UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
For the transition period from __________ to __________.
Commission File Number
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| Incorporation or organization) | Identification No.) |
| | ||
| (Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| Smaller reporting company | ||
| Emerging Growth Company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether
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As of March 3, 2023, the Company
had
SINGULARITY FUTURE TECHNOLOGY LTD.
FORM 10-Q
TABLE OF CONTENTS
| CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS | ii | |
| PART I. | FINANCIAL INFORMATION | 1 |
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 31 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 42 |
| Item 4. | Controls and Procedures | 42 |
| PART II. OTHER INFORMATION | 44 | |
| Item 1. | Legal Proceedings | 44 |
| Item 1A. | Risk Factors | 44 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 44 |
| Item 3. | Defaults Upon Senior Securities | 44 |
| Item 4. | Mine Safety Disclosures | 44 |
| Item 5. | Other Information | 44 |
| Item 6. | Exhibits | 44 |
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Report contains certain statements that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements, including but not limited to statements regarding our projected growth, trends and strategies, future operating and financial results, financial expectations and current business indicators are based upon current information and expectations and are subject to change based on factors beyond our control. Forward-looking statements typically are identified by the use of terms such as “look,” “may,” “will,” “should,” “might,” “believe,” “plan,” “expect,” “anticipate,” “estimate” and similar words, although some forward-looking statements are expressed differently. The accuracy of such statements may be impacted by a number of business risks and uncertainties we face that could cause our actual results to differ materially from those projected or anticipated, including but not limited to the following:
| ● | our ability to timely and properly deliver our services; |
| ● | our dependence on a limited number of major customers and suppliers; | |
| ● | our ability to resume our business of sales of crypto mining machines and to expand our operations after the conclusion of the investigation; |
| ● | current and future political and economic factors in the United States and China and the relationship between the two countries; |
| ● | our ability to explore and enter into new business opportunities and the acceptance in the marketplace of our new lines of business; |
| ● | unanticipated changes in general market conditions or other factors which may result in cancellations or reductions in the need for our services; |
| ● | the demand for warehouse, shipping and logistics services; |
| ● | the foreign currency exchange rate fluctuations; |
| ● | possible disruptions in commercial activities caused by events such as natural disasters, health epidemics, terrorist activity and armed conflict; |
| ● | our ability to identify and successfully execute cost control initiatives; |
| ● | the impact of quotas, tariffs or safeguards on our customer products that we service; |
| ● | our ability to attract, retain and motivate qualified management team members and skilled personnel; |
| ● | relevant governmental policies and regulations relating to our businesses and industries; | |
| ● | developments in, or changes to, laws, regulations, governmental policies, incentives and taxation affecting our operations; | |
| ● | our reputation and ability to do business may be impacted by the improper conduct of our employees, agents or business partners; and | |
| ● | the outcome of litigation or investigation in which we are involved is unpredictable, and an adverse decision in any such matter could have a material adverse effect on our financial condition, results of operations, cash flows and equity. |
Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. The Company undertakes no obligation to update the forward-looking statements. Nonetheless, the Company reserves the right to make such updates from time to time by press release, periodic report or other method of public disclosure without the need for specific reference to this Report. No such update shall be deemed to indicate that other statements not addressed by such update remain correct or create an obligation to provide any other updates.
ii
PART I. FINANCIAL INFORMATION
Item 1. Financial Information.
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash | $ | $ | ||||||
| Cryptocurrencies | ||||||||
| Accounts receivable, net | ||||||||
| Other receivables, net | ||||||||
| Advances to suppliers - third parties, net | ||||||||
| Advances to suppliers - related party | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Due from related party, net | ||||||||
| Loan receivable-related parties, net | ||||||||
| Total Current Assets | ||||||||
| Property and equipment, net | ||||||||
| Right-of-use assets, net | ||||||||
| Other long-term assets - deposits | ||||||||
| Investment in unconsolidated entity | ||||||||
| Total Assets | $ | $ | ||||||
| Liabilities and Equity | ||||||||
| Current Liabilities | ||||||||
| Deferred revenue | $ | $ | ||||||
| Refund payable | ||||||||
| Accounts payable | ||||||||
| Accounts payable -related party | ||||||||
| Lease liabilities - current | ||||||||
| Taxes payable | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Convertible notes | ||||||||
| Total current liabilities | ||||||||
| Lease liabilities – noncurrent | ||||||||
| Loan payable - noncurrent | ||||||||
| Total liabilities | ||||||||
| Commitments and Contingencies | ||||||||
| Equity | ||||||||
| Preferred stock, | ||||||||
| Common stock, | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total Stockholders’ Equity attributable to controlling shareholders of the Company | ||||||||
| Non-controlling Interest | ( | ) | ( | ) | ||||
| Total Equity | ||||||||
| Total Liabilities and Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Restated | ||||||||||||||||
| Net revenues | $ | $ | ||||||||||||||
| Cost of revenues | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ( | ) | ||||||||||||||
| Selling expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Impairment loss of Cryptocurrencies | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Recovery (provision) for doubtful accounts, net | ( | ) | ||||||||||||||
| Stock-based compensation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss from disposal of subsidiary and VIE | ( | ) | ( | ) | ||||||||||||
| Other expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss before provision for income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax expense | ( | ) | ||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ||||||||||
| Net loss attributable to controlling shareholders of the Company. | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Comprehensive loss | ||||||||||||||||
| Net loss | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Other comprehensive income (loss) - foreign currency | ( | ) | ( | ) | ||||||||||||
| Comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: Comprehensive loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ||||||||||
| Comprehensive loss attributable to controlling shareholders of the Company. | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Loss per share | ||||||||||||||||
| $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Weighted average number of common shares used in computation | ||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY)
(UNAUDITED)
| Additional | Accumulated other | |||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | paid-in | Shares to | Accumulated | comprehensive | Noncontrolling | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | be issued | deficit | loss | interest | Total | |||||||||||||||||||||||||||||||
| BALANCE, June 30, 2021 (Restated) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Stock compensation issue to employee | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ( | ) | ||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| BALANCE, September 30, 2021 (Restated) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Stock compensation issue to former director | ||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock to private investors | - | - | ||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Disposal of VIE and subsidiaries | ||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| BALANCE, December 31, 2021 (Restated) | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Additional | Accumulated other | |||||||||||||||||||||||||||||||||||||||
| Preferred Stock | Common Stock | paid-in | Shares to | Accumulated | comprehensive | Noncontrolling | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | be issued | deficit | loss | interest | Total | |||||||||||||||||||||||||||||||
| BALANCE, June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Stock based compensation to consultants | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | ( | ) | |||||||||||||||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| BALANCE, September 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
| Stock based compensation to consultants | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| BALANCE, December 31, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the Six Months Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Operating Activities | Restated | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Stock-based compensation | ||||||||
| Depreciation and amortization | ||||||||
| Non-cash lease expense | ||||||||
| (Recovery) provision for doubtful accounts, net | ( | ) | ||||||
| (Gain) Loss on disposal of fixed assets | ( | ) | ||||||
| Impairment loss of cryptocurrencies | ||||||||
| Investment loss from unconsolidated subsidiary | ||||||||
| Changes in assets and liabilities | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Other receivables | ( | ) | ||||||
| Advances to suppliers - third parties | ||||||||
| Advances to suppliers - related party | ||||||||
| Prepaid expenses and other current assets | ( | ) | ||||||
| Other long-term assets - deposits | ( | ) | ( | ) | ||||
| Deferred revenue | ( | ) | ( | ) | ||||
| Refund payable | ( | ) | ||||||
| Accounts payable | ( | ) | ||||||
| Taxes payable | ( | ) | ||||||
| Lease liabilities | ( | ) | ( | ) | ||||
| Accrued expenses and other current liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing Activities | ||||||||
| Acquisition of property and equipment | ( | ) | ( | ) | ||||
| Proceeds from disposal of property and equipment | ||||||||
| Loan receivable-related parties | ( | ) | ||||||
| Investment in unconsolidated entity | ( | ) | ||||||
| Advance to related parties | ( | ) | ||||||
| Repayment from related parties | ||||||||
| Net cash (used in) provided by investing activities | ( | ) | ||||||
| Financing Activities | ||||||||
| Repayment of loan payable | ( | ) | ||||||
| Proceeds from issuance of common stock | ||||||||
| Proceeds from convertible notes | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate fluctuations on cash | ( | ) | ||||||
| Net (decrease) increase in cash | ( | ) | ||||||
| Cash at beginning of period | ||||||||
| Cash at end of period | $ | $ | ||||||
| Supplemental information | ||||||||
| Interest paid | $ | $ | ||||||
| Non-cash transactions of operating and investing activities | ||||||||
| Initial recognition of right-of-use assets and lease liabilities | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
SINGULARITY FUTURE TECHNOLOGY LTD. AND SUBSIDIAIRES
Notes to the Condensed Consolidated Financial Statements
For the Six Months ended December 31, 2022
Note 1. ORGANIZATION AND NATURE OF BUSINESS
The Company is a global logistics integrated solution provider that was founded in the United States in 2001. On September 18, 2007, the Company amended its Articles of Incorporation and Bylaws to merge into a new corporation, Sino-Global Shipping America, Ltd. in Virginia. The Company primarily focuses on providing logistics and support to businesses in the Peoples’ Republic of China (“PRC”) and the United States. On January 3, 2022, the Company changed its corporate name from Sino-Global Shipping America, Ltd. to Singularity Future Technology Ltd. to reflect its expanded operations into the digital assets business.
The Company conducted its business primarily through its wholly-owned subsidiaries in the PRC (including Hong Kong) and the United States, where the majority of its clients are located. As of December 31, 2022, the Company operated in two segments: (1) freight logistics services, which were operated by its subsidiaries in both the United States and PRC, and (2) the sale of crypto-mining machines, which were operated by its subsidiaries in the United States.
The outbreak of the novel coronavirus (COVID-19) starting from late January 2020 in the PRC has spread rapidly to many parts of the world. In March 2020, the World Health Organization declared the COVID-19 as a pandemic and has resulted in quarantines, travel restrictions, and the temporary closure of stores and business facilities in China and the U.S. Given the rapidly expanding nature of the COVID-19 pandemic, and because substantially all of the Company’s business operations and its workforce are concentrated in China and the U.S., the Company’s business, results of operations, and financial condition have been adversely affected. In early December 2022, Chinese government eased the strict control measure for COVID-19, which has led to surge in increased infections and disruption in our business operations. Any future impact of COVID-19 on the Company’s China operation results will depend on, to a large extent, future developments and new information that may emerge regarding the duration and resurgence of COVID-19 variants and the actions taken by government authorities to contain COVID-19 or treat its impact, almost all of which are beyond our control.
As of December 31, 2022, the Company’s subsidiaries included the following:
| Name | Background | Ownership | |||
| Sino-Global Shipping New York Inc. (“SGS NY”) |
● ● ● |
A New York Corporation Incorporated on May 03, 2013 Primarily engaged in freight logistics services |
|||
| Sino-Global Shipping Australia Pty Ltd. (“SGS AUS”) | ● | 100% owned by the Company Dissolved in November 2022 | |||
| Sino-Global Shipping HK Ltd. (“SGS HK”) |
● ● ● ● ● |
Incorporated on July 03, 2008 No material operations A Hong Kong Corporation Incorporated on September 22, 2008 No material operations |
|||
5
| Name | Background | Ownership | |||
| Thor Miner Inc. (“Thor Miner”) |
● ● ● |
A Delaware Corporation Incorporated on October 13, 2021 Primarily engaged in sales of crypto mining machines |
|||
| Trans Pacific Shipping Ltd. (“Trans Pacific Beijing”) |
● ● ● |
A PRC limited liability company Incorporated on November 13, 2007. Primarily engaged in freight logistics services |
|||
| Trans Pacific Logistic Shanghai Ltd. (“Trans Pacific Shanghai”) |
● ● ● |
A PRC limited liability company Incorporated on May 31, 2009 Primarily engaged in freight logistics services |
|||
| Ningbo Saimeinuo Supply Chain Management Ltd. (“SGS Ningbo”) |
● ● ● |
A PRC limited liability company Incorporated on September 11,2017 Primarily engaged in freight logistics services |
|||
| Blumargo IT Solution Ltd. (“Blumargo”) |
● ● ● |
A New York Corporation Incorporated on December 14, 2020 No material operations |
|||
| Gorgeous Trading Ltd (“Gorgeous Trading”) |
● ● ● |
A Texas Corporation Incorporated on July 01, 2021 Primarily engaged in warehouse related services |
|||
| Brilliant Warehouse Service Inc. (“Brilliant Warehouse”) |
● ● ● |
A Texas Corporation Incorporated on April 19,2021 Primarily engaged in warehouse house related services |
|||
| Phi Electric Motor In. (“Phi”) |
● ● ● |
A New York Corporation Incorporated on August 30, 2021 No operations |
| SG Shipping & Risk Solution Inc, (“SGSR”) | ● | A New York Corporation | 100% owned the Company | ||
| ● | Incorporated on September 29, 2021 | ||||
| ● | No material operations |
| SG Link LLC (“SG Link”) |
● ● ● |
A New York Corporation Incorporated on December 23, 2021 No operations |
6
Restatement of previously issued financial statements
The Company discovered error in revenue recognition
in its subsidiary SGS NY during the audit for the year ended June 30, 2022 that $
In addition, in connection with the Company’s restatement for the financial statements as of and for the year ended June 30, 2021, the Company also restated its recovery (provision) for doubtful accounts, net related to its other receivables.
Effects of the restatement is as follows:
| Previously Reported | Adjustments | As Restated | ||||||||||
| Consolidated statement of operations for the six months ended December 31, 2021 | ||||||||||||
| Net revenues | $ | $ | ( | ) | $ | |||||||
| Cost of revenues | ( | ) | ( | ) | ||||||||
| Recovery (provision) for doubtful accounts, net | $ | $ | ( | ) | $ | |||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| As Previously Reported | Adjustments | As Restated | ||||||||||
| Consolidated statement of cash flow for the six months ended December 31, 2021 | ||||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Provision for doubtful accounts | ( | ) | ( | ) | ||||||||
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements include the accounts of the Company and include the assets, liabilities, revenues and expenses of its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Prior to December
31, 2021, Sino-China was considered a Variable Interest Entity (“VIE”), with the Company as the primary beneficiary. The
Company, through Trans Pacific Beijing, entered into certain agreements with Sino-Global Shipping Agency Ltd. (“Sino-China”),
pursuant to which the Company received
As a VIE, Sino-China’s revenues were included in the Company’s total revenues, and any income/loss from operations was consolidated with that of the Company. Because of contractual arrangements between the Company and Sino-China, the Company had a pecuniary interest in Sino-China that required consolidation of the financial statements of the Company and Sino-China.
7
The Company has consolidated Sino-China’s operating results in accordance with Accounting Standards Codification (“ASC”) 810-10, “Consolidation”. The agency relationship between the Company and Sino-China and its branches was governed by a series of contractual arrangements pursuant to which the Company had substantial control over Sino-China. Management makes ongoing reassessments of whether the Company remains the primary beneficiary of Sino-China. On December 31, 2021, the Company entered into a series of agreements to terminate its VIE structure and deconsolidated its formerly controlled entity Sino-China.
(b) Fair Value of Financial Instruments
The Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures, which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1 — Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2 — Inputs other than quoted prices that are observable for the asset or liability in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3 — Unobservable inputs that reflect management’s assumptions based on the best available information.
The carrying value of accounts receivable, other receivables, other current assets, and current liabilities approximate their fair values because of the short-term nature of these instruments.
(c) Use of Estimates and Assumptions
The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with US GAAP 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates are adjusted to reflect actual experience when necessary. Significant accounting estimates reflected in the Company’s unaudited condense consolidated financial statements include revenue recognition, fair value of stock-based compensation, cost of revenues, allowance for credit losses, impairment loss, deferred income taxes, income tax expense and the useful lives of property and equipment. The inputs into the Company’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.
(d) Translation of Foreign Currency
The accounts of the Company and its subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Company’s functional currency is the U.S. dollar (“USD”) while its subsidiaries in the PRC, including Trans Pacific Beijing and Trans Pacific Shanghai report their financial positions and results of operations in Renminbi (“RMB”), its subsidiary Sino-Global Shipping (HK), Ltd. reports its financial positions and results of operations in Hong Kong dollar (“HKD”). The accompanying consolidated unaudited condensed financial statements are presented in USD. Foreign currency transactions are translated into USD using the fixed exchange rates in effect at the time of the transaction. Generally, foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated statements of operations. The Company translates the foreign currency financial statements in accordance with ASC 830-10, “Foreign Currency Matters”. Assets and liabilities are translated at current exchange rates quoted by the People’s Bank of China at the balance sheets’ dates and revenues and expenses are translated at average exchange rates in effect during the year. The resulting translation adjustments are recorded as other comprehensive loss and accumulated other comprehensive loss as a separate component of equity of the Company, and also included in non-controlling interests.
8
The exchange rates as of December 31, 2022 and June 30, 2022 and for the three and six months ended December 31, 2022 and 2021 are as follows:
| December 31, 2022 | June 30, 2022 | Three months ended December 31, | Six months ended December 31, | |||||||||||||||||||||
| Foreign currency | Balance Sheet | Balance Sheet | 2022 Profit/Loss | 2021 Profit/Loss | 2022 Profit/Loss | 2021 Profit/Loss | ||||||||||||||||||
| RMB:1USD | ||||||||||||||||||||||||
| HKD:1USD | ||||||||||||||||||||||||
(e) Cash
Cash consists of cash on hand and cash in bank
which are unrestricted as to withdrawal or use. The Company maintains cash with various financial institutions mainly in the PRC, Australia,
Hong Kong and the U.S. As of December 31, 2022 and June 30, 2022, cash balances of $
(f) Cryptocurrencies
Cryptocurrencies, mainly bitcoin, are included in current assets in the accompanying consolidated balance sheets. Cryptocurrencies purchased are recorded at cost. Fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency at the time of receipt.
Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.
9
(g) Receivables and Allowance for Credit Losses
Accounts receivable are presented at net realizable
value. The Company maintains allowances for credit losses. The Company reviews the accounts receivable on a periodic basis and makes general
and specific allowances when there is doubt as to the collectability of individual receivable balances. In evaluating the collectability
of individual receivable balances, the Company considers many factors, including the age of the balances, customers’ historical
payment history, their current credit-worthiness and current economic trends. The estimate of expected credit losses is based on information
about past events, current economic conditions, and forecasts of future economic conditions that affect collectability.
Other receivables represent mainly customer advances, prepaid employee insurance and welfare benefits, which will be subsequently deducted from the employee payroll, project advances as well as office lease deposits. Management reviews its receivables on a regular basis to determine if the credit loss is adequate, and adjusts the allowance when necessary. The estimate of expected credit losses is based on information about past events, current economic conditions, and forecasts of future economic conditions that affect collectability. Delinquent account balances are written-off against allowance for credit losses after management has determined that the likelihood of collection is not probable. Other receivables are written off against the allowances only after exhaustive collection efforts.
(h) Property and Equipment, net
Property and equipment are stated at historical cost less accumulated depreciation. Historical cost comprises its purchase price and any directly attributable costs of bringing the assets to its working condition and location for its intended use. Depreciation is calculated on a straight-line basis over the following estimated useful lives:
| Buildings | |
| Motor vehicles | |
| Computer and office equipment | |
| Furniture and fixtures | |
| System software | |
| Leasehold improvements | |
| Mining equipment |
The carrying value of a long-lived asset is considered impaired by the Company when the anticipated undiscounted cash flows from such asset is less than its carrying value. If impairment is identified, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved or based on independent appraisals. For the three and six months ended December 31, 2022 and 2021, no impairment were recorded, respectively.
(i) Investments in unconsolidated entity
Entities in which the Company has the ability
to exercise significant influence, but does not have a controlling interest, are accounted for using the equity method. Significant influence
is generally considered to exist when the Company has voting shares representing
10
Investments are evaluated for impairment when
facts or circumstances indicate that the fair value of the long-term investment is less than its carrying value. An impairment loss is
recognized when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether
a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration
of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects of the investment;
and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. On January 10,
2020, the Company entered into a cooperation agreement with Mr. Shanming Liang, a shareholder of the Company, to set up a joint venture
in New York named LSM Trading Ltd. (“LSM”) in which the Company holds a
(j) Convertible notes
The Company evaluates its convertible notes to determine if those contracts or embedded components of those contracts qualify as derivatives. The result of this accounting treatment is that the fair value of the embedded derivative is recorded at fair value each reporting period and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statements of operations as other income or expense.
(k) Revenue Recognition
The Company recognizes revenue which represents the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. The Company identifies contractual performance obligations and determines whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer.
The Company uses a five-step model to recognize revenue from customer contracts. The five-step model requires the Company to (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
For the Company’s freight logistic, the Company provided transportation services which includes mainly shipping services. The Company derived transportation revenue from sales contracts with its customers with revenues being recognized upon performance of services. Sales price to the customer was fixed upon acceptance of the sales contract and there was no separate sales rebate, discount, or other incentive. The Company’s revenues were recognized at a point in time after all performance obligations were satisfied
For the Company’s warehouse services, which are included in the freight logistic services, the Company’s contracts provide the customer an integrated service that includes two or more services, including but not limited to warehousing, collection, first-mile delivery, drop shipping, customs clearance packaging, etc. Accordingly, the Company generally identifies one performance obligation in its contracts, which is a series of distinct services that remain substantially the same over time and possess the same pattern of transfer. Revenue is recognized over the period in which services are provided under the terms of the Company’s contractual relationships with its clients.
Accordingly, the Company generally identifies one performance obligation in its contracts, which is a series of distinct services that remain substantially the same over time and possess the same pattern of transfer. Revenue is recognized over the period in which services are provided under the terms of the Company’s contractual relationships with its clients.
11
The transaction price is based on the amount specified in the contract with the customer and contains fixed and variable consideration. In general, the fixed consideration in a contract represents facility and equipment costs incurred to satisfy the performance obligation and is recognized on a straight-line basis over the term of the contract. The variable consideration is comprised of cost reimbursement determined based on the costs incurred. Revenue relating to variable pricing is estimated and included in the consideration if it is probable that a significant revenue reversal will not occur in the future. The estimate of variable consideration is determined by the expected value or most likely amount method and factors in current, past and forecasted experience with the customer. Customers are billed based on terms specified in the revenue contract and they pay us according to approved payment terms.
Revenue for the above services is recognized on a gross basis when the Company controls the services as it has the obligation to (i) provide all services (ii) bear any inventory risk for warehouse services. In addition, the Company has control to set its selling price to ensure it would generate profit for the services.
For the six months ended December 31, 2022, the Company engaged in resale of cryptocurrency mining equipment.
On January 10, 2022, the Company’s joint venture, Thor Miner, entered into a Purchase and Sale Agreement with SOS Information Technology New York Inc. (the “Buyer”). Pursuant to the Purchase and Sale Agreement, Thor Miner agreed to sell and the Buyer agreed to purchase certain cryptocurrency mining equipment.
The Company’s performance obligation is to deliver products according to contract specifications. The Company recognizes product revenue at a point in time when the control of products or services are transferred to customers. To distinguish a promise to provide products from a promise to facilitate the sale from a third party, the Company considers the guidance of control in ASC 606-10-55-37A and the indicators in 606-10-55-39. The Company considers this guidance in conjunction with the terms in the Company’s arrangements with both suppliers and customers.
In general, revenue is recognized on a gross basis when the Company controls the products as it has the obligation to (i) fulfill the products delivery and custom clearance (ii) bear any inventory risk as legal owners. In addition, when establishing the selling prices for delivery of the resale products, the Company has control to set its selling price to ensure it would generate profit for the products delivery arrangements. If the Company is not responsible for provision of product and does not bear inventory risk, the Company recorded revenue on a net basis.
For the three and six months ended December 31, 2022, the Company recognized the sale of cryptocurrency mining equipment based on net basis as the manufacturer of the products are responsible for shipping and custom clearing for the products.
Contract balances
The Company records receivables related to revenue when the Company has an unconditional right to invoice and receive payment.
Deferred revenue consists primarily of customer
billings made in advance of performance obligations being satisfied and revenue being recognized. Contract balance amounted to $
The Company’s disaggregated revenue streams are described as follows:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 (Restated) | |||||||||||||
| Sale of crypto mining machines | $ | $ | $ | $ | - | |||||||||||
| Freight logistics services | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
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Disaggregated information of revenues by geographic locations are as follows:
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, 2021 | |||||||||||||
| 2022 | 2021 | 2022 | (Restated) | |||||||||||||
| PRC | $ | |||||||||||||||
| U.S. | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
(l) Leases
The Company adopted FASB ASU 2016-02, “Leases”
(Topic 842) for the year ended June 30, 2020, and elected the practical expedients that does not require us to reassess: (1) whether any
expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct
costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy
election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat
the lease and non-lease components of a lease as a single lease component. Upon adoption, the Company recognized right of use (“ROU”)
assets and same amount of lease liabilities based on the present value of the future minimum rental payments of leases, using an incremental
borrowing rate of
Operating lease ROU assets and lease liabilities are recognized at the adoption date or the commencement date, whichever is earlier, based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company use its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.
