UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

~~Form 10-Q~~x

☒ Quarterly Report PURSUANT TO SECTION 13 OR15(d)OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, ~~2020~~2021

☐¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from to .

Commission File Number 000-54485

IONIX TECHNOLOGY, INC.

(Exact Name of Registrant as Specified in Its Charter)

Nevada		45-0713638
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Rm 608, Block B, Times Square，No.50 People Road, Zhongshan District, Dalian City, Liaoning Province, China 116001

(Address of Principal Executive Offices) (Zip Code)

+86-411-88079120

(Registrant’s Telephone Number, Including Area Code)

__Not applicable_

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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. Yes ☒x No ☐.¨.

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). Yes ☒x No ☐ ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 ☐¨
	Non-accelerated filer ☒x	Smaller reporting company ☒x
	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 the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐¨ No ☒.x.

Securities registered pursuant to Section 12(b) of the Act: None

Title of each class	Trading Symbol(s)	Name of the principal U.S. market
Common Stock, par value $0.0001 per share	IINX	OTCQB marketplace of OTC Markets, Inc.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of May 15, ~~2020,~~2021, there were~~114,193,057~~ 164,041,058 shares of common stock issued and outstanding, par value $0.0001 per share.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information included in this Quarterly Report on Form 10-Q and other filings of the Registrant under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements in this Quarterly Report on Form 10-Q, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results. Among these risks, trends and uncertainties are the availability of working capital to fund our operations, the competitive market in which we operate, the efficient and uninterrupted operation of our computer and communications systems, our ability to generate a profit and execute our business plan, the retention of key personnel, our ability to protect and defend our intellectual property, the effects of governmental regulation, and other risks identified in the Registrant’s filings with the Securities and Exchange Commission from time to time.

In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or other comparable terminology. Although the Registrant believes that the expectations reflected in the forward-looking statements contained herein are reasonable, the Registrant cannot guarantee future results, levels of activity, performance or achievements. Moreover, neither the Registrant, nor any other person, assumes responsibility for the accuracy and completeness of such statements. The Registrant is under no duty to update any of the forward-looking statements contained herein after the date of this Quarterly Report on Form 10-Q.

~~IONIX TECHNOLOGY, INC.~~

~~FORM 10-Q~~

~~March 31, 2020~~

~~INDEX~~

		~~Page~~
~~Part I – Financial Information~~		~~F-1~~

~~Item 1.~~	~~Financial Statements (Unaudited)~~	~~F-1~~
~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operation~~	25
~~Item 3.~~	~~Quantitative and Qualitative Disclosures about Market Risk~~	28
~~Item 4.~~	~~Controls and Procedures~~	28

~~Part II – Other Information~~		29

~~Item 1.~~	~~Legal Proceedings~~	29
~~Item 1A.~~	~~Risk Factors~~	29
~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~	29
~~Item 3.~~	~~Defaults Upon Senior Securities~~	30
~~Item 4.~~	~~Mine Safety Disclosures~~	30
~~Item 5.~~	~~Other Information~~	30
~~Item 6.~~	~~Exhibits~~	30

~~Signatures~~		31

~~Certifications~~

PART I –- FINANCIAL INFORMATION

Item 1. Financial Statements.

IONIX TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31, 2020 June 30, 2019
ASSETS
Current Assets:
Cash and cash equivalents (Note 3 at VIE) $ 1,834,763 $ 509,615
Notes receivable (Note 3 at VIE) 23,721 120,182
Accounts receivable - non-related parties (Note 3 at VIE) 3,494,207 3,639,030
- related parties 420,906 340,026
Inventory (Note 3 at VIE) 3,045,127 3,379,146
Advances to suppliers - non-related parties (Note 3 at VIE) 354,820 129,423
- related parties 264,797 269,498
Prepaid expenses and other current assets (Note 3 at VIE) 593,122 269,495
Total Current Assets (Note 3 at VIE) 10,031,463 8,656,415

