shenzhen Baileqi Science and Technology Co., Ltd. (“Shenzhen Baileqi S&T”), a related party, with monthly rent of approximately $2,500 (RMB17,525) and the lease period is from June 1, 2019 to May 31, 2020. On June 5, 2020, Baileqi Electronic extended the lease with Shenzhen Baileqi S&T for one more year until May 31, 2021 with monthly rent of approximately $2,500 (RMB17,525). (See Note 10).This lease was not extended when it expired in May 2021.
Dalian Shizhe New Energy Technology Co., Ltd. (“Shizhe New Energy”) leases a boat from a non-related party with monthly rent of approximately $7,200 (RMB50,000) for one year from March 1, 2019 to February 28, 2020. On July 1, 2019, Shizhe New Energy leased another boat from the same non-related party with monthly rent of approximately $7,200 (RMB50,000) for four months from July 10, 2019 to November 10, 2019.
On November 1, 2019, the Company leased an office space located in Dalian, China as its principal executive office under non-cancelable operating lease agreement for three years, which expires through October 31, 2022. The monthly rent is approximately $715 (RMB5,000). The Company adopted the new standard to recognize lease asset and liability for this lease after examining the criteria established. For the year ended June 30, 2020, the Company made $109,563 of fixed cash payments related to operating leases. Non-cash activities involving ROU assets obtained in exchange for lease liabilities were $19,711 for the year ended June 30, 2020, including the impact of adopting the new leases standard.
On June 30, 2020, this lease agreement was early terminated on a mutually agreed basis between the Company and the landlord. The Company paid the lessor a termination fee of approximately $1,400 (RMB10,000). The lease asset and liability were extinguished accordingly and decreased to zero as of June 30, 2020.
The Company made an accounting policy election not to recognize lease assets and liabilities for the leases listed above as all lease terms are 12 months or shorter.
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT, NET
The components of property, plant and equipment were as follows:
June 30, 2021 June 30, 2020
Buildings $ 5,073,335 $ 4,601,685
Machinery and equipment 3,216,474 2,822,686
Office equipment 75,374 67,091
Automobiles 173,090 98,848
Subtotal 8,538,273 7,590,310
Less: Accumulated depreciation (1,745,958 ) (1,016,373 )
Property, plant and equipment, net $ 6,792,315 $ 6,573,937
Depreciation expense related to property, plant and equipment was $676,191 and $723,346 for the year ended June 30, 2021 and 2020, respectively.
As of June 30, 2021 and June 30, 2020, buildings were pledged as collateral for bank loans (See Note 8).
NOTE 7- INTANGIBLE ASSETS, NET
Intangible assets consist of the following:
June 30, 2021 June 30, 2020
Land use right $ 1,580,761 $ 1,442,456
Computer software 29,905 25,039
Subtotal 1,610,666 1,467,495
Less: Accumulated amortization (102,083 ) (43,091 )
Intangible assets, net $ 1,508,583 $ 1,424,404
Amortization expense related to intangible assets was $30,705 and $28,905 for the year ended June 30, 2021 and 2020, respectively.
Fangguan Electronics acquired the land use right from the local government in August 2012 which expires on August 15, 2062. As of June 30, 2021 and June 30, 2020, land use right was pledged as collateral for bank loans (See Note 8).
NOTE 8 - SHORT-TERM BANK LOAN
The Company’s short-term bank loans consist of the following:
June 30, 2021 June 30, 2020
Loan payable to Industrial Bank, due November 2020 (1) $ 0 $ 1,836,288
Loan payable to Industrial Bank, due May 2021 (2) 154,353
Loan payable to Industrial Bank, due June 2021 (2) 44,094
Loan payable to Industrial Bank, due August 2021 (3) 556,508
Loan payable to Industrial Bank, due October2021 (4) 348,324
Total
$ 904,832 $ 2,034,735
(1) On November 19, 2019, Fangguan Electronics entered into a short-term loan agreement with Industrial Bank to borrow approximately US$2.7 million (RMB 18 million) for a year until November 18, 2020 with annual interest rate of 5.22%. The borrowing was collateralized by the Company’s buildings and land use right. In addition, the borrowing was guaranteed by the Company’s shareholder and CEO of Fangguan Electronics, Mr. Jialin Liang, and his wife Ms. Dongjiao Su. On May 20, 2020, Fangguan Electronics partially repaid this bank loan of approximately US$760,000 (RMB5,000,000). On August 28, 2020 and September 21, 2020, Fangguan Electronics further partially repaid this bank loan of approximately US$457,000 (RMB3,000,000) and US$760,000 (RMB5,000,000) respectively. On November 18, 2020, Fangguan Electronics repaid the remaining balance in full of this bank loan of approximately US$760,000 (RMB5,000,000).
(2) During May and Jun 2020, Fangguan Electronics issued two one-year commercial acceptance bills with amounts of approximately US$166,000 (RMB1,092,743) and US$48,000 (RMB312,161) and maturity dates at May 21, 2021 and June 11, 2021 respectively. On May 22, 2020 and June 16, 2020, the two commercial acceptance bills were discounted with Industrial Bank at an interest rate of 3.85% and the balance of the two commercial acceptance bills converted to bank loans with Industrial Bank based on a mutual agreement from both parties. This loan was also secured by the same collateral as the aforementioned RMB18 million loan under the same bank. In May and June 2021, Fangguan Electronics repaid the commercial acceptance bill of approximately US$166,000(RMB1,092,743) and US$48,000 (RMB312,161) in full upon maturity respectively.
(3) During August 2020, Fangguan Electronics issued a one-year commercial acceptance bill with amount of approximately US$556,508 (RMB3,595,096) and maturity date at August 6, 2021. On August 31, 2021, the amount has been repaid in full. During September 2020, Fangguan Electronics issued a six-month commercial acceptance bill with amount of approximately US$464,389 (RMB3,000,000) and maturity date at March 9, 2021. On August 11, 2020 and September 10, 2020, the two commercial acceptance bills were discounted with Industrial Bank at an interest rate of 3.80% and the balance of the two commercial acceptance bills converted to bank loans with Industrial Bank based on a mutual agreement from both parties. This loan was also secured by the same collateral as the above RMB18 million loan under the same bank. In March 2021, Fangguan Electronics repaid the commercial acceptance bill of approximately US$464,389 (RMB3,000,000) in full upon maturity.
(4) During April 2021, Fangguan Electronics issued a six-month commercial acceptance bill with amount of approximately US$348,324(RMB2,250,212) and maturity date at October 13, 2021. On April 13, 2021, the commercial acceptance bill was discounted with Industrial Bank at an interest rate of 3.85% and the balance of the commercial acceptance bill converted to bank loan with Industrial Bank based on a mutual agreement from both parties. This loan was also secured by the same collateral as the above RMB18 million loan under the same bank.
NOTE 9 - STOCKHOLDERS' EQUITY
Stock Issued for Services
The Company engaged Maxim Group LLC (“Maxim”) as its financial advisor to assist the Company in articulating its growth strategy to the investment community and up-list its securities to a National Securities Exchange. On February 10, 2020, the Company issued 150,000 shares of common stock valued at $262,500 based on the quoted market price to Maxim Group LLC as a part of its compensation.
On May 19, 2020, the Company and Maxim mutually agreed to terminate all rights and obligations. Pursuant to the Settlement Agreement dated May 19, 2020, Maxim returned 75,000 shares of common stock valued at $131,250 to the Company for cancellation. The net cost of $131,250 was amortized in full during the year ended June 30, 2020.
Stock Issued for Conversion of Convertible Debt
During the year ended June 30, 2021, the Company issued a total of 9,470,630 shares of common stock for the conversion of debt in the principal amount of $273,200 together with all accrued and unpaid interest, according to the conditions of the convertible notes. All these conversions resulted in a total gain on extinguishment of debt of $202,588 for the year ended June 30, 2021. The remaining principal balance due under convertible notes after these conversions and other debt settlements (See Note 13) is zero.
During the year ended June 30, 2020, the Company issued a total of 96,265 shares of common stock for the conversion of debt in the principal amount of $67,615.6 together with all accrued and unpaid interest, according to the conditions of the convertible notes. All these conversions resulted in a total loss on extinguishment of debt of $41,255 for the year ended June 30, 2020.
Stock Issued for Exercise of Warrants
On December 21, 2020, the Company issued a total of 1,500,000 shares of common stock to FirstFire Global Opportunities Fund, LLC for the exercise of warrants in full, according to the conditions of the convertible note dated as September 11, 2019. The exercise of warrants resulted in a loss of $67,028 for the Year ended June 30, 2021. (See Note 13)
Stock Issued for Private Placement
In December 2020, the Company issued a total of 28,869,999 shares of common stock to nine individual subscribers for an aggregate purchase price of $433,000 at $0.015 per share, according to the conditions of the subscription agreements signed between the Company and subscribers.
On January 13, 2021, the Company issued a total of 7,000,000 shares of common stock to one individual subscriber for purchase price of $105,000 at $0.015 per share, according to the conditions of the subscription agreement signed by both parties.
Stock Issued as Commitment Shares for Promissory Note
On December 21, 2020, the Company issued a self-amortization promissory note to Labrys Fund, L.P in the aggregate principal amount of $300,000. The promissory note is due on or before December 21, 2021 and bears an interest rate of five percent (5%) per annum. The note is not convertible unless in default, as defined in the agreement. The Company agreed to reserve 7,052,239 shares of its common stock for issuance if any debt is converted.
On December 31, 2020, the Company issued 447,762 shares of common stock (the “First Commitment Shares”) and 1,119,402 shares of common stock (the “Second Commitment Shares”) related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date. The Company recorded the First Commitment Shares as debt discount valued at $68,060 based on the quoted market price at issue date and amortized over the term of the promissory note. The Company recorded the Second Commitment Shares at par for the year ended June 30, 2021. (See Note 14)
On March 10, 2021, the Company issued a self-amortization promissory note to Labrys Fund, L.P in the aggregate principal amount of $500,000. The promissory note is due on or before March 10, 2022 and bears an interest rate of five percent (5%) per annum. The note is not convertible unless in default, as defined in the agreement. The Company agreed to reserve 6,562,500 shares of its common stock for issuance if any debt is converted.
On March 10, 2021, the Company issued 417,000 shares of common stock (the “First Commitment Shares”) and 1,042,000 shares of common stock (the “Second Commitment Shares”) related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date. The Company recorded the First Commitment Shares as debt discount valued at $87,153 based on the quoted market price at issue date and amortized over the term of the promissory note. The Company recorded the Second Commitment Shares at par for the year ended June 30, 2021. (See Note 14)
NOTE 10 - RELATED PARTY TRANSACTIONS AND BALANCES
Purchase from related party
During the year ended June 30, 2021, the Company did not purchase from any related party.
During the year ended June 30, 2020, the Company purchased $1,630,684 and $37,393 from Keenest and Shenzhen Baileqi S&T which were owned by the Company’s stockholders who own approximately 1.3% and 0.7% respectively of the Company’s outstanding common stock. The amounts of $1,630,684 (Lisite Science) and $37,393 (Baileqi Electronic) were included in the cost of Revenue for the year ended June 30, 2020.
Advances to suppliers - related parties
Lisite Science made advances of $434,200 and $357,577 to Keenest for future purchases as of June 30, 2021 and June 30, 2020, respectively.
Sales to related party
During the year ended June 30, 2021 and 2020, Baileqi Electronic sold materials of $0 and $713,008 respectively to Shenzhen Baileqi S&T.
Lease from related party
Lisite Science leases office and warehouse space from Keenest, a related party, with annual rent of approximately $1,500 (RMB10,000) for one year until July 20, 2020. On July 20, 2020, Lisite Science further extended the lease with Keenest for one more year until July 20, 2021 with annual rent of approximately $1,500 (RMB10,000). (See Note 5). On July 20, 2021, Lisite Science further extended the lease with Keenest for one more year until July 20, 2022 with annual rent of approximately $295 (RMB2,000).
Baileqi Electronic leases office and warehouse space from Shenzhen Baileqi S&T, a related party, with monthly rent of approximately $2,500 (RMB17,525) and the lease period is from June 1, 2019 to May 31, 2020. On June 5, 2020, Baileqi Electronic further extended the lease with Shenzhen Baileqi S&T for one more year until May 31, 2021 with monthly rent of approximately $2,500 (RMB17,525). (See Note 5). This lease was not extended when it expired in May 2021.
Due to related parties
Due to related parties represents certain advances to the Company or its subsidiaries by related parties. The amounts are non-interest bearing, unsecured and due on demand.
June 30, 2021 June 30, 2020
Ben Wong (1)
$ 143,792 $ 143,792
Yubao Liu (2)
352,236 102,938
Xin Sui (3)
2,016 2,016
Baozhen Deng (4)
45,276 9,437
Jialin Liang (6) (11) 1,844,857 901,460
Xuemei Jiang (7) (10) 554,171 505,685
Shikui Zhang (8)
58,961 28,528
Biao Shang (5)
19,804
Changyong Yang (9)
32,705 23,063
$ 3,053,818 $ 1,716,919
(1) Ben Wong was the former controlling shareholder (before April 20, 2017) of Shinning Glory, which holds majority shares in the Company.