(m) Taxation
Because the Company and its subsidiaries and Sino-China were incorporated in different jurisdictions, they file separate income tax returns. The Company uses the asset and liability method of accounting for income taxes in accordance with U.S. GAAP. Deferred taxes, if any, are recognized for the future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. A valuation allowance is provided against deferred tax assets if it is more likely than not that the asset will not be utilized in the future.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense. The Company had no uncertain tax positions as of December 31, 2022 and 2021.
13
Income tax returns for the years prior to 2018 are no longer subject to examination by U.S. tax authorities.
PRC Enterprise Income Tax
PRC enterprise income tax is calculated based
on taxable income determined under the PRC Generally Accepted Accounting Principles (“PRC GAAP”) at
PRC Value Added Taxes and Surcharges
The Company is subject to value added tax (“VAT”).
Revenue from services provided by the Company’s PRC subsidiaries are subject to VAT at rates ranging from
In addition, under the PRC regulations, the Company’s
PRC subsidiaries and VIE are required to pay city construction tax (
(n) Earnings (loss) per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to holders of common stock of the Company by the weighted average number of shares of common stock of the Company outstanding during the applicable period. Diluted earnings (loss) per share reflect the potential dilution that could occur if securities or other contracts to issue common stock of the Company were exercised or converted into common stock of the Company. Common stock equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive.
For the three and six months ended December 31, 2022 and 2021, there was no dilutive effect of potential shares of common stock of the Company because the Company generated net loss.
(o) Comprehensive Income (Loss)
The Company reports comprehensive income (loss) in accordance with the authoritative guidance issued by Financial Accounting Standards Board (the “FASB”) which establishes standards for reporting comprehensive income (loss) and its component in financial statements. Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under US GAAP are recorded as an element of stockholders’ equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies.
(p) Stock-based Compensation
The Company accounts for stock-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that stock-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period. The Company records stock-based compensation expense at fair value on the grant date and recognizes the expense over the employee’s requisite service period.
The Company accounts for stock-based compensation awards to non-employees in accordance with FASB ASC Topic 718 amended by ASU 2018-07. Under FASB ASC Topic 718, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received.
Valuations of stock-based compensation are based upon highly subjective assumptions about the future, including stock price volatility and exercise patterns. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model. Expected volatilities are based on the historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee terminations. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.
14
(q) Risks and Uncertainties
The Company’s business, financial position and results of operations may be influenced by the political, economic, health and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic, health and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
In March 2020, the World Health Organization declared the COVID-19 as a pandemic. Given the rapidly expanding nature of the COVID-19 pandemic, and because substantially all of the Company’s business operations and the workforce are concentrated in China and United States, the Company’s business, results of operations, and financial condition have been adversely affected for the three and six months ended December 31, 2022. The situation remains highly uncertain for any further outbreak or resurgence of the COVID-19. It is therefore difficult for the Company to estimate the impact on the business or operating results that might be adversely affected by any further outbreak or resurgence of COVID-19.
(r) Disposal of subsidiaries and VIE
On December 31, 2021, the Company entered into a series of agreements to terminate its VIE structure and deconsolidated its formerly controlled entity Sino-Global Shipping Agency Ltd. (“Sino-China”). The Company controlled Sino-China through its wholly owned subsidiary Trans Pacific Beijing. The Company made the decision to dissolve the VIE structure and Sino-China because Sino-China has no active operations and the Company wanted to remove any potential risks associated with any VIE structures. In addition, the Company dissolved its subsidiary Sino-Global Shipping LA, Inc. On March 14, 2022, the company discontinued its subsidiary Sino-Global Shipping Canada, Inc., no gain or loss was recognized in the deconsolidation.
Since the disposal did not represent any strategic change of the Company’s operation, the disposal was not presented as discontinued operations.
Net assets of the entities disposed and loss on disposal was as follows:
| For the three and six months ended | ||||||||||||
| December 31, 2021 | ||||||||||||
| VIE | Subsidiaries | Total | ||||||||||
| Total current assets | $ | $ | $ | |||||||||
| Total other assets | ||||||||||||
| Total assets | ||||||||||||
| Total current liabilities | ||||||||||||
| Total net assets | ||||||||||||
| Noncontrolling interests | ||||||||||||
| Exchange rate effect | ||||||||||||
| Total loss on disposal | $ | $ | $ | |||||||||
15
(s) Recent Accounting Pronouncements
In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments in this ASU address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. In November 2019, the FASB issued ASU No. 2019-10, which to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses standard. The new effective date for these preparers is for fiscal years beginning after July 1, 2023, including interim periods within those fiscal years. The Company has not early adopted this update and it will become effective on July 1, 2023 assuming the Company will remain eligible to be smaller reporting company. The adoption did not have material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements.
Note 3. CRYPTOCURRENCIES
The following table presents additional information about cryptocurrencies:
| December 31 , | June 30, | |||||||
| 2022 | 2022 | |||||||
| Beginning balance | $ | $ | ||||||
| Receipt of cryptocurrencies from mining services | ||||||||
| Impairment loss | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
The company recorded $
Note 4. ACCOUNTS RECEIVABLE, NET
The Company’s net accounts receivable are as follows:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Trade accounts receivable | $ | $ | ||||||
| Less: allowances for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | $ | $ | ||||||
16
Movement of allowance for credit losses are as follows:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Beginning balance | $ | $ | ||||||
| Provision for credit losses, net of recovery | ||||||||
| Exchange rate effect | ( | ) | ( | ) | ||||
| Ending balance | $ | $ | ||||||
Note 5. OTHER RECEIVABLES, NET
The Company’s other receivables are as follows:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Advances to customers* | $ | $ | ||||||
| Employee business advances | ||||||||
| Total | ||||||||
| Less: allowances for credit losses | ( | ) | ( | ) | ||||
| Other receivables, net | $ | $ | ||||||
| * | In fiscal year 2019 and 2020,
the Company entered into contracts with several customers where the Company’s services included both freight charge and cost of
commodities to be shipped to customers’ designated locations. The terms of the contracts required the Company to prepay the commodities.
The Company prepaid for the commodities and reclassified the payment as other receivables as the payments were paid on behalf of
the customers. These payments will be repaid to the Company when either the contract is executed or the contracts are terminated by either
party. The customers were negatively impacted by the pandemic and required additional time to execute the contracts, due to significant
uncertainty on whether the delayed contracts will be executed timely, the Company had provided full allowance due to contract delay during
the fiscal year ended June 30, 2020. The Company subsequently recovered $ |
Movement of allowance for doubtful accounts are as follows:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Beginning balance | $ | $ | ||||||
| Recovery for credit losses | ( | ) | ||||||
| Exchange rate effect | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
Note 6. ADVANCES TO SUPPLIERS
The Company’s advances to suppliers – third parties are as follows:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Freight fees (1) | $ | $ | ||||||
| Less: allowances for credit losses | ( | ) | ( | ) | ||||
| Advances to suppliers-third parties, net | $ | $ | ||||||
| (1) | The advanced freight fee is the
Company’s prepayment made for various shipping costs for shipments from January 1, 2023 to March 31, 2023. As of December
31, 2022 and June 30, 2022, the Company provided allowance of $ |
17
Note 7. PREPAID EXPENSES AND OTHER CURRENT ASSETS
The Company’s prepaid expenses and other assets are as follows:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Prepaid income taxes | $ | $ | ||||||
| Other (including prepaid professional fees, rent, listing fees) | ||||||||
| Total | $ | $ | ||||||
Note 8. OTHER LONG-TERM ASSETS – DEPOSITS, NET
The Company’s other long-term assets – deposits are as follows:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Rental and utilities deposits | $ | $ | ||||||
| Less: allowances for deposits | ( | ) | ( | ) | ||||
| Other long-term assets- deposits, net | $ | $ | ||||||
Movements of allowance for deposits are as follows:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Beginning balance | $ | $ | ||||||
| Less: Write-off | ( | ) | ||||||
| Exchange rate effect | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
Note 9. PROPERTY AND EQUIPMENT, NET
The Company’s net property and equipment as follows:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Motor vehicles | ||||||||
| Computer equipment | ||||||||
| Office equipment | ||||||||
| Furniture and fixtures | ||||||||
| System software | ||||||||
| Leasehold improvements | ||||||||
| Mining equipment | ||||||||
| Total | ||||||||
| Less: Impairment reserve | ( | ) | ( | ) | ||||
| Less: Accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
Depreciation and amortization expenses for the
three months ended December 31, 2022 and 2021 were $
18
Note 10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Salary and reimbursement payable | $ | $ | ||||||
| Professional fees and other expense payable | ||||||||
| Interest payable | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
Note 11. CONVERTIBLE NOTES
On December 19, 2021,
the Company issued two Senior Convertible Notes (the “Convertible Notes”) to two non-U.S. investors for an aggregate purchase
price of $
The Convertible Notes
bear an interest at
The investors may convert any conversion amount into common stock on any date beginning on June 19, 2022.
The Company evaluated the convertible notes agreement under ASC 815 Derivatives and Hedging (“ASC 815”) amended by ASU 2020-06. ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. Based on terms of the convertible notes agreements, the Company’s notes are convertible for a fixed number of shares and do not require the Company to net settle. None of the embedded terms required bifurcation and liability classification.
On March 8, 2022, the
Company issued amended and restated the terms of the notes and issued the Amended and Restated Senior Convertible Notes (the “Amended
and Restated Convertible Notes”) to the investors to change the principal amount of the Convertible Notes to an aggregate principal
amount of $
The terms of the Amended and Restated Convertible Notes are the same as that of the original Convertible Notes, except for the reduced principal amount and the waiver of interest for the $5,000,000 payment made on March 8, 2022.
For the three and six
months ended December 31, 2022, interest expenses related to the aforementioned convertible notes amounted to $
19
Note 12. LEASES
The Company determines if a contract contains a lease at inception which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty. All of the Company’s leases are classified as operating leases.
The Company has several lease agreements with
lease terms ranging from
The Company’s lease agreements do not contain
any material residual value guarantees or material restrictive covenants. The leases generally do not contain options to extend at the
time of expiration and the weighted average remaining lease terms are
For the three months ended December 31, 2022 and
2021, rent expense amounted to approximately and $
The five-year maturity of the Company’s lease obligations is presented below:
| Twelve Months Ending December 31, | Operating Lease Amount | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| Total lease payments | ||||
| Less: Interest | ||||
| Present value of lease liabilities | $ | |||
Note 13. EQUITY
Stock issuances:
On December 14, 2021,
the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with non-U.S. investors and accredited
investors pursuant to which the Company sold to the investors, and the investors agreed to purchase from the Company, an aggregate of
20
The warrants will be
exercisable at any time during the Exercise Window. The “Exercise Window” means the period beginning on or after June 14,
2022 and ending on or prior to 5:00 p.m. (New York City time) on December 13, 2026 but not thereafter; provided, however, that the total
number of the Company’s issued and outstanding shares of common stock, multiplied by the NASDAQ official closing bid price of the
common stock shall equal or exceed $
The Company’s outstanding warrants are classified as equity since they qualify for exception from derivative accounting as they are considered to be indexed to the Company’s own stock and require net share settlement. The fair value of the warrants was recorded as additional paid-in capital from common stock
On January 6, 2022, the
Company entered into Warrant Purchase Agreements with certain warrant holders (the “Sellers”) pursuant to which the Company
agreed to buy back an aggregate of
On January 7, 2022, the Company wired the purchase price to each Seller. Each Seller has agreed to deliver the Warrant to the Company for cancellation as soon as practicable following the closing date, but in no event later than January 13, 2022. The Warrants are deemed cancelled upon the receipt by the Sellers of the purchase price.
Following is a summary of the status of warrants outstanding and exercisable as of December 31, 2022:
| Warrants | Weighted Average Exercise Price | |||||||
| Warrants outstanding, as of June 30, 2022 | $ | |||||||
| Issued | ||||||||
| Exercised | ||||||||
| Repurchased | ||||||||
| Warrants outstanding, as of December 31, 2022 | $ | |||||||
| Warrants exercisable, as of December 31, 2022 | $ | |||||||
| Warrants Outstanding | Warrants Exercisable | Weighted Average Exercise Price | Average Remaining Contractual Life | |||||||
| 2018 Series A, | $ | |||||||||
| 2020 warrants, | $ | |||||||||
| 2021 warrants, | $ | |||||||||
Stock-based compensation:
21
On November 18, 2021, Mr. Jing Wang retired from
his position as a member of the Board, the Chairperson of the Committee, a member of Nominating/Corporate Governance Committee, and a
member of the Audit Committee. In connection with Mr. Wang’s retirement, the Company granted Mr. Wang
On February 4, 2022,
On February 16, 2022, the Company’s Board
approved a consulting agreement pursuant to which the Company will pay the consultant a monthly fee of $
During the three months ended December 31, 2022
and 2021, $
Stock Options:
A summary of the outstanding options is presented in the table below:
| Options | Weighted Average Exercise Price | |||||||
| Options outstanding, as of June 30, 2022 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Cancelled, forfeited or expired | ||||||||
| Options outstanding, as of December 31, 2022 | $ | |||||||
| Options exercisable, as of December 31, 2022 | $ | |||||||
Following is a summary of the status of options outstanding and exercisable as of December 31, 2022:
| Outstanding Options | Exercisable Options | |||||||||||||||||
| Exercise Price | Number | Average Remaining Contractual Life | Average Exercise Price | Number | Average Remaining Contractual Life | |||||||||||||
| $ | $ | |||||||||||||||||
Note 14. NON-CONTROLLING INTEREST
The Company’s non-controlling interest consists of the following:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Trans Pacific Shanghai | $ | ( | ) | $ | ( | ) | ||
| Thor Miner | ( | ) | ( | ) | ||||
| Brilliant Warehouse | ( | ) | ||||||
| Total | $ | ( | ) | $ | ( | ) | ||
22
Note 15. COMMITMENTS AND CONTINGENCIES
Contingencies
From time to time, the Company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity.
SOS Information Technology New York, Inc. (“SOSNY”),
a company incorporated under the laws of state of New York and a wholly owned subsidiary of SOS Ltd., filed a December 9, 2022 lawsuit
in the New York State Supreme Court against Thor Miner, Inc., which is Singularity’s joint venture (“Thor Miner”), Singularity
Future Technology Ltd. (“Singularity” or the “Company,” and, together with Thor Miner, referred to as the “Corporate
Defendants”), Lei Cao, Yang Jie, John F. Levy, Tieliang Liu, Tuo Pan, Shi Qiu, Jing Shan, and Heng Wang (jointly referred to as
the “Individual Defendants”) (collectively, the Individual Defendants and the Corporate Defendants are the “Defendants”).
SOSNY and Defendants entered into a certain settlement
agreement and general mutual release with an Effective Date of December 28, 2022 (“Settlement Agreement”). Pursuant to the
Settlement Agreement, Thor Miner agreed to pay a sum of thirteen million in U.S. dollars ($
Singularity and Thor Miner further covenanted
and agreed that if they receive additional funds from HighSharp (Shenzhen Gaorui) Electronic Technology Co., Ltd. (“HighSharp”)
related to the PSA, they will promptly transfer such funds to SOSNY in an amount not to exceed forty million, five hundred sixty thousand,
five hundred sixty-nine dollars ($
Lawsuits in connection with the Securities Purchase Agreement
On September 23, 2022, Hexin Global Limited and
Viner Total Investments Fund filed a lawsuit against the Company and other defendants in the United States District Court for the Southern
District of New York (the “Hexin lawsuit”). On December 5, 2022, St. Hudson Group LLC, Imperii Strategies LLC, Isyled Technology
Limited, and Hsqynm Family Inc. filed a lawsuit against the Company and other defendants in the United States District Court for the Southern
District of New York (the “St. Hudson lawsuit,” and together with the Hexin lawsuit, the “Investor Actions”).
The plaintiffs in the Investor Actions are investors that entered into a securities purchase agreement (“Securities Purchase Agreement”)
with the Company in late 2021. Each of these plaintiffs asserts causes of action for, among other things, violations of federal securities
laws, breach of fiduciary duty, fraudulent inducement, breach of contract, conversion, and unjust enrichment, and seeks monetary damages
and specific performance to remove legends from certain securities sold pursuant to the Securities Purchase Agreement. The Hexin lawsuit
claims monetary damages of “at least $
23
Lawsuit in connection with the Financial Advisory Agreement
On October 6, 2022, Jinhe Capital Limited (“Jinhe”)
filed a lawsuit against the Company in the United States District Court for the Southern District of New York, asserting causes of actions
for, among other things, breach of contract, breach of the covenant of good faith and fair dealing, conversion, quantum meruit, and unjust
enrichment, in connection with a financial advisory agreement entered into by and between Jinhe and the Company on November 10, 2021.
Jinhe claims monetary damages of “at least $
On January 10, 2023, St. Hudson lawsuit was consolidated with this lawsuit and Hexin lawsuit; on February 24, 2023, all three consolidated actions were dismissed without prejudice by the court, in furtherance of the parties having reached an agreement in principle to settle their disputes.
Putative Class Action
On December 9, 2022, Piero Crivellaro, purportedly on behalf of the persons or entities who purchased or acquired publicly traded securities of the Company between February 2021 and November 2022, filed a putative class action against the Company and other defendants in the United States District Court for the Eastern District of New York, alleging violations of federal securities laws related to alleged false or misleading disclosures made by the Company in its public filings. The plaintiff seeks unspecified damages, plus interest, costs, fees, and attorneys’ fees. As this action is still in the early stage, the Company cannot predict the outcome.
In addition to the above litigations, the Company is also subject to additional contractual litigations as to which it is unable to estimate the outcome.
Government Investigations
Following a publication issued by Hindenburg Research dated May 5, 2022, the Company received subpoenas from the United States Attorney’s Office for the Southern District of New York and the United States Securities and Exchange Commission. The Company is cooperating with the government regarding these matters. At this early stage, the Company is not able to estimate the outcome or duration of the government investigations.
Note 16. INCOME TAXES
On March 27, 2020, the CARES Act was enacted and signed into law and includes, among other things, refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods and alternative minimum tax credit refunds. The Company does not at present expect the provisions of the CARES Act to have a material impact on its tax provision given the amount of net operating losses currently available.
24
The Company’s income tax expenses for three and six months ended December 31, 2022 and 2021 are as follows:
| For the three months Ended December 31 | For the six months Ended December 31 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Current | ||||||||||||||||
| U.S. | $ | - | $ | $ | $ | |||||||||||
| PRC | ||||||||||||||||
| Total income tax expenses | - | |||||||||||||||
The Company’s deferred tax assets are comprised of the following:
| December 31, 2022 | June 30, 2022 | |||||||
| Allowance for doubtful accounts | ||||||||
| U.S. | $ | $ | ||||||
| PRC | ||||||||
| Net operating loss | ||||||||
| U.S. | ||||||||
| PRC | ||||||||
| Total deferred tax assets | ||||||||
| Valuation allowance | ( | ) | ( | ) | ||||
| Deferred tax assets, net - long-term | $ | $ | ||||||
The Company’s operations in the U.S. incurred
a cumulative U.S. federal net operation losses (“NOL”) of approximately $
The Company’s operations in China incurred
a cumulative NOL of approximately $
The Company periodically evaluates the likelihood
of the realization of deferred tax assets (“DTA”) and reduces the carrying amount of the deferred tax assets by a valuation
allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that
could affect the Company’s future realization of deferred tax assets including its recent cumulative earnings experience, expectation
of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company determined that
it is more likely than not its deferred tax assets could not be realized due to uncertainty on future earnings as a result of the company’s
reorganization and venture into new businesses . The Company provided a
25
The Company’s taxes payable consists of the following:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| VAT tax payable | $ | $ | ||||||
| Corporate income tax payable | ||||||||
| Others | ||||||||
| Total | $ | $ | ||||||
Note 17. CONCENTRATIONS
Major Customers
For the three months ended December 31, 2022,
two customers accounted for approximately
For the three months ended December 31, 2021,
four customers accounted for approximately
For the six months ended December 31, 2022, two
customers accounted for
For the six months ended December 31, 2021, four
customers accounted for approximately
Major Suppliers
For the
three months ended December 31, 2022, one supplier accounted for approximately
For the
three months ended December 31, 2021, three suppliers accounted for approximately
For the six months ended December 31, 2022, one
supplier accounted for approximately
For the six months ended December 31, 2021, two
suppliers accounted for approximately
Note 18. SEGMENT REPORTING
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in unaudited condensed consolidated financial statements for detailing the Company’s business segments.
26
The Company’s chief operating decision maker is the Chief Operating Officer, who reviews the financial information of the separate operating segments when making decisions about allocating resources and assessing the performance of the group. As of December 31, 2022, the Company determined that it had two operating segments: (1) freight logistics services which include shipping and warehouse services and (2) the sale of crypto mining machines.
The following tables present summary information by segment for the three and six months ended December 31, 2022 and 2021, respectively:
| For the Three Months Ended December 31, 2022 | ||||||||||||
| Freight Logistics Services | Crypto-mining equipment sales | Total | ||||||||||
| Net revenues | $ | $ | $ | |||||||||
| Cost of revenues | $ | $ | $ | |||||||||
| Gross profit | $ | ( | ) | $ | $ | |||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total capital expenditures | $ | - | $ | - | $ | - | ||||||
| Gross margin% | ( | )% | % | % | ||||||||
| For the Three Months Ended December 31, 2021 | ||||||||||||
| Freight Logistics Services | Crypto-mining equipment sales | Total | ||||||||||
| Net revenues | $ | $ | $ | |||||||||
| Cost of revenues | $ | $ | $ | |||||||||
| Gross profit | $ | $ | $ | |||||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total capital expenditures | $ | $ | $ | |||||||||
| Gross margin% | % | % | % | |||||||||
| For Six Months Ended December 31, 2022 | ||||||||||||
| Freight Logistics Services | Crypto-mining equipment sales | Total | ||||||||||
| Net revenues | $ | $ | $ | |||||||||
| Cost of revenues | $ | $ | - | $ | ||||||||
| Gross profit | $ | ( | ) | $ | $ | |||||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total capital expenditures | $ | $ | $ | |||||||||
| Gross margin% | ( | )% | % | % | ||||||||
| For the Six Months Ended December 31, 2021 (Restated) | ||||||||||||
Freight Logistics | Crypto-mining equipment | Total | ||||||||||
| Net revenues | $ | $ | $ | |||||||||
| Cost of revenues | $ | $ | $ | |||||||||
| Gross profit | $ | ( | ) | $ | $ | ( | ) | |||||
| Depreciation and amortization | $ | $ | $ | |||||||||
| Total capital expenditures | $ | $ | $ | |||||||||
| Gross margin% | ( | )% | % | ( | )% | |||||||
27
Total assets as of:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Freight Logistic Services | ||||||||
Sale of crypto mining machines | ||||||||
| Total Assets | $ | $ | ||||||
The Company’s operations are primarily based in the PRC and U.S, where the Company derives all of its revenues. Management also reviews consolidated financial results by business locations.