Property, plant and equipment, net (Note 3 at VIE) 6,812,910 7,508,637
Right-of-use assets – operating leases 20,825 -
Intangible assets, net (Note 3 at VIE) 1,430,449 1,496,399
Deferred tax assets (Note 3 at VIE) 51,460 54,361
Total Assets (Note 3 at VIE) $ 18,347,107 $ 17,715,812

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term bank loan (Note 3 at VIE) $ 2,540,543 $ 2,618,296
Accounts payable (Note 3 at VIE) 2,569,420 2,732,327
Advance from customers (Note 3 at VIE) 59,165 114,158
Convertible notes payable, net of debt discount and loan cost 347,427 -
Derivative liability 446,852 -
Due to related parties (Note 3 at VIE) 2,032,723 2,105,338
Operating lease liabilities – current portion 7,646 -
Accrued expenses and other current liabilities (Note 3 at VIE) 199,015 368,319
Total Current Liabilities (Note 3 at VIE) 8,202,791 7,938,438

Operating lease liabilities 12,462 -
Total Liabilities (Note 3 at VIE) 8,215,253 7,938,438

COMMITMENT AND CONTINGENCIES

Stockholders’ Equity:
Preferred stock, $.0001 par value, 5,000,000 shares authorized,
5,000,000 shares issued and outstanding 500 500
Common stock, $.0001 par value, 195,000,000 shares
authorized, 114,193,057 and 114,003,000 shares issued and
outstanding as of March 31, 2020 and June 30, 2019,
respectively 11,419 11,400
Additional paid in capital 9,299,825 8,829,487
Retained earnings 750,578 539,866
Accumulated other comprehensive loss (372,429 ) (45,840 )
Total Stockholders' Equity attributable to the Company 9,689,893 9,335,413
Noncontrolling interest 441,961 441,961
Total Stockholders’ Equity 10,131,854 9,777,374
Total Liabilities and Stockholders’ Equity $ 18,347,107 $ 17,715,812

	March 31, 2021			June 30, 2020
ASSETS
Current Assets:
Cash and cash equivalents	$	542,092		$	1,285,373
Notes receivable		99,327			125,798
Accounts receivable		3,253,702			3,273,141
Inventory		4,193,668			3,263,850
Advances to suppliers - non-related parties		921,417			540,259
- related parties		426,852			357,577
Prepaid expenses and other current assets		476,407			320,296
Total Current Assets		9,913,465			9,166,294

Property, plant and equipment, net		6,793,595			6,573,937
Intangible assets, net		1,491,089			1,424,404
Long-term prepaid expenses		512,906			-
Deferred tax assets		49,257			20,743
Total Assets	$	18,760,312		$	17,185,378

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Short-term bank loan	$	1,217,415		$	2,034,735
Accounts payable		2,650,376			2,637,792
Advance from customers		351,225			43,077
Promissory notes payable, net of debt discount and loan cost		571,093			-
Convertible notes payable, net of debt discount and loan cost		-			514,390
Derivative liability		-			276,266
Due to related parties		2,879,635			1,716,919
Accrued expenses and other current liabilities		78,536			359,577
Total Current Liabilities		7,748,280			7,582,756
Total Liabilities		7,748,280			7,582,756

COMMITMENT AND CONTINGENCIES

Stockholders’ Equity:
Preferred stock, $.0001 par value, 5,000,000 shares authorized, 5,000,000 shares issued and outstanding		500			500
Common stock, $.0001 par value, 195,000,000 shares authorized, 164,041,058 and 114,174,265 shares issued and outstanding as of March 31, 2021 and June 30, 2020 respectively		16,404			11,417
Additional paid in capital		10,786,792			9,243,557
Retained earnings (accumulated deficit)		(741,820	)		262,198
Accumulated other comprehensive income (loss)		488,563			(357,011	)
Total Stockholders' Equity attributable to the Company		10,550,439			9,160,661
Noncontrolling interest		461,593			441,961
Total Stockholders’ Equity		11,012,032			9,602,622
Total Liabilities and Stockholders’ Equity	$	18,760,312		$	17,185,378

The accompanying notes are an integral part of these consolidated financial statements.