(2) Yubao Liu has been the controlling shareholder of Shinning Glory since April 20, 2017, which holds majority shares in the Company. He also serves as director of the Company.
(3) Xin Sui serves as director of Welly Surplus.
(4) Baozhen Deng is a stockholder of the Company, who owns approximately 0.7% of the Company’s outstanding common stock, and the owner of Shenzhen Baileqi S&T.
(5) Biao Shang is a stockholder of the Company and serves as director of Fangguan Photoelectric.
(6) Jialin Liang is a stockholder of the Company, serves as the president, CEO, and director of Fangguan Electronics and director of the Company.
(7) Xuemei Jiang is a stockholder of the Company and serves as director of both Fangguan Electronics and the Company.
(8) Shikui Zhang is a stockholder of the Company and serves as the general manager of Shizhe New Energy since May 2019.
(9) Changyong Yang is a stockholder of the Company,who owns approximately 1.3% of the Company’s outstanding common stock,and the owner of Keenest.
(10) The liability represents the advances to Fangguan Electronics by Xuemei Jiang at the acquisition date of Fangguan Electronics (December 27, 2018). Thereafter Ms.Jiang neither made any further advance nor was refunded.
(11) At the acquisition date of Fangguan Electronics (December 27, 2018), the advances to Fangguan Electronics by Jialin Liang amounted to be approximately $5.8 million (RMB39,581,883), among which approximately $4.4 million (RMB30,000,000) was used for debt for equity swap by Mr.Liang during the capital increase of Fangguan Electronics occurred in March 2019. Thereafter Mr.Liang continued making advances to Fangguan Electronics.
During the year ended June 30, 2021, after netting off the refund by Fangguan Electronics, Mr Liang 's advance to Fangguan amounted to $983,397, among which $464,000 (RMB 3 million) was the proceeds from a one -year term bank loan that Mr.Liang borrowed in his own name . The loan is guaranteeed by Fangguan Electronics and can solely be used for supplementing the working capital of Fangguan Electronics. Mr. Liang himself bears the interest at 3.85% annually.
During the year ended June 30, 2021, Shenzhen Baileqi S&T paid back Baileqi Electronic directly for the amount of $383,031 (RMB2,474,417). Therefore the equivalent amount of due to Yubao Liu previously offered by Mr.Liu to settle the liability on behalf of Baileqi S&T, was reversed to the current account with Mr.Liu. Considering this reversal,and setting off the further advance by Mr Liu, the net refund to Mr Liu was approximately $133,733 during the year ended June 30, 2021.
During the year ended June 30, 2021, Baozhen Deng advanced $35,839 to Baileqi Electronic. Shikui Zhang advanced approximately $30,433 to Shizhe New Energy. Changyong Yang, a stockholder of the Company, advanced approximately $9,642 to Lisite Science. Biao Shang advanced $19,804 to Fangguan Photoelectric.
During the year ended June 30, 2020, Yubao Liu was refunded $46,312 by Welly Surplus and Well Best after netting off his advances to Well Best. In addition, Yubao Liu agreed to decrease his advances to Well Best of $349,519 (RMB2,474,417) to pay off the trade receivables due from Shenzhen Baileqi S&T to Baileqi Electronic on behalf of Shenzhen Baileqi S&T.
During the year ended June 30, 2020, Baileqi Electronic refunded $5,303 to Baozhu Deng and Baozhen Deng advanced $5,537 to Baileqi Electronic. Shizhe New Energy refunded $625 and $1,869 to Liang Zhang and Zijian Yang respectively. Shikui Zhang advanced $28,528 to Shizhe New Energy. Changyong Yang, a stockholder of the Company, advanced $23,063 to Lisite Science.
NOTE 11- CONCENTRATION
Major customers
Customers who accounted for 10% or more of the Company’s revenues (goods sold and services) and its outstanding balance of accounts receivable are presented as follows:
For the Year Ended
June 30, 2021 As of June 30, 2021
Revenue Percentage of
total revenue Accounts
receivable Percentage of
total accounts
receivable
Customer A $ 2,323,869 16 % $ 0 0 %
Customer B 1,931,936 14 % 0 %
Customer C 1,488,695 10 % 0 %
Total $ 5,744,500 40 % $ 0 0 %
For the Year Ended
June 30, 2020 As of June 30, 2020
Revenue Percentage of
revenue Accounts
receivable Percentage of
accounts
receivable
Customer A $ 3,235,320 16 % $ 648,786 20 %
Customer B 2,168,387 11 % 0 %
Total $ 5,403,707 27 % $ 648,786 20 %
Primarily all customers are located in the PRC.
Major suppliers
The suppliers who accounted for 10% or more of the Company’s total purchases (materials and services) and its outstanding balance of accounts payable are presented as follows:
For the Year Ended
June 30, 2021 As of June 30, 2021
Purchase Percentage of
total purchase Accounts
payable Percentage of
total accounts
payable
Supplier A $ 1,786,674 18 % $ 55,820 1 %
Supplier B 1,151,483 12 % 537,335 11 %
Total $ 2,938,157 30 % $ 593,155 12 %
For the Year Ended
June 30, 2020 As of June 30, 2020
Total Purchase Percentage of
total purchase Accounts
payable Percentage of
total accounts
payable
Supplier A - related party $ 1,630,684 10 % $ 0 0 %
Supplier B 3,053,591 18 % 218,709 8 %
Total $ 4,684,275 28 % $ 218,709 8 %
All suppliers of the Company are located in the PRC.
NOTE 12- INCOME TAXES
The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company operates in United States of America, Hong Kong and the PRC that are subject to taxes in the jurisdictions in which they operate.
United States of America
The Company is registered in the State of Nevada and is subject to the tax laws of United States of America and subject to the corporate tax rate of 21% on its taxable income.
For the year ended June 30, 2021 and 2020, the Company did not generate income in United States of America and no provision for income tax was made. Under normal circumstances, the Internal Revenue Service is authorized to audit income tax returns during a three-year period after the returns are filed. In unusual circumstances, the period may be longer. Tax returns for the years ended June 30, 2016 and after were still open to audit as of June 30, 2021.
Hong Kong
The Company’s subsidiaries, Well Best and Welly Surplus, are registered in Hong Kong and subject to income tax rate of 16.5%. For the year ended June 30, 2021 and 2020, there is no assessable income chargeable to profit tax in Hong Kong.
The PRC
The Company’s subsidiaries in China are subject to a unified income tax rate of 25%. Fangguan Electronics was certified as high-tech enterprises for three calendar years from 2016 to 2019 and is taxed at a unified income tax rate of 15%. Fangguan Electronics has renewed the high-tech enterprise certificate which granted it the tax rate of 15% for the three whole calendar years of 2019 to 2021.
The reconciliation of income tax expense (benefit) at the U.S. statutory rate of 21% to the Company's effective tax rate is as follows:
For the Year Ended June 30,
Tax (benefit) at U.S. statutory rate $ (89,057 ) $ (22,023 )
Tax rate difference between foreign operations and U.S. (31,378 ) (73,374 )
Change in valuation allowance 141,902 287,447
Permanent difference (38,943 ) (19,251 )
Effective tax (benefit) $ (17,476 ) $ 172,799
The provisions for income taxes (benefits) are summarized as follows:
For the Year Ended June 30,
Current $ 8,645 $ 140,531
Deferred (26,121 ) 32,268
Total $ (17,476 ) $ 172,799
The tax effects of temporary differences that give rise to the Company’s net deferred tax assets are as follows:
As of June 30,
Deferred tax assets:
Net operating loss carryforward $ 297,929 $ 439,831
Allowance for doubtful accounts 48,958 44,900
Others 11,947 9,087
358,834 493,818
Less valuation allowance (297,929 ) (439,831 )
Total Deferred tax assets $ 60,905 $ 53,987
Deferred tax liability:
Revenue cutoff $ 10,800 $ 33,244
Total Deferred tax liability $ 10,800 $ 33,244
Net Deferred tax assets $ 50,105 $ 20,743
As of June 30, 2021, the Company has approximately $3,419,353 net operating loss carryforwards available in the U.S., Hong Kong and China to reduce future taxable income which will begin to expire from 2035. It is more likely than not that the deferred tax assets resulted from net operating loss carryforward cannot be utilized in the future because there will not be significant future earnings from the entities which generated the net operating loss. Therefore, the Company recorded a full valuation allowance on its deferred tax assets resulted from net operating loss carryforward as of June 30, 2021.
On December 22, 2017, the “Tax Cuts and Jobs Act” (“The 2017 Tax Act”) was enacted in the United States. Under the provisions of the Act, the U.S. corporate tax rate decreased from 34% to 21%. Accordingly, the Company has re-measured its deferred tax assets on net operating loss carry forwards in the U.S at the lower enacted cooperated tax rate of 21%. However, this re-measurement has no effect on the Company’s income tax expenses as the Company has provided a 100% valuation allowance on its deferred tax assets previously.
Additionally, the 2017 Tax Act implemented a modified territorial tax system and imposing a tax on previously untaxed accumulated earnings and profits (“E&P”) of foreign subsidiaries (the “Toll Charge”). The Toll Charge is based in part on the amount of E&P held in cash and other specific assets as of December 31, 2017. The Toll Charge can be paid over an eight-year period, starting in 2018, and will not accrue interest. The 2017 Tax Act also imposed a global intangible low-taxed income tax (“GILTI”), which is a new tax on certain off-shore earnings at an effective rate of 10.5% for tax years beginning after December 31, 2017 (increasing to 13.125% for tax years beginning after December 31, 2025) with a partial offset for foreign tax credits.
The Company has determined that this one-time Toll Charge has no effect on the Company’s income tax expenses as the Company has no undistributed foreign earnings at either of the two testing dates of November 2, 2017 and December 31, 2017.
For purposes of the inclusion of GILTI, the Company determined that the Company did not have tax liabilities resulting from GILTI for the year ended June 30, 2021 and 2020 due to net operating loss carryforwards available in the U.S. Therefore, there was no accrual of GILTI liability as of June 30, 2021 and June 30, 2020.
The extent of the Company’s operations involves dealing with uncertainties and judgments in the application of complex tax regulations in a multitude of jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state and international tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due.
NOTE 13 - CONVERTIBLE DEBT
Convertible notes
Convertible notes payable balance was zero as of June 30, 2021.
As of June 30, 2020, convertible notes payable consists of:
Note Balance Debt discount Carrying Value
Power Up Lending Group Ltd (1) $ 39,000 $ (1,953 ) $ 37,047
Firstfire Global Opportunities Fund LLC (2) 165,000 (32,909 ) 132,091
Power Up Lending Group Ltd (3) 53,000 (13,995 ) 39,005
Crown Bridge Partners (4) 51,384 (15,095 ) 36,289
Morningview Financial LLC (5) 165,000 (64,416 ) 100,584
BHP Capital NY (6) 91,789 91,789
Labrys Fund, LP (7) 146,850 (69,265 ) 77,585
Total
$ 712,023 $ (197,633 ) $ 514,390
(1) On July 25, 2019, the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $103,000 and received $94,840 in cash on August 1, 2019 after deducting legal fees and other costs. The convertible note bears interest rate at 6% per annum and due on July 25, 2020. The convertible note can be converted into shares of the Company’s common stock at 65% of the average of the two lowest trading prices during the fifteen trading day prior to the conversion date.
During the year ended June 30, 2020, Power Up Lending Group Ltd elected to convert $64,000 of the principal amount of the convertible notes into 76,265 shares of the Company’s common stock. The conversion resulted in a loss on extinguishment of debt of $25,782.
During the year ended June 30, 2021, Power Up Lending Group Ltd elected to convert $39,000 of the principal amount together with $4,916 of accrued and unpaid interest of the convertible notes into 264,970 shares of the Company’s common stock. The conversion resulted in a loss on extinguishment of debt of $32,778. (See Note 9)
The remaining principal balance due under this convertible note after all conversions is zero as of June 30, 2021.
(2) On September 11, 2019, the Company entered into a Securities Purchase Agreement with Firstfire Global Opportunities Fund LLC to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $165,000 and received $143,500 in cash on September 18, 2019 after deducting an original issue discount in the amount of $15,000 (the “OID”), legal fees and other costs. The convertible note bears interest rate at 5% per annum and payable in one year. Conversion price shall be equal to the lower of (i) $2.00 or (ii) 75% multiplied by the lowest traded price of the common stock during the twenty consecutive trading day period immediately preceding the date of the respective conversion.
During the year ended June 30, 2021, Firstfire Global Opportunities Fund LLC elected to convert $68,850 of the principal amount of the convertible notes into 4,125,000 shares of the Company’s common stock. The conversion resulted in a loss on extinguishment of debt of $67,512 (See Note 9).