Disaggregated information of revenues by geographic locations are as follows:
| For the Three Months Ended | For the Six Months Ended (Restated) | |||||||||||||||
| December 31, | December 31, | December 31, | December 31, | |||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| PRC | $ | $ | $ | $ | ||||||||||||
| U.S. | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
Note 19. RELATED PARTY BALANCE AND TRANSACTIONS
Advance to suppliers-related party
The Company’s advances to suppliers – related party are as follows:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Bitcoin mining hardware and other equipment (1) | $ | $ | ||||||
| Total Advances to suppliers-related party | $ | $ | ||||||
| (1) | On January 10, 2022, the Company’s joint venture, Thor
Miner, entered into a Purchase Agreement with HighSharp. Pursuant to the Purchase Agreement, Thor Miner agreed to purchase certain cryptocurrency
mining equipment. In January and April 2022, Thor Miner made total prepayment of $ |
| Due to production issues from HighSharp, Thor Miner was not able to timely deliver the full quantity of cryptocurrency mining machines to SOSNY under the PSA and was sued by SOSNY for breach of contract on December 9, 2022. |
| The Company entered into a settlement agreement with SOSNY effective on December 28, 2022, under which the Company will repay $13.0 million to SOSNY and terminate the previous agreements and balance of the deposits. The Company also assigned to SOSNY the right for the deposit that Thor Miner has paid to HighSharp. |
| As of December 22, 2022, the balance of advance to HighSharp and deposit from SOSNY amounted to $27,927,583 and $40,560,569, respectively. Thor Miner paid $13.0 million on December 23, 2022 to SOSNY which was received by SOSNY on December 28, 2022. Thor Miner wrote off the balance of the deposit it received from SOSNY and the balance of its payment to HighSharp resulted in net bad debt expenses of $367,014. |
28
Due from related party, net
As of December 31, 2022 and June 30, 2022, the outstanding amounts due from related parties consist of the following:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Zhejiang Jinbang Fuel Energy Co., Ltd (1) | $ | $ | ||||||
| Shanghai Baoyin Industrial Co., Ltd (2) | ||||||||
| LSM Trading Ltd (3) | ||||||||
| Rich Trading Co. Ltd (4) | ||||||||
| Cao Lei (5) | ||||||||
| Less: allowance for doubtful accounts | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
| (1) | As of December 31,2022 and June 30, 2022, the Company advanced approximately $ |
| (2) | As of December 31,2022, the Company advanced approximately $ |
| (3) | As of December 31,2022, the Company advanced $ |
| (4) | On November 16, 2021, the Company entered into a project cooperation agreement with Rich Trading Co. Ltd USA (“Rich Trading”) for the trading of computer equipment. Rich Trading’s bank account was controlled by now-terminated members of the Company’s management and was, at the time, an undisclosed related party. According to the agreement, the Company was to invest $ |
| (5) | The amount represents business advance to Mr. Cao Lei, Chairman of the Board. The Company provided full credit losses for the balance of the receivable. |
Loan receivable- related parties
As of December 31, 2022 and June 30, 2022, the outstanding loan receivable from related parties consists of the following:
| December 31, | June 30, | |||||||
| 2022 | 2022 | |||||||
| Wang, Qinggang (1) | $ | $ | ||||||
| (1) | On June 10, 2021, the Company entered into a loan agreement with Wang Qinggang, CEO and legal representative of Trans Pacific Logistic Shanghai Ltd. The loan is non-interest bearing for loan amounts up to $ |
29
Note 20. SUBSEQUENT EVENTS
On January 9, 2023, the Company entered into an Executive Separation Agreement and General Release (the “Separation Agreement”), with Lei Cao, an employee of the Company and a member of the Board of Directors of the Company (the “Board”), setting forth the terms and conditions related to (1) the termination of Mr. Cao’s employment with the Company and the termination of the employment agreement dated as of November 1, 2021 as well as cancellation and/or termination of certain other agreements relating to Mr. Cao’s employment with the Company; and (2) Mr. Cao’s resignation from the Board, effective as of January 9, 2023.
Pursuant to the Separation
Agreement, Mr. Cao submitted a letter of resignation from the Board on January 9, 2023. In addition, he agreed to forfeit and return to
the Company the
30
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes included elsewhere in the report. This discussion contains forward-looking statements that involve risks and uncertainties. Actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors.
Overview
We previously focused on providing customized freight logistic services, but starting in 2017, we began exploring new opportunities to expand our business and generate more revenue. These opportunities ranged from complementary businesses to other new service and product initiatives. In the fiscal years 2021 and 2022, while we continued to provide our freight logistic business, we expanded our services to include warehousing services provided by our US subsidiary Brilliant Warehouse Service Inc. On January 3, 2022, we changed our corporate name to Singularity Future Technology Ltd. to align with our entry into the digital assets business through our U.S. subsidiaries. During 2022, we were engaged in purchases and sales of cryptocurrency mining machines through our U.S. subsidiary.
As of December 31, 2022, the Company operated in two operating segments, including (1) freight logistics services; (2) the purchase and sale of crypto mining machines, through our subsidiary Thor Miner.
Recent Development
On January 10, 2022, the Company’s joint venture, Thor Miner, entered into a Purchase Agreement with HighSharp. Pursuant to the Purchase Agreement, Thor Miner agreed to purchase certain cryptocurrency mining equipment. In January and April 2022, Thor Miner made total prepayment of $35,406,649 for the order. The Company also entered into sales contract with SOS information Technology New York Inc (“SOSNY”) which specify the products to be delivered within 120 days from acceptance of contract and received deposit form SOSNY in the amount of $48,930,000.
The Company shipped products of $1,325,520 for the year ended June 30, 2022 and $6,153,546 from July to December 2023. Due to production issue from HighSharp, Thor Miner was not able to timely deliver the products to SOSNY according to contract and was sued by SOSNY for breach of contract on December 9, 2022.
On December 22, 2022, the Company entered into a settlement agreement SOSNY in which the Company will repay $13.0 million to SOSNY and terminate the previous agreements and balance of the deposits. The Company also assigned to SOSNY the right for the deposit that Thor Miner has paid to HighSharp. The full settlement payment of $13 million was received by SOSNY on December 28, 2022. SOSNY dismissed the lawsuit with prejudice against Singularity (and other defendants) on December 28, 2022.
Restatement of previously issued financial statements
The Company discovered error in revenue recognition in its subsidiary SGS NY during the audit for the three ended September 30, 2021 that $980,200 of revenue recognized in freight logistics did not meet revenue recognition criteria for the six months ended December 31, 2021.
In addition, in connection with the Company’s restatement for the financial statements as of and for the year ended June 30, 2021, the Company also restated its recovery (provision) for doubtful accounts, net related to its other receivables.
31
Effect of the restatements are as follows:
| Previously | ||||||||||||
| Reported | Adjustments | As Restated | ||||||||||
| Consolidated statement of operations for the six months ended December 31, 2021 | ||||||||||||
| Net revenues | $ | 2,838,135 | $ | (980,200 | ) | $ | 1,857,935 | |||||
| Cost of revenues | (2,651,759 | ) | 580,000 | (2,071,759 | ) | |||||||
| Recovery (provision) for doubtful accounts, net | $ | 1,931,591 | $ | (1,792,713 | ) | $ | 138,878 | |||||
| Net loss | $ | (11,840,032 | ) | $ | (2,192,913 | ) | $ | (14,032,945 | ) | |||
| As | ||||||||||||
| Previously | ||||||||||||
| Reported | Adjustments | As Restated | ||||||||||
| Consolidated statement of cash flow for the six months ended December 31, 2021 | ||||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | (11,840,032 | ) | $ | (2,192,913 | ) | $ | (14,032,945 | ) | |||
| Provision for doubtful accounts | (1,931,591 | ) | 1,792,713 | (138,878 | ) | |||||||
COVID-19
The outbreak of the COVID-19 virus (“COVID-19”) starting from late January 2020 in the PRC has spread rapidly to many parts of the world. In March 2020, the World Health Organization declared COVID-19 as a pandemic. Given the continually expanding nature of the COVID-19 pandemic in China and U.S., our business, results of operations, and financial condition are still adversely affected. The situation remains highly uncertain for any further outbreak or resurgence of COVID-19. It is therefore difficult for us to estimate the impact on our business or operating results that might be adversely affected by any further outbreak or resurgence of COVID-19.
In early December 2022, the Chinese government eased its strict control measures for COVID-19, which led to a surge in increased infections and disruptions in our business operations. Any future impact of COVID-19 on the Company’s China operational results will depend on, to a large extent, future developments and new information that may emerge regarding the duration and resurgence of COVID-19 variants and the actions taken by government authorities to contain COVID-19 or treat its impact, almost all of which are beyond our control.
The impacts of COVID-19 on our business, financial condition, and results of operations include, but are not limited to, the following:
| ● | Our customers have been negatively impacted by the pandemic, which reduced their demand for freight logistics services. For the six months ended December 31, 2022, our companies revenue were down by approximately $0.4 million, or 27.1%. There were no material impact for the three months ended December 31, 2022. |
| ● | Due to travel restrictions between US and China, our joint ventures were unable to start operation as planned which has slowed down our new business development. |
| ● | Our sales of crypto mining machines were materially adversely affected by COVID-19. Specifically, Crypto mining machine manufacturers have been impacted by the constrained supply of the semiconductors used in the production of the highly specialized crypto mining machines; COVID-related issues have exacerbated port congestion and intermittent supplier shutdowns and delays, resulting in delayed shipments and additional expenses to expedite delivery; as a result, we were unable to fulfil our customer orders on a timely basis, resulting cancellation of orders and partial refund of purchase price, as evident from the settlement in SOSNY. |
32
Results of Operations
Comparison of the Three Months Ended December 31, 2022 and 2021
Revenues
Revenues increased by $449,006, or approximately 43.1%, from $1,041,925 for the three months ended December 31, 2022 to $$1,490,931 for the same period in 2021. The increase was primarily due to increases in freight logistic services, which include shipping and warehouse services, and sales of crypto-mining machines.
The following tables present summary information by segments for the three months ended December 31, 2022 and 2021:
| For the Three Months Ended December 31, 2022 | ||||||||||||
| Freight Logistics Services | Crypto-mining equipment sales | Total | ||||||||||
| Net revenues | $ | 1,255,411 | $ | 235,520 | $ | 1,490,931 | ||||||
| Cost of revenues | $ | 1,311,137 | $ | - | $ | 1,311,137 | ||||||
| Gross profit | $ | (55,726 | ) | $ | 235,520 | $ | 179,794 | |||||
| Depreciation and amortization | $ | 76,704 | $ | 13,471 | $ | 76,704 | ||||||
| Total capital expenditures | $ | - | $ | - | $ | - | ||||||
| Gross margin | (4.4 | )% | 100.0 | % | 12.1 | % | ||||||
| For the Three Months Ended December 31, 2021 | ||||||||||||
| Freight Logistics Services | Crypto-mining equipment sales | Total | ||||||||||
| Net revenues | $ | 1,041,925 | $ | - | $ | 1,041,925 | ||||||
| Cost of revenues | $ | 1,024,891 | $ | - | $ | 1,024,891 | ||||||
| Gross profit | $ | 17,034 | $ | - | $ | 17,034 | ||||||
| Depreciation and amortization | $ | 137,807 | $ | - | $ | 137,807 | ||||||
| Total capital expenditures | $ | 6,939 | $ | - | $ | 6,939 | ||||||
| Gross margin | 1.6 | % | - | % | 1.6 | % | ||||||
| % Changes For the Three Months Ended December 31, 2022 and 2021 | ||||||||||||
| Freight Logistics Services | Crypto-mining equipment sales | Total | ||||||||||
| Net revenues | 20.5 | % | 100.0 | % | 43.1 | % | ||||||
| Cost of revenues | 27.9 | % | - | 27.9 | % | |||||||
| Gross profit | (427.2 | )% | 100.0 | % | 955.5 | % | ||||||
| Depreciation and amortization | (44.3 | )% | - | (44.3 | )% | |||||||
| Total capital expenditures | (100.0 | )% | - | (100.0 | )% | |||||||
| Gross margin | (6.0 | )% | 100.0 | % | 10.5 | % | ||||||
33
Disaggregated information of revenues by geographic locations are as follows:
| For the Three Months Ended | ||||||||
| December 31, | December 31, | |||||||
| 2022 | 2021 | |||||||
| PRC | 912,611 | 868,255 | ||||||
| U.S. | 578,320 | 173,670 | ||||||
| Total revenues | $ | 1,490,931 | $ | 1,041,925 | ||||
Revenues
Revenues from Freight Logistics Services
Freight logistics services primarily consist of cargo forwarding, brokerage, warehouse and other freight services. Revenues from freight logistics services was $1,255,411 for the three months ended December 31, 2022, an increase of $213,486, or approximately 20.5%, as compared to $1,041,925 for the same period in 2021 mainly due to the increase in our U.S. operations of our subsidiary Brilliant Warehouse for the three months ended December 31, 2022. Brilliant Warehouse was in the start-up stage for the three months ended December 31, 2021 and did not contribute significant revenue.
Revenues from Sales of Crypto Mining Machines
Our subsidiary, Thor Miner entered into a Purchase and Sale Agreement with SOS Information Technology New York Inc. (the “Buyer”). Pursuant to the Purchase and Sale Agreement to sell certain cryptocurrency mining hardware and other equipment. Since our vendor shipped the products to the Buyer directly which we did not control the delivery and did not bear inventory risk, we recognized net revenue of $235,520. Gross revenue and gross purchases amounted to $2,213,888 and $1,978,368, respectively for the three months ended December 31, 2022. The contract was terminated in December 2022.
Operating Costs and Expenses
Operating costs and expenses increased by $1,481,176 or approximately 40.1%, from $3,695,991 for the three months ended December 31, 2021 to $5,177,166 for the three months ended December 31, 2022. This increase was mainly due to the increase in selling expenses, stock-based compensation, and general and administrative expenses, which offset by decrease of cost of revenue as discussed below.
The following table sets forth the components of our costs and expenses for the periods indicated:
For the Three Months Ended December 31, | ||||||||||||||||||||||||
| 2022 | 2021 | Change | ||||||||||||||||||||||
| US$ | % | US$ | % | US$ | % | |||||||||||||||||||
| Revenues | 1,490,931 | 100.0 | % | 1,041,925 | 100.0 | % | 449,006 | 43.1 | % | |||||||||||||||
| Cost of revenues | 1,311,137 | 87.9 | % | 1,024,891 | 98.4 | % | 286,246 | 27.9 | % | |||||||||||||||
| Gross margin | 12.1 | % | N/A | 1.6 | % | N/A | 10.5 | % | N/A | |||||||||||||||
| Selling expenses | 26,848 | 1.8 | % | 197,225 | 18.9 | % | (170,377 | ) | (86.4 | )% | ||||||||||||||
| General and administrative expenses | 3,743,458 | 252.0 | % | 2,151,431 | 206.5 | % | 1,592,027 | 74.0 | % | |||||||||||||||
| Recovery (provision) for doubtful accounts, net | - | 0.0 | % | (104,683 | ) | (10 | )% | 104,683 | (100.0 | ) | ||||||||||||||
| Impairment loss of Cryptocurrencies | 13,280 | 0.9 | % | 50,127 | 4.8 | % | (36,849 | ) | 100.0 | % | ||||||||||||||
| Stock-based compensation | 82,444 | 5.5 | % | 377,000 | 36.2 | % | (294,556 | ) | (78.1 | )% | ||||||||||||||
| Total costs and expenses | 5,177,167 | 347.2 | % | 3,695,991 | 354.7 | % | 1,481,176 | 40.1 | % | |||||||||||||||
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Cost of Revenues
Cost of revenues for our freight logistics segment mainly consisted primarily of freight costs to various freight carriers, cost of labor, warehouse rent and other overhead and sundry costs. Cost of revenues for freight logistic segment was $1,311,137 for the three months ended December 31, 2022, an increase of $286,246, or approximately 27.9 %, as compared to $1,024,891 for the same period in 2021 as our revenue increased. The increase was mainly due to increase in freight cost operations as our revenue increased.
Our gross margin was 12.1% and 1.6% for the three months ended December 31, 2022 and 2021, respectively.
Our freight logistic margin decreased from 1.6% to (4.4)% from our PRC operations due to rising freight cost from carriers in PRC as we were not able to negotiate better pricing due to lower volume than the previous year.
The overall increase in our margin was due to the sales of crypto-mining machines that we started providing in 2022. We recognized this revenue on a net basis, thus increasing the overall margin of our operations.
Operating Costs and Expenses
Operating costs and expenses increased by $1,481,176 or approximately 40.1%, from $3,695,991 for the three months ended December 31, 2021 to $5,177,166 for the three months ended December 31, 2022. This increase was mainly due to the increase in general administrative expenses as discussed below.
Selling Expenses
Our selling expenses consisted primarily of salaries for our sales representatives. For the three months ended December 31, 2022, we had $26,848 of selling expenses, as compared to $197,225 for the same period in 2021, which represents a decrease of $170,377 or approximately 86.4%. The decrease was mainly due to a decrease in salaries as we reduced the salary of the freight logistics segment for our selling team under COVID-19 compared to the same period of 2021.
General and Administrative Expenses
Our general and administrative expenses consist primarily of salaries and benefits, travel expenses for administration department, office expenses, regulatory filing and professional service fees including audit, legal and IT consulting. For the three months ended December 31, 2022, we had $3,743,458 of general and administrative expenses, as compared to $2,151,431 for the same period in 2021, representing an increase of $ 1,592,027, or approximately 74.0%. The increase was mainly due to the increase in salaries & wages and office related costs of approximately $0.5 million as we hired more employees to our new subsidiaries such as Gorgeous Trading Ltd. and Brilliant Warehouse Service, Inc., and additional professional fees of approximately $2.0 million which are mainly legal fees.
Impairment Loss of Cryptocurrencies
The Company recorded $13,280 and $50,127 impairment loss for the three months ended December 31, 2022 and 2021 due to recent price drop in bitcoin which the Company deemed a triggering event for impairment testing.
Stock-based Compensation
Stock-based compensation was $82,444 for the three months ended December 31, 2022, a decrease of $294,556 or 78.1%, as compared to $377,000 for the same period in 2021 because less stock compensation was granted in current period.
Other Expenses, Net
Total other expenses, net was $60,631 for the three months ended December 31, 2022, an increase of approximately $30,750 or 102.9%, as compared to $29,881 for the same period in 2021. The increase was mainly due to interest of our $5.0million convertible notes which we issued in December 2021.
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Loss from disposal of Subsidiaries and VIE
On December 31, 2021, our wholly owned foreign subsidiary Trans Pacific Beijing entered into a series of agreements to terminate our VIE structure and terminate the existence of our formerly controlled entity Sino-Global Shipping Agency Ltd. (“Sino-China”) since Sino-China has no active operations. We controlled Sino-China through Trans Pacific Beijing. In addition, the Company dissolved its subsidiary Sino-Global Shipping LA, Inc. Total loss from disposal was approximately $6.1 million mainly from write off of due from non-controlling interest of Sino-China. Since the disposal did not represent any strategic change of the Company’s operation, the disposal was not presented as discontinued operations.
Taxes
We recorded no income tax expense for both three months ended December 31, 2022 and 2021.
We have incurred a cumulative U.S. federal net operating loss (“NOL”) of approximately $22,000,000 as of June 30, 2022, which may reduce future federal taxable income. The NOL generated prior to the three months ended December 31, 2022 amounted to approximately $4,1000,000. The Tax benefit derived from this NOL was approximately $861,000. As of December 31, 2022, our cumulative NOL amounted to approximately $29,400,000. This may reduce our future federal taxable income, approximately $1,400,000 of which will expire in 2037. The remaining balance will be carried forward indefinitely.
Our operations in China have incurred a cumulative NOL of approximately $1,333,000 as of June 30, 2022, which was mainly from Sino -China which was disposed of during the three months ended December 31, 2022. During the three months ended December 31, 2022 we generated an additional NOL of approximately $130,000. As of December 31, 2022, our PRC subsidiaries’ cumulative NOL amounted to approximately $5,567,000, which may reduce future taxable income and will expire by 2026.
We periodically evaluate the likelihood of the realization of deferred tax assets, and reduce the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect our future realization of deferred tax assets including our recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. We determined that it is more likely than not our deferred tax assets could not be realized due to uncertainty on future earnings as a result of the company’s reorganization and venture into new businesses. We provided a 100% allowance for deferred tax assets as of December 31, 2022. The net decrease in valuation for the three months ended December 31, 2022 amounted to approximately $894,000 based on management’s reassessment of the amount of our deferred tax assets that are more likely than not to be realized.
Net Loss
As a result of the foregoing, we had a net loss of $3,746,867 for the three months ended December 31, 2022, compared to $8,815,563 for the same period in 2021. After the deduction of non-controlling interest, net loss attributable to us was $3,732,496 for the three months ended December 31, 2022, compared to $8,760,575 for the same period in 2021. Comprehensive loss attributable to us was $3,738,793 for the three months ended December 31, 2022, as compared to $9,136,530 for the same period in 2021.
Comparison of the Six Months ended December 31, 2022 and 2021
Revenues
Revenues increased by $854,200, or approximately 46.0 %, from $1,857,935 for the six months ended December 31, 2021 to $ 2,712,135 for the same period in 2022. The increase was primarily due to increased revenue from our sale of crypto mining machines.
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The following tables present summary information by segments mainly regarding the top-line financial results for the six months ended December 31, 2022 and 2021:
| For the Six Months Ended December 31, 2022 | ||||||||||||
| Sale of crypto mining machines | Freight Logistics Services | Total | ||||||||||
| Net revenues | $ | 732,565 | $ | 1,979,570 | $ | 2,712,135 | ||||||
| Cost of revenues | $ | - | $ | 2,056,764 | $ | 2,056,764 | ||||||
| Gross profit | $ | 732,565 | $ | (77,194 | ) | $ | 655,371 | |||||
| Depreciation and amortization | $ | 20,729 | $ | 155,649 | $ | 155,649 | ||||||
| Total capital expenditures | $ | 40,777 | $ | 150,966 | $ | 150,966 | ||||||
| Gross margin% | 100 | % | (3.9 | )% | 24.2 | % | ||||||
For the Six Months Ended (Restated) | ||||||||||||
| Crypto- mining equipment sales | Freight Logistics Services | Total | ||||||||||
| Net revenues | $ | - | $ | 1,857,935 | $ | 1,857,935 | ||||||
| Cost of revenues | $ | - | $ | 2,071,759 | $ | 2,071,759 | ||||||
| Gross profit | $ | - | $ | (213,824 | ) | $ | (213,824 | ) | ||||
| Depreciation and amortization | $ | - | $ | 278,517 | $ | 278,517 | ||||||
| Total capital expenditures | $ | - | $ | 624,086 | $ | 624,086 | ||||||
| Gross margin% | - | % | (11.5 | )% | (11.5 | )% | ||||||
| ● | Including related party revenue from Zhejiang Jinbang Fuel Energy Co., Ltd of nil and $223,705 for the six months ended December 31, 2022 and the same period in 2021, respectively. |
| % Changes For the Six Months Ended December 31, 2022 to 2021 | ||||||||||||
| Crypto- mining equipment sales | Freight Logistics Services | Total | ||||||||||
| Net revenues | 100.0 | % | 6.5 | % | 46.0 | % | ||||||
| Cost of revenues | - | (0.7 | )% | (0.7 | )% | |||||||
| Gross profit | 100.0 | % | (63.9 | )% | (406.5 | )% | ||||||
| Depreciation and amortization | 100.0 | % | (44.1 | )% | (44.1 | )% | ||||||
| Total capital expenditures | 0.0 | % | (75.8 | )% | (75.8 | )% | ||||||
| Gross margin% | 100.0 | % | 7.6 | % | 35.7 | % | ||||||
Disaggregated information of revenues by geographic locations are as follows:
For the six months ended | For the six months ended December 31, | |||||||
December 31, 2022 | 2021 (Restated) | |||||||
| PRC | $ | 1,160,821 | $ | 1,593,332 | ||||
| U.S. | 1,551,314 | 264,603 | ||||||
| Total revenues | $ | 2,712,135 | $ | 1,857,935 | ||||
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Revenues
Revenues from Freight Logistics Services
Freight logistics services primarily consist of cargo forwarding, brokerage and warehouse services. The revenues from freight logistics services were $1,979,570 for the six months ended December 31, 2022, an increase of $121,635, or 6.5%, as compared to $1,857,935 for the same period in 2021. The increase was mainly due to an increase of revenue from our U.S. subsidiary Brilliant Warehouse of approximately $0.6 million and decrease in shipping revenue of approximately $0.1 million from our PRC operation due to a decrease in demand from one major customer.
Revenues from Sales of Crypto Mining Machines
For the six months ended December 31, 2022 and 2021, sale of crypto mining machines generated revenues of $732,565 and nil, respectively as we entered into sales contract with SOSNY. Our contract with the Buyer was terminated in December 2022.