IONIX TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~INCOME (LOSS)~~LOSS

(Unaudited)

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Nine Months Ended
	March 31,						March 31,						March 31,						March 31,
	2020			2019			2020			2019			2021			2020			2021			2020

Revenues (See Note 2 and Note 9 for related party amounts)	$	2,752,170		$	2,894,802		$	17,585,468		$	7,841,437
Revenues (See Note 3 and Note 11 for related party amounts)													$	3,160,746		$	2,752,170		$	9,102,094		$	17,585,468

Cost of Revenues (See Note 9 for related party amounts)		2,506,518			2,271,380			14,850,194			6,618,015
Cost of Revenues (See Note 11 for related party amounts)														2,802,497			2,506,518			8,071,941			14,850,194

Gross profit		245,652			623,422			2,735,274			1,223,422			358,249			245,652			1,030,153			2,735,274

Operating expenses
Selling, general and administrative expense		499,616			392,367			1,378,241			686,132			327,372			499,616			985,273			1,378,241
Research and development expense		139,029			158,562			645,880			158,562			147,871			139,029			425,111			645,880
Total operating expenses		638,645			550,929			2,024,121			844,694			475,243			638,645			1,410,384			2,024,121

Income (loss) from operations		(392,993	)		72,493			711,153			378,728			(116,994	)		(392,993	)		(380,231	)		711,153

Other income (expense):
Interest expense, net of interest income		(213,267	)		(34,412	)		(470,500	)		(34,412	)		(42,441	)		(213,267	)		(262,174	)		(470,500	)
Subsidy income		-			-			50,018			-			45,790			-			59,876			50,018
Change in fair value of derivative liability		(44,850	)		-			86,602			-			-			(44,850	)		(647,632	)		86,602
Loss on extinguishment of debt		(15,074	)		-			(15,074	)		-
Total other expense		(273,191	)		(34,412	)		(348,954	)		(34,412	)
Gain (loss) on extinguishment of debt														-			(15,074	)		202,588			(15,074	)
Total other income (expense)														3,349			(273,191	)		(647,342	)		(348,954	)

Income (loss) before income tax provision		(666,184	)		38,081			362,199			344,316

Income tax provision (benefit)		(29,962	)		17,017			151,487			139,245
Income (loss) before income tax expense (benefit)														(113,645	)		(666,184	)		(1,027,573	)		362,199
Income tax expense (benefit)														1,949			(29,962	)		(23,555	)		151,487
Net income (loss)		(636,222	)		21,064			210,712			205,071			(115,594	)		(636,222	)		(1,004,018	)		210,712

Other comprehensive income (loss)
Foreign currency translation adjustment		(165,507	)		56,484			(326,589	)		28,523			(29,945	)		(165,507	)		865,206			(326,589	)
Comprehensive income (loss)	$	(801,729	)	$	77,548		$	(115,877	)	$	233,594
Comprehensive loss														(145,539	)		(801,729	)		(138,812	)		(115,877	)
Less: Comprehensive income attributable to noncontrolling interest														19,632			-			19,632			-
Comprehensive loss attributable to common stockholders of the Company													$	(165,171	)	$	(801,729	)	$	(158,444	)	$	(115,877	)


Earnings (Loss) Per Share - Basic	$	(0.01	)	$	0.00		$	0.00		$	0.00
Weighted average number of common shares outstanding - Basic		114,104,735			114,003,000			114,036,665			104,148,985

Earnings (Loss) Per Share - Diluted	$	(0.01	)	$	0.00		$	0.00		$	0.00
Weighted average number of common shares outstanding - Diluted		113,913,240			114,003,000			114,036,665			104,148,985
Earnings (Loss) Per Share - Basic and Diluted													$	(0.00	)	$	(0.01	)	$	(0.01	)	$	0.00
Weighted average number of common shares outstanding - Basic and Diluted														161,911,380			114,104,735			134,708,314			114,036,665

The accompanying notes are an integral part of these consolidated financial statements.