After the foregoing conversions, on November 12, 2020, the Company paid Firstfire Global Opportunities Fund LLC, the holder of the Company’s convertible debt an aggregate of $130,500 in order to terminate their convertible note dated September 11, 2019, including all accrued and unpaid interest. The payment was made by Yubao Liu on behalf of the Company and the note holder confirmed this full settlement on November 13, 2020. The debt settlement resulted in a gain on extinguishment of debt of $94,928.
The remaining principal balance due under this convertible note after all conversions and settlement is zero as of June 30, 2021.
(3) On November 4, 2019, the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $53,000 and received $47,350 in cash on November 12, 2019 after deducting legal fees and other costs. The convertible note bears interest rate at 6% per annum and due on November 4, 2020. The convertible note can be converted into shares of the Company’s common stock at 65% of the average of the two lowest trading prices during the fifteen trading day prior to the conversion date.
On September 16, 2020, the Company entered into a Note Settlement Agreement with Power Up Lending Group Ltd., the holder of the Company’s convertible debt. The Note Settlement Agreement terminated their convertible note dated November 4, 2019, including all accrued and unpaid interest, after the Company paid an aggregate of $75,000 on September 16, 2020. The debt settlement resulted in a gain on extinguishment of debt of $15,346.
(4) On November 12, 2019, the Company entered into a Securities Purchase Agreement with Crown Bridge Partners, LLC to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount sum up to $165,000 with a purchase price sum up to $156,750. During November 2019, First Tranche of the agreement was executed in the principal amount of $55,000 and the Company received $50,750 in cash on November 15, 2019 after deducting an OID in the amount of $2,750, legal fees and other costs. The convertible note bears interest rate at 5% per annum and due on November 12, 2020. The convertible note can be converted into shares of the Company’s common stock at 75% multiplied by the lowest traded price of the common stock during the twenty consecutive trading day period immediately preceding the date of the respective conversion.
During the year ended June 30, 2020, Crown Bridge Partners, LLC elected to convert $3,615.6 of the principal amount of the convertible notes into 20,000 shares of the Company’s common stock. The conversion resulted in a loss on extinguishment of debt of $15,473.
On October 16, 2020, the Company issued a total of 500,000 shares of common stock to Crown Bridge Partners, LLC for the conversion of debt in the principal amount of $3,500 according to the conditions of the convertible note dated as November 12, 2019. The conversion resulted in a loss on extinguishment of debt of $22,424. (See Note 9)
After the foregoing conversions, on December 7, 2020, the Company paid Crown Bridge Partners, LLC, the holder of the Company’s convertible debt an aggregate of $82,500 in order to terminate their convertible note dated November 12, 2019, including all accrued and unpaid interest. Among the total, payment of $60,000 was made by Yubao Liu on behalf of the Company while the remaining payment of $22,500 was made directly by the Company. The note holder confirmed this full settlement on December 10, 2020. The debt settlement resulted in a gain on extinguishment of debt of $206,377.
The remaining principal balance due under this convertible note after all conversions and settlement is zero as of June 30, 2021.
(5) On November 20, 2019, the Company entered into a Securities Purchase Agreement with Morningview Financial, LLC to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $165,000 and received $153,250 in cash on November 22, 2019 after deducting an OID in the amount of $8,250, legal fees and other costs. The convertible note bears interest rate at 5% per annum and due on November 20, 2020. Conversion price shall be equal to the lower of (i) $2.00 or (ii) 75% multiplied by the lowest traded price of the common stock during the twenty consecutive trading day period immediately preceding the date of the respective conversion.
On September 24, 2020, Morningview Financial, LLC elected to convert $15,000 of the principal amount of the convertible notes into 568,182 shares of the Company’s common stock. The conversion resulted in a loss on extinguishment of debt of $5,907. (See Note 9)
After the foregoing conversions, on November 12, 2020, the Company paid Morningview Financial, LLC, the holder of the Company’s convertible debt an aggregate of $175,000 in order to terminate their convertible note dated November 20, 2019, including all accrued and unpaid interest. The payment was made by Yubao Liu on behalf of the Company and the note holder confirmed this full settlement on November 14, 2020. The debt settlement resulted in a gain on extinguishment of debt of $209,604.
The remaining principal balance due under this convertible note after all conversions and settlement is zero as of June 30 ,2021.
(6) On December 3, 2019, the Company entered into a Securities Purchase Agreement with BHP Capital NY, Inc to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $102,900 and received $95,500 in cash on December 13, 2019 after deducting and OID in the amount of $4,900, legal fees and other costs. The convertible note bears interest rate at 5% per annum and due on December 3, 2020. The convertible note can be converted into shares of the Company’s common stock at 75% of the average of the two lowest trading prices during the fifteen trading day prior to the conversion date.
On April 14, 2020, the Company entered into an Amendment to Securities Purchase Agreement with BHP Capital NY, Inc dated on December 3, 2019. The Company agreed to pay off this note holder in 6 installments of $23,186.79 each, with an aggregate amount of $139,121 (including principal of $137,114 and interest of $2,007). The repayment resulted in a loss on extinguishment of debt of $4,703, which was included in other income and expense in the consolidated statement of comprehensive income (loss) for the year ended June 30, 2020.
In May and June 2020, the Company paid two installments totaling $46,373 (including principal of $45,325 and interest of $1,048) and note payable balance decreased to $91,789 as of June 30, 2020. During the period from July to September 2020, the Company continued to pay 4 installments of an aggregate amount of $92,748 (including principal of $91,789 and interest of $959).
As of the date of this report, the Company has made total six installments payment of an aggregate amount of $139,121 (including principal of $137,114 and interest of $2,007). The note payable balance decreased to zero as of June 30, 2021.
(7) On January 10, 2020, the Company entered into a convertible promissory note with Labrys Fund, LP to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $146,850 and received $137,000 in cash on January 13, 2020 after deducting an OID in the amount of $7,350, legal fees and other costs. The note is due on January 10, 2021 and bears interest at 5% per annum. The conversion price shall be equal to 75% multiplied by the lesser of the lowest closing bid price or lowest traded price of the Common Stock during the twenty (20) consecutive trading day period immediately preceding the date of the respective conversion.
During the year ended June 30, 2021, Labrys Fund, LP elected to convert $146,850 of the principal amount together with all accrued and unpaid interest of the convertible notes into 4,012,478 shares of the Company’s common stock. The conversion resulted in a loss on extinguishment of debt of $128,018. The remaining principal balance due under this convertible note after all conversions is zero as of June 30, 2021. (See Note 9)
All convertible notes aforementioned
For the Year ended June 30, 2021 and 2020, the Company recorded the amortization of debt discount of $138,399 and $500,675 for the convertible notes issued, which were included in other income and expense in the consolidated statement of comprehensive income (loss).
Derivative liability
Upon issuing of the convertible notes, the Company determined that the conversion feature embedded in the notes referred to above that contain a potential variable conversion amount constitutes a derivative which has been bifurcated from the note and accounted for as a derivative liability, with a corresponding discount recorded to the associated debt. The excess of the derivative value over the face amount of the note, if any, is recorded immediately to interest expense at inception.
The derivative liability in connection with the conversion feature of the convertible debt is the only financial liability measured at fair value on a recurring basis.
The change of derivative liabilities is as follows:
Issued during the year ended June 30, 2020
$ 555,696
Converted
(42,308)
Debt settlement
(85,223)
Change in fair value recognized in operations
(151,899)
Balance at June 30, 2020 276,266
Converted (357,868 )
Debt settlement (566,030 )
Change in fair value recognized in operations 647,632
Balance at June 30, 2021 $ 0
The estimated fair value of the derivative instruments was valued using the Black-Scholes option pricing model during the year ended June 30, 2021, using the following assumptions:
Estimated dividends None
Expected volatility 78.55% to 253.30%
Risk free interest rate 0.61% to 0.93%
Expected term 0 to 6 months
The estimated fair value of the derivative instruments was valued using the Black-Scholes option pricing model at issuance date and June 30, 2020, using the following assumptions:
Estimated dividends
None
Expected volatility
55.87% to 78.46%
Risk free interest rate
0.66% to 2.08%
Expected term
0 to 12 months
Warrants
In connection with the issuance of the $165,000 convertible promissory note on September 11, 2019, FirstFire Global Opportunities Fund, LLC is entitled, upon the terms and subject to the limitations on exercise and the conditions set forth in the agreement, at any time on or after the date of issuance hereof to purchase from the Company up to 68,750 shares of common stock. Exercise price shall be $2.40, and the warrants can be exercised within 5 years which is before September 11, 2024.
On December 21, 2020, the Company issued a total of 1,500,000 shares of common stock to FirstFire Global Opportunities Fund, LLC for the exercise of warrants in full. The exercise of warrants resulted in a loss of $67,028 for the Year ended June 30, 2021. After this exercise, FirstFire Global Opportunities Fund, LLC is not entitled to any warrant to purchase shares. (See Note 9)
In connection with the issuance of the $55,000 convertible promissory note on November 12, 2019, Crown Bridge Partners, LLC is entitled, upon the terms and subject to the limitations on exercise and the conditions set forth in the agreement, at any time on or after the date of issuance hereof to purchase from the Company up to 22,916 shares of common stock. Exercise price shall be $2.80, and the warrants can be exercised within 5 years which is before November 12, 2024.
In December 2020, the Company paid a total of $82,500 to fully settle the convertible note dated November 12, 2019 with Crown Bridge Partners, LLC, including all accrued and unpaid interest and unexercised warrants. After this settlement, Crown Bridge Partners, LLC is not entitled to any warrant to purchase shares.
In connection with the issuance of the $165,000 convertible promissory note on November 20, 2019, Morningview Financial LLC is entitled, upon the terms and subject to the limitations on exercise and the conditions set forth in the agreement, at any time on or after the date of issuance hereof to purchase from the Company up to 68,750 shares of common stock. Exercise price shall be $2.80, and the warrants can be exercised within 5 years which is before November 20, 2024.
In November 2020, the Company paid a total of $175,000 to fully settle the convertible note dated November 20, 2019 with Morningview Financial LLC, including all accrued and unpaid interest and unexercised warrants. After this settlement, Morningview Financial LLC is not entitled to any warrant to purchase shares.
In connection with the issuance of the $146,850 convertible promissory note on January 10, 2020, Labrys Fund, LP is entitled, upon the terms and subject to the limitations on exercise and the conditions set forth in the agreement, at any time on or after the date of issuance hereof to purchase from the Company up to 68,750 shares of common stock. Exercise price shall be $2.80, and the warrants can be exercised within 5 years which is before January 10, 2025.
The estimated fair value of the warrants was valued using the Black-Scholes option pricing model at grant date, using the following assumptions:
Estimated dividends
None
Expected volatility
56.23% to 71.08%
Risk free interest rate
1.73% to 1.92%
Expected term
5 years
Since the warrants can be exercised at $2.4 or $2.8 and are not liabilities, the face value of convertible notes was allocated between convertible note and warrant based on the fair values of the conversion feature and warrants. Accordingly, $147,492 was allocated to warrants and recorded in additional paid in capital account during the year ended June 30, 2020.
The details of the outstanding warrants are as follows:
Number of
shares
Weighted Average
Exercise Price
Remaining
Contractual Term
(years)
Outstanding at July 1, 2019
$ 0
Granted
229,166 2.68
Exercised
Cancelled or expired
Outstanding at June 30, 2020 229,166 2.68 4.2 to 4.53
Granted
Exercised or settled (160,416 ) 2.63 4.05 to 4.16
Cancelled or expired
Outstanding at June 30, 2021 68,750 $ 2.80 3.53
NOTE 14- PROMISSORY NOTE
Schedule of promissory note
Note Balance Debt Discount Carrying Value
Labrys Fund, LP (1) $195,000 55,526 139,474
Labrys Fund, LP (2) 500,000 106,158 393,842
Total
$695,000 161,684 533,316
(1) On December 21, 2020, the Company issued a self-amortization promissory note to Labrys Fund, L.P in the aggregate principal amount of $300,000. The promissory note is due on or before December 21, 2021 and bears an interest rate of five percent (5%) per annum. The note is not convertible unless in default, as defined in the agreement. The Company agreed to reserve 7,052,239 shares of its common stock for issuance if any debt is converted. The Company executed and closed the transaction on December 31, 2020 and received $253,500 in cash after deducting an OID in the amount of $30,000, legal fees of $3,000 and other costs of $13,500. The self-amortization promissory note has an amortization schedule of $35,000 payment at each month end beginning on April 23, 2021 through December 21, 2021.