Operating Costs and Expenses
Operating costs and expenses decreased by $490,607 or 5.1%, from $9,677,029 for the six months ended December 31, 2021 to $ 9,186,422 for the six months ended December 31, 2022. This decrease was mainly due to the significant decrease in stock-based compensation, partially offset by the increase in general and administrative expenses
The following table sets forth the components of the Company’s costs and expenses for the periods indicated:
| For the Six Months Ended December 31, | ||||||||||||||||||||||||
| 2022 | 2021 | Change | ||||||||||||||||||||||
| US$ | % | US$ | % | US$ | % | |||||||||||||||||||
| Revenues | 2,712,135 | 100.0 | % | 1,857,935 | 100.0 | % | 854,200 | 46.0 | % | |||||||||||||||
| Cost of revenues | 2,056,764 | 75.8 | % | 2,071,759 | 111.5 | % | (14,995 | ) | (0.7 | )% | ||||||||||||||
| Gross margin | 24.2 | % | (11.5 | )% | N/A | 35.7 | % | |||||||||||||||||
| Selling expenses | 54,223 | 2.0 | % | 271,621 | 14.6 | % | (217,398 | ) | (80.0 | )% | ||||||||||||||
| General and administrative expenses | 6,723,704 | 247.9 | % | 4,118,000 | 221.6 | % | 2,605,704 | 63.3 | % | |||||||||||||||
| Impairment loss of Cryptocurrencies | 14,801 | 0.5 | % | 50,127 | 2.7 | % | (35,326 | ) | (70.5 | )% | ||||||||||||||
| Recovery (provision) for doubtful accounts, net | 7,153 | 0.3 | % | (138,878 | ) | (7.5 | )% | 146,031 | (105.2 | ) | ||||||||||||||
| Stock-based compensation | 329,777 | 12.2 | % | 3,304,400 | 177.9 | % | (2,974,623 | ) | (90.0 | )% | ||||||||||||||
| Total costs and expenses | 9,186,422 | 338.7 | % | 9,677,029 | 520.8 | % | (490,607 | ) | (5.1 | )% | ||||||||||||||
Cost of Revenues
Cost of revenues consisted primarily of freight costs to various freight carriers, the cost of labor, and other overhead and sundry costs. Cost of revenues was $2,056,764 for the six months ended December 31, 2022, a decrease of $14,995, or approximately 0.7%, as compared to $2,071,759 for the same period in 2021.
Our freight logistic margin increased from (11.5)% to (3.9)% mainly due to an improvement in Brilliant Warehouse’s efficiency as it generated more revenue.
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The overall increase in our margin was due to the sales of crypto-mining machines for the six months ended December 31, 2022. We recognized this revenue on a net basis, thus increasing the overall margin of our operations.
Selling Expenses
Our selling expenses consisted primarily of salaries, meals and entertainment and travel expenses for our sales representatives. For the six months ended December 31, 2021, we had $271,621 of selling expenses, as compared to $54,223 for the same period in 2022, which represents a decrease of $217,398 or approximately 80.0%. The decrease was mainly due to a decrease in salaries and travel expenses for our freight logistics segment in the PRC due to the impact of COVID-19 compared to the same period of 2021.
General and Administrative Expenses
Our general and administrative expenses consist primarily of salaries and benefits, travel expenses for administration department, office expenses, regulatory filing and professional service fees including audit, legal and IT consulting. For the six months ended December 31, 2022, we had $6,723,704 of general and administrative expenses, as compared to $4,118,000 for the same period in 2021, representing an increase of $2,605,704, or approximately 63.3%. The increase was mainly due to the increase in employees, offices and other general and administrative expense approximately of $0.3 million as we hired more employees and opened more office locations to expand our logistics services and additional professional fees of approximately $3.6 million which are mainly legal fees due to professional fees paid to the Company’s special committee to investigate claims of alleged fraud, misrepresentation, and inadequate disclosure related to the Company and certain of its management personnel raised in the Hindenburg Report and other related matters.
Impairment Loss of Cryptocurrencies
The company recorded $14,801 and $50,127 impairment loss for the six months ended December 31, 2022 and 2021, respectively, due to recent price drops in bitcoin, which the Company deemed a triggering event for impairment testing.
Stock-based Compensation
Stock-based compensation was $329,777 for the six months ended December 31, 2022, a decrease of $2,974,623 or 90.0%, as compared to $3,304,400 for the same period in 2021, as we issued less stock compensation to employees and directors.
Loss from Disposal of Subsidiaries and VIE
On December 31, 2021, our wholly owned foreign subsidiary Trans Pacific Beijing entered into a series of agreements to terminate our VIE structure and terminate the existence of our formerly controlled entity Sino-Global Shipping Agency Ltd. (“Sino-China”) since Sino-China has no active operations. We controlled Sino-China through Trans Pacific Beijing. In addition, the Company dissolved its subsidiary Sino-Global Shipping LA, Inc. Total loss from disposal was approximately $6.1 million, which was primarily due to a write off of due from the non-controlling interest of Sino-China. This disposal was not presented as discontinued operations because it did not represent any strategic change of the Company’s operations.
Taxation
We recorded income tax expenses of $103,426 and nil for the six months ended December 31, 2022 and 2021, respectively.
We have incurred a cumulative U.S. federal net operating loss (“NOL”) of approximately $22,000,000 as of June 30, 2022, which may reduce future federal taxable income. The NOL generated prior to the year ended June 30, 2017 amounted to approximately $1,400,000 will expire in 2037 and the remaining balance carried forward indefinitely. During the six months ended December 31, 2022, approximately $7,300,000 of additional NOL was generated and the tax benefit derived from such NOL was approximately $1,500,000.
Our operations in China have incurred a cumulative a cumulative NOL of approximately $1,333,000 as of June 30, 2022, which may reduce future taxable income. During the six months ended December 31, 2022, additional NOL of approximately $245,000 was generated. The NOL amounted to approximately $5,567,000 start expiring from 2023 and the remaining balance of NOL will be expired by 2026.
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We periodically evaluate the likelihood of the realization of deferred tax assets, and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect our future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. We determined that it is more likely than not our deferred tax assets could not be realized due to uncertainty on future earnings as a result of the deterioration of trade negotiation between the U.S. and China. We provided a 100% allowance for its deferred tax assets as of December 31, 2022. The net decrease in valuation for the six months ended December 31, 2022 amounted to approximately $1,464,000 based on management’s reassessment of the amount of our deferred tax assets that are more likely than not to be realized.
Net loss
As a result of the foregoing, we had a net loss of $6,697,193 for the six months ended December 31, 2022, compared to $14,032,945 for the same period in 2021. After the deduction of non-controlling interest, net loss attributable to the Company was $6,816,847 for the six months ended December 31, 2022, compared to $13,721,755 for the same period in 2021. Comprehensive loss attributable to the Company was $6,669,146 for the six months ended December 31, 2022, compared to $13,471,980 for the same period in 2021.
Liquidity and Capital Resources
Cash Flows and Working Capital
As of December 31, 2022, we had $36,068,874 in cash (including cash on hand and cash in bank). The majority of our cash is in banks located in the U.S.
On December 19, 2021, the Company issued two Convertible Notes to two non-U.S. investors for an aggregate purchase price of $10,000,000.
The Convertible Notes bear interest at 5% annually and may be converted into shares of the Company’s common stock, no par value per share at a conversion price of $3.76 per share. At the investors’ request, we prepaid $5,000,000 in the aggregate principal amount, without interest, of the Convertible Notes on March 8, 2022. Interest for the principal of $5,000,000 repaid was waived.
As of December 31, 2022, we had the following loans outstanding:
| Loans | Maturities | Interest rate | December 31, 2022 | |||||||
| Convertible Notes | December 2023 | 5 | % | $ | 5,000,000 | |||||
The following table sets forth a summary of our cash flows for the periods as indicated:
| For the Six Months Ended December 31, | ||||||||
| 2022 | 2021 (Restated) | |||||||
| Net cash used in operating activities | $ | (19,364,517 | ) | $ | (5,640,003 | ) | ||
| Net cash (used in) provided by investing activities | $ | 474,563 | $ | (2,210,346 | ) | |||
| Net cash provided by financing activities | $ | - | $ | 14,408,503 | ||||
| Effect of exchange rate fluctuations on cash | $ | (874,454 | ) | $ | 5,939 | |||
| Net (decrease) increase in cash | $ | (19,764,408 | ) | $ | 6,564,093 | |||
| Cash at the beginning of period | $ | 55,833,282 | $ | 44,837,317 | ||||
| Cash at the end of period | $ | 36,068,874 | $ | 51,401,410 | ||||
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The following table sets forth a summary of our working capital:
| December 31, | June 30, | |||||||||||||||
| 2022 | 2022 | Variation | % | |||||||||||||
| Total Current Assets | $ | 37,509,123 | $ | 63,165,462 | $ | (25,656,339 | ) | (40.6 | )% | |||||||
| Total Current Liabilities | $ | 10,688,550 | $ | 25,212,959 | $ | (14,524,409 | ) | (57.6 | )% | |||||||
| Working Capital | $ | 26,820,573 | $ | 37,952,503 | $ | (11,131,930 | ) | (29.3 | )% | |||||||
| Current Ratio | 3.51 | 2.51 | 1.00 | 39.8 | % | |||||||||||
In assessing the liquidity, we monitor and analyze our cash on-hand and our operating and capital expenditure commitments. Our liquidity needs are to meet our working capital requirements, operating expenses and capital expenditure obligations. As of December 31, 2022, our working capital was approximately $26.8 million and we had cash of approximately $36.1 million. We believe our current working capital is sufficient to support our operations and debt obligations as they become due one year through the date of this report.
Operating Activities
Our net cash used in operating activities was approximately $19.4 million for the six months ended December 31, 2022. The operating cash outflow for the six months ended December 31, 2022 was primarily attributable to our net loss of approximately $6.7 million, deferred revenue of approximately $6.8 million where we realized revenue from the sale of crypto mining equipment and decrease in refund payable of $13.0 million as a result of the settlement payment to SOSNY, offset by cash inflow consisting of advance to a related party supplier of approximately $6.2 million which we realized cost for sale of cryptocurrency equipment.
Our net cash used in operating activities was approximately $5.6 million for six months ended December 31, 2021. The operating cash outflow for the six months ended December 31, 2021 was primarily attributable to our net loss of approximately $14.0 million, adjusted by non cash stock-based compensation of approximately $3.3 million and loss on disposal of subsidiaries of approximately $6.1 million. We had an increase in cash outflow of other receivables of approximately $1.7 million.
Investing Activities
Net cash provided by investing activities was approximately $0.5 million for the six months ended December 31, 2022 due to repayment of loan receivable of approximately $0.5 million from Wang Qinggang, a related party and cash inflow of $90,000 from the sale of property and equipment and purchase of equipment of approximately $151,000.
Net cash used in investing activities was approximately $2.2 million for the six months ended December 31, 2021 due to the acquisition of property and equipment of approximately $0.6 million, investment of approximately $0.2 million to a joint venture named LSM Trading Ltd., in which we hold a 40% of equity interest. We loaned Shanghai Baoyin Industrial Co., Ltd., a related party and made advance of approximately $1.5 million. The loan is unsecured and non-interest bearing.
Financing Activities
We did not have any financing activities for the six months ended December 31,2022.
Net cash provided by financing activities was approximately $14.4 million for the six months ended December 31, 2021 due to issuance of common stock to private investor approximately $4.6 million and proceeds from convertible notes of $10 million and repayment of Economic Injury Disaster Loan of $0.2 million.
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Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions and estimates that affect the amounts reported. Note 2, “Summary of Significant Accounting Policies” of the Notes to consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended June 30, 2022 (the “2022 Form 10-K”) describe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the 2022 Form 10-K.
Off-Balance Sheet Arrangements
None.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
As of December 31, 2022, the Company carried out an evaluation, under the supervision of and with the participation of its management, including the Company’s Chief Operating Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on the foregoing evaluation, the Chief Operating Officer concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were not effective to ensure that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms due to ineffective internal controls over financial reporting that stemmed from the following material weaknesses:
| ● | Lack of segregation of duties for accounting personnel who prepared and reviewed the journal entries in some of the subsidiaries within the consolidation, lack of supervision, coordination and communication of financial information between different entities within the Group; |
| ● | Lack of a full time U.S. GAAP personnel in the accounting department to monitor and reconcile the recording of the transactions which led to error in revenue recognition in previously issued financial statements; |
| ● | Lack of resources with technical competency to address, review and record non-routine or complex transactions under U.S. GAAP; |
| ● | Lack of management control reviews of the budget against actual with analysis of the variance with a precision that can be explained through the analysis of the accounts; |
| ● | Lack of proper procedures in identifying and recording related party transactions which led to restatement of previously issued financial statements; |
| ● | Lack of proper procedures to maintain supporting documents for accounting records; and |
| ● | Lack of proper oversight for the Company’s cash disbursement process that led to misuse of the Company funds by its former executive. |
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In order to remediate the material weaknesses stated above, we intend to explore implementing additional policies and procedures, which may include:
| ● | Hiring additional accounting staff to report the internal financial timely; |
| ● | Hiring of CEO and CFO to properly set up the Company’s internal control and oversight process; |
| ● | Reporting other material and non-routine transactions to the Board and obtain proper approval; |
| ● | Recruiting additional qualified professionals with appropriate levels of U.S. GAAP knowledge and experience to assist in resolving accounting issues in non-routine or complex transactions; |
| ● | Developing and conducting U.S. GAAP knowledge, SEC reporting and internal control training to senior executives, management personnel, accounting departments and the IT staff, so that management and key personnel understand the requirements and elements of internal control over financial reporting mandated by the U.S. securities laws; |
| ● | Setting up budgets and developing expectations based on understanding of the business operations, compare the actual results with the expectations periodically and document the reasons of the fluctuations with further analysis. This should be done by CFO and reviewed by CEO, communicated with the Board; |
| ● | Strengthening corporate governance; |
| ● | Setting up policies and procedures for the Company’s related party identification to properly identify, record and disclose related party transactions; and |
| ● | Setting up proper procedures for the Company’s fund disbursement process to ensure that cash is disbursed only upon proper authorization, for valid business purposes, and that all disbursements are properly recorded. |
Changes in Internal Control over Financial Reporting.
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
For a discussion of our legal proceedings, see the information in Part I, “Item 1. Business – Recent Developments” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2022. There have been no material changes to the legal proceedings disclosed in our 2022 Form 10-K.
Other than the items disclosed in our 2022 Form 10-K in “Item 1. Business – Recent Developments,” there are no other legal proceedings currently pending against us, or known to be contemplated by any governmental agency, which we believe would have a material effect on our business, financial position or results of operations.
Item 1A. Risk Factors
As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our (i) Registration Statement on Form S-3, filed with the SEC on March 3, 2021, (ii) Annual Report on Form 10-K for the fiscal year ended June 30, 2022, as filed with the SEC on March 6, 2023. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q:
| (1) | Incorporated herein by reference to exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 5, 2023. |
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SINGULARITY FUTURE TECHNOLOGY, LTD. | ||
| March 6, 2023 | By: | /s/ Jing Shan |
| Jing Shan | ||
|
Chief Operating Officer (Principal Executive Officer and Principal Financial and Accounting Officer) | ||
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Exhibit 31
CERTIFICATIONS REQUIRED BY
RULE 13a-14(a)/15d-14(a), AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jing Shan, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Singularity Future Technology Ltd. (the “registrant”) for the quarterly period ended December 31, 2022; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditor and the audit committee of the registrant’s board of directors: |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
| Date: March 6, 2023 | By: | /s/ Jing Shan |
| Jing Shan | ||
| Chief Operating Officer | ||
| (Principal Executive Officer and Principal Financial and Accounting Officer) |
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Singularity Future Technology Ltd. (the “Company”) for the quarterly period ended December 31, 2022, as filed with the Securities and Exchange Commission (the “Report”), I, Jing Shan, Chief Operating Officer of the Company, certify, based on my knowledge, pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report. |
| Date: March 6, 2023 | By: | /s/ Jing Shan |
| Jing Shan | ||
| Chief Operating Officer | ||
| (Principal Executive Officer and Principal Financial and Accounting Officer) |
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
| Preferred stock, par value (in Dollars per share) | ||
| Preferred stock, shares issued | ||
| Preferred stock, shares outstanding | ||
| Common stock, shares authorized | 50,000,000 | 50,000,000 |
| Common stock, par value (in Dollars per share) | ||
| Common stock, shares issued | 22,244,333 | 22,244,333 |
| Common stock, shares outstanding | 22,244,333 | 22,244,333 |
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Income Statement [Abstract] | ||||
| Net revenues | $ 1,490,931 | $ 1,041,925 | $ 2,712,135 | $ 1,857,935 |
| Cost of revenues | (1,311,137) | (1,024,891) | (2,056,764) | (2,071,759) |
| Gross profit | 179,794 | 17,034 | 655,371 | (213,824) |
| Selling expenses | (26,848) | (197,225) | (54,223) | (271,621) |
| General and administrative expenses | (3,743,458) | (2,151,431) | (6,723,704) | (4,118,000) |
| Impairment loss of Cryptocurrencies | (13,280) | (50,127) | (14,801) | (50,127) |
| Recovery (provision) for doubtful accounts, net | 104,683 | (7,153) | 138,878 | |
| Stock-based compensation | (82,444) | (377,000) | (329,777) | (3,304,400) |
| Total operating expenses | (3,866,030) | (2,671,100) | (7,129,658) | (7,605,270) |
| Operating loss | (3,686,236) | (2,654,066) | (6,474,287) | (7,819,094) |
| Loss from disposal of subsidiary and VIE | (6,131,616) | (6,131,616) | ||
| Other expenses, net | (60,631) | (29,881) | (119,480) | (82,235) |
| Net loss before provision for income taxes | (3,746,867) | (8,815,563) | (6,593,767) | (14,032,945) |
| Income tax expense | (103,426) | |||
| Net loss | (3,746,867) | (8,815,563) | (6,697,193) | (14,032,945) |
| Net loss attributable to non-controlling interest | (14,371) | (54,988) | 119,655 | (311,190) |
| Net loss attributable to controlling shareholders of the Company. | (3,732,496) | (8,760,575) | (6,816,848) | (13,721,755) |
| Comprehensive loss | ||||
| Net loss | (3,746,867) | (8,815,563) | (6,697,193) | (14,032,945) |
| Other comprehensive income (loss) - foreign currency | (42,675) | (341,756) | 110,094 | 276,005 |
| Comprehensive loss | (3,789,542) | (9,157,319) | (6,587,099) | (13,756,940) |
| Less: Comprehensive loss attributable to non-controlling interest | (50,749) | (20,789) | 82,047 | (284,960) |
| Comprehensive loss attributable to controlling shareholders of the Company. | $ (3,738,793) | $ (9,136,530) | $ (6,669,146) | $ (13,471,980) |
| Loss per share | ||||
| Basic and diluted (in Dollars per share) | $ (0.18) | $ (0.54) | $ (0.32) | $ (0.87) |
| Weighted average number of common shares used in computation | ||||
| Basic and diluted (in Shares) | 21,238,901 | 16,201,026 | 21,227,819 | 15,836,703 |
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) (Parentheticals) - $ / shares |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Income Statement [Abstract] | ||||
| Loss per share basic and diluted | $ (0.18) | $ (0.54) | $ (0.32) | $ (0.87) |
| Weighted average number of common shares used in computation basic and diluted | 21,238,901 | 16,201,026 | 21,227,819 | 15,836,703 |
Condensed Consolidated Statements of Changes in Equity (Deficiency) (Unaudited) - USD ($) |
Preferred Stock |
Common Stock |
Additional paid-in capital |
Shares to be issued |
Accumulated deficit |
Accumulated other comprehensive loss |
Noncontrolling interest |
Total |
|---|---|---|---|---|---|---|---|---|
| BALANCE at Jun. 30, 2021 | $ 82,555,700 | $ 2,334,962 | $ (34,321,762) | $ (729,096) | $ (7,415,631) | $ 42,424,173 | ||
| BALANCE (in Shares) at Jun. 30, 2021 | 15,132,113 | |||||||
| Stock compensation issue to employee | $ 2,927,400 | 2,927,400 | ||||||
| Stock compensation issue to employee (in Shares) | 1,020,000 | |||||||
| Foreign currency translation | 625,730 | (7,969) | 617,761 | |||||
| Net loss | (4,961,180) | (256,202) | (5,217,382) | |||||
| BALANCE at Sep. 30, 2021 | $ 85,483,100 | 2,334,962 | (39,282,942) | (103,366) | (7,679,802) | 40,751,952 | ||
| BALANCE (in Shares) at Sep. 30, 2021 | 16,152,113 | |||||||
| BALANCE at Jun. 30, 2021 | $ 82,555,700 | 2,334,962 | (34,321,762) | (729,096) | (7,415,631) | 42,424,173 | ||
| BALANCE (in Shares) at Jun. 30, 2021 | 15,132,113 | |||||||
| Net loss | (14,032,945) | |||||||
| BALANCE at Dec. 31, 2021 | $ 85,860,100 | 2,334,962 | 4,563,908 | (48,043,517) | (479,321) | (1,781,541) | 42,454,591 | |
| BALANCE (in Shares) at Dec. 31, 2021 | 17,652,113 | |||||||
| BALANCE at Sep. 30, 2021 | $ 85,483,100 | 2,334,962 | (39,282,942) | (103,366) | (7,679,802) | 40,751,952 | ||
| BALANCE (in Shares) at Sep. 30, 2021 | 16,152,113 | |||||||
| Stock compensation issue to former director | $ 377,000 | 377,000 | ||||||
| Stock compensation issue to former director (in Shares) | 100,000 | |||||||
| Issuance of common stock to private investors | 4,563,908 | 4,563,908 | ||||||
| Issuance of common stock to private investors (in Shares) | 1,400,000 | |||||||
| Disposal of VIE and subsidiaries | 5,919,050 | 5,919,050 | ||||||
| Foreign currency translation | (375,955) | 34,199 | (341,756) | |||||
| Net loss | (8,760,575) | (54,988) | (8,815,563) | |||||
| BALANCE at Dec. 31, 2021 | $ 85,860,100 | 2,334,962 | 4,563,908 | (48,043,517) | (479,321) | (1,781,541) | 42,454,591 | |
| BALANCE (in Shares) at Dec. 31, 2021 | 17,652,113 | |||||||
| BALANCE at Jun. 30, 2022 | $ 96,127,691 | 2,334,962 | (62,579,592) | 45,739 | (2,140,890) | 33,787,910 | ||
| BALANCE (in Shares) at Jun. 30, 2022 | 22,244,333 | |||||||
| Stock based compensation to consultants | $ 247,333 | 247,333 | ||||||
| Stock based compensation to consultants (in Shares) | ||||||||
| Foreign currency translation | 153,999 | (1,230) | 152,769 | |||||
| Net loss | (3,084,352) | 134,026 | (2,950,326) | |||||
| BALANCE at Sep. 30, 2022 | $ 96,375,024 | 2,334,962 | (65,663,944) | 199,738 | (2,008,094) | 31,237,686 | ||
| BALANCE (in Shares) at Sep. 30, 2022 | 22,244,333 | |||||||
| BALANCE at Jun. 30, 2022 | $ 96,127,691 | 2,334,962 | (62,579,592) | 45,739 | (2,140,890) | 33,787,910 | ||
| BALANCE (in Shares) at Jun. 30, 2022 | 22,244,333 | |||||||
| Net loss | (6,697,193) | |||||||
| BALANCE at Dec. 31, 2022 | $ 96,457,468 | 2,334,962 | (69,396,440) | 193,441 | (2,058,843) | 27,530,588 | ||
| BALANCE (in Shares) at Dec. 31, 2022 | 22,244,333 | |||||||
| BALANCE at Sep. 30, 2022 | $ 96,375,024 | 2,334,962 | (65,663,944) | 199,738 | (2,008,094) | 31,237,686 | ||
| BALANCE (in Shares) at Sep. 30, 2022 | 22,244,333 | |||||||
| Stock based compensation to consultants | $ 82,444 | 82,444 | ||||||
| Stock based compensation to consultants (in Shares) | ||||||||
| Foreign currency translation | (6,297) | (36,378) | (42,675) | |||||
| Net loss | (3,732,496) | (14,371) | (3,746,867) | |||||
| BALANCE at Dec. 31, 2022 | $ 96,457,468 | $ 2,334,962 | $ (69,396,440) | $ 193,441 | $ (2,058,843) | $ 27,530,588 | ||
| BALANCE (in Shares) at Dec. 31, 2022 | 22,244,333 |
Organization and Nature of Business |
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| Organization and Nature of Business [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ORGANIZATION AND NATURE OF BUSINESS | Note 1. ORGANIZATION AND NATURE OF BUSINESS
The Company is a global logistics integrated solution provider that was founded in the United States in 2001. On September 18, 2007, the Company amended its Articles of Incorporation and Bylaws to merge into a new corporation, Sino-Global Shipping America, Ltd. in Virginia. The Company primarily focuses on providing logistics and support to businesses in the Peoples’ Republic of China (“PRC”) and the United States. On January 3, 2022, the Company changed its corporate name from Sino-Global Shipping America, Ltd. to Singularity Future Technology Ltd. to reflect its expanded operations into the digital assets business.
The Company conducted its business primarily through its wholly-owned subsidiaries in the PRC (including Hong Kong) and the United States, where the majority of its clients are located. As of December 31, 2022, the Company operated in two segments: (1) freight logistics services, which were operated by its subsidiaries in both the United States and PRC, and (2) the sale of crypto-mining machines, which were operated by its subsidiaries in the United States.