IONIX TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

Preferred Stock Common Stock Additional Accumulated Other
Number of Shares Amount Number of Shares Amount Paid-in
Capital Retained
Earnings Comprehensive Income
(loss) Non-controlling
interest Total
Balance at June 30, 2019 5,000,000 $ 500 114,003,000 $ 11,400 $ 8,829,487 $ 539,866 $ (45,840 ) $ 441,961 $ 9,777,374

Stock warrants issued with convertible notes - - - - 20,022 - - - 20,022

Net income - - - - - 711,276 - - 711,276

Foreign currency translation adjustment - - - - - - (416,785 ) - (416,785 )

Balance at September 30, 2019 5,000,000 500 114,003,000 11,400 8,849,509 1,251,142 (462,625 ) 441,961 10,091,887

Stock warrants issued with convertible notes - - - - 84,613 - - - 84,613

Net income - - - - - 135,658 - - 135,658

Foreign currency translation adjustment - - - - - - 255,703 - 255,703

Balance at December 31, 2019 5,000,000 500 114,003,000 11,400 8,934,122 1,386,800 (206,922 ) 441,961 10,567,861

Issuance of common stock for advisory services - - 150,000 15 262,485 - - - 262,500

Issuance of common stock for conversion of convertible notes - - 40,057 4 60,361 - - - 60,365

Stock warrants issued with convertible notes - - - - 42,857 - - - 42,857

Net loss - - - - - (636,222 ) - - (636,222 )

Foreign currency translation adjustment - - - - - - (165,507 ) - (165,507 )

Balance at March 31, 2020 5,000,000 $ 500 114,193,057 $ 11,419 $ 9,299,825 $ 750,578 $ (372,429 ) $ 441,961 $ 10,131,854

Preferred Stock Common Stock Additional Accumulated Other
Number of Shares Amount Number of Shares Amount Paid-in
Capital Retained
Earnings Comprehensive Income
(loss) Non-controlling
interest Total
Balance at June 30, 2018 5,000,000 $ 500 99,003,000 $ 9,900 $ 237,246 $ 142,819 $ 7,950 $ - $ 398,415

Net income - - - - - 177,153 - - 177,153

Foreign currency translation adjustment - - - - - - (7,922 ) - (7,922 )

Balance at September 30, 2018 5,000,000 500 99,003,000 9,900 $ 237,246 319,972 28 - 567,646

Issuance of 15,000,000 shares of common stock in
exchange for 95.14% ownership rights of a variable
interest entity - - 15,000,000 1,500 8,650,396 - - 441,961 9,093,857

Net income - - - - - 6,854 - - 6,854

Foreign currency translation adjustment - - - - - - (20,039 ) - (20,039 )

Balance at December 31, 2018 5,000,000 500 114,003,000 11,400 8,887,642 326,826 (20,011 ) 441,961 9,648,318

Return of capital - - - - (58,155 ) - - - (58,155 )

Net income - - - - - 21,064 - - 21,064

Foreign currency translation adjustment - - - - - - 56,484 - 56,484

Balance at March 31, 2019 5,000,000 $ 500 114,003,000 $ 11,400 $ 8,829,487 $ 347,890 $ 36,473 $ 441,961 $ 9,667,711

	Preferred Stock				Common Stock				Additional			Retained Earnings			Accumulated Other
	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital			(Accumulated Deficit)			Comprehensive Income (loss)			Non-controlling interest		Total
Balance at June 30, 2020		5,000,000	$	500		114,174,265	$	11,417	$	9,243,557		$	262,198		$	(357,011	)	$	441,961	$	9,602,622