In connection with the issuance of promissory note, on December 31, 2020, the Company issued 447,762 shares of common stock (the “First Commitment Shares”) and 1,119,402 shares of common stock (the “Second Commitment Shares”) related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date. The Company recorded the First Commitment Shares as debt discount valued at $68,060 based on the quoted market price at issue date and amortized over the term of the promissory note. The Company recorded the Second Commitment Shares at par for the year ended June 30, 2021. (See Note 9)
(2) On March 10, 2021, the Company issued a self-amortization promissory note to Labrys Fund, L.P in the aggregate principal amount of $500,000. The promissory note is due on or before March 10, 2022 and bears an interest rate of five percent (5%) per annum. The note is not convertible unless in default, as defined in the agreement. The Company agreed to reserve 6,562,500 shares of its common stock for issuance if any debt is converted. The Company executed and closed the transaction on March 19, 2021 and received $434,000 in cash after deducting an OID in the amount of $50,000, legal fees of $2,500 and other costs of $13,500. The self-amortization promissory note has an amortization schedule of $58,333.33 payment at each month beginning on July 9, 2021 through March 10, 2022.
In connection with the issuance of promissory note, on March 10, 2021, the Company issued 417,000 shares of common stock (the “First Commitment Shares”) and 1,042,000 shares of common stock (the “Second Commitment Shares”) related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date. The Company recorded the First Commitment Shares as debt discount valued at $87,153 based on the quoted market price at issue date and amortized over the term of the promissory note. The Company recorded the Second Commitment Shares at par for the year ended June 30, 2021. (See Note 9)
For the year ended June 30, 2021, the Company recorded the amortization of debt discount of $106,029 for the self-amortization promissory notes issued, which was included in other income and expense in the consolidated statement of comprehensive income (loss).
NOTE 15 - SEGMENT INFORMATION
The Company’s business was classified by management into three reportable business segments (smart energy, photoelectric display and service contracts) before March 31,2021 and into four segments (smart energy, photoeletric display, service contract and lithium battery-related business )after March 31,2021 supported by a corporate group which conducts activities that are non-segment specific. The smart energy reportable segment derives revenue from the sales of portable power banks that is intended to be utilized as a power source for electronic devices such as the iphone, ipad, mp3/mp4 players, PSP gaming systems, and cameras. The photoelectric display reportable segment derives revenue from the sales of LCM and LCD screens manufactured for small devices such as video capable baby monitors, electronic devices such as tablets and cell phones, and for use in televisions or computer monitors. The service contracts reportable segment derives revenue from providing IT and solution-oriented services.The lithium battery -related business reportable segment derives revenue from providing lithium battery packs and furnace used in firing for lithium battery,etc. Unallocated items comprise mainly corporate expenses and corporate assets.
Although all of the Company’s revenue is generated from Mainland China, the Company is organizationally structured along business segments. The accounting policies of each operating segments are same and are described in Note 2, “Summary of Significant Accounting Policies”.
The following tables provide the business segment information for the year ended June 30, 2021 and 2020.
For the Year Ended June 30, 2021
Lithume
battery-related Smart
energy Photoelectric
display Service
contracts Unallocated
items Total
Revenues $ 1,084,083 $ 0 $ 13,203,189 $ 41,054 $ 0 $ 14,328,326
Cost of Revenues 982,814 11,057,298 10,290 12,050,402
Gross profit (loss) 101,269 2,145,891 30,764 2,277,924
Operating expenses 8,590 10,804 1,707,702 29,819 214,012 1,970,927
Income (loss) from operations 92,679 (10,804 ) 438,189 (214,012 ) 306,997
Net income (loss) $ 88,918 $ (10,614 ) $ 445,494 $ 948 $ (931,353 ) $ (406,607 )
For the Year Ended June 30, 2020
Smart
energy Photoelectric
display Service
contracts Unallocated
items Total
Revenues $ 1,709,799 $ 18,183,974 $ 705,455 $ 0 $ 20,599,228
Cost of Revenues 1,630,684 15,431,065 444,684 17,506,433
Gross profit 79,115 2,752,909 260,771 3,092,795
Operating expenses 12,708 1,743,219 33,191 953,506 2,742,624
Income (loss) from operations 66,407 1,009,690 227,580 (953,506 ) 350,171
Net income (loss) $ 58,151 $ 834,284 $ 204,848 $ (1,374,951 ) $ (277,668 )
NOTE 16- COMMITMENTS AND CONTINGENCIES
Lease commitment
Lisite Science leases office and warehouse space from Keenest, a related party, with annual rent of approximately $295 (RMB2,000) until July 20, 2022.
The future minimum lease payments for non-cancelable operating leases held by the Company as of June 30, 2021 was $295, which will be paid in fiscal year ended June 30, 2022.
NOTE 17- SUBSEQUENT EVENTS
Stock Issued as Commitment Shares for Promissory Note
On July 5, 2021, the Company issued a self-amortization promissory note to FIRSTFIRE GLOBAL OPPORTUNITIES FUND, LLC in the aggregate principal amount of $500,000. The promissory note is due on or before July 6, 2022 and bears an interest rate of five percent (5%) per annum. The note is not convertible unless in default, as defined in the agreement. The Company agreed to reserve 6,562,500 shares of its common stock for issuance if any debt is converted. The Company executed and closed the transaction on July 15,2021 and received $437,500 in cash after deducting an OID in the amount of $50,000 and other costs of $12,500. The self-amortization promissory note has an amortization schedule of $58,333.33 payment at each month beginning November 9, 2021 through July 6, 2022.
In connection with the issuance of promissory note, on July 8 , 2021, the Company issued 300,000 shares of common stock (the “First Commitment Shares”) and 1,042,000 shares of common stock (the “Second Commitment Shares”) related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date. The Company records the First Commitment Shares as debt discount valued at $51,000 based on the quoted market price at issue date and amortized over the term of the promissory note and the Second Commitment Shares at par for the three months ended September 30, 2021
END NOTES TO FINANCIAL STATEMENTS

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
Paritz & Company, P.A. ("Paritz"), the independent registered public accounting firm for Ionix Technology, Inc. (the "Company"), announced effective October 16, 2018, that Paritz was acquired by Prager Metis CPA’s LLC (“Prager”), and that all of the employees and partners of Paritz joined Prager.
As a result, effective October 16, 2018, Paritz resigned as the Company’s independent registered public accounting firm. The Company’s Board of Directors engaged Prager to serve as the Company’s independent registered public accounting firm effective October 18, 2018.
The reports of Paritz on the financial statements of the Company as of and for the fiscal years ended June 30, 2018 and 2017, contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope, or accounting principles, except that the audit reports on the financial statements of the Company for the years ended June 30, 2018 and 2017 contained a modification expressing substantial doubt regarding the Company’s ability to continue as a going concern.
During the Company’s fiscal years ended June 30, 2018 and 2017 and the subsequent interim period from July 1, 2018 to October 16, 2018, and in connection with the audit of the Company’s financial statements for such periods, there were no disagreements between the Company and Paritz on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of Paritz, would have caused Paritz to make reference to the subject matter of such disagreements in connection with its audit reports on the Company’s financial statements.
During the Company’s fiscal years ended June 30, 2018 and 2017, and the subsequent interim period from July 1, 2018 to October 16, 2018, there were no reportable events within the meaning of Item 304(a)(1)(v) of Regulation S-K.
During the Company’s fiscal years June 30, 2018 and 2017, and the subsequent interim period from July 1, 2018 to October 16, 2018, the Company did not consult with Prager regarding any of the matters set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K.
The Company has provided Paritz with a copy of the disclosures in the Current Report on Form 8-K filed with the SEC on October 19, 2018 (the “8-K”) and has requested that Paritz furnish it with a letter addressed to the Securities and Exchange Commission stating whether or not Paritz agrees with the statements in the 8-K.
Effective July 16, 2021, the Company dismissed Prager Metis CPAs LLC (“Prager”) as the Company’s independent registered public accounting firm. The decision to change accountants was approved by the Company’s Audit Committee and Board of Directors.
Prager’s report on the Company’s financial statements as of and for the fiscal years ended June 30, 2020 and June 30, 2019 (which included an explanatory paragraph regarding substantial doubt about the Company’s ability to continue as a going concern) did not contain an adverse opinion or a disclaimer of opinion, nor was the report qualified or modified as to uncertainty, audit scope or accounting principles.
As of the date of the dismissal, Prager did not complete its audit of the Company’s consolidated financial statements for the fiscal year ended June 30, 2021. Since Prager’s appointment on October 16, 2018, and through the date of the dismissal, there were (i) no disagreements with Prager on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures that, which disagreements if not resolved to their satisfaction would have caused Prager to make reference to the subject matter of the disagreements in connection with its reports on the Company’s consolidated financial statements for such periods, and (ii) no “reportable events” within the meaning of Item 304(a)(1)(v) of Regulation S-K.
The Company provided Prager with a copy of the disclosures it is making in this Current Report on Form 8-K and requested that Prager furnish a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the statements made herein.
Effective July 16, 2021, the Company engaged TAAD LLP (“TAAD”) as the Company’s new independent registered public accounting firm. The decision to change accountants was approved by the Company’s Audit Committee and Board of Directors.
During the two most recent fiscal years ended June 30, 2021 and June 30, 2020 and during the subsequent interim period from June 30, 2021 through July 16, 2021, neither the Company nor anyone on its behalf consulted TAAD regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report nor oral advice was provided to the Company that TAAD concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue, or (ii) any matter that was either the subject of a “disagreement” or a “reportable event”, each as defined in Regulation S-K Item 304(a)(1)(iv) and 304(a)(1)(v), respectively

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures
As of June 30, 2021, our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this report. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is a process designed by, or under the supervision of, our chief executive officer and chief financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (GAAP). Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company are being made only in accordance with authorization of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Management assessed the effectiveness of the Company’s internal control over financial reporting as of June 30, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in the 2013 Internal Control-Integrated Framework. Based on its evaluation, management has concluded that the Company’s internal control over financial reporting was not effective as of June 30, 2021.
During the year ended June 30, 2021, management identified the following weaknesses, which were deemed to be material weaknesses in internal controls:
1. Due to the size of the Company and available resources, there are limited personnel to assist with the accounting and financial reporting function, which results in a lack of segregation of duties.
2. We did not implement appropriate information technology controls - As at June 30, 2021, the Company retains copies of all financial data and material agreements; however,r there is no formal procedure or evidence of normal backup of the Company's data or off-site storage of data in the event of theft, misplacement, or loss due to unmitigated factors.
Pursuant to Regulation S-K Item 308(b), this Annual Report on Form 10-K does not include an attestation report of our company’s registered public accounting firm regarding internal control over financial reporting.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. A control system, no matter how well designed and operated can provide only reasonable, but not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their cost.
Changes in Internal Control and Financial Reporting
There have been no changes in our internal control over financial reporting in the fiscal year ended June 30, 2021, which were identified in connection with our management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information
On September 29, 2019, our Board of Directors approved and adopted a Code of Ethics which is applicable to our officers, directors, and senior executives, including our Chief Financial Officer, Treasurer and Chief Accounting Officer. This Code embodies our commitment to conduct business in accordance with the highest ethical standards and applicable laws, rules and regulations.
PART III

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance
Identification of Directors and Executive Officers and Term of Office
The following table sets forth the names and ages of our current directors and executive officers and those of our wholly owned direct subsidiary and indirect wholly owned subsidiaries. Our Board of Directors appoints our executive officers. Each director of the Company serves for a term of one year or until the successor is elected at the Company’s annual shareholders’ meeting and is qualified, subject to removal by the Company’s shareholders. Each officer serves, at the pleasure of the Board of Directors, for a term of one year and until the successor is elected at the annual meeting of the Board of Directors and is qualified. There are no family relationships among our directors or executive officers. None of our directors or officers has been affiliated with any company that has filed for bankruptcy within the last five years. The Company is not aware of any proceedings to which any of the Company’s officers or directors, or any associate of any such officer or director, is a party adverse to the Company or any of the Company’s subsidiaries or has a material interest adverse to it or any of its subsidiaries.
Ionix Technology, Inc.
Name Age Position Date of Appointment
Cheng Li Chief Executive Officer, Director, and Chairman of the Board April 25, 2019
Yue Kou Chief Financial Officer May 27, 2016
Yang Yan President and Treasurer March 16, 2020
Yubao Liu Director May 16, 2018
Jialin Liang Director January 22, 2019
Xuemei Jiang Director January 22, 2019
Liyan Wang Independent Director October 27, 2020
Yongping Wang Independent Director May 25, 2020
Zhenyu Wang Independent Director July 31, 2019
Yongsheng Fu Independent Director July 31, 2019
Xiaolin Wei Independent Director October 27, 2020
Subsidiaries:
Welly Surplus International Limited
The following table sets forth the names and ages of Welly Surplus’s directors and executive officers As of June 30, 2021.
Name Age Position Date of Appointment
Xin Sui President and Director December 29, 2016
Well Best International Investment Limited
The following table sets forth the names and ages of Well Best’s directors and executive officers As of June 30, 2021.
Name Age Position Date of Appointment
Qingchun Yang President and Director February 17, 2016
Lisite Science Technology (Shenzhen) Co., Ltd.
The following table sets forth the names and ages of Lisite Science’s directors and executive officers as of June 30, 2021.
Name Age Position Date of Appointment
Yun Yang President and Director November 7, 2016
Shenzhen Baileqi Electronic Technology Co., Ltd
The following table sets forth the names and ages of Baileqi Electronic’s directors and executive officers as of June 30, 2021.