The outbreak of the novel coronavirus (COVID-19) starting from late January 2020 in the PRC has spread rapidly to many parts of the world. In March 2020, the World Health Organization declared the COVID-19 as a pandemic and has resulted in quarantines, travel restrictions, and the temporary closure of stores and business facilities in China and the U.S. Given the rapidly expanding nature of the COVID-19 pandemic, and because substantially all of the Company’s business operations and its workforce are concentrated in China and the U.S., the Company’s business, results of operations, and financial condition have been adversely affected. In early December 2022, Chinese government eased the strict control measure for COVID-19, which has led to surge in increased infections and disruption in our business operations. Any future impact of COVID-19 on the Company’s China operation results will depend on, to a large extent, future developments and new information that may emerge regarding the duration and resurgence of COVID-19 variants and the actions taken by government authorities to contain COVID-19 or treat its impact, almost all of which are beyond our control.
As of December 31, 2022, the Company’s subsidiaries included the following:
Restatement of previously issued financial statements
The Company discovered error in revenue recognition in its subsidiary SGS NY during the audit for the year ended June 30, 2022 that $980,200 of revenue recognized in freight logistics did not meet revenue recognition criteria for the six months ended December 31, 2021.
In addition, in connection with the Company’s restatement for the financial statements as of and for the year ended June 30, 2021, the Company also restated its recovery (provision) for doubtful accounts, net related to its other receivables.
Effects of the restatement is as follows:
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Summary of Significant Accounting Policies |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements include the accounts of the Company and include the assets, liabilities, revenues and expenses of its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Prior to December 31, 2021, Sino-China was considered a Variable Interest Entity (“VIE”), with the Company as the primary beneficiary. The Company, through Trans Pacific Beijing, entered into certain agreements with Sino-Global Shipping Agency Ltd. (“Sino-China”), pursuant to which the Company received 90% of Sino-China’s net income.
As a VIE, Sino-China’s revenues were included in the Company’s total revenues, and any income/loss from operations was consolidated with that of the Company. Because of contractual arrangements between the Company and Sino-China, the Company had a pecuniary interest in Sino-China that required consolidation of the financial statements of the Company and Sino-China.
The Company has consolidated Sino-China’s operating results in accordance with Accounting Standards Codification (“ASC”) 810-10, “Consolidation”. The agency relationship between the Company and Sino-China and its branches was governed by a series of contractual arrangements pursuant to which the Company had substantial control over Sino-China. Management makes ongoing reassessments of whether the Company remains the primary beneficiary of Sino-China. On December 31, 2021, the Company entered into a series of agreements to terminate its VIE structure and deconsolidated its formerly controlled entity Sino-China.
(b) Fair Value of Financial Instruments
The Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures, which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1 — Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2 — Inputs other than quoted prices that are observable for the asset or liability in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3 — Unobservable inputs that reflect management’s assumptions based on the best available information.
The carrying value of accounts receivable, other receivables, other current assets, and current liabilities approximate their fair values because of the short-term nature of these instruments.
(c) Use of Estimates and Assumptions
The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with US GAAP 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates are adjusted to reflect actual experience when necessary. Significant accounting estimates reflected in the Company’s unaudited condense consolidated financial statements include revenue recognition, fair value of stock-based compensation, cost of revenues, allowance for credit losses, impairment loss, deferred income taxes, income tax expense and the useful lives of property and equipment. The inputs into the Company’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.
(d) Translation of Foreign Currency
The accounts of the Company and its subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Company’s functional currency is the U.S. dollar (“USD”) while its subsidiaries in the PRC, including Trans Pacific Beijing and Trans Pacific Shanghai report their financial positions and results of operations in Renminbi (“RMB”), its subsidiary Sino-Global Shipping (HK), Ltd. reports its financial positions and results of operations in Hong Kong dollar (“HKD”). The accompanying consolidated unaudited condensed financial statements are presented in USD. Foreign currency transactions are translated into USD using the fixed exchange rates in effect at the time of the transaction. Generally, foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated statements of operations. The Company translates the foreign currency financial statements in accordance with ASC 830-10, “Foreign Currency Matters”. Assets and liabilities are translated at current exchange rates quoted by the People’s Bank of China at the balance sheets’ dates and revenues and expenses are translated at average exchange rates in effect during the year. The resulting translation adjustments are recorded as other comprehensive loss and accumulated other comprehensive loss as a separate component of equity of the Company, and also included in non-controlling interests.
The exchange rates as of December 31, 2022 and June 30, 2022 and for the three and six months ended December 31, 2022 and 2021 are as follows:
(e) Cash
Cash consists of cash on hand and cash in bank which are unrestricted as to withdrawal or use. The Company maintains cash with various financial institutions mainly in the PRC, Australia, Hong Kong and the U.S. As of December 31, 2022 and June 30, 2022, cash balances of $86,621 and $143,044, respectively, were maintained at financial institutions in the PRC. of these balances are not covered by insurance as the deposit insurance system in China only insured each depositor at one bank for a maximum of approximately $70,000 (RMB 500,000). As of, December 31, 2022 and June 30, 2022, cash balances of $35,978,756 and $55,636,636, respectively, were maintained at U.S. financial institutions. $34,637,312 and $53,869,575 of these balances are not covered by insurance, as each U.S. account was insured by the Federal Deposit Insurance Corporation or other programs subject to $250,000 limitations. The Hong Kong Deposit Protection Board pays compensation up to a limit of HKD 500,000 (approximately $64,000) if the bank with which an individual/a company holds its eligible deposit fails. As of December 31, 2022 and June 30, 2022, cash balances of $2,289 and $51,701, respectively, were maintained at financial institutions in Hong Kong and were insured by the Hong Kong Deposit Protection Board. As of December 31, 2022 and June 30, 2022, cash balances of and $192, respectively, were maintained at Australia financial institutions, and were insured as the Australian government guarantees deposits up to AUD 250,000 (approximately $172,000). As of December 31, 2022 and June 30, 2022, amount of deposits the Company had covered by insurance amounted to $1,430,354 and $1,961,997, respectively.
(f) Cryptocurrencies
Cryptocurrencies, mainly bitcoin, are included in current assets in the accompanying consolidated balance sheets. Cryptocurrencies purchased are recorded at cost. Fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency at the time of receipt.
Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.
(g) Receivables and Allowance for Credit Losses
Accounts receivable are presented at net realizable value. The Company maintains allowances for credit losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual receivable balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balances, customers’ historical payment history, their current credit-worthiness and current economic trends. The estimate of expected credit losses is based on information about past events, current economic conditions, and forecasts of future economic conditions that affect collectability. Receivables are generally considered past due after 180 days. The Company reserves 25%-50% of the customers balance aged between 181 days to 1 year, 50%-100% of the customers balance over 1 year and 100% of the customers balance over 2 years. Accounts receivable are written off against the allowances only after exhaustive collection efforts.
Other receivables represent mainly customer advances, prepaid employee insurance and welfare benefits, which will be subsequently deducted from the employee payroll, project advances as well as office lease deposits. Management reviews its receivables on a regular basis to determine if the credit loss is adequate, and adjusts the allowance when necessary. The estimate of expected credit losses is based on information about past events, current economic conditions, and forecasts of future economic conditions that affect collectability. Delinquent account balances are written-off against allowance for credit losses after management has determined that the likelihood of collection is not probable. Other receivables are written off against the allowances only after exhaustive collection efforts.
(h) Property and Equipment, net
Property and equipment are stated at historical cost less accumulated depreciation. Historical cost comprises its purchase price and any directly attributable costs of bringing the assets to its working condition and location for its intended use. Depreciation is calculated on a straight-line basis over the following estimated useful lives:
The carrying value of a long-lived asset is considered impaired by the Company when the anticipated undiscounted cash flows from such asset is less than its carrying value. If impairment is identified, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved or based on independent appraisals. For the three and six months ended December 31, 2022 and 2021, no impairment were recorded, respectively.
(i) Investments in unconsolidated entity
Entities in which the Company has the ability to exercise significant influence, but does not have a controlling interest, are accounted for using the equity method. Significant influence is generally considered to exist when the Company has voting shares representing 20% to 50%, and other factors, such as representation on the board of directors, voting rights and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate. Under this method of accounting, the Company records its proportionate share of the net earnings or losses of equity method investees and a corresponding increase or decrease to the investment balances. Dividends received from the equity method investments are recorded as reductions in the cost of such investments. The Company generally considers an ownership interest of 20% or higher to represent significant influence. The Company accounts for the investments in entities over which it has neither control nor significant influence, and no readily determinable fair value is available, using the investment cost minus any impairment, if necessary.
Investments are evaluated for impairment when facts or circumstances indicate that the fair value of the long-term investment is less than its carrying value. An impairment loss is recognized when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects of the investment; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. On January 10, 2020, the Company entered into a cooperation agreement with Mr. Shanming Liang, a shareholder of the Company, to set up a joint venture in New York named LSM Trading Ltd. (“LSM”) in which the Company holds a 40% equity interest. Mr. Shanming Liang subsequently transferred his shares to Guanxi Golden Bridge Industry Group Co., Ltd in October 2021. For the year ended June 30, 2022, the Company invested $210,000 and recorded $47,181 investment loss. The joint venture has not started its operations due to COVID-19 and substantially all of the Company’s investment was deposited in bank account with LSM and LSM has only incurred some administrative expenses. The Company recorded $31,844 and $34,458 investment loss for the three and six months ended December 31, 2022. No events have occurred that indicated other-than-temporary impairment existed for the three and six months ended December 31, 2022.
(j) Convertible notes
The Company evaluates its convertible notes to determine if those contracts or embedded components of those contracts qualify as derivatives. The result of this accounting treatment is that the fair value of the embedded derivative is recorded at fair value each reporting period and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statements of operations as other income or expense.
(k) Revenue Recognition
The Company recognizes revenue which represents the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. The Company identifies contractual performance obligations and determines whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer.
The Company uses a five-step model to recognize revenue from customer contracts. The five-step model requires the Company to (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
For the Company’s freight logistic, the Company provided transportation services which includes mainly shipping services. The Company derived transportation revenue from sales contracts with its customers with revenues being recognized upon performance of services. Sales price to the customer was fixed upon acceptance of the sales contract and there was no separate sales rebate, discount, or other incentive. The Company’s revenues were recognized at a point in time after all performance obligations were satisfied
For the Company’s warehouse services, which are included in the freight logistic services, the Company’s contracts provide the customer an integrated service that includes two or more services, including but not limited to warehousing, collection, first-mile delivery, drop shipping, customs clearance packaging, etc. Accordingly, the Company generally identifies one performance obligation in its contracts, which is a series of distinct services that remain substantially the same over time and possess the same pattern of transfer. Revenue is recognized over the period in which services are provided under the terms of the Company’s contractual relationships with its clients.
Accordingly, the Company generally identifies one performance obligation in its contracts, which is a series of distinct services that remain substantially the same over time and possess the same pattern of transfer. Revenue is recognized over the period in which services are provided under the terms of the Company’s contractual relationships with its clients.
The transaction price is based on the amount specified in the contract with the customer and contains fixed and variable consideration. In general, the fixed consideration in a contract represents facility and equipment costs incurred to satisfy the performance obligation and is recognized on a straight-line basis over the term of the contract. The variable consideration is comprised of cost reimbursement determined based on the costs incurred. Revenue relating to variable pricing is estimated and included in the consideration if it is probable that a significant revenue reversal will not occur in the future. The estimate of variable consideration is determined by the expected value or most likely amount method and factors in current, past and forecasted experience with the customer. Customers are billed based on terms specified in the revenue contract and they pay us according to approved payment terms.
Revenue for the above services is recognized on a gross basis when the Company controls the services as it has the obligation to (i) provide all services (ii) bear any inventory risk for warehouse services. In addition, the Company has control to set its selling price to ensure it would generate profit for the services.
For the six months ended December 31, 2022, the Company engaged in resale of cryptocurrency mining equipment.
On January 10, 2022, the Company’s joint venture, Thor Miner, entered into a Purchase and Sale Agreement with SOS Information Technology New York Inc. (the “Buyer”). Pursuant to the Purchase and Sale Agreement, Thor Miner agreed to sell and the Buyer agreed to purchase certain cryptocurrency mining equipment.
The Company’s performance obligation is to deliver products according to contract specifications. The Company recognizes product revenue at a point in time when the control of products or services are transferred to customers. To distinguish a promise to provide products from a promise to facilitate the sale from a third party, the Company considers the guidance of control in ASC 606-10-55-37A and the indicators in 606-10-55-39. The Company considers this guidance in conjunction with the terms in the Company’s arrangements with both suppliers and customers.
In general, revenue is recognized on a gross basis when the Company controls the products as it has the obligation to (i) fulfill the products delivery and custom clearance (ii) bear any inventory risk as legal owners. In addition, when establishing the selling prices for delivery of the resale products, the Company has control to set its selling price to ensure it would generate profit for the products delivery arrangements. If the Company is not responsible for provision of product and does not bear inventory risk, the Company recorded revenue on a net basis.
For the three and six months ended December 31, 2022, the Company recognized the sale of cryptocurrency mining equipment based on net basis as the manufacturer of the products are responsible for shipping and custom clearing for the products.
Contract balances
The Company records receivables related to revenue when the Company has an unconditional right to invoice and receive payment.
Deferred revenue consists primarily of customer billings made in advance of performance obligations being satisfied and revenue being recognized. Contract balance amounted to $204,442 and $72,095 for the six months ended December 31, 2022 and 2021, respectively.
The Company’s disaggregated revenue streams are described as follows:
Disaggregated information of revenues by geographic locations are as follows:
(l) Leases
The Company adopted FASB ASU 2016-02, “Leases” (Topic 842) for the year ended June 30, 2020, and elected the practical expedients that does not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. Upon adoption, the Company recognized right of use (“ROU”) assets and same amount of lease liabilities based on the present value of the future minimum rental payments of leases, using an incremental borrowing rate of 7% based on the duration of lease terms.
Operating lease ROU assets and lease liabilities are recognized at the adoption date or the commencement date, whichever is earlier, based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company use its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.
(m) Taxation
Because the Company and its subsidiaries and Sino-China were incorporated in different jurisdictions, they file separate income tax returns. The Company uses the asset and liability method of accounting for income taxes in accordance with U.S. GAAP. Deferred taxes, if any, are recognized for the future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. A valuation allowance is provided against deferred tax assets if it is more likely than not that the asset will not be utilized in the future.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense. The Company had no uncertain tax positions as of December 31, 2022 and 2021.
Income tax returns for the years prior to 2018 are no longer subject to examination by U.S. tax authorities.
PRC Enterprise Income Tax
PRC enterprise income tax is calculated based on taxable income determined under the PRC Generally Accepted Accounting Principles (“PRC GAAP”) at 25%. Sino-China and Trans Pacific Beijing were incorporated in the PRC and are subject to the Enterprise Income Tax Laws of the PRC.
PRC Value Added Taxes and Surcharges
The Company is subject to value added tax (“VAT”). Revenue from services provided by the Company’s PRC subsidiaries are subject to VAT at rates ranging from 9% to 13%. Entities that are VAT general taxpayers are allowed to offset qualified VAT paid to suppliers against their VAT liability. Net VAT liability is recorded in taxes payable on the consolidated balance sheets.
In addition, under the PRC regulations, the Company’s PRC subsidiaries and VIE are required to pay city construction tax (7%) and education surcharges (3%) based on the net VAT payments.
(n) Earnings (loss) per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to holders of common stock of the Company by the weighted average number of shares of common stock of the Company outstanding during the applicable period. Diluted earnings (loss) per share reflect the potential dilution that could occur if securities or other contracts to issue common stock of the Company were exercised or converted into common stock of the Company. Common stock equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive.
For the three and six months ended December 31, 2022 and 2021, there was no dilutive effect of potential shares of common stock of the Company because the Company generated net loss.
(o) Comprehensive Income (Loss)
The Company reports comprehensive income (loss) in accordance with the authoritative guidance issued by Financial Accounting Standards Board (the “FASB”) which establishes standards for reporting comprehensive income (loss) and its component in financial statements. Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under US GAAP are recorded as an element of stockholders’ equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies.
(p) Stock-based Compensation
The Company accounts for stock-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that stock-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period. The Company records stock-based compensation expense at fair value on the grant date and recognizes the expense over the employee’s requisite service period.
The Company accounts for stock-based compensation awards to non-employees in accordance with FASB ASC Topic 718 amended by ASU 2018-07. Under FASB ASC Topic 718, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received.
Valuations of stock-based compensation are based upon highly subjective assumptions about the future, including stock price volatility and exercise patterns. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model. Expected volatilities are based on the historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee terminations. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.
(q) Risks and Uncertainties
The Company’s business, financial position and results of operations may be influenced by the political, economic, health and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic, health and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
In March 2020, the World Health Organization declared the COVID-19 as a pandemic. Given the rapidly expanding nature of the COVID-19 pandemic, and because substantially all of the Company’s business operations and the workforce are concentrated in China and United States, the Company’s business, results of operations, and financial condition have been adversely affected for the three and six months ended December 31, 2022. The situation remains highly uncertain for any further outbreak or resurgence of the COVID-19. It is therefore difficult for the Company to estimate the impact on the business or operating results that might be adversely affected by any further outbreak or resurgence of COVID-19.
(r) Disposal of subsidiaries and VIE
On December 31, 2021, the Company entered into a series of agreements to terminate its VIE structure and deconsolidated its formerly controlled entity Sino-Global Shipping Agency Ltd. (“Sino-China”). The Company controlled Sino-China through its wholly owned subsidiary Trans Pacific Beijing. The Company made the decision to dissolve the VIE structure and Sino-China because Sino-China has no active operations and the Company wanted to remove any potential risks associated with any VIE structures. In addition, the Company dissolved its subsidiary Sino-Global Shipping LA, Inc. On March 14, 2022, the company discontinued its subsidiary Sino-Global Shipping Canada, Inc., no gain or loss was recognized in the deconsolidation.
Since the disposal did not represent any strategic change of the Company’s operation, the disposal was not presented as discontinued operations.
Net assets of the entities disposed and loss on disposal was as follows:
(s) Recent Accounting Pronouncements
In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments in this ASU address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. In November 2019, the FASB issued ASU No. 2019-10, which to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses standard. The new effective date for these preparers is for fiscal years beginning after July 1, 2023, including interim periods within those fiscal years. The Company has not early adopted this update and it will become effective on July 1, 2023 assuming the Company will remain eligible to be smaller reporting company. The adoption did not have material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements. |
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Cryptocurrencies |
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| Cryptocurrencies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CRYPTOCURRENCIES | Note 3. CRYPTOCURRENCIES
The following table presents additional information about cryptocurrencies:
The company recorded $13,280 and $14,801 impairment loss for the three and six months ended December 31, 2022, respectively. |
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Accounts Receivable, Net |
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| ACCOUNTS RECEIVABLE, NET | Note 4. ACCOUNTS RECEIVABLE, NET
The Company’s net accounts receivable are as follows:
Movement of allowance for credit losses are as follows:
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Other Receivables, Net |
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| OTHER RECEIVABLES, NET | Note 5. OTHER RECEIVABLES, NET
The Company’s other receivables are as follows:
Movement of allowance for doubtful accounts are as follows:
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Advances to Suppliers |
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| ADVANCES TO SUPPLIERS | Note 6. ADVANCES TO SUPPLIERS
The Company’s advances to suppliers – third parties are as follows:
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| Prepaid Expense and Other Assets, Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| PREPAID EXPENSES AND OTHER CURRENT ASSETS | Note 7. PREPAID EXPENSES AND OTHER CURRENT ASSETS
The Company’s prepaid expenses and other assets are as follows:
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Other Long-Term Assets – Deposits, Net |
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| OTHER LONG-TERM ASSETS – DEPOSITS, NET | Note 8. OTHER LONG-TERM ASSETS – DEPOSITS, NET
The Company’s other long-term assets – deposits are as follows:
Movements of allowance for deposits are as follows:
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| Property and Equipment, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT, NET | Note 9. PROPERTY AND EQUIPMENT, NET
The Company’s net property and equipment as follows:
Depreciation and amortization expenses for the three months ended December 31, 2022 and 2021 were $76,704 and $137,807, respectively. Depreciation and amortization expenses for the six months ended December 31, 2022 and 2021 were $155,649 and $278,517, respectively. No impairment loss was recorded for the three and six months ended December 31, 2022 and 2021. For the three and six months of December 31, 2022, the Company disposed vehicles with net cost of $83,519, resulting in gain on disposal of fixed assets of $6,481. |
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| ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | Note 10. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
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Convertible Notes |
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| Convertible notes [Abstract] | |
| CONVERTIBLE NOTES | Note 11. CONVERTIBLE NOTES
On December 19, 2021, the Company issued two Senior Convertible Notes (the “Convertible Notes”) to two non-U.S. investors for an aggregate purchase price of $10,000,000.
The Convertible Notes bear an interest at 5% annually and may be converted into shares of the Company’s common stock, no par value per share at a conversion price of $3.76 per share, the closing price of the common stock on December 17, 2021. The Convertible Notes are unsecured senior obligations of the Company, and the maturity date of the Convertible Notes is December 18, 2023. The Company may repay any portion of the outstanding principal, accrued and unpaid interest, without penalty for early repayment. The Company may make any repayment of principal and interest in (a) cash, (b) common stock at the conversion price or (c) a combination of cash or common stock at the conversion price.
The investors may convert any conversion amount into common stock on any date beginning on June 19, 2022.
The Company evaluated the convertible notes agreement under ASC 815 Derivatives and Hedging (“ASC 815”) amended by ASU 2020-06. ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. Based on terms of the convertible notes agreements, the Company’s notes are convertible for a fixed number of shares and do not require the Company to net settle. None of the embedded terms required bifurcation and liability classification.
On March 8, 2022, the Company issued amended and restated the terms of the notes and issued the Amended and Restated Senior Convertible Notes (the “Amended and Restated Convertible Notes”) to the investors to change the principal amount of the Convertible Notes to an aggregate principal amount of $5,000,000. There other terms of the notes remained unchanged.
The terms of the Amended and Restated Convertible Notes are the same as that of the original Convertible Notes, except for the reduced principal amount and the waiver of interest for the $5,000,000 payment made on March 8, 2022.
For the three and six months ended December 31, 2022, interest expenses related to the aforementioned convertible notes amounted to $61,944 and $123,587, respectively. |
Leases |
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| LEASES | Note 12. LEASES
The Company determines if a contract contains a lease at inception which is the date on which the terms of the contract are agreed to and the agreement creates enforceable rights and obligations. US GAAP requires that the Company’s leases be evaluated and classified as operating or finance leases for financial reporting purposes. The classification evaluation begins at the commencement date and the lease term used in the evaluation includes the non-cancellable period for which the Company has the right to use the underlying asset, together with renewal option periods when the exercise of the renewal option is reasonably certain and failure to exercise such option which result in an economic penalty. All of the Company’s leases are classified as operating leases.
The Company has several lease agreements with lease terms ranging from two to five years. As of December 31, 2022, ROU assets and lease liabilities amounted to $478,547 and $1,044,670 (including $448,252 from lease liabilities current portion and $596,418 from lease liabilities non-current portion), respectively and weighted average discount rate was approximately 10.89%.
The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The leases generally do not contain options to extend at the time of expiration and the weighted average remaining lease terms are 3.06 years.
For the three months ended December 31, 2022 and 2021, rent expense amounted to approximately and $137,040, respectively. For the six months ended December 31, 2022 and 2021, rent expense amounted to approximately $146,461 and $256,218, respectively.
The five-year maturity of the Company’s lease obligations is presented below:
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Equity |
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| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| EQUITY | Note 13. EQUITY
Stock issuances:
On December 14, 2021, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with non-U.S. investors and accredited investors pursuant to which the Company sold to the investors, and the investors agreed to purchase from the Company, an aggregate of 3,228,807 shares of common stock, no par value, and warrants to purchase 4,843,210 shares. The purchase price for each share of common stock and one and a half warrants is $3.26, and the exercise price per warrant is $4.00. The Company received net proceed of $10,525,819 and issued 3,228,807 shares and 4,843,210 warrants. In connection with the issuance, the Company issued 500,000 shares to a consultant in assisting the Company in finding potential investors.
The warrants will be exercisable at any time during the Exercise Window. The “Exercise Window” means the period beginning on or after June 14, 2022 and ending on or prior to 5:00 p.m. (New York City time) on December 13, 2026 but not thereafter; provided, however, that the total number of the Company’s issued and outstanding shares of common stock, multiplied by the NASDAQ official closing bid price of the common stock shall equal or exceed $150,000,000 for a three consecutive month period prior to an exercise.