Name Age Position Date of Appointment
Baozhu Deng President and Director November 15, 2017
Changchun Fangguan Photoelectric Display Technology Co. Ltd
The following table sets forth the names and ages of Fangguan Photoelectric’s directors and executive officers as of June 30, 2021.
Name Age Position Date of Appointment
Biao Shang President and Director October 20, 2018
Dalian Shizhe New Energy Technology Co., Ltd
The following table sets forth the names and ages of Dalian Shizhe New Energy’s directors and executive officers As of June 30, 2021.
Name Age Position Date of Appointment
Shikui Zhang President and Director June 28, 2018
Shijirun (Yixing) Technology Co., Ltd
The following table sets forth the names and ages of Shijirun’s directors and executive officers as of June 30, 2021.
Name Age Position Date of Appointment
Yunqiang Xie President and Director February 7, 2021
Huixiang Energy Technology (Suzhou) Co., Ltd
The following table sets forth the names and ages of Huixiang Energy’s directors and executive officers as of June 30, 2021.
Name Age Position Date of Appointment
Hongke Li President and Director March 30, 2021
Information about our Executive Officers
The business experience during the past five years of the person presently listed above as an Officer or Director of the Company is as follows:
Cheng Li - Mr. Cheng Li has participated in the operation and management of the Company since 2015. From April 2013 to March 2015, Mr. Li served as the general Manager and financial controller of Dalian Huanyu Venture Capital Co., Ltd, where he engaged in project approvals, financing, and investments and accumulated substantial experience in the field of high-tech and financing operations. From 1996 to 2012, Mr. Li served in the Ministry of Industry and Information Technology of Jiamusi city, Heilongjiang Province and the Association for Science and Technology of Jiamusi. He received his undergraduate degree in 1980 from Liaoning Normal University.
Yue Kou- Ms. Kou is a member of the Hong Kong Institute of Certified Public Accountants, the Association of Chartered Certified Accountants, and the Chinese Institute of Certified Public Accountants. Ms. Kou has 20 years of solid experience in statutory auditing, international accounting, and publicly listed companies. Ms. Kou started her career as Chief Accountant (1996-1999) with Xinmao Tech Holding Limited, a company in China. From 1999-2002, she was employed as a staff accountant in the Ernst & Young, Beijing Branch focusing on external audit and international accounting conversions. From 2002-2006, she worked as an account manager with China Data Broadcasting Holding Ltd, a publicly listed company on the Hong Kong Stock Exchange. From 2006 to present, Ms. Kou worked as an auditor and financial controller for three different audit firms: (i) Zhongyi (HK) CPA Limited, (ii) Thomas Lee and Partners, and (iii) GDT CPA Limited. Since May 27, 2016, Ms. Kou has worked for Ionix Technology Inc., as the Chief Financial Officer.
Yang Yan - Mr. Yang Yan was graduated from Dongbei University of Finance and Economics in 2002 with a Bachelor Degree of Intenational Finance. From April 2003 to December 2006, he served as the manager of Finance Department in Industrial and Commercial Bank of China, Dalian Xigang Branch which was mainly responsible for international settlement business. From March 2007 to October 2016, he served as the general manager of Dalian Huanyu Venture Capital Ltd., which was mainly responsible for investment and financing business. In October 2016, he joined Ionix Technology, Inc. as vice-president of the Company which was mainly responsible for asset restructuring, mergers, investment and financing and other business activities.
Yubao Liu - Mr. Liu was graduated and acquired a Bachelor degree from Harbin University of Science and Technology in 1996, where he majored in Economic Management, and was honorably entitled as a National Economist in 2002. From 2004 to June of 2012, Mr. Liu was employed by Dalian Carbon Fiber Technology Limited (China), where he served in the position of vice managing director. During this period, Mr. Liu was awarded as an International Enterprise (IEM) Senior Management Specialist. With multiple years of working practice, Mr. Liu has published many papers and participated in the development and testing of national new energy Lithium battery and pure electromobiles, and was also involved in formulating related standards.
From July of 2012 to April of 2018, Mr. Liu was employed by Dalian Yinlong Accounting & Law Firm, where he was assigned to take charge of operational control, internal auditing, and recapitalization among other things. Mr. Liu possesses both intelligence and virtue, persists in exploiting great causes with enthusiasm, and has made a remarkable contribution to the resource reorganization of enterprise. Mr. Liu is considered to be an expert of his field and a valuable asset to the business, which we believe will ensure rapid company growth and enhance the level of business management.
Jialin Liang - Mr. Liang was graduated from Nankai University in 1985 with a major in Microelectronics. Mr. Liang has an extensive experience in microelectronics, and since 2007, serves as general manager of Changchun Fangguan Electronics Technology Co., Ltd. Mr. Liang served as vice general manager of Jilin Zijing Electronics Co., Ltd. from 1997 to 2007. Mr. Liang is a beneficial owner of 8.3% of the Company’s outstanding common stock. Mr. Liang received his bachelor degree in microelectronics from Nankai University.
Xuemei Jiang - Ms. Jiang has over 10 years of experience in finance and taxation. Since 20017, she serves as vice general manager of Changchun Fangguan Electronics Technology Co., Ltd. Ms. Jiang received her bachelor degree in accounting from Jilin Finance and Taxation College in China.
Yongping Wang - Ms. Wang was graduated and acquired a Bachelor’s degree from China Dongbei University of Finance and Economics in 1992 where she majored in Accounting. From 1992 to 1997, Ms. Wang served as Director of accounting for the Bihai Villa Hotel in Dalian. In this role, Ms. Wang was responsible for daily financial management which included ensuring compliance with regulatory matters such as taxation and banking. During this time, Ms. Wang also became qualified as an Intermediate Accountant of China. From 1997 to 2008, Ms. Wang took over management of the financial department of Dalian Daxian Limited (China) where she aided in the financial audits, was responsible for daily financial management, and she spearheaded a complete capital restructuring of the company. With multiple years of practical experience and knowledge under her belt, Ms. Wang began managing her own business. Since 2008, Ms. Wang has been sharing her knowledge of accounting with others through her accountant training studio by teaching accounting principles through the use of practical teaching methods.
Zhenyu Wang - Mr. Wang, has over 20 years of experience in the management and marketing. Since 2011, Mr. Wang has served as a project manager at LG Group, focusing in the overall operation of projects. From 1998 to 2011, Mr. Wang was engaged in marketing work for TCL. Mr. Wang graduated from Jiamusi University in 1998 with a bachelor degree in accounting.
Yongsheng Fu - Mr. Fu has retired from his service in 2015. Prior to his retirement, from 1999 to 2015, he served as vice director of Jiamusi Electric Heater Factory and was responsible for the production and operation of the factory. Mr. Fu graduated from Jiamusi University in 1982 with a bachelor degree in Economic Statistics.
Xiaolin Wei, is originally from Dalian, Liaoning Province, China. Ms. Wei received a Bachelor degree in Advertising and Marketing in 2014 from the British Columbia Institute of Technology (BCIT) in Canada. From 2015 to present, Ms. Wei has acted as the General Manager of Shenzhen Hongbo Fund Management, where she has participated in angel round investments and subsequent stage financing of domestic projects. Ms. Wei has valuable practical experience in the capital market.
Liyan Wang, was graduated from Dongbei University of Finance and Economics majoring in accounting, and has been a senior accountant and senior economic analyst. From October 2012 to present, Wang has worked as Financial Director, Audit Manager, and Manager of audit and supervision department, of the Dalian Branch of China Ping An Life Insurance Co., Ltd. From November 1993 to September 1995, Wang worked at Jiamusi Plastic No. 8 Factory as a cashier. From October 1995 to August 1999, she worked at Jiamusi Great Wall Company as a cost accountant. From April 2000 to October 2012, Wang worked at Shanghai Jiaji Express Co., Ltd. as a financial manager.
Xin Sui - Mr. Sui received a bachelor degree in Finance from Jiamusi University in 2002. Mr. Sui worked as assistant to the Chairman for Dalian Great Wall Economic and Trade Company from 2007 to 2015 where he assisted in the drafting of regulations and laws of the company, ensured the Company was achieving its business goals, and attended business negotiations on behalf of the Chairman. Mr. Sui incorporated Welly Surplus in 2016 to serve as an investment holding company. Mr. Sui is dedicated to seeking financial resources for Welly Surplus.
Qingchun Yang - Mr. Yang was majored in Economic Management and graduated as an Economist in 1987. From 2007 to 2011, Mr. Yang worked as the senior executive in Dalian Huanyu Venture Capital Co. where he was involved in wealth management experiences and high ability of resources integration. In 2012, Mr. Yang co-founded Jiamusi Huanqiu New Energy Company Limited, where he was in charge of drafting strategic plans and operating plan of the company, including the overall human recourse strategy plan, which is suitable for the short-term and long-term development of companies. Since February 17, 2016, Mr. Yanghas worked as the president and director of Well Best.
Yun Yang - Mr. Yang served as the Chief Technology Officer of Shenzhen Jinlisite Science and Technology Corporation Ltd. from July 2007 until May of 2016. Mr. Yang was employed as an assistant to the Chief Engineer of the Shenzhen Jinsiwei Technology Co., Ltd. from 2004 to 2007.From 2016 to present, Mr. Yang has worked as the president and director of Lisite Science Technology(Shenzhen) Co. Ltd. Mr. Yang graduated from Hebei University of Science and Technology wheree majored in Electronic Information Science and Technology and received a bachelor of science degree upon graduation.
Baozhu Deng - Ms. Deng was graduated from Shenzhen University with a bachelor degree in International Trade and English. From March 2010 to October 2014, she worked for Shenzhen Baileqi Science and Technology Co., Ltd.as a Marketing Manager. From October 2014 to March 2016, she worked for Shenzhen Guoxian Technology Co., Ltd. as a Purchasing Manager. She has been working for Shenzhen Baileqi Electronic Technology Co., Ltd. since March 2016, firstly as manager. Then on November 15, 2017, she was promoted as the new president and director of Baileqi Electronic.
Biao Shang - Mr. Shang has an extensive experience in microelectronics, and since October 2018, he serves as the President and Director of Fangguan Photoelectric.
Shikui Zhang - Mr. Zhang was graduated from Liaoning University of Technology, majored in Material Science and Engineering. He used to work in the Material Research Institute of Changchun Bus Factory and served as Project Manager in Shichong Power Development Co., Ltd. He serves as the legal person and General Manager of Dalian Shizhe New Energy Technology Co., Ltd since May 2019.
Long Xie-Mr. Xie was graduated from Liaoning University of Technology, majoring in industrial and civil architecture. He successively worked in Dalian TV station as an editor, Wantangshiye Development Co., Ltd. as project manager. Mr. Xie joined the Company since March 2016. He resigned on July 23,2021.
Yunqiang Xie - Mr. Xie has accumulated an extensive experience in manufacturing and marketing the alloy materials after the several years of working in this industry. He began to serve as the legal person of Shijirun (Yixing) Technology Co., Ltd in February 2021.
Hongke Li - Mr. Li was graduated from University of South Australia with MBA degree.He accumulated the extensive experience in Internet of Things and the new energy industry after several years of working with Beijing Dianxiaoer Network Technology Co.,Ltd. He began to serve as the legal person of Huixiang Energy Technology (Suzhou) Co., Ltd in March 2021.
Identification of Significant Employees
We have no significant employees other than our officers and directors.
Family Relationship
We currently do not have any officers or directors of our Company who are related to each other.
Potential Conflicts of Interest
We are not aware of any conflicts of interest with any of our executive officers or directors.
Involvement in Certain Legal Proceedings
During the past ten years no director, executive officer, promoter or control person of the Company has been involved in the following:
(1) A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
(2) Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
(3) Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:
i. Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
ii. Engaging in any type of business practice; or
iii. Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
(4) Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;
(5) Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
(6) Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
(7) Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
i. Any Federal or State securities or commodities law or regulation; or
ii. Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
iii. Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
(8) Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
Committees
On August 9, 2019, the Board of Directors established an Audit Committee and a Compensation Committee, and on August 14, 2019, the Board established a Nominating Committee and a Corporate Governance Committee, each of which operates under a charter that has been approved by the Board.
Audit Committee
The Audit Committee (a) assists the Board in fulfilling its oversight of: (i) the quality and integrity of the Company’s financial statements; (ii) the Company’s compliance with legal and regulatory requirements relating to the Company’s financial statements and related disclosures; (iii) the qualifications and independence of the Company’s independent auditors; and (iv) the performance of the Company’s independent auditors; and (b) prepares any reports that the rules of the Securities and Exchange Commission (the “SEC”) require be included in the Company’s annual proxy statement.
The initial members of the Audit Committee were Hui Zhang, as Chairman, Anthony Saviano, and Zhenyu Wang.On May 25, 2020, Mr. Hui Zhang resigned as an independent Director and Chairman of the Audit Committee of Ionix Technology, Inc., a Nevada corporation (the “Company”). The resignation was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices.
On May 25, 2020, effective upon Mr. Zhang’s resignation, Ms. Yongping Wang (“Ms. Wang”) was appointed to serve as an independent Director of the Company and Chairman of the Audit Committee and has accepted such appointment. The Board has determined that Ms. Wang is an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable Nasdaq rules and regulations.
On October 27, 2020, Anthony Saviano (“Mr. Saviano”) resigned as independent director and member of the Audit Committee. The resignations of Mr. Saviano was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices.
On October 27, 2020, effective upon Mr. Saviano’s resignation, Ms. Liyan Wang (“Ms. Wang”) was appointed to serve as an independent Director of the Company and as a member of the Audit Committee of the Company; and Ms. Wang has accepted such appointment.
The Board has determined that all of the members of the Audit Committee are “independent,” as defined under the Nasdaq Listing Rule 506(a)(2). In addition, all members of the Audit Committee meet the independence requirements contemplated by Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Further, all members of the Audit Committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and the Nasdaq Capital Market. A current copy of the Audit Committee’s charter is available on the Company’s website at www.iinx-tech.com.
Compensation Committee
The Compensation Committee (a) assists the Board in discharging its responsibilities with respect to compensation of the Company’s executive officers and directors, (b) evaluates the performance of the executive officers of the Company, and (c) administers the Company’s stock and incentive compensation plans and recommends changes in such plans to the Board as needed.
The members of the Compensation Committee are Zhenyu Wang, as Chairman, Yongsheng Fu and Qinghua Shi. The Board has determined that each of the members of the Compensation Committee is “independent,” as defined under the Nasdaq Listing Rule 506(a)(2). A current copy of the Compensation Committee’s charter is available on the Company’s website at www.iinx-tech.com.
On October 27, 2020, Mr. Qinghua Shi (“Mr. Shi”), resigned as independent director and member of the Compensation Committee and Nominating and Corporate Governance Committee. The resignations of Mr. Shi was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices.
On October 27, 2020, effective upon Mr. Shi’s resignation, Ms. Xiaolin Wei (“Ms. Wei”) was appointed to serve as an independent Director of the Company and a member of all the Compensation Committee, Nominating Committeeand Corporate Governance Committee of the Company; and Ms. Wei has accepted such appointment.
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee assists the Board in (a) identifying qualified individuals to become directors, (b) determining the composition of the Board and its committees, (c) developing succession plans for executive officers, (d) monitoring a process to assess Board effectiveness, and (e) developing and implementing the Company’s corporate governance procedures and policies.
The members of the Nominating and Corporate Governance Committee are Yongsheng Fu, as a chairman, Zhenyu Wang and Qinghua Shi. The Board has determined that each of the members of the Nominating and Corporate Governance Committee is “independent,” as defined under the rules of the Nasdaq Capital Market. A current copy of the Nominating and Corporate Governance Committee’s charter is available on the Company’s website at www.iinx-tech.com.
On October 27, 2020, Mr. Qinghua Shi (“Mr. Shi”), resigned as independent director and member of the Compensation Committee, Nominating and Corporate Governance Committee. The resignations of Mr. Shi was not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies, or practices.
On October 27, 2020, effective upon Mr. Shi’s resignation, Ms. Xiaolin Wei (“Ms. Wei”) was appointed to serve as an independent Director of the Company, and a member of all the Compensation Committee, Nominating and Corporate Governance Committee of the Company; and Ms. Wei has accepted such appointment.
Code of Ethics
On September 29, 2019, our Board of Directors adopted a Code of Ethics which is applicable to our officers, directors, and senior executives, including our Chief Financial Officer, Treasurer and Chief Accounting Officer. This Code embodies our commitment to conduct business in accordance with the highest ethical standards and applicable laws, rules and regulations. The Company has posted the text of the Code of Ethics on its Internet Website www.iinx-tech.com. We will provide any person a copy of our Code of Ethics, without charge, upon written request to the Company Secretary. Requests should be addressed in writing to Rm 608, No.279, Zhongnan Road, Zhongshan District, Dalian, Liaoning, PRC.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and persons who beneficially own more than ten percent of a registered class of our equity securities to file with the SEC initial reports of ownership and reports of change in ownership of Common Stock and other equity securities of the Company. Based solely upon a review of Forms 3 and 4 and 5 and amendments filed on EDGAR for the year ended June 30, 2020, the Company determined that the following filers were delinquent in their filings of Form 3 and Form 4, but they all filed their Form 5 reporting their Form 3 and Form 4 holdings timely, except for one director, as shown below:
Person Filing Type Transaction Date Required File Date Actual File Date
Cheng Li 3 (1) April 25, 2019 May 6, 2019 September 27, 2019
Anthony Saviano 3 (2) July 31, 2019 August 11, 2019 September 27, 2019
Hui Zhang 3 (3) July 31, 2019 August 11, 2019 September 30, 2019
Zhenyu Wang 3 (4) July 31, 2019 August 11, 2019 September 27, 2019
Yongsheng Fu 3 (5) July 31, 2019 August 11, 2019 September 27, 2019
Qinghua Shi 3 (6) July 31, 2019 August 11, 2019 September 27, 2019
Anthony Saviano 4 (7) August 28, 2019 September 2, 2019 September 27, 2019
Yongping Wang 3 (8) May 25, 2020 June 4, 2020 June 19, 2020
Yang Yan 3 (9) March 16, 2020 March 26, 2020 June 19, 2020
Shuyu Li 3(10) January 7, 2020 January 17, 2020 January 22, 2020
Long Xie 3(11) January 7, 2020 January 17, 2020 January 22, 2020
(1) On April 25, 2019, Cheng Li was appointed as a director of the Company and Chairman of the Board. Mr. Li filed a Form 5 on September 27, 2019 reporting Form 3 holdings. Mr. Li owns 0 shares of the Company’s stock.
(2) On July 31, 2019, Anthony Saviano was appointed as an independent director of the Company. Mr. Saviano filed a Form 5 on September 27, 2019 reporting Form 3 holdings. Mr. Saviano owns 0 shares of the Company’s stock. The Form 5 was filed timely.
(3) On July 31, 2019, Hui Zhang was appointed as an independent director of the Company. Mr. Zhang filed a Form 5 on September 30, 2019 reporting Form 3 holdings. Mr. Zhang owns 0 shares of the Company’s stock. The Form 5 was filed timely.
(4) On July 31, 2019, Zhenyu Wang was appointed as an independent director of the Company. Mr. Wang filed a Form 5 on September 27, 2019 reporting Form 3 holdings. Wang owns 0 shares of the Company’s stock. The Form 5 was filed timely.
(5) On July 31, 2019, Yongsheng F was appointed as an independent director of the Company. Mr. Fu filed a Form 5 on September 27, 2019 reporting Form 3 holdings. Mr. Fu owns 0 shares of the Company’s stock. The Form 5 was filed timely.
(6) On July 31, 2019, Qinghua Shi was appointed as an independent director of the Company. Mr. Shi filed a Form 5 on September 27, 2019 reporting Form 3 holdings. Mr. Shi owns 0 shares of the Company’s stock. The Form 5 was filed timely.
(7) On August 28, 2019, Anthony Saviano purchased 30,000 shares from a natural person shareholder, Enan Wang (Ahnan) through a Stock Purchase Agreement, and the transaction was fully settled on September 13, 2019. Mr. Saviano filed a Form 5 on September 27, 2019 reporting Form 4 holdings. The Form 5 was filed timely.
(8) On May 25, 2020, Yongping Wang was appointed as an independent director of the Company. Ms. Wang filed a Form 3 on June 19, 2020 reporting Form 3 holdings. The original filing was amended to reflect the correct amount of shares owned on September 28, 2021. Ms. Wang owns 500,000 shares of the Company’s stock. The delay in Ms. Wang’s filing was a result of delay in obtaining a CIK code due to COVID-19 interruptions in business.
(9) On March 16, 2020, Yang Yan was appointed as President and Treasurer of the Company. Form 3 on June 19, 2020 reporting Form 3 holdings. Mr. Yan owns 0 shares of the Company’s stock. The delay in Mr. Yan’s filing was a result of delay in obtaining a CIK code due to COVID-19 interruptions in business.
(10) On January 7, 2020, Shuyu Li was appointed as President and Treasurer of the Company. Mr. Li filed a Form 3 on January 22, 2020 reporting Form 3 holdings of 0 shares of the Company’s stock.
(11) On January 7, 2020, Long Xie was appointed as Secretary of the Company. Mr. Long Xie filed a Form 3 on January 22, 2020 reporting Form 3 holdings of 100,000 shares of the Company’s stock.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation
Summary Compensation Table
The following table sets forth the compensation paid to our executive officers, and those of Well Best and its subsidiaries, and Welly Surplus for the year ended June 30, 2021 and 2020. Unless otherwise specified, the term of each executive officer is that as set forth under that section entitled, “Directors, Executive Officers, Promoters and Control Persons -- Term of Office”.
Name and Principal
Position Year
Ended
June
30, Salary
($) Bonus
($) Stock
Awards
($) Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation
($) Total
($)
Cheng Li(1)
Chief Executive Officer, Director and Chairman of the Company
$2,174 Nil Nil Nil Nil Nil Nil $2,174
Nil Nil Nil Nil Nil Nil Nil Nil
Yue Kou(2)
Chief Financial Officer of the Company
$8,900 Nil Nil Nil Nil Nil Nil $8,900
$8,900 Nil Nil Nil Nil Nil Nil $8,900
Yang Yan(3)
Treasurer and President of the Company
$1,258 Nil Nil Nil Nil Nil Nil $1,258
Nil Nil Nil Nil Nil Nil Nil Nil
Yubao Liu(4)
Director of the Company
Nil Nil Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Xin Sui (5)
President and Director of Welly Surplus
Nil Nil Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Qingchun Yang(6)
President and Director of Well Best
Nil Nil Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Yun Yang (7)
President and Director of Lisite Science
$310 Nil Nil Nil Nil Nil Nil $310
$320 Nil Nil Nil Nil Nil Nil $320
Shuyu Li(8)
Former President &Treasurer, Director of Overseas Business
$1,258 Nil Nil Nil Nil Nil Nil $1,258
Nil Nil Nil Nil Nil Nil Nil Nil
Biao Shang(9)
Director of Fangguan Photoelectric
$,8,300 Nil Nil Nil Nil Nil Nil $8,300
$8,400 Nil Nil Nil Nil Nil Nil $8,400
Baozhu Deng(10)
President and Director of Baileqi Electronics
$5,382 Nil Nil Nil Nil Nil Nil $5,382
$5,382 Nil Nil Nil Nil Nil Nil $5,382
Shikui Zhang (11)
President and Director of Shizhe New Energy
Nil Nil Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Long Xie (12)
Former secretary of the Company
$1,258 Nil Nil Nil Nil Nil Nil $1,258
Nil Nil Nil Nil Nil Nil Nil Nil
Jialin Liang (13)
Director of the Company
$17,143 Nil Nil Nil Nil Nil Nil $17,143
$18,760 Nil Nil Nil Nil Nil Nil $18,760
Xuemei Jiang (14)
Director of the Company
$15,714 Nil Nil Nil Nil Nil Nil $15,714
$17,430 Nil Nil Nil Nil Nil Nil $17,430
Yunqiang Xie (15)
Director of Shijihui
Nil Nil Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Li Hongke (16)
Director of Huixiang Energy
Nil Nil Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Notes to Summary Compensation Table:
(1) On April 25, 2019, the Board appointed Cheng Li as a director and Chairman of the Board. On January 7, 2020, Mr. Li was appointed as Chief Executive Officer of the Company. Mr. Li’s salary is $0 for the year ended June 30, 2021
(2) Ms. Kou was appointed as Chief Financial Officer of the Company on May 27, 2016. Ms. Kou’s salary is $8,900 for the year ended June 30, 2021.
(3) Mr. Yan was appointed to serve as the president and treasurer of the Company March 16, 2020. Mr. Yan's salary is $0 for the year ended June 30, 2021.
(4) Mr. Liu was appointed to serve as the Company’s Chief Executive Officer, President, Secretary, Treasurer and as Chairman of the Board of Directors of the Company on May 16, 2018. . On January 22, 2019, Mr. Liu resigned from his position as chairman of the Board of Directors (the “Board”); and on January 7, 2020, he effectively resigned from all positions held in the Company. On January 15, 2020 he was appointed as a director of the Company again.Mr. Liu’s salary is $0 for the year ended June 30, 2021.
(5) Mr. Sui was appointed as Director of Welly Surplus on December 29, 2016. Mr. Sui’s salary is $0 for the year ended June 30, 2021.
(6) Mr. Q. Yang was appointed as a director of Well Best, a wholly owned subsidiary of the Company, on February 17, 2016. His salary is $0 for the year ended June 30, 2021.
(7) Mr. Yun Yang was appointed as President and a director of Lisite Science on November 7, 2016. His annual salary package is $320 for the year ended June 30, 2021.