The Company’s outstanding warrants are classified as equity since they qualify for exception from derivative accounting as they are considered to be indexed to the Company’s own stock and require net share settlement. The fair value of the warrants was recorded as additional paid-in capital from common stock
On January 6, 2022, the Company entered into Warrant Purchase Agreements with certain warrant holders (the “Sellers”) pursuant to which the Company agreed to buy back an aggregate of 3,870,800 warrants (the “Warrants”) from the Sellers, and the Sellers agreed to sell the Warrants back to the Company. These Warrants were sold to these Sellers in three previous transactions that closed on February 11, 2021, February 10, 2021, and March 14, 2018. The purchase price for each Warrant is $2.00. Following announcement of the Warrant Purchase Agreements on January 6, 2022, the Company agreed to repurchase an additional 103,200 warrants from other Sellers on the same terms as the previously announced Warrant Purchase Agreements. The aggregate number of warrants repurchased under the Warrant Purchase Agreements was 3,974,000.
On January 7, 2022, the Company wired the purchase price to each Seller. Each Seller has agreed to deliver the Warrant to the Company for cancellation as soon as practicable following the closing date, but in no event later than January 13, 2022. The Warrants are deemed cancelled upon the receipt by the Sellers of the purchase price.
Following is a summary of the status of warrants outstanding and exercisable as of December 31, 2022:
Stock-based compensation:
By action taken as of August 13, 2021, the Board of Directors (the “Board”) of the Company and the Compensation Committee of the Board (the “Committee”) approved a one-time award of a total of 1,020,000 shares of the common stock under the Company’s 2014 Stock Incentive Plan (the “Plan”) to, including (i) a one-time stock award grant of 600,000 shares to Chief Executive Officer, Lei Cao, (ii) a one-time stock award grant of 200,000 shares to acting Chief Financial Officer, Tuo Pan, (iii) a one-time stock award grant of 160,000 shares to Board member, Zhikang Huang, (iv) a one-time stock award grant of 20,000 shares to Board member, Jing Wang, (v) a one-time stock award grant of 20,000 shares to Board member, Xiaohuan Huang, and (vi) a one-time stock award grant of 20,000 shares to Board member, Tieliang Liu. The shares were valued at an aggregate of $2,927,400 based on the grant date fair value of such shares.
On November 18, 2021, Mr. Jing Wang retired from his position as a member of the Board, the Chairperson of the Committee, a member of Nominating/Corporate Governance Committee, and a member of the Audit Committee. In connection with Mr. Wang’s retirement, the Company granted Mr. Wang 100,000 shares of common stock under the Company’s 2021 stock incentive plan, which shares were valued at $377,000 based on the grant date fair value.
On February 4, 2022, the Company approved a one-time award of a total of 500,000 shares of common stock under the Company’s 2021 Stock Incentive Plan to certain executive officers of the Company, including Chief Executive Officer, Yang Jie (300,000 shares), Chief Operating Officer, Jing Shan (100,000 shares), and Chief Technology Officer, Shi Qiu (100,000 shares). The total fair value of the grants amounts to $2,740,000 based on the grant date share price of $5.48. On December 27, 2022 and December 19, 2022, Jing Shan and Yang Jie each signed a cancellation agreement to return 100,000 and 300,000 share, respectively, to the Company for cancellation for no consideration. The cancellation agreements and the cancellation of shares underlying thereunder were ratified and approved by the Board on January 19, 2023. As of the date of this Report, the 300,000 shares issued to Mr. Jie were cancelled and the 100,000 shares issued to Ms. Shan were in the process of being cancelled.
On February 16, 2022, the Company’s Board approved a consulting agreement pursuant to which the Company will pay the consultant a monthly fee of $10,000 and 100,000 shares of the Company’s common stock. The shares were valued at $7.42 at grant date with a grant date fair value of $742,000 to be amortized through October 31, 2022. Stock compensation expenses for this contract was $329,777 for the six months ended December 31, 2022.
During the three months ended December 31, 2022 and 2021, $82,444 and $377,000 were recorded as stock-based compensation expense, respectively. During the six months ended December 31, 2022 and 2021, $329,777 and $3,304,400 were recorded as stock-based compensation expense, respectively.
Stock Options:
A summary of the outstanding options is presented in the table below:
Following is a summary of the status of options outstanding and exercisable as of December 31, 2022:
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| NON-CONTROLLING INTEREST | Note 14. NON-CONTROLLING INTEREST
The Company’s non-controlling interest consists of the following:
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Commitments and Contingencies |
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| Commitments and Contingencies [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | Note 15. COMMITMENTS AND CONTINGENCIES
Contingencies
From time to time, the Company may be subject to certain legal proceedings, claims and disputes that arise in the ordinary course of business. Although the outcomes of these legal proceedings cannot be predicted, the Company does not believe these actions, in the aggregate, will have a material adverse impact on its financial position, results of operations or liquidity.
SOS Information Technology New York, Inc. (“SOSNY”), a company incorporated under the laws of state of New York and a wholly owned subsidiary of SOS Ltd., filed a December 9, 2022 lawsuit in the New York State Supreme Court against Thor Miner, Inc., which is Singularity’s joint venture (“Thor Miner”), Singularity Future Technology Ltd. (“Singularity” or the “Company,” and, together with Thor Miner, referred to as the “Corporate Defendants”), Lei Cao, Yang Jie, John F. Levy, Tieliang Liu, Tuo Pan, Shi Qiu, Jing Shan, and Heng Wang (jointly referred to as the “Individual Defendants”) (collectively, the Individual Defendants and the Corporate Defendants are the “Defendants”). SOSNY and Thor Miner entered into a January 10, 2022 Purchase and Sale Agreement (the “PSA”) for the purchase of $200,000,000 in crypto mining rigs, which SOSNY claims was breached by the Defendants.
SOSNY and Defendants entered into a certain settlement agreement and general mutual release with an Effective Date of December 28, 2022 (“Settlement Agreement”). Pursuant to the Settlement Agreement, Thor Miner agreed to pay a sum of thirteen million in U.S. dollars ($13,000,000) (the “Settlement Payment”) to SOSNY in exchange for SOSNY dismissing the lawsuit with prejudice as to the settling Defendants and without prejudice as to all others. The full Settlement Payment was received by SOSNY on December 28, 2022. SOSNY dismissed the lawsuit with prejudice against Singularity (and other Defendants) on December 28, 2022.
Singularity and Thor Miner further covenanted and agreed that if they receive additional funds from HighSharp (Shenzhen Gaorui) Electronic Technology Co., Ltd. (“HighSharp”) related to the PSA, they will promptly transfer such funds to SOSNY in an amount not to exceed forty million, five hundred sixty thousand, five hundred sixty-nine dollars ($40,560,569.00) (which is the total amount paid by SOSNY pursuant to the PSA less the price of the machines actually received by SOSNY pursuant to the PSA). The Settlement Payment and any payments subsequently received by SOSNY from HighSharp shall be deducted from the total amount of forty million, five hundred sixty thousand, five hundred sixty-nine dollars ($40,560,569.00) previously paid by, and now due and owing to SOSNY. In further consideration of the Settlement Agreement, Thor Miner agreed to execute and provide to SOSNY, within seven (7) business days after SOSNY’s receipt of the Settlement Payment, an assignment of all claims it may have against HighSharp or otherwise to the proceeds of the PSA. See Note 19 for further details.
Lawsuits in connection with the Securities Purchase Agreement
On September 23, 2022, Hexin Global Limited and Viner Total Investments Fund filed a lawsuit against the Company and other defendants in the United States District Court for the Southern District of New York (the “Hexin lawsuit”). On December 5, 2022, St. Hudson Group LLC, Imperii Strategies LLC, Isyled Technology Limited, and Hsqynm Family Inc. filed a lawsuit against the Company and other defendants in the United States District Court for the Southern District of New York (the “St. Hudson lawsuit,” and together with the Hexin lawsuit, the “Investor Actions”). The plaintiffs in the Investor Actions are investors that entered into a securities purchase agreement (“Securities Purchase Agreement”) with the Company in late 2021. Each of these plaintiffs asserts causes of action for, among other things, violations of federal securities laws, breach of fiduciary duty, fraudulent inducement, breach of contract, conversion, and unjust enrichment, and seeks monetary damages and specific performance to remove legends from certain securities sold pursuant to the Securities Purchase Agreement. The Hexin lawsuit claims monetary damages of “at least $6 million,” plus interest, costs, fees, and attorneys’ fees. The St. Hudson lawsuit claims monetary damages of “at least $4.4 million,” plus interest, costs, fees, and attorneys’ fees.
Lawsuit in connection with the Financial Advisory Agreement
On October 6, 2022, Jinhe Capital Limited (“Jinhe”) filed a lawsuit against the Company in the United States District Court for the Southern District of New York, asserting causes of actions for, among other things, breach of contract, breach of the covenant of good faith and fair dealing, conversion, quantum meruit, and unjust enrichment, in connection with a financial advisory agreement entered into by and between Jinhe and the Company on November 10, 2021. Jinhe claims monetary damages of “at least $575,000” and “potentially exceeding $1.8 million,” plus interest, costs, and attorneys’ fees.
On January 10, 2023, St. Hudson lawsuit was consolidated with this lawsuit and Hexin lawsuit; on February 24, 2023, all three consolidated actions were dismissed without prejudice by the court, in furtherance of the parties having reached an agreement in principle to settle their disputes.
Putative Class Action
On December 9, 2022, Piero Crivellaro, purportedly on behalf of the persons or entities who purchased or acquired publicly traded securities of the Company between February 2021 and November 2022, filed a putative class action against the Company and other defendants in the United States District Court for the Eastern District of New York, alleging violations of federal securities laws related to alleged false or misleading disclosures made by the Company in its public filings. The plaintiff seeks unspecified damages, plus interest, costs, fees, and attorneys’ fees. As this action is still in the early stage, the Company cannot predict the outcome.
In addition to the above litigations, the Company is also subject to additional contractual litigations as to which it is unable to estimate the outcome.
Government Investigations
Following a publication issued by Hindenburg Research dated May 5, 2022, the Company received subpoenas from the United States Attorney’s Office for the Southern District of New York and the United States Securities and Exchange Commission. The Company is cooperating with the government regarding these matters. At this early stage, the Company is not able to estimate the outcome or duration of the government investigations. |
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| INCOME TAXES | Note 16. INCOME TAXES
On March 27, 2020, the CARES Act was enacted and signed into law and includes, among other things, refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods and alternative minimum tax credit refunds. The Company does not at present expect the provisions of the CARES Act to have a material impact on its tax provision given the amount of net operating losses currently available.
The Company’s income tax expenses for three and six months ended December 31, 2022 and 2021 are as follows:
The Company’s deferred tax assets are comprised of the following:
The Company’s operations in the U.S. incurred a cumulative U.S. federal net operation losses (“NOL”) of approximately $22,000,000 as of June 30, 2022, which may reduce future federal taxable income. During the three and six months ended December 31, 2022, approximately $4,100,000 and $7,300,000 of NOL was generated and the tax benefit derived from such NOL was approximately $861,000 and $1,500,000. As of December 31, 2022, the Company’s cumulative NOL amounted to approximately $29,400,000, which may reduce future federal taxable income, of which approximately $1,400,000 will expire in 2037 and the remaining balance carried forward indefinitely.
The Company’s operations in China incurred a cumulative NOL of approximately $1,333,000 as of June 30, 2022 which was mainly from net loss. During the three and six months ended December 31, 2022, additional NOL of approximately $130,000 and $245,000 was generated. As of December 31, 2022, the Company’s cumulative NOL amounted to approximately $5,567,000 which may reduce future taxable income which will expire by 2026.
The Company periodically evaluates the likelihood of the realization of deferred tax assets (“DTA”) and reduces the carrying amount of the deferred tax assets by a valuation allowance to the extent it believes a portion will not be realized. Management considers new evidence, both positive and negative, that could affect the Company’s future realization of deferred tax assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax reporting purposes and other relevant factors. The Company determined that it is more likely than not its deferred tax assets could not be realized due to uncertainty on future earnings as a result of the company’s reorganization and venture into new businesses . The Company provided a 100% allowance for its DTA as of December 31, 2022. The net increase in valuation for the three months and six months ended December 31, 2022 amounted to approximately $894,000 and $1,464,000, based on management’s reassessment of the amount of the Company’s deferred tax assets that are more likely than not to be realized.
The Company’s taxes payable consists of the following:
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| Concentrations [Abstract] | |
| CONCENTRATIONS | Note 17. CONCENTRATIONS
Major Customers
For the three months ended December 31, 2022, two customers accounted for approximately 26.3% and 63.8% of the Company’s gross revenues, respectively.
For the three months ended December 31, 2021, four customers accounted for approximately 32.3%, 29.6%, 21.5% and 16.7% of the Company’s revenues.
For the six months ended December 31, 2022, two customers accounted for 12.7% and 77.6% of the Company’s gross revenues. As of December 31, 2022, one customer accounted for 74.1% of the Company’s accounts receivable, net.
For the six months ended December 31, 2021, four customers accounted for approximately 55.6%, 18.1%, 14.2% and 12.0% of the Company’s revenues, respectively. As of December 31, 2021, three customers accounted for approximately 38.1%, 15.2% and 11.2% of the Company’s accounts receivable, net.
Major Suppliers
For the three months ended December 31, 2022, one supplier accounted for approximately 60.1% of the total gross purchases.
For the three months ended December 31, 2021, three suppliers accounted for approximately 54.7%, 22.8% and 11.7% of the total costs of revenue.
For the six months ended December 31, 2022, one supplier accounted for approximately 74.9% of the gross purchases.
For the six months ended December 31, 2021, two suppliers accounted for approximately 36.2% and 27.0% of the total cost of revenues. |
Segment Reporting |
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| Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT REPORTING | Note 18. SEGMENT REPORTING
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in unaudited condensed consolidated financial statements for detailing the Company’s business segments.
The Company’s chief operating decision maker is the Chief Operating Officer, who reviews the financial information of the separate operating segments when making decisions about allocating resources and assessing the performance of the group. As of December 31, 2022, the Company determined that it had two operating segments: (1) freight logistics services which include shipping and warehouse services and (2) the sale of crypto mining machines.
The following tables present summary information by segment for the three and six months ended December 31, 2022 and 2021, respectively:
Total assets as of:
The Company’s operations are primarily based in the PRC and U.S, where the Company derives all of its revenues. Management also reviews consolidated financial results by business locations.
Disaggregated information of revenues by geographic locations are as follows:
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Related Party Balance and Transactions |
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| Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RELATED PARTY BALANCE AND TRANSACTIONS | Note 19. RELATED PARTY BALANCE AND TRANSACTIONS
Advance to suppliers-related party
The Company’s advances to suppliers – related party are as follows:
Due from related party, net
As of December 31, 2022 and June 30, 2022, the outstanding amounts due from related parties consist of the following:
Loan receivable- related parties
As of December 31, 2022 and June 30, 2022, the outstanding loan receivable from related parties consists of the following:
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Subsequent Events |
6 Months Ended |
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Dec. 31, 2022 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS | Note 20. SUBSEQUENT EVENTS
On January 9, 2023, the Company entered into an Executive Separation Agreement and General Release (the “Separation Agreement”), with Lei Cao, an employee of the Company and a member of the Board of Directors of the Company (the “Board”), setting forth the terms and conditions related to (1) the termination of Mr. Cao’s employment with the Company and the termination of the employment agreement dated as of November 1, 2021 as well as cancellation and/or termination of certain other agreements relating to Mr. Cao’s employment with the Company; and (2) Mr. Cao’s resignation from the Board, effective as of January 9, 2023.
Pursuant to the Separation Agreement, Mr. Cao submitted a letter of resignation from the Board on January 9, 2023. In addition, he agreed to forfeit and return to the Company the 600,000 shares of common stock of the Company granted to him on August 13, 2021 under the terms of the 2014 Equity Incentive Plan of the Company (the “2021 Shares”). Mr. Cao also agreed to cooperate with the Company regarding certain investigations and proceedings set forth in the Separation Agreement, and/or any other matters arising out of or related to Mr. Cao’s relationship with or service to the Company. In consideration, the Company agreed to provide the following benefits to which Mr. Cao was not otherwise entitled: (1) payment of reasonable attorneys’ fees and costs incurred by Mr. Cao up through January 9, 2023 associated with Mr. Cao’s personal legal representation in matters relating to Mr. Cao’s tenure with the Company, the investigations and proceedings set forth in the Separation Agreement, and the negotiation and drafting of the Separation Agreement; (2) the release of claims in Mr. Cao’s favor contained in the Separation Agreement; and (3) payment of Mr. Cao’s reasonable and necessary legal fees to the extent incurred by Mr. Cao as a result of his cooperation as required by the Company under the terms of the Separation Agreement. Additionally, the Separation Agreement contains mutual general releases and waiver of claims from Mr. Cao and the Company. |
Accounting Policies, by Policy (Policies) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of Presentation | (a) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements include the accounts of the Company and include the assets, liabilities, revenues and expenses of its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Prior to December 31, 2021, Sino-China was considered a Variable Interest Entity (“VIE”), with the Company as the primary beneficiary. The Company, through Trans Pacific Beijing, entered into certain agreements with Sino-Global Shipping Agency Ltd. (“Sino-China”), pursuant to which the Company received 90% of Sino-China’s net income.
As a VIE, Sino-China’s revenues were included in the Company’s total revenues, and any income/loss from operations was consolidated with that of the Company. Because of contractual arrangements between the Company and Sino-China, the Company had a pecuniary interest in Sino-China that required consolidation of the financial statements of the Company and Sino-China.
The Company has consolidated Sino-China’s operating results in accordance with Accounting Standards Codification (“ASC”) 810-10, “Consolidation”. The agency relationship between the Company and Sino-China and its branches was governed by a series of contractual arrangements pursuant to which the Company had substantial control over Sino-China. Management makes ongoing reassessments of whether the Company remains the primary beneficiary of Sino-China. On December 31, 2021, the Company entered into a series of agreements to terminate its VIE structure and deconsolidated its formerly controlled entity Sino-China.
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| Fair Value of Financial Instruments | (b) Fair Value of Financial Instruments
The Company follows the provisions of ASC 820, Fair Value Measurements and Disclosures, which clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
Level 1 — Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2 — Inputs other than quoted prices that are observable for the asset or liability in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3 — Unobservable inputs that reflect management’s assumptions based on the best available information.
The carrying value of accounts receivable, other receivables, other current assets, and current liabilities approximate their fair values because of the short-term nature of these instruments.
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| Use of Estimates and Assumptions | (c) Use of Estimates and Assumptions
The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with US GAAP 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 dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Estimates are adjusted to reflect actual experience when necessary. Significant accounting estimates reflected in the Company’s unaudited condense consolidated financial statements include revenue recognition, fair value of stock-based compensation, cost of revenues, allowance for credit losses, impairment loss, deferred income taxes, income tax expense and the useful lives of property and equipment. The inputs into the Company’s judgments and estimates consider the economic implications of COVID-19 on the Company’s critical and significant accounting estimates. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates.
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| Translation of Foreign Currency | (d) Translation of Foreign Currency
The accounts of the Company and its subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The Company’s functional currency is the U.S. dollar (“USD”) while its subsidiaries in the PRC, including Trans Pacific Beijing and Trans Pacific Shanghai report their financial positions and results of operations in Renminbi (“RMB”), its subsidiary Sino-Global Shipping (HK), Ltd. reports its financial positions and results of operations in Hong Kong dollar (“HKD”). The accompanying consolidated unaudited condensed financial statements are presented in USD. Foreign currency transactions are translated into USD using the fixed exchange rates in effect at the time of the transaction. Generally, foreign exchange gains and losses resulting from the settlement of such transactions are recognized in the consolidated statements of operations. The Company translates the foreign currency financial statements in accordance with ASC 830-10, “Foreign Currency Matters”. Assets and liabilities are translated at current exchange rates quoted by the People’s Bank of China at the balance sheets’ dates and revenues and expenses are translated at average exchange rates in effect during the year. The resulting translation adjustments are recorded as other comprehensive loss and accumulated other comprehensive loss as a separate component of equity of the Company, and also included in non-controlling interests.
The exchange rates as of December 31, 2022 and June 30, 2022 and for the three and six months ended December 31, 2022 and 2021 are as follows:
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| Cash | (e) Cash
Cash consists of cash on hand and cash in bank which are unrestricted as to withdrawal or use. The Company maintains cash with various financial institutions mainly in the PRC, Australia, Hong Kong and the U.S. As of December 31, 2022 and June 30, 2022, cash balances of $86,621 and $143,044, respectively, were maintained at financial institutions in the PRC. of these balances are not covered by insurance as the deposit insurance system in China only insured each depositor at one bank for a maximum of approximately $70,000 (RMB 500,000). As of, December 31, 2022 and June 30, 2022, cash balances of $35,978,756 and $55,636,636, respectively, were maintained at U.S. financial institutions. $34,637,312 and $53,869,575 of these balances are not covered by insurance, as each U.S. account was insured by the Federal Deposit Insurance Corporation or other programs subject to $250,000 limitations. The Hong Kong Deposit Protection Board pays compensation up to a limit of HKD 500,000 (approximately $64,000) if the bank with which an individual/a company holds its eligible deposit fails. As of December 31, 2022 and June 30, 2022, cash balances of $2,289 and $51,701, respectively, were maintained at financial institutions in Hong Kong and were insured by the Hong Kong Deposit Protection Board. As of December 31, 2022 and June 30, 2022, cash balances of and $192, respectively, were maintained at Australia financial institutions, and were insured as the Australian government guarantees deposits up to AUD 250,000 (approximately $172,000). As of December 31, 2022 and June 30, 2022, amount of deposits the Company had covered by insurance amounted to $1,430,354 and $1,961,997, respectively.
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| Cryptocurrencies | (f) Cryptocurrencies
Cryptocurrencies, mainly bitcoin, are included in current assets in the accompanying consolidated balance sheets. Cryptocurrencies purchased are recorded at cost. Fair value of the cryptocurrency award received is determined using the quoted price of the related cryptocurrency at the time of receipt.
Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.
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| Receivables and Allowance for Credit Losses | (g) Receivables and Allowance for Credit Losses
Accounts receivable are presented at net realizable value. The Company maintains allowances for credit losses. The Company reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual receivable balances. In evaluating the collectability of individual receivable balances, the Company considers many factors, including the age of the balances, customers’ historical payment history, their current credit-worthiness and current economic trends. The estimate of expected credit losses is based on information about past events, current economic conditions, and forecasts of future economic conditions that affect collectability. Receivables are generally considered past due after 180 days. The Company reserves 25%-50% of the customers balance aged between 181 days to 1 year, 50%-100% of the customers balance over 1 year and 100% of the customers balance over 2 years. Accounts receivable are written off against the allowances only after exhaustive collection efforts.
Other receivables represent mainly customer advances, prepaid employee insurance and welfare benefits, which will be subsequently deducted from the employee payroll, project advances as well as office lease deposits. Management reviews its receivables on a regular basis to determine if the credit loss is adequate, and adjusts the allowance when necessary. The estimate of expected credit losses is based on information about past events, current economic conditions, and forecasts of future economic conditions that affect collectability. Delinquent account balances are written-off against allowance for credit losses after management has determined that the likelihood of collection is not probable. Other receivables are written off against the allowances only after exhaustive collection efforts.
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| Property and Equipment, net | (h) Property and Equipment, net
Property and equipment are stated at historical cost less accumulated depreciation. Historical cost comprises its purchase price and any directly attributable costs of bringing the assets to its working condition and location for its intended use. Depreciation is calculated on a straight-line basis over the following estimated useful lives:
The carrying value of a long-lived asset is considered impaired by the Company when the anticipated undiscounted cash flows from such asset is less than its carrying value. If impairment is identified, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved or based on independent appraisals. For the three and six months ended December 31, 2022 and 2021, no impairment were recorded, respectively.
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| Investments in unconsolidated entity | (i) Investments in unconsolidated entity
Entities in which the Company has the ability to exercise significant influence, but does not have a controlling interest, are accounted for using the equity method. Significant influence is generally considered to exist when the Company has voting shares representing 20% to 50%, and other factors, such as representation on the board of directors, voting rights and the impact of commercial arrangements, are considered in determining whether the equity method of accounting is appropriate. Under this method of accounting, the Company records its proportionate share of the net earnings or losses of equity method investees and a corresponding increase or decrease to the investment balances. Dividends received from the equity method investments are recorded as reductions in the cost of such investments. The Company generally considers an ownership interest of 20% or higher to represent significant influence. The Company accounts for the investments in entities over which it has neither control nor significant influence, and no readily determinable fair value is available, using the investment cost minus any impairment, if necessary.