(8) Mr. Li was appointed as President and Treasurer on January 7, 2020 and resigned on March 16, 2020. He remained director of overseas business until April 12, 2020, when he resigned.
(9) Mr. Shang was appointed as Fangguan Photoelectric’s directors and executive officers on October 20, 2018. Mr. Shang's salary is $8,400 for the year ended June 30, 2021.
(10) Ms. Baozhu Deng was appointed as President and a director of Baileqi Electronics on November 15, 2017. Ms.Deng's salary is $5,382 for the fiscal years ended June 30, 2021.
(11)Mr. Zhang was appointed as President and a member of the board of directors of Shizhe New Energy on May 24, 2019. Shizhe New Energy is a wholly owned subsidiary of Well Best and an indirect wholly-owned subsidiary of the Company. Mr. Zhang’s salary is $0 for the year ended June 30, 2021.
(12) Mr. Xie was appointed as Secretary of the Company on January 7, 2020. Mr. Xie’s salary is $0 for the year ended June 30, 2021.
(13) Mr. Liang was appointed as a Director of the Company on January 22, 2019.Mr. Liang’s salary is $18,760 for the year ended June 30, 2021.
(14) Ms.Jiang was appointed as a Director of the Company on January 22, 2019.Ms. Jiang salary is $17,430 for the year ended June 30, 2021.
(15) Mr. Xie was appointed to serve as Director of Shijihui on February 7,2021.Mr. Xie's salary is $0 USD for the year ended June 30, 2021.
(16) Mr. Li was appointed to serve as Director of Huixiang Energy on March 30,2021. Mr. Li's salary is $0 USD for the year ended June 30, 2021.
Narrative Disclosure to Summary Compensation Table
As of June 30, 2021 and 2020， none of Ionix Technology, Welly Surplus, and Well Best or its subsidiaries, had any compensatory plans or arrangements, including payments to be received from Ionix, Welly Surplus, Well Best or its subsidiaries with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, Well Best, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company, Well Best, or its subsidiaries.
Independent Directors Compensation Table
Name of Independent Director Year
Ended
June
30, Salary
($) Bonus
($) Stock
Awards
($) Option
Awards
($)
Non-Equity
Incentive Plan
Compensation
($)
Nonqualified
Deferred
Compensation
Earnings
($)
All Other
Compensation ($) Total
($)
Anthony Vincent Saviano (1)
55,000 Nil Nil Nil Nil Nil Nil 55,000
15,000 Nil Nil Nil Nil Nil Nil 15,000
Yongsheng Fu (2)
Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Zhenyu Wang (3) Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Qinghua Shi (4) Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Xiaolin Wei(6) Nil Nil Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Yongping Wang (5) Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Liyan Wang(7) Nil Nil Nil Nil Nil Nil Nil Nil
Nil Nil Nil Nil Nil Nil Nil Nil
Notes to Independent Director Compensation Table:
(1) On July 31, 2019, our Board appointed Anthony Vincent Saviano, age 52, as a director of the Board. On October 27, 2020, he resigned.
(2) On July 31, 2019 our Board appointed Yongsheng Fu, age 66, as a director of the Board.
(3) On July 31, 2019 our Board appointed Zhenyu Wang, age 46, as a director of the Board.
(4) On July 31, 2019, our Board appointed Qinghua Shi, age 45, as a director of the Board.On October 27, 2020, he resigned.
(5) On May 25, 2020, our Board appointed Yongping Wang, age 53, as a director of the Board.
(6) On October 27, 2020, our Board appointed Xiaolin Wei, age 31, as a director of the Board.
(7) On October 27, 2020, our Board appointed Liyan Wang, age 50, as a director of the Board.
Outstanding Equity Awards
There are no equity awards outstanding as of June 30, 2021 for Ionix Technology, Welly Surplus, Well Best or its subsidiaries.
Stock Options/SAR Grants
During the fiscal year ended June 30, 2021 there were no options granted to our named officers or directors.
Option Exercises
During the Fiscal year ended June 30, 2021 there were no options exercised by our named officers.
Compensation of Directors
As of June 30, 2021, an aggregate $15,000 in cash compensation was paid to directors for their service on our board of directors. We have an agreement with Mr. Saviano, dated July 29, 2019, for his services as a director for $5,000 a month for a term of one year or until his death, resignation, termination or removal. On October 27, 2020, he resigned.
Other than the agreement with Mr. Saviano, we have no other agreements for compensating our directors for their services in their capacity as directors, although such directors are expected in the future to receive stock options to purchase shares of our common stock as awarded by our board of directors.
Pension, Retirement or Similar Benefit Plans
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the board of directors or a committee thereof.
Indebtedness of Directors, Senior Officers, Executive Officers and Other Management
None of our directors or executive officers or any associate or affiliate of our company during the last two fiscal years, is or has been indebted to our company by way of guarantee, support agreement, letter of credit or other similar agreement or understanding currently outstanding.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security Ownership of Certain Beneficial Owners and Management
The following table lists, As of June 30, 2021, the number of shares of common stock that are beneficially owned by (i) each person or entity known to the Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of the Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a 1eneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
Name of Beneficial Owner,
Directors and Officers:
Amount and Nature of
Beneficial Ownership Percentage of Beneficial
Ownership (1)
Cheng Li(2) 0%
Yue Kou (3) 0%
Yang Yan(4) 0%
Yubao Liu (5) 29,109,000 17.74%
Jialin Liang (6) 9,500,000 5.79%
Xuemei Jiang (7) 5,500,000 3.35%
Xiaolin Wei(8) 0%
Yongsheng Fu(9) 0%
Zhenyu Wang(10) 0%
Liyan Wang(11) 0%
Yongping Wang(12) 500,000 0.30%
Xin Sui (13) 0%
Qingchun Yang (14) 0%
Yun Yang (15) 0%
Biao Shang (16) 1,560,000 0.95%
Baozhu Deng (17) 0%
Shikui Zhang (18) 60,000 0.04%
Long Xie (19) 100,000 0.06%
Yunqiang Xie(20) 558,350 0.34%
Hongke Li (21) 0％
All executive officers and directors as a group (20 people) 46,887,350 28.58%
Beneficial Shareholders of Common Stock greater than 5%
- - -
Beneficial Owners of Preferred Stock(1):
Amount and Nature of
Beneficial Ownership
Percentage of Beneficial
Ownership (1)
Yubao Liu(5) 5,000,000 100%
(1) Applicable percentage of ownership is based on 164,041,058 shares of common stock outstanding on June 30, 2021 and 5,000,000 shares of Preferred Stock issued and outstanding on June 30, 2021. Percentage totals are calculated separately based on each class of capital stock. Each share of Preferred Stock entitles the holder to vote 100 shares of common stock; the Preferred Stock is not convertible into common stock. Percentage ownership is determined based on shares owned together with securities exercisable or convertible into shares of common stock within 60 days of June 30, 2021, for each stockholder. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to securities exercisable or convertible into shares of common stock that are currently exercisable or exercisable within 60 days of June 30, 2021, are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
(2) Cheng Li is the CEO, Chairman, and a Director of the Company. Mr. Li’s beneficial ownership includes 0 shares of common stock and 0 shares issuable upon the exercise of stock options.
(3) Yue Kou is the CFO of Ionix Technology. Ms. Kou’s beneficial ownership includes 0 shares of common stock and 0 shares issuable upon the exercise of stock options.
(4) Yang Yan is the President and treasurer of Ionix Technology. Mr. Yan’s beneficial ownership includes 0 shares of common stock and 0 shares issuable upon the exercise of stock options.
(5) Yubao Liu, is the Former CEO, and current Director of Ionix Technology. Mr. Liu’s ownership includes 100,000 directly and 29,009,000 indirectly through Shining Glory Investments Limited; additionally Mr. Liu is the beneficial owner of 5,000,000 shares of preferred stock which has the authority to vote a total of 500,000,000 common stock votes. Mr. Liu owns 0 shares issuable upon exercise of stock options. Mr. Liu is the sole officer and director of Shining Glory Investments Limited and has dispositive voting and investment control over the shares held by Shining Glory. Thus, in total, Shining Glory and its sole officer and director collectively owns an aggregate 79.68% of the total outstanding voting securities of the Company.
(6) Jialin Liang is the Director of the Company. Mr. Liang’s beneficial ownership includes 9,500,000 shares of common stock and 0 shares issuable upon the exercise of stock options.
(7) Xuemei Jiang is the Director of the Company. Ms. Jiang’s beneficial ownership includes 5,500,000 shares of common stock and 0 shares issuable upon the exercise of stock options.
(8) Xiaolin Wei is the Director of the Company. Ms.Wei’s beneficial ownership includes 0 shares of common stock and 0 shares issuable upon the exercise of stock options.
(9) Yongsheng Fu is the Director of the Company. Mr. Fu’s beneficial ownership includes 0 shares of common stock and 0 shares issuable upon the exercise of stock options.
(10) Zhenyu Wang is the Director of the Company. Mr. Wang’s beneficial ownership includes 0 shares of common stock and 0 shares issuable upon the exercise of stock options.
(11) Liyan Wang is the Director of the Company. Ms.Wang’s beneficial ownership includes 0 shares of common stock and 0 shares issuable upon the exercise of stock options.
(12) Yongping Wang is the Director of the Company. Ms. Wang’s beneficial ownership includes 500,000 shares of common stock and 0 shares issuable upon the exercise of stock options.
(13)Xin Sui is President and Director of Welly Surplus International Limited, a wholly owned subsidiary of Ionix Technoloy. Mr. Sui’s beneficial ownership includes 0 shares of common stock of the Company and 0 shares issuable upon the exercise of stock options.
(14)Qingchun Yang is the President and Director of Well Best, a wholly owned subsidiary of Ionix Technology. Mr. Yang’s beneficial ownership includes 0 shares of common stock of the Company and 0 shares issuable upon the exercise of stock options.
(15) Yun Yang is the President and Director of Lisite Science Technology, an indirect wholly owned subsidiary of Ionix Technology. Mr. Yang’s beneficial ownership includes 0 shares of common stock of the Company and 0 shares issuable upon the exercise of stock options.
(16) Biao Shang is the President and Director of Fangguan Photoelectric an indirect wholly owned subsidiary of Ionix Technology. Mr. Shang’s beneficial ownership includes 1,560,000 shares of common stock of the Company and 0 shares issuable upon the exercise of stock options.
(17)Baozhu Deng is the President and Director of Shenzhen Baileqi Electronic Technology Co., Ltd, an indirect wholly owned subsidiary of Ionix Technology. Ms. Deng’s beneficial ownership includes 0 shares of common stock of the Company and 0 shares issuable upon the exercise of stock options.
(18) Shikui Zhang is the President and Director of Dalian Shizhe New Energy Technology Co., Ltd, a limited liability company formed under the laws of the PRC on June 28, 2018. Well Best is the sole shareholder of Shizhe New Energy. As a result, Shizhe New Energy is an indirect, wholly-owned subsidiary of the Company. Mr. Zhang’s beneficial ownership includes 60,000 shares of common stock of the Company and 0 shares issuable upon the exercise of stock options.
(19)Long Xie is the former Secretary of Ionix Technology. Mr. Xie’s beneficial ownership includes 100,000 shares of common stock of the Company and 0 shares issuable upon the exercise of stock options.He resigned on July 23,2021.
(20) Yunqiang Xie is the President and Director of Shijirun,an indirect wholly owned subsidiary of Ionix Technology. Mr. Xie’s beneficial ownership includes 558,350 shares of common stock of the Company and 0 shares issuable upon the exercise of stock options.
(21)Hongke Li is the President and Director of Huixiang, an indirect wholly owned subsidiary of Ionix Technology. Mr. Li's beneficial ownership includes 0 shares of common stock of the Company and 0 shares issuable upon the exercise of stock options.
Changes in Control
There are no present arrangements or pledges of the Company’s securities which may result in a change in control of the Company.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions and Director Independence
Director Independence
For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB on which our shares of common stock are quoted does not have any director independence requirements. The NASDAQ definition of “Independent Director” means a person other than an Executive Officer or employee of the Company or any other individual having a relationship which, in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
On July 31, 2019, our Board increased the number of members constituting the Board from four (4) to nine (9) and appointed the following five (5) new members (“New Directors”): Anthony Vincent Saviano, Hui Zhang, Yongsheng Fu, Zhenyu Wang and Qinghua Shi to the Board. On May 25, 2020, effective upon Mr. Zhang’s resignation, Yongping Wang was appointed to serve as a member of the Board of Directors of the Company and fill the vacancy.
On October 27, 2020, effective upon Mr. Shi’s resignation, Ms. Xiaolin Wei (“Ms. Wei”) was appointed to serve as a member of the Board of Directors of the Company and member of each of the Compensation Committee and Nominating and Corporate Governance Committee of the Company.
On October 27, 2020, effective upon Mr. Saviano’s resignation, Ms. Liyan Wang (“Ms. Wang”) was appointed to serve as a member of the Board of Directors of the Company and as a member of the Audit Committee of the Company.
In connection with the appointment of New Directors and based upon information requested from and provided by each New Director concerning his background, employment and affiliations, including family relationship, the Board determined that each New Director would qualify as “independent” as that term is defined by Nasdaq Listing Rule 506(a)(2).
There are no other arrangements or understandings between New Directors and any other person pursuant to which each New Director was as appointed as member of the Board. In addition, there are no family relationships between each New Director and any of the Company’s other officers or directors.
Related Party Transactions
Purchase from related party
During the year ended June 30, 2021, the Company did not purchase from any related party.
During the year ended June 30, 2020, the Company purchased $1,630,684 and $37,393 from Keenest and Shenzhen Baileqi S&T which were owned by the Company’s stockholders who own approximately 1.3% and 0.7% respectively of the Company’s outstanding common stock. The amounts of $1,630,684 (Lisite Science) and $37,393 (Baileqi Electronic) were included in the cost of Revenue for the year ended June 30, 2020.
Advances to suppliers - related parties
Lisite Science made advances of $434,200 and $357,577 to Keenest for future purchases as of June 30, 2021 and June 30, 2020, respectively.
Sales to related party
During the year ended June 30, 2021 and 2020, Baileqi Electronic sold materials of $0 and $713,008 respectively to Shenzhen Baileqi S&T.
Lease from related party
Lisite Science leases office and warehouse space from Keenest, a related party, with annual rent of approximately $1,500 (RMB10,000) for one year until July 20, 2020. On July 20, 2020, Lisite Science further extended the lease with Keenest for one more year until July 20, 2021 with annual rent of approximately $1,500 (RMB10,000). (See Note 5). On July 20, 2021, Lisite Science further extended the lease with Keenest for one more year until July 20, 2022 with annual rent of approximately $295 (RMB2,000).
Baileqi Electronic leases office and warehouse space from Shenzhen Baileqi S&T, a related party, with monthly rent of approximately $2,500 (RMB17,525) and the lease period is from June 1, 2019 to May 31, 2020. On June 5, 2020, Baileqi Electronic further extended the lease with Shenzhen Baileqi S&T for one more year until May 31, 2021 with monthly rent of approximately $2,500 (RMB17,525). (See Note 5). This lease was not extended when it expired in May 2021.
Due to related parties
Due to related parties represents certain advances to the Company or its subsidiaries by related parties. The amounts are non-interest bearing, unsecured and due on demand.
June 30, 2021 June 30, 2020
Ben Wong (1) $ 143,792 $ 143,792
Yubao Liu (2) 352,236 102,938
Xin Sui (3) 2,016 2,016
Baozhen Deng (4) 45,276 9,437
Jialin Liang (6)(11) 1,844,857 901,460
Xuemei Jiang (7)(10) 554,171 505,685
Shikui Zhang (8) 58,961 28,528
Biao Shang (5) 19,804
Changyong Yang (9) 32,705 23,063
$ 3,053,818 $ 1,716,919
(1) Ben Wong was the former controlling shareholder (before April 20, 2017) of Shinning Glory, which holds majority shares in the Company.
(2) Yubao Liu has been the controlling shareholder of Shinning Glory since April 20, 2017, which holds majority shares in the Company. He also serves as director of the Company.
(3) Xin Sui serves as director of Welly Surplus.
(4) Baozhen Deng is a stockholder of the Company, who owns approximately 0.7% of the Company’s outstanding common stock, and the owner of Shenzhen Baileqi S&T.
(5) Biao Shang is a stockholder of the Company and serves as director of Fangguan Photoelectric.
(6) Jialin Liang is a stockholder of the Company, serves as the president, CEO, and director of Fangguan Electronics and director of the Company.
(7) Xuemei Jiang is a stockholder of the Company and serves as director of both Fangguan Electronics and the Company.
(8) Shikui Zhang is a stockholder of the Company and serves as the general manager of Shizhe New Energy since May 2019.
(9) Changyong Yang is a stockholder of the Company,who owns approximately 1.3% of the Company’s outstanding common stock,and the owner of Keenest.
(10) The liability represents the advances to Fangguan Electronics by Xuemei Jiang at the acquisition date of Fangguan Electronics (December 27, 2018). Thereafter Ms.Jiang neither made any further advance nor was refunded.
(11) At the acquisition date of Fangguan Electronics (December 27, 2018), the advances to Fangguan Electronics by Jialin Liang amounted to be approximately $5.8 million (RMB39,581,883), among which approximately $4.4 million (RMB30,000,000) was used for debt for equity swap by Mr.Liang during the capital increase of Fangguan Electronics occurred in March 2019. Thereafter Mr.Liang continued making advances to Fangguan Electronics.
During the year ended June 30, 2021, after netting off the refund by Fangguan Electronics, Mr Liang 's advance to Fangguan amounted to $943,397, among which $464,000 (RMB 3 million) was the proceeds from a one -year term bank loan that Mr.Liang borrowed in his own name . The loan is guaranteeed by Fangguan Electronics and can solely be used for supplementing the working capital of Fangguan Electronics. Mr. Liang himself bears the interest at 3.85% annually.
During the year ended June 30, 2021, Shenzhen Baileqi S&T paid back Baileqi Electronic directly for the amount of $383,031 (RMB2,474,417). Therefore the equivalent amount of due to Yubao Liu previously offered by Mr.Liu to settle the liability on behalf of Baileqi S&T, was reversed to the current account with Mr.Liu. Considering this reversal,and setting off the further advance by Mr Liu, the net refund to Mr Liu was approximately $133,733 during the year ended June 30, 2021.
During the year ended June 30, 2021, Baozhen Deng advanced $35,839 to Baileqi Electronic. Shikui Zhang advanced approximately $30,433 to Shizhe New Energy. Changyong Yang, a stockholder of the Company, advanced approximately $9,642 to Lisite Science. Biao Shang advanced $19,804 to Fangguan Photoelectric.
During the year ended June 30, 2020, Yubao Liu was refunded $46,312 by Welly Surplus and Well Best after netting off his advances to Well Best. In addition, Yubao Liu agreed to decrease his advances to Well Best of $349,519 (RMB2,474,417) to pay off the trade receivables due from Shenzhen Baileqi S&T to Baileqi Electronic on behalf of Shenzhen Baileqi S&T.
During the year ended June 30, 2020, Baileqi Electronic refunded $5,303 to Baozhu Deng and Baozhen Deng advanced $5,537 to Baileqi Electronic. Shizhe New Energy refunded $625 and $1,869 to Liang Zhang and Zijian Yang respectively. Shikui Zhang advanced $28,528 to Shizhe New Energy. Changyong Yang, a stockholder of the Company, advanced $23,063 to Lisite Science.
Other than the foregoing, none of the directors or executive officers of the Company, nor any person who owned of record or was known to own beneficially more than 5% of the Company’s outstanding shares of its Common Stock, nor any associate or affiliate of such persons or companies, has any material interest, direct or indirect, in any transaction that has occurred during the past fiscal year, or in any proposed transaction, which has materially affected or will affect the Company.
With regard to any future related party transaction, we plan to fully disclose any and all related party transactions in the following manner:
· Disclosing such transactions in reports where required;
· Disclosing in any and all filings with the SEC, where required;
· Obtaining disinterested directors consent; and
· Obtaining shareholder consent where required.
Review, Approval or Ratification of Transactions with Related Persons
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accounting Fees and Services.
On October 18, 2018, the Company appointed Prager Metis CPAs, LLC as the Company’s registered independent public accounting firm. On July 16 2021， the Company appointed TAAD LLP as the Company’s registered independent public accounting firm. Their pre-approved fees billed to the Company are set forth below:
For Fiscal Year Ended
June 30, 2021
For Fiscal Year Ended
June 30, 2020
Audit Fees $ 217,500 $ 217,500
Audit-related fees $ 0 $ 0
Tax Fees $ 8,500 $ 8,500
All other Fees $ 8,500 $ 0
Total $ 234,500 $ 226,000
Audit Fees
During the fiscal year ended June 30, 2020, we incurred approximately $217,500 in fees to our principal independent accountants for professional services rendered in connection with the audit and review of our financial statements for fiscal year ended June 30, 2020.
During the fiscal year ended June 30, 2021 we incurred approximately $217,500 in fees to our principal independent accountants for professional services rendered in connection with the audit and review of our financial statements for fiscal year ended June 30, 2021.
Audit-Related Fees
The aggregate fees billed during the fiscal years ended June 30, 2021 and 2020 for assurance and related services by our principal independent accountants that are reasonably related to the performance of the audit or review of our financial statements (and are not reported under Item 9(e)(1) of Schedule 14A) was $NIL and $NIL, respectively.
Tax Fees
The aggregate fees billed during the fiscal years ended June 30, 2021 and 2020 for professional services rendered by our principal accountant for tax compliance were $8,500 and $8,500, respectively.
All Other Fees
The aggregate fees billed during the fiscal years ended June 30, 2021 and 2020 for products and services provided by our principal independent accountants (other than the services reported in Items 9(e)(1) through 9(e)(3) of Schedule 14A) was $8,500 and $NIL, respectively.

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules.
Exhibit
Number Description of Exhibit
3.01a Articles of Incorporation, dated March 11, 2011
Filed with the SEC on October 13, 2017 as part of our Annual Report on Form 10-K
3.01b Certificate of Amendment to Articles of Incorporation, dated August 7, 2014
Filed with the SEC on September 3, 2014 as part of our Current Report on Form 8-K
3.01c Certificate of Amendment to Articles of Incorporation, dated December 3, 2015
Filed with the SEC on December 10, 2015 as part of our Current Report on Form 8-K
3.01d Certificate of Amendment to Articles of Incorporation, dated June 7,2021
Filed with the SEC on June 11, 2021 as part of our Current Report on Form 8-K
3.02a Bylaws
Filed with the SEC on August 23, 2011 as an exhibit to our Registration Statement on Form 10.
3.02b Amended Bylaws, dated August 7, 2014
Filed with the SEC on September 3, 2014 as part of our Current Report on Form 8-K
4.06 Description of Registrant’s Securities
Filed with the SEC on September 30, 2019 as part of our Annual Report on Form 10-K
10.01 Manufacturing Agreement, dated as of August 19, 2016, by and between Jiangxi Huanming Technology Limited Company and XinyuIonix Technology Company Limited.
Filed with the SEC on August 24, 2016 as part of our Current Report on Form 8-K
10.02 Share Transfer Agreement, dated as of August 19, 2016, by and between GuoEn Li and Well Best International Investment Limited
Filed with the SEC on August 24, 2016 as part of our Current Report on Form 8-K
10.03 Share Purchase Agreement dated December 27, 2018 by and between Ionix Technology, Inc., Changchun Fangguan Electronics Technology Co., Ltd. and the shareholders of Changchun Fangguan Electronics Technology Co., Ltd.
Filed with the SEC on December 27, 2018 as part of our Current Report on Form 8-K
10.04 Business Operation Agreement dated December 27, 2018 by and between Changchun Fangguan Photoelectric Display Technology Co., Ltd., Changchun Fangguan Electronics Technology Co., Ltd., Jialin Liang and Xuemei Jiang.
Filed with the SEC on December 27, 2018 as part of our Current Report on Form 8-K
10.05 Exclusive Technical Support Service Agreement dated December 27, 2018 by and between Changchun Fangguan Photoelectric Display Technology Co., Ltd. and Changchun Fangguan Electronics Technology Co., Ltd.
Filed with the SEC on December 27, 2018 as part of our Current Report on Form 8-K
10.06 Equity Interest Purchase Agreement dated December 27, 2018 by and between Changchun Fangguan Photoelectric Display Technology Co., Ltd., Changchun Fangguan Electronics Technology Co., Ltd., Jialin Liang and Xuemei Jiang.
Filed with the SEC on December 27, 2018 as part of our Current Report on Form 8-K
10.07 Equity Interest Pledge Agreement dated December 27, 2018 by and between Changchun Fangguan Photoelectric Display Technology Co., Jialin Liang and Xuemei Jiang
Filed with the SEC on December 27, 2018 as part of our Current Report on Form 8-K
10.8 Compilation of Labrys Securities Purchase Agreement, Self-Amortization Promissory Note and Other Agreements
File with SEC on January 5, 2021 as part of our Current Report on Form 8-K
21.1 List of Subsidiaries
Filed herewith.
31.01 Certification of Principal Executive Officer Pursuant to Rule 13a-14
Filed herewith.
31.02 Certification of Principal Financial Officer Pursuant to Rule 13a-14
Filed herewith.
32.01 CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
Filed herewith.
32.02 CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
Filed herewith.
101.INS* Inline XBRL Instance Document. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Filed herewith.
101.SCH* Inline XBRL Taxonomy Extension Schema Document
Filed herewith.
101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document
Filed herewith.
101.LAB* Inline XBRL Taxonomy Extension Labels Linkbase Document
Filed herewith.
101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document
Filed herewith.
101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document
Filed herewith.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
Filed herewith
*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.