Investments are evaluated for impairment when facts or circumstances indicate that the fair value of the long-term investment is less than its carrying value. An impairment loss is recognized when a decline in fair value is determined to be other-than-temporary. The Company reviews several factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial condition and near term prospects of the investment; and (v) ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. On January 10, 2020, the Company entered into a cooperation agreement with Mr. Shanming Liang, a shareholder of the Company, to set up a joint venture in New York named LSM Trading Ltd. (“LSM”) in which the Company holds a 40% equity interest. Mr. Shanming Liang subsequently transferred his shares to Guanxi Golden Bridge Industry Group Co., Ltd in October 2021. For the year ended June 30, 2022, the Company invested $210,000 and recorded $47,181 investment loss. The joint venture has not started its operations due to COVID-19 and substantially all of the Company’s investment was deposited in bank account with LSM and LSM has only incurred some administrative expenses. The Company recorded $31,844 and $34,458 investment loss for the three and six months ended December 31, 2022. No events have occurred that indicated other-than-temporary impairment existed for the three and six months ended December 31, 2022.
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| Convertible notes | (j) Convertible notes
The Company evaluates its convertible notes to determine if those contracts or embedded components of those contracts qualify as derivatives. The result of this accounting treatment is that the fair value of the embedded derivative is recorded at fair value each reporting period and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statements of operations as other income or expense.
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| Revenue Recognition | (k) Revenue Recognition
The Company recognizes revenue which represents the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. The Company identifies contractual performance obligations and determines whether revenue should be recognized at a point in time or over time, based on when control of goods and services transfers to a customer.
The Company uses a five-step model to recognize revenue from customer contracts. The five-step model requires the Company to (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective performance obligations in the contract, and (v) recognize revenue when (or as) the Company satisfies the performance obligation.
For the Company’s freight logistic, the Company provided transportation services which includes mainly shipping services. The Company derived transportation revenue from sales contracts with its customers with revenues being recognized upon performance of services. Sales price to the customer was fixed upon acceptance of the sales contract and there was no separate sales rebate, discount, or other incentive. The Company’s revenues were recognized at a point in time after all performance obligations were satisfied
For the Company’s warehouse services, which are included in the freight logistic services, the Company’s contracts provide the customer an integrated service that includes two or more services, including but not limited to warehousing, collection, first-mile delivery, drop shipping, customs clearance packaging, etc. Accordingly, the Company generally identifies one performance obligation in its contracts, which is a series of distinct services that remain substantially the same over time and possess the same pattern of transfer. Revenue is recognized over the period in which services are provided under the terms of the Company’s contractual relationships with its clients.
Accordingly, the Company generally identifies one performance obligation in its contracts, which is a series of distinct services that remain substantially the same over time and possess the same pattern of transfer. Revenue is recognized over the period in which services are provided under the terms of the Company’s contractual relationships with its clients.
The transaction price is based on the amount specified in the contract with the customer and contains fixed and variable consideration. In general, the fixed consideration in a contract represents facility and equipment costs incurred to satisfy the performance obligation and is recognized on a straight-line basis over the term of the contract. The variable consideration is comprised of cost reimbursement determined based on the costs incurred. Revenue relating to variable pricing is estimated and included in the consideration if it is probable that a significant revenue reversal will not occur in the future. The estimate of variable consideration is determined by the expected value or most likely amount method and factors in current, past and forecasted experience with the customer. Customers are billed based on terms specified in the revenue contract and they pay us according to approved payment terms.
Revenue for the above services is recognized on a gross basis when the Company controls the services as it has the obligation to (i) provide all services (ii) bear any inventory risk for warehouse services. In addition, the Company has control to set its selling price to ensure it would generate profit for the services.
For the six months ended December 31, 2022, the Company engaged in resale of cryptocurrency mining equipment.
On January 10, 2022, the Company’s joint venture, Thor Miner, entered into a Purchase and Sale Agreement with SOS Information Technology New York Inc. (the “Buyer”). Pursuant to the Purchase and Sale Agreement, Thor Miner agreed to sell and the Buyer agreed to purchase certain cryptocurrency mining equipment.
The Company’s performance obligation is to deliver products according to contract specifications. The Company recognizes product revenue at a point in time when the control of products or services are transferred to customers. To distinguish a promise to provide products from a promise to facilitate the sale from a third party, the Company considers the guidance of control in ASC 606-10-55-37A and the indicators in 606-10-55-39. The Company considers this guidance in conjunction with the terms in the Company’s arrangements with both suppliers and customers.
In general, revenue is recognized on a gross basis when the Company controls the products as it has the obligation to (i) fulfill the products delivery and custom clearance (ii) bear any inventory risk as legal owners. In addition, when establishing the selling prices for delivery of the resale products, the Company has control to set its selling price to ensure it would generate profit for the products delivery arrangements. If the Company is not responsible for provision of product and does not bear inventory risk, the Company recorded revenue on a net basis.
For the three and six months ended December 31, 2022, the Company recognized the sale of cryptocurrency mining equipment based on net basis as the manufacturer of the products are responsible for shipping and custom clearing for the products.
Contract balances
The Company records receivables related to revenue when the Company has an unconditional right to invoice and receive payment.
Deferred revenue consists primarily of customer billings made in advance of performance obligations being satisfied and revenue being recognized. Contract balance amounted to $204,442 and $72,095 for the six months ended December 31, 2022 and 2021, respectively.
The Company’s disaggregated revenue streams are described as follows:
Disaggregated information of revenues by geographic locations are as follows:
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| Leases | (l) Leases
The Company adopted FASB ASU 2016-02, “Leases” (Topic 842) for the year ended June 30, 2020, and elected the practical expedients that does not require us to reassess: (1) whether any expired or existing contracts are, or contain, leases, (2) lease classification for any expired or existing leases and (3) initial direct costs for any expired or existing leases. For lease terms of twelve months or fewer, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. The Company also adopted the practical expedient that allows lessees to treat the lease and non-lease components of a lease as a single lease component. Upon adoption, the Company recognized right of use (“ROU”) assets and same amount of lease liabilities based on the present value of the future minimum rental payments of leases, using an incremental borrowing rate of 7% based on the duration of lease terms.
Operating lease ROU assets and lease liabilities are recognized at the adoption date or the commencement date, whichever is earlier, based on the present value of lease payments over the lease term. Since the implicit rate for the Company’s leases is not readily determinable, the Company use its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would have to pay to borrow, on a collateralized basis, an amount equal to the lease payments, in a similar economic environment and over a similar term.
Lease terms used to calculate the present value of lease payments generally do not include any options to extend, renew, or terminate the lease, as the Company does not have reasonable certainty at lease inception that these options will be exercised. The Company generally considers the economic life of its operating lease ROU assets to be comparable to the useful life of similar owned assets. The Company has elected the short-term lease exception, therefore operating lease ROU assets and liabilities do not include leases with a lease term of twelve months or less. Its leases generally do not provide a residual guarantee. The operating lease ROU asset also excludes lease incentives. Lease expense is recognized on a straight-line basis over the lease term.
The Company reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Company reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Company has elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.
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| Taxation | (m) Taxation
Because the Company and its subsidiaries and Sino-China were incorporated in different jurisdictions, they file separate income tax returns. The Company uses the asset and liability method of accounting for income taxes in accordance with U.S. GAAP. Deferred taxes, if any, are recognized for the future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the unaudited condensed consolidated financial statements. A valuation allowance is provided against deferred tax assets if it is more likely than not that the asset will not be utilized in the future.
The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax expense. The Company had no uncertain tax positions as of December 31, 2022 and 2021.
Income tax returns for the years prior to 2018 are no longer subject to examination by U.S. tax authorities.
PRC Enterprise Income Tax
PRC enterprise income tax is calculated based on taxable income determined under the PRC Generally Accepted Accounting Principles (“PRC GAAP”) at 25%. Sino-China and Trans Pacific Beijing were incorporated in the PRC and are subject to the Enterprise Income Tax Laws of the PRC.
PRC Value Added Taxes and Surcharges
The Company is subject to value added tax (“VAT”). Revenue from services provided by the Company’s PRC subsidiaries are subject to VAT at rates ranging from 9% to 13%. Entities that are VAT general taxpayers are allowed to offset qualified VAT paid to suppliers against their VAT liability. Net VAT liability is recorded in taxes payable on the consolidated balance sheets.
In addition, under the PRC regulations, the Company’s PRC subsidiaries and VIE are required to pay city construction tax (7%) and education surcharges (3%) based on the net VAT payments.
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| Earnings (loss) per Share | (n) Earnings (loss) per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to holders of common stock of the Company by the weighted average number of shares of common stock of the Company outstanding during the applicable period. Diluted earnings (loss) per share reflect the potential dilution that could occur if securities or other contracts to issue common stock of the Company were exercised or converted into common stock of the Company. Common stock equivalents are excluded from the computation of diluted earnings per share if their effects would be anti-dilutive.
For the three and six months ended December 31, 2022 and 2021, there was no dilutive effect of potential shares of common stock of the Company because the Company generated net loss.
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| Comprehensive Income (Loss) | (o) Comprehensive Income (Loss)
The Company reports comprehensive income (loss) in accordance with the authoritative guidance issued by Financial Accounting Standards Board (the “FASB”) which establishes standards for reporting comprehensive income (loss) and its component in financial statements. Other comprehensive income (loss) refers to revenue, expenses, gains and losses that under US GAAP are recorded as an element of stockholders’ equity but are excluded from net income. Other comprehensive income (loss) consists of a foreign currency translation adjustment resulting from the Company not using the U.S. dollar as its functional currencies.
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| Stock-based Compensation | (p) Stock-based Compensation
The Company accounts for stock-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that stock-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period. The Company records stock-based compensation expense at fair value on the grant date and recognizes the expense over the employee’s requisite service period.
The Company accounts for stock-based compensation awards to non-employees in accordance with FASB ASC Topic 718 amended by ASU 2018-07. Under FASB ASC Topic 718, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received.
Valuations of stock-based compensation are based upon highly subjective assumptions about the future, including stock price volatility and exercise patterns. The fair value of share-based payment awards was estimated using the Black-Scholes option pricing model. Expected volatilities are based on the historical volatility of the Company’s stock. The Company uses historical data to estimate option exercise and employee terminations. The expected term of options granted represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.
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| Risks and Uncertainties | (q) Risks and Uncertainties
The Company’s business, financial position and results of operations may be influenced by the political, economic, health and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s operations in the PRC are subject to special considerations and significant risks not typically associated with companies in North America and Western Europe. These include risks associated with, among others, the political, economic, health and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in the political, regulatory and social conditions in the PRC, and by changes in governmental policies or interpretations with respect to laws and regulations, anti-inflationary measures, currency conversion, remittances abroad, and rates and methods of taxation, among other things.
In March 2020, the World Health Organization declared the COVID-19 as a pandemic. Given the rapidly expanding nature of the COVID-19 pandemic, and because substantially all of the Company’s business operations and the workforce are concentrated in China and United States, the Company’s business, results of operations, and financial condition have been adversely affected for the three and six months ended December 31, 2022. The situation remains highly uncertain for any further outbreak or resurgence of the COVID-19. It is therefore difficult for the Company to estimate the impact on the business or operating results that might be adversely affected by any further outbreak or resurgence of COVID-19.
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| Disposal of subsidiaries and VIE | (r) Disposal of subsidiaries and VIE
On December 31, 2021, the Company entered into a series of agreements to terminate its VIE structure and deconsolidated its formerly controlled entity Sino-Global Shipping Agency Ltd. (“Sino-China”). The Company controlled Sino-China through its wholly owned subsidiary Trans Pacific Beijing. The Company made the decision to dissolve the VIE structure and Sino-China because Sino-China has no active operations and the Company wanted to remove any potential risks associated with any VIE structures. In addition, the Company dissolved its subsidiary Sino-Global Shipping LA, Inc. On March 14, 2022, the company discontinued its subsidiary Sino-Global Shipping Canada, Inc., no gain or loss was recognized in the deconsolidation.
Since the disposal did not represent any strategic change of the Company’s operation, the disposal was not presented as discontinued operations.
Net assets of the entities disposed and loss on disposal was as follows:
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| Recent Accounting Pronouncements | (s) Recent Accounting Pronouncements
In May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The amendments in this ASU address those stakeholders’ concerns by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. For those entities, the targeted transition relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar financial assets. Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments in Update 2016-13 while still providing financial statement users with decision-useful information. In November 2019, the FASB issued ASU No. 2019-10, which to update the effective date of ASU No. 2016-13 for private companies, not-for-profit organizations and certain smaller reporting companies applying for credit losses standard. The new effective date for these preparers is for fiscal years beginning after July 1, 2023, including interim periods within those fiscal years. The Company has not early adopted this update and it will become effective on July 1, 2023 assuming the Company will remain eligible to be smaller reporting company. The adoption did not have material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.
The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements. |
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Organization and Nature of Business (Tables) |
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| Organization and Nature of Business [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of subsidiaries |
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| Schedule of operations |
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| Schedule of cash flow |
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Summary of Significant Accounting Policies (Tables) |
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| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of translation foreign currency exchange rates |
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| Schedule of estimated useful lives |
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| Schedule of disaggregated revenue streams |
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| Schedule of revenues by geographic locations |
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| Schedule of net assets of the entities disposed and loss on disposal |
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Cryptocurrencies (Tables) |
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| Cryptocurrencies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of additional information about cryptocurrencies |
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Accounts Receivable, Net (Tables) |
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| Schedule of net accounts receivable |
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| Schedule of allowance for credit losses |
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Other Receivables, Net (Tables) |
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| Schedule of other receivables |
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| Schedule of movement of allowance for doubtful accounts |
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Advances to Suppliers (Tables) |
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| Schedule of advances to suppliers – third parties |
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Prepaid Expenses and Other Current Assets (Tables) |
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| Prepaid Expense and Other Assets, Current [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of prepaid expenses and other assets |
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Other Long-Term Assets – Deposits, Net (Tables) |
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| Disclosure Text Block Supplement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of other long-term assets – deposits |
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| Schedule of movements of allowance for deposits |
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Property and Equipment, Net (Tables) |
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| Property and Equipment, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of net property and equipment |
|
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Accrued Expenses and Other Current Liabilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Payables and Accruals [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of accrued expenses and other current liabilities |
|
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Leases (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of lease obligations |
|
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Equity (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of status of warrants outstanding and exercisable |
|
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| Schedule of warrants outstanding |
|
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| Schedule of outstanding options |
|
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| Schedule of status of options outstanding and exercisable |
|
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Non-controlling interest (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of non-controlling interest |
|
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Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of income tax expenses |
|
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| Schedule of deferred tax assets |
|
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| Schedule of taxes payable |
|
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Segment Reporting (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of information by segment |
|
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| Schedule of segment reporting total assets |
|
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| Schedule of disaggregated information of revenues by geographic locations |
|
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Related Party Balance and Transactions (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of company’s advances to suppliers – related party |
|
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| Schedule of outstanding amounts due from related parties |
|
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| Schedule of outstanding loan receivable from related parties |
|
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Organization and Nature of Business (Details) |
Jun. 30, 2022
USD ($)
|
|---|---|
| Accounting Policies [Abstract] | |
| Revenue | $ 980,200 |
Organization and Nature of Business (Details) - Schedule of subsidiaries |
6 Months Ended |
|---|---|
Dec. 31, 2022 | |
| Sino-Global Shipping New York Inc. (“SGS NY”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | A New York Corporation Incorporated on May 03, 2013 Primarily engaged in freight logistics services |
| Ownership | 100% owned by the Company |
| Sino-Global Shipping Australia Pty Ltd. (“SGS AUS”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | An Australian Corporation |
| Ownership | 100% owned by the Company Dissolved in November 2022 |
| Sino-Global Shipping HK Ltd. (“SGS HK”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | Incorporated on July 03, 2008 No material operations A Hong Kong Corporation Incorporated on September 22, 2008 No material operations |
| Ownership | 100% owned by the Company |
| Thor Miner Inc. (“Thor Miner”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | A Delaware Corporation Incorporated on October 13, 2021 Primarily engaged in sales of crypto mining machines |
| Ownership | 51% owned by the Company |
| Trans Pacific Shipping Ltd. (“TP BJ”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | A PRC limited liability company Incorporated on November 13, 2007. Primarily engaged in freight logistics services |
| Ownership | 100% owned by the Company |
| Trans Pacific Logistic Shanghai Ltd. (“TP SH”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | A PRC limited liability company Incorporated on May 31, 2009 Primarily engaged in freight logistics services |
| Ownership | 90% owned by Trans Pacific Beijing |
| Ningbo Saimeinuo Supply Chain Management Ltd. (“SGS Ningbo”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | A PRC limited liability company Incorporated on September 11,2017 Primarily engaged in freight logistics services |
| Ownership | 100% owned by SGS NY |
| Blumargo IT Solution Ltd. (“Blumargo”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | A New York Corporation Incorporated on December 14, 2020 No material operations |
| Ownership | 100% owned by SGS NY |
| Gorgeous Trading Ltd (“Gorgeous Trading”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | A Texas Corporation Incorporated on July 01, 2021 Primarily engaged in warehouse related services |
| Ownership | 100% owned by SGS NY |
| Brilliant Warehouse Service Inc. (“Brilliant”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | A Texas Corporation Incorporated on April 19,2021 Primarily engaged in warehouse house related services |
| Ownership | 51% owned by SGS NY |
| Phi Electric Motor In. (“Phi”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | A New York Corporation Incorporated on August 30, 2021 No operations |
| Ownership | 51% owned by SGS NY |
| SG Link LLC (“SG Link”) [Member] | |
| Schedule of subsidiaries [Abstract] | |
| Background | A New York Corporation Incorporated on December 23, 2021 No operations |
| Ownership | 100% owned by SG Shipping & Risk Solution Inc on January 25, 2022 |
Organization and Nature of Business (Details) - Schedule of operations |
6 Months Ended |
|---|---|
|
Dec. 31, 2021
USD ($)
| |
| Previously Reported [Member] | |
| Schedule of operations [Abstract] | |
| Net revenues | $ 2,838,135 |
| Cost of revenues | (2,651,759) |
| Recovery (provision) for doubtful accounts, net | 1,931,591 |
| Net loss | (11,840,032) |
| Adjustments [Member] | |
| Schedule of operations [Abstract] | |
| Net revenues | (980,200) |
| Cost of revenues | 580,000 |
| Recovery (provision) for doubtful accounts, net | (1,792,713) |
| Net loss | (2,192,913) |
| As Restated [Member] | |
| Schedule of operations [Abstract] | |
| Net revenues | 1,857,935 |
| Cost of revenues | (2,071,759) |
| Recovery (provision) for doubtful accounts, net | 138,878 |
| Net loss | $ (14,032,945) |
Organization and Nature of Business (Details) - Schedule of cash flow |
6 Months Ended |
|---|---|
|
Dec. 31, 2021
USD ($)
| |
| As Previously Reported [Member] | |
| Cash flows from operating activities: | |
| Net loss | $ (11,840,032) |
| Provision for doubtful accounts | (1,931,591) |
| Adjustments [Member] | |
| Cash flows from operating activities: | |
| Net loss | (2,192,913) |
| Provision for doubtful accounts | 1,792,713 |
| As Restated [Member] | |
| Cash flows from operating activities: | |
| Net loss | (14,032,945) |
| Provision for doubtful accounts | $ (138,878) |
Summary of Significant Accounting Policies (Details) - Schedule of disaggregated revenue streams - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Schedule of Disaggregated Revenue Streams [Abstract] | ||||
| Sale of crypto mining machines | $ 235,520 | $ 732,565 | ||
| Freight logistics services | 1,255,411 | 1,041,925 | 1,979,570 | $ 1,857,935 |
| Total | $ 1,490,931 | $ 1,041,925 | $ 2,712,135 | $ 1,857,935 |
Summary of Significant Accounting Policies (Details) - Schedule of revenues by geographic locations - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Summary of Significant Accounting Policies (Details) - Schedule of revenues by geographic locations [Line Items] | ||||
| Total revenues | $ 1,490,931 | $ 1,041,925 | $ 2,712,135 | $ 1,857,935 |
| PRC [Member] | ||||
| Summary of Significant Accounting Policies (Details) - Schedule of revenues by geographic locations [Line Items] | ||||
| Total revenues | 912,611 | 868,255 | 1,160,821 | 1,593,332 |
| U.S. [Member] | ||||
| Summary of Significant Accounting Policies (Details) - Schedule of revenues by geographic locations [Line Items] | ||||
| Total revenues | $ 578,320 | $ 173,670 | $ 1,551,314 | $ 264,603 |
Cryptocurrencies (Details) - USD ($) |
3 Months Ended | 6 Months Ended |
|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2022 |
|
| Cryptocurrencies [Abstract] | ||
| Impairment loss | $ 13,280 | $ 14,801 |
Cryptocurrencies (Details) - Schedule of additional information about cryptocurrencies - USD ($) |
6 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
|
| Schedule of additional information about cryptocurrencies [Abstract] | ||
| Beginning balance | $ 90,458 | $ 261,338 |
| Receipt of cryptocurrencies from mining services | ||
| Impairment loss | (14,801) | (170,880) |
| Ending balance | $ 75,657 | $ 90,458 |
Accounts Receivable, Net (Details) - Schedule of net accounts receivable - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Net Accounts Receivable [Abstract] | ||
| Trade accounts receivable | $ 3,760,886 | $ 3,521,491 |
| Less: allowances for credit losses | (3,357,131) | (3,413,110) |
| Accounts receivable, net | $ 403,755 | $ 108,381 |
Accounts Receivable, Net (Details) - Schedule of allowance for credit losses - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
|
| Schedule of Allowance for Doubtful Accounts [Abstract] | ||
| Beginning balance | $ 3,413,110 | $ 3,475,769 |
| Provision for credit losses, net of recovery | 257 | |
| Exchange rate effect | (55,979) | (62,916) |
| Ending balance | $ 3,357,131 | $ 3,413,110 |
Other Receivables, Net (Details) |
Dec. 31, 2022
USD ($)
|
|---|---|
| Other Receivables, Net [Abstract] | |
| Subsequently recovered | $ 1,934,619 |
Other Receivables, Net (Details) - Schedule of other receivables - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Other Receivables [Abstract] | ||
| Advances to customers | $ 4,188,979 | $ 3,943,547 |
| Employee business advances | 18,944 | 23,768 |
| Total | 4,207,923 | 3,967,315 |
| Less: allowances for credit losses | (4,163,677) | (3,942,258) |
| Other receivables, net | $ 44,246 | $ 25,057 |
Other Receivables, Net (Details) - Schedule of movement of allowance for doubtful accounts - USD ($) |
6 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
|
| Schedule Of Movement Of Allowance For Doubtful Accounts Abstract | ||
| Beginning balance | $ 3,942,258 | $ 6,024,266 |
| Recovery for credit losses | (1,934,619) | |
| Exchange rate effect | 221,419 | (147,389) |
| Ending balance | $ 4,163,677 | $ 3,942,258 |
Advances to Suppliers (Details) - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
|
| Advances To Suppliers [Abstract] | ||
| Provided allowance | $ 300,000 | $ 300,000 |
Advances to Suppliers (Details) - Schedule of advances to suppliers – third parties - USD ($) |
6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
|||
| Schedule of Advances to Suppliers Third Parties [Abstract] | ||||
| Freight fees | [1] | $ 335,605 | $ 336,540 | |
| Less: allowances for credit losses | (300,000) | (300,000) | ||
| Advances to suppliers-third parties, net | $ 35,605 | $ 36,540 | ||
| ||||
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other assets - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Prepaid Expenses and Other Assets [Abstract] | ||
| Prepaid income taxes | $ 11,929 | $ 11,929 |
| Other (including prepaid professional fees, rent, listing fees) | 446,850 | 353,984 |
| Total | $ 458,779 | $ 365,913 |
Other Long-Term Assets – Deposits, Net (Details) - Schedule of other long-term assets – deposits - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Other Long Term Assets Deposits [Abstract] | ||
| Rental and utilities deposits | $ 249,162 | $ 246,581 |
| Less: allowances for deposits | (8,564) | (8,832) |
| Other long-term assets- deposits, net | $ 240,598 | $ 237,749 |
Other Long-Term Assets – Deposits, Net (Details) - Schedule of movements of allowance for deposits - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
|
| Schedule of Movements of Allowance [Abstract] | ||
| Beginning balance | $ 8,832 | $ 3,177,127 |
| Less: Write-off | (3,173,408) | |
| Exchange rate effect | (268) | 5,113 |
| Ending balance | $ 8,564 | $ 8,832 |
Property and Equipment, Net (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Property and Equipment, Net (Details) [Line Items] | ||||
| Depreciation and amortization expenses | $ 76,704 | $ 137,807 | ||
| Depreciation and amortization expenses | $ 155,649 | $ 278,517 | ||
| Loss on disposal of fixed assets | 6,481 | 6,481 | ||
| Vehicles [Member] | ||||
| Property and Equipment, Net (Details) [Line Items] | ||||
| Net cost | $ 83,519 | $ 83,519 | ||
Accrued Expenses and Other Current Liabilities (Details) - Schedule of accrued expenses and other current liabilities - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of Accrued Expenses and Other Current Liabilities Abstract | ||
| Salary and reimbursement payable | $ 316,575 | $ 305,423 |
| Professional fees and other expense payable | 27,811 | 305,264 |
| Interest payable | 198,022 | 136,379 |
| Others | 71,004 | 9,206 |
| Total | $ 613,412 | $ 756,272 |
Convertible Notes (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|---|
Mar. 08, 2022 |
Dec. 17, 2021 |
Dec. 31, 2022 |
Dec. 31, 2022 |
Dec. 19, 2021 |
|
| Convertible Notes (Details) [Line Items] | |||||
| Aggregate purchase price | $ 10,000,000 | ||||
| Convertible notes bear interest | 5.00% | ||||
| Conversion price per share (in Dollars per share) | $ 3.76 | ||||
| Interest expense | $ 61,944 | $ 123,587 | |||
| Amended and Restated Convertible Notes [Member] | |||||
| Convertible Notes (Details) [Line Items] | |||||
| Aggregate principal amount | $ 5,000,000 | ||||
| Waiver of interest description | The terms of the Amended and Restated Convertible Notes are the same as that of the original Convertible Notes, except for the reduced principal amount and the waiver of interest for the $5,000,000 payment made on March 8, 2022. |
Leases (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Leases (Details) [Line Items] | ||||
| Expiration term | 3 years 21 days | |||
| Rent expense | $ 137,040 | $ 146,461 | $ 256,218 | |
| Lease Agreements [Member] | ||||
| Leases (Details) [Line Items] | ||||
| Right-of-use assets | 478,547 | |||
| Lease liabilities | 1,044,670 | 1,044,670 | ||
| Lease liabilities current | 448,252 | 448,252 | ||
| Lease liabilities non-current | $ 596,418 | $ 596,418 | ||
| Weighted average discount rate | 10.89% | 10.89% | ||
| Lease Agreements [Member] | Minimum [Member] | ||||
| Leases (Details) [Line Items] | ||||
| Lease term range | 2 years | 2 years | ||
| Lease Agreements [Member] | Maximum [Member] | ||||
| Leases (Details) [Line Items] | ||||
| Lease term range | 5 years | 5 years | ||
Leases (Details) - Schedule of lease obligations |
Dec. 31, 2022
USD ($)
|
|---|---|
| Schedule of Lease Obligations [Abstract] | |
| 2023 | $ 542,430 |
| 2024 | 405,902 |
| 2025 | 168,052 |
| 2026 | 85,220 |
| Total lease payments | 1,201,604 |
| Less: Interest | 156,934 |
| Present value of lease liabilities | $ 1,044,670 |
Equity (Details) - USD ($) |
1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 04, 2022 |
Jan. 06, 2022 |
Dec. 14, 2021 |
Aug. 13, 2021 |
Dec. 27, 2022 |
Dec. 19, 2022 |
Feb. 16, 2022 |
Nov. 18, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
Jun. 30, 2022 |
|
| Equity (Details) [Line Items] | |||||||||||||
| Aggregate shares of common stock | 3,228,807 | ||||||||||||
| Purchase of warrants | 4,843,210 | ||||||||||||
| Purchase price for common stock and warrants (in Dollars per share) | $ 3.26 | ||||||||||||
| Warrants exercise price (in Dollars per share) | $ 4 | ||||||||||||
| Net proceeds (in Dollars) | $ 10,525,819 | ||||||||||||
| Issued shares | 3,228,807 | 600,000 | 100,000 | ||||||||||
| Warrants issued | 4,843,210 | 12,191,824 | 12,191,824 | 12,191,824 | |||||||||
| Shares issued to consultant | 500,000 | ||||||||||||
| Price of common stock (in Dollars) | $ 150,000,000 | $ 150,000,000 | |||||||||||
| Consecutive month | 3 months | ||||||||||||
| Shares of common stock | 100,000 | ||||||||||||
| Stock based compensation, description | the Company approved a one-time award of a total of 500,000 shares of common stock under the Company’s 2021 Stock Incentive Plan to certain executive officers of the Company, including Chief Executive Officer, Yang Jie (300,000 shares), Chief Operating Officer, Jing Shan (100,000 shares), and Chief Technology Officer, Shi Qiu (100,000 shares). The total fair value of the grants amounts to $2,740,000 based on the grant date share price of $5.48. | By action taken as of August 13, 2021, the Board of Directors (the “Board”) of the Company and the Compensation Committee of the Board (the “Committee”) approved a one-time award of a total of 1,020,000 shares of the common stock under the Company’s 2014 Stock Incentive Plan (the “Plan”) to, including (i) a one-time stock award grant of 600,000 shares to Chief Executive Officer, Lei Cao, (ii) a one-time stock award grant of 200,000 shares to acting Chief Financial Officer, Tuo Pan, (iii) a one-time stock award grant of 160,000 shares to Board member, Zhikang Huang, (iv) a one-time stock award grant of 20,000 shares to Board member, Jing Wang, (v) a one-time stock award grant of 20,000 shares to Board member, Xiaohuan Huang, and (vi) a one-time stock award grant of 20,000 shares to Board member, Tieliang Liu. | |||||||||||
| Grant date fair value (in Dollars) | $ 2,927,400 | $ 377,000 | |||||||||||
| Stock-based compensation expense (in Dollars) | $ 82,444 | $ 377,000 | $ 329,777 | $ 3,304,400 | |||||||||
| Warrants [Member] | |||||||||||||
| Equity (Details) [Line Items] | |||||||||||||
| Shares of common stock | 3,870,800 | ||||||||||||
| Contract [Member] | |||||||||||||
| Equity (Details) [Line Items] | |||||||||||||
| Stock-based compensation expense (in Dollars) | $ 329,777 | ||||||||||||
| Warrant Purchase Agreement [Member] | |||||||||||||
| Equity (Details) [Line Items] | |||||||||||||
| Purchase price per warrant (in Dollars per share) | $ 2 | $ 2 | |||||||||||
| Additional repurchase of warrants | 103,200 | ||||||||||||
| Repurchase of warrants | 3,974,000 | ||||||||||||
| Consulting Agreement [Member] | |||||||||||||
| Equity (Details) [Line Items] | |||||||||||||
| Shares of common stock | 100,000 | ||||||||||||
| Grant date fair value (in Dollars) | $ 742,000 | ||||||||||||
| Monthly fee (in Dollars) | $ 10,000 | ||||||||||||
| Grant value per share (in Dollars per share) | $ 7.42 | ||||||||||||
| Jing Shan [Member] | |||||||||||||
| Equity (Details) [Line Items] | |||||||||||||
| Cancellation agreement shares | 100,000 | ||||||||||||
| Yang Jie [Member] | |||||||||||||
| Equity (Details) [Line Items] | |||||||||||||
| Cancellation agreement shares | 300,000 | ||||||||||||
| Mr. Jie [Member] | |||||||||||||
| Equity (Details) [Line Items] | |||||||||||||
| Issued shares | 300,000 | ||||||||||||
Equity (Details) - Schedule of status of warrants outstanding and exercisable |
6 Months Ended |
|---|---|
|
Dec. 31, 2022
$ / shares
shares
| |
| Schedule of Status of Warrants Outstanding and Exercisable [Abstract] | |
| Warrants outstanding, Warrants, beginning | shares | 12,191,824 |
| Warrants outstanding, Weighted Average Exercise Price, beginning | $ / shares | $ 4.37 |
| Warrants outstanding, Warrants, ending | shares | 12,191,824 |
| Warrants outstanding, Warrants, ending | $ / shares | $ 4.37 |
| Warrants exercisable, Warrants | shares | 12,191,824 |
| Warrants exercisable, Weighted Average Exercise Price | $ / shares | $ 4.37 |
| Warrants, Issued | shares | |
| Weighted Average Exercise Price, Issued | $ / shares | |
| Warrants, Exercised | shares | |
| Weighted Average Exercise Price, Exercised | $ / shares | |
| Warrants, Repurchased | shares | |
| Weighted Average Exercise Price, Repurchased | $ / shares |
Equity (Details) - Schedule of warrants outstanding |
6 Months Ended |
|---|---|
|
Dec. 31, 2022
$ / shares
shares
| |
| 2020 Warrants [Member] | |
| Equity (Details) - Schedule of warrants outstanding [Line Items] | |
| Warrants Exercisable | shares | 181,000 |
| Weighted Average Exercise Price | $ / shares | $ 1.83 |
| Average Remaining Contractual Life | 2 years 11 months 1 day |
| 2021 Warrants [Member] | |
| Equity (Details) - Schedule of warrants outstanding [Line Items] | |
| Warrants Exercisable | shares | 11,907,490 |
| Weighted Average Exercise Price | $ / shares | $ 4.94 |
| Average Remaining Contractual Life | 3 years 9 months 21 days |
| 2018 Series A [Member] | |
| Equity (Details) - Schedule of warrants outstanding [Line Items] | |
| Warrants Exercisable | shares | 103,334 |
| Weighted Average Exercise Price | $ / shares | $ 8.75 |
| Average Remaining Contractual Life | 11 months 12 days |
Equity (Details) - Schedule of warrants outstanding (Parentheticals) |
6 Months Ended |
|---|---|
|
Dec. 31, 2022
shares
| |
| 2020 Warrants [Member] | |
| Equity (Details) - Schedule of warrants outstanding (Parentheticals) [Line Items] | |
| Number of warrants outstanding | 2,922,000 |
| 2021 Warrants [Member] | |
| Equity (Details) - Schedule of warrants outstanding (Parentheticals) [Line Items] | |
| Number of warrants outstanding | 11,088,280 |
| 2018 Series A [Member] | |
| Equity (Details) - Schedule of warrants outstanding (Parentheticals) [Line Items] | |
| Number of warrants outstanding | 400,000 |
Equity (Details) - Schedule of status of options outstanding and exercisable - $ / shares |
6 Months Ended | |
|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
|
| Schedule of Status of Options Outstanding and Exercisable [Abstract] | ||
| Outstanding Options, Exercise Price | $ 10.05 | $ 10.05 |
| Outstanding Options, Number | 2,000 | 2,000 |
| Outstanding Options, Average Remaining Contractual Life | 7 months 2 days | |
| Exercisable Options, Average Exercise Price | $ 10.05 | |
| Exercisable Options, Number | 2,000 | |
| Exercisable Options, Average Remaining Contractual Life | 3 months 29 days |
Non-controlling interest (Details) - Schedule of non-controlling interest - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Redeemable Noncontrolling Interest [Line Items] | ||
| Total | $ (2,058,843) | $ (2,140,890) |
| Trans Pacific Logistics Shanghai Ltd. [Member] | Noncontrolling Interest [Member] | ||
| Redeemable Noncontrolling Interest [Line Items] | ||
| Total | (1,581,456) | (1,521,645) |
| Thor Miner Inc. [Member] | Noncontrolling Interest [Member] | ||
| Redeemable Noncontrolling Interest [Line Items] | ||
| Total | (622,582) | (486,942) |
| Brilliant Warehouse Service, Inc.[Member] | Noncontrolling Interest [Member] | ||
| Redeemable Noncontrolling Interest [Line Items] | ||
| Total | $ 145,195 | $ (132,303) |
Commitments and Contingencies (Details) - USD ($) |
6 Months Ended | ||
|---|---|---|---|
Oct. 06, 2022 |
Jan. 10, 2022 |
Dec. 31, 2022 |
|
| Commitments and Contingencies (Details) [Line Items] | |||
| Purchase and sale agreement description | SOSNY and Thor Miner entered into a January 10, 2022 Purchase and Sale Agreement (the “PSA”) for the purchase of $200,000,000 in crypto mining rigs, which SOSNY claims was breached by the Defendants. | ||
| Settlement payment | $ 13,000,000 | ||
| Transfer amount | 40,560,569 | ||
| Settlement amount | 40,560,569 | ||
| Interest costs | $ 1,800,000 | ||
| Jinhe [Member] | |||
| Commitments and Contingencies (Details) [Line Items] | |||
| Interest costs | $ 575,000 | ||
| Hexin [Member] | |||
| Commitments and Contingencies (Details) [Line Items] | |||
| Damage amount | 6,000,000 | ||
| St. Hudson [Member] | |||
| Commitments and Contingencies (Details) [Line Items] | |||
| Damage amount | $ 4,400,000 |
Income Taxes (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |
|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2022 |
Jun. 30, 2022 |
|
| Income Taxes (Details) [Line Items] | |||
| Additional net operating loss | $ 130,000 | $ 245,000 | |
| Tax benefit derived from NOL | $ 861,000 | $ 1,500,000 | |
| Allowance of DTA | 100.00% | 100.00% | |
| Net increase in valuation | $ 894,000 | $ 1,464,000 | |
| U.S. [Member] | |||
| Income Taxes (Details) [Line Items] | |||
| Cumulative net operating loss | $ 22,000,000 | ||
| Additional net operating loss | $ 4,100,000 | $ 7,300,000 | |
| Net operating loss, description | As of December 31, 2022, the Company’s cumulative NOL amounted to approximately $29,400,000, which may reduce future federal taxable income, of which approximately $1,400,000 will expire in 2037 and the remaining balance carried forward indefinitely | ||
| China [Member] | |||
| Income Taxes (Details) [Line Items] | |||
| Cumulative net operating loss | $ 1,333,000 | ||
| Net operating loss, description | As of December 31, 2022, the Company’s cumulative NOL amounted to approximately $5,567,000 which may reduce future taxable income which will expire by 2026. |
Income Taxes (Details) - Schedule of income tax expenses - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Current | ||||
| Total income tax expenses | $ 103,426 | |||
| U.S. [Member] | ||||
| Current | ||||
| Total income tax expenses | 103,426 | |||
| PRC [Member] | ||||
| Current | ||||
| Total income tax expenses | ||||
Income Taxes (Details) - Schedule of deferred tax assets - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
|
| Income Taxes (Details) - Schedule of deferred tax assets [Line Items] | ||
| Total deferred tax assets | $ 9,822,000 | $ 8,358,000 |
| Valuation allowance | (9,822,000) | (8,358,000) |
| Deferred tax assets, net - long-term | ||
| U.S. [Member] | ||
| Income Taxes (Details) - Schedule of deferred tax assets [Line Items] | ||
| Allowance for credit losses | 491,000 | 617,000 |
| Net operating loss | 6,165,000 | 4,628,000 |
| PRC [Member] | ||
| Income Taxes (Details) - Schedule of deferred tax assets [Line Items] | ||
| Allowance for credit losses | 1,772,000 | 1,830,000 |
| Net operating loss | $ 1,394,000 | $ 1,283,000 |
Income Taxes (Details) - Schedule of taxes payable - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Schedule of taxes payable [Abstract] | ||
| VAT tax payable | $ 1,131,448 | $ 1,098,862 |
| Corporate income tax payable | 2,331,010 | 2,295,803 |
| Others | 54,607 | 62,512 |
| Total | $ 3,517,065 | $ 3,457,177 |
Segment Reporting (Details) - Schedule of information by segment - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Segment Reporting Information [Line Items] | ||||
| Net revenues | $ 1,490,931 | $ 1,041,925 | $ 2,712,135 | $ 1,857,935 |
| Cost of revenues | 1,311,137 | 1,024,891 | 2,056,764 | 2,071,759 |
| Gross profit | 179,794 | 17,034 | 655,371 | (213,824) |
| Depreciation and amortization | $ 76,704 | 137,807 | 155,649 | 278,517 |
| Total capital expenditures | $ 6,939 | $ 150,966 | $ 624,086 | |
| Gross margin% | 12.10% | 1.60% | 24.20% | (11.50%) |
| Freight Logistic Services [Member] | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | $ 1,255,411 | $ 1,041,925 | $ 1,979,570 | $ 1,857,935 |
| Cost of revenues | 1,311,137 | 1,024,891 | 2,056,764 | 2,071,759 |
| Gross profit | (55,726) | 17,034 | (77,194) | (213,824) |
| Depreciation and amortization | $ 76,704 | 137,807 | 155,649 | 278,517 |
| Total capital expenditures | $ 6,939 | $ 150,966 | $ 624,086 | |
| Gross margin% | (4.40%) | 1.60% | (3.90%) | (11.50%) |
| Crypto-Mining Equipment Sales [Member] | ||||
| Segment Reporting Information [Line Items] | ||||
| Net revenues | $ 235,520 | $ 732,565 | ||
| Cost of revenues | ||||
| Gross profit | 235,520 | 732,565 | ||
| Depreciation and amortization | $ 13,471 | 20,729 | ||
| Total capital expenditures | $ 40,777 | |||
| Gross margin% | 100.00% | 100.00% | ||
Segment Reporting (Details) - Schedule of segment reporting total assets - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
|---|---|---|
| Segment Reporting, Asset Reconciling Item [Line Items] | ||
| Total Assets | $ 38,815,556 | $ 64,847,740 |
| Freight Logistic Services [Member] | ||
| Segment Reporting, Asset Reconciling Item [Line Items] | ||
| Total Assets | 31,894,338 | 44,058,444 |
| Sales of crypto-mining machines [Member] | ||
| Segment Reporting, Asset Reconciling Item [Line Items] | ||
| Total Assets | $ 6,921,218 | $ 20,789,296 |
Segment Reporting (Details) - Schedule of disaggregated information of revenues by geographic locations - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2022 |
Dec. 31, 2021 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
| Total revenues | $ 1,490,931 | $ 1,041,925 | $ 2,712,135 | $ 1,857,935 |
| PRC [Member] | ||||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
| Total revenues | 912,611 | 868,255 | 1,160,821 | 1,593,332 |
| U.S. [Member] | ||||
| Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
| Total revenues | $ 578,320 | $ 173,670 | $ 1,551,314 | $ 264,603 |
Related Party Balance and Transactions (Details) |
1 Months Ended | 4 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
|
Jun. 10, 2021
USD ($)
|
Jun. 10, 2021
CNY (¥)
|
Dec. 31, 2022
CNY (¥)
|
Sep. 30, 2022
USD ($)
|
Feb. 28, 2022
USD ($)
|
Nov. 16, 2021
USD ($)
|
Apr. 30, 2022
USD ($)
|
Dec. 31, 2022
USD ($)
|
Dec. 31, 2022
USD ($)
|
Jun. 30, 2022
USD ($)
|
Jun. 30, 2022
CNY (¥)
|
|
| Related Party Balance and Transactions (Details) [Line Items] | |||||||||||
| Total prepayment | $ 35,406,649 | ||||||||||
| Advance from non-interest amount | $ 400,000 | $ 400,000 | |||||||||
| Company to invest the trading business | $ 4,500,000 | 3,303,424 | |||||||||
| Amount return | 3,200,000 | ||||||||||
| Repayment of loan amount | $ 630,805 | ¥ 4,000,000 | |||||||||
| Loan amount | $ 552,285 | ¥ 3,700,000 | |||||||||
| Returned amount | ¥ 500,000 | $ 70,265 | $ 400,000 | $ 3,200,000 | |||||||
| Shipped product description | The Company shipped products of $1,325,520 for the year ended June 2022 and $6,153,546 from July to December 2022. Due to production issues from HighSharp, Thor Miner was not able to timely deliver the full quantity of cryptocurrency mining machines to SOSNY under the PSA and was sued by SOSNY for breach of contract on December 9, 2022. The Company entered into a settlement agreement with SOSNY effective on December 28, 2022, under which the Company will repay $13.0 million to SOSNY and terminate the previous agreements and balance of the deposits. The Company also assigned to SOSNY the right for the deposit that Thor Miner has paid to HighSharp. As of December 22, 2022, the balance of advance to HighSharp and deposit from SOSNY amounted to $27,927,583 and $40,560,569, respectively. Thor Miner paid $13.0 million on December 23, 2022 to SOSNY which was received by SOSNY on December 28, 2022. Thor Miner wrote off the balance of the deposit it received from SOSNY and the balance of its payment to HighSharp resulted in net bad debt expenses of $367,014. | ||||||||||
| Wang Qing Gang [Member] | |||||||||||
| Related Party Balance and Transactions (Details) [Line Items] | |||||||||||
| Equity method investment ownership percentage | 30.00% | 30.00% | 30.00% | ||||||||
| LSM trading Ltd [Member] | |||||||||||
| Related Party Balance and Transactions (Details) [Line Items] | |||||||||||
| Equity method investment ownership percentage | 40.00% | 40.00% | 40.00% | ||||||||
| Rich Trading Co. Ltd [Member] | |||||||||||
| Related Party Balance and Transactions (Details) [Line Items] | |||||||||||
| Equity method investment ownership percentage | 90.00% | ||||||||||
| Zhejiang Jinbang [Member] | |||||||||||
| Related Party Balance and Transactions (Details) [Line Items] | |||||||||||
| Related party transaction return amount | $ 400,000 | ||||||||||
| Company to invest the trading business | 1,200,000 | ||||||||||
| LSM trading Ltd [Member] | |||||||||||
| Related Party Balance and Transactions (Details) [Line Items] | |||||||||||
| Company to invest the trading business | 570,000 | ||||||||||
| Wang Qing Gang [Member] | |||||||||||
| Related Party Balance and Transactions (Details) [Line Items] | |||||||||||
| Repayment of loan amount | $ 232,340 | ||||||||||
| CEO [Member] | |||||||||||
| Related Party Balance and Transactions (Details) [Line Items] | |||||||||||
| Allowance amount | $ 103,424 | ||||||||||
Related Party Balance and Transactions (Details) - Schedule of company’s advances to suppliers – related party - USD ($) |
6 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2022 |
Jun. 30, 2022 |
|||
| Schedule of Advances to Suppliers Related Party [Abstract] | ||||
| Bitcoin mining hardware and other equipment | [1] | $ 6,153,546 | ||
| Total Advances to suppliers-related party | $ 6,153,546 | |||
| ||||
Related Party Balance and Transactions (Details) - Schedule of outstanding amounts due from related parties - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Related Party Balance and Transactions (Details) - Schedule of outstanding amounts due from related parties [Line Items] | ||||||||||||
| Less: allowance for doubtful accounts | $ (2,397,040) | $ (2,449,700) | ||||||||||
| Total | 422,207 | |||||||||||
| Zhejiang Jinbang Fuel Energy Co., Ltd [Member] | ||||||||||||
| Related Party Balance and Transactions (Details) - Schedule of outstanding amounts due from related parties [Line Items] | ||||||||||||
| Due from related parties | [1] | 810,542 | 415,412 | |||||||||
| Shanghai Baoyin Industrial Co., Ltd [Member] | ||||||||||||
| Related Party Balance and Transactions (Details) - Schedule of outstanding amounts due from related parties [Line Items] | ||||||||||||
| Due from related parties | [2] | 1,280,854 | 1,306,004 | |||||||||
| LSM Trading Ltd [Member] | ||||||||||||
| Related Party Balance and Transactions (Details) - Schedule of outstanding amounts due from related parties [Line Items] | ||||||||||||
| Due from related parties | [3] | 570,000 | 570,000 | |||||||||
| Rich Trading Co. Ltd [Member] | ||||||||||||
| Related Party Balance and Transactions (Details) - Schedule of outstanding amounts due from related parties [Line Items] | ||||||||||||
| Due from related parties | [4] | 103,424 | 103,424 | |||||||||
| Cao Lei [Member] | ||||||||||||
| Related Party Balance and Transactions (Details) - Schedule of outstanding amounts due from related parties [Line Items] | ||||||||||||
| Due from related parties | [5] | $ 54,427 | $ 54,860 | |||||||||
| ||||||||||||
Related Party Balance and Transactions (Details) - Schedule of outstanding loan receivable from related parties - USD ($) |
Dec. 31, 2022 |
Jun. 30, 2022 |
||
|---|---|---|---|---|
| Wang, Qinggang [Member] | ||||
| Related Party Transaction [Line Items] | ||||
| Outstanding loans receivable | [1] | $ 552,285 | ||
| ||||
Subsequent Events (Details) - shares |
Dec. 19, 2022 |
Dec. 14, 2021 |
Aug. 13, 2021 |
|---|---|---|---|
| Subsequent Events [Abstract] | |||
| Common share, shares issued | 100,000 | 3,228,807 | 600,000 |