Issuance of common stock for conversion of convertible notes		-		-		2,326,652		233		390,768			-			-			-		391,001

Net loss		-		-		-		-		-			(532,306	)		-			-		(532,306	)

Foreign currency translation adjustment		-		-		-		-		-			-			430,281			-		430,281

Balance at September 30, 2020		5,000,000		500		116,500,917		11,650		9,634,325			(270,108	)		73,270			441,961		9,891,598

Issuance of common stock for conversion of convertible notes		-		-		7,143,978		714		455,429			-			-			-		456,143

Issuance of common stock for exercise of warrants		-		-		1,500,000		150		66,878			-			-			-		67,028

Issuance of common stock as commitment shares for promissory note		-		-		1,567,164		157		67,903			-			-			-		68,060

Issuance of common stock for private placement		-		-		28,869,999		2,887		430,113			-			-			-		433,000

Settlement of warrants in relation to extinguishment of debt		-		-		-		-		(59,163	)		-			-			-		(59,163	)

Net loss		-		-		-		-		-			(356,118	)		-			-		(356,118	)

Foreign currency translation adjustment		-		-		-		-		-			-			464,870			-		464,870

Balance at December 31, 2020		5,000,000		500		155,582,058		15,558		10,595,485			(626,226	)		538,140			441,961		10,965,418

Issuance of common stock as commitment shares for promissory note		-		-		1,459,000		146		87,007			-			-			-		87,153

Issuance of common stock for private placement		-		-		7,000,000		700		104,300			-			-			-		105,000

Net loss		-		-		-		-		-			(115,594	)		-			-		(115,594	)

Foreign currency translation adjustment		-		-		-		-		-			-			(49,577	)		19,632		(29,945	)

Balance at March 31, 2021		5,000,000	$	500		164,041,058	$	16,404	$	10,786,792		$	(741,820	)	$	488,563		$	461,593	$	11,012,032

The accompanying notes are an integral part of these consolidated financial statements.

IONIX TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~STOCKHOLDERS' EQUITY (continued)

(Unaudited)

For the Nine Months Ended
March 31,
2020 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 210,712 $ 205,071
Adjustments required to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 580,625 184,172
Deferred taxes 1,306 (15,732 )
Stock compensation for advisory services 79,891 -
Change in fair value of derivative liability (86,602 ) -
Loss on extinguishment of debt 15,074 -
Non-cash interest 351,474 -
Gain on disposal of property and equipment (7,018 ) -
Changes in operating assets and liabilities:
Accounts receivable - non-related parties 37,312 593,935
Accounts receivable - related parties (92,348 ) (22,607 )
Inventory 237,193 (774,776 )
Advances to suppliers - non-related parties (232,695 ) 13,826
Advances to suppliers - related parties (3,352 ) (114,802 )
Prepaid expenses and other current assets (150,496 ) (75,559 )
Accounts payable - non-related parties (83,000 ) (645,258 )
Accounts payable - related parties - (198,782 )
Advance from customers (52,380 ) (61,014 )
Accrued expenses and other current liabilities (164,326 ) 10,938
Net cash provided by (used in) operating activities 641,370 (900,588 )

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment (193,610 ) (38,375 )
Proceeds received from sale of equipment 121,715 -
Cash received from acquisition - 687,591
Net cash provided by (used in) investing activities (71,895 ) 649,216

CASH FLOWS FROM FINANCING ACTIVITIES
Notes receivable 94,292 54,451
Proceeds from issuance of convertible notes payable 722,190 -
Return of capital to non-controlling interests - (58,155 )
Proceeds from (repayment of) loans from related parties (28,979 ) 591,766
Net cash provided by financing activities 787,503 588,062

Effect of exchange rate changes on cash (31,830 ) 46,668

Net increase in cash and cash equivalents 1,325,148 383,358

Cash and cash equivalents, beginning of period 509,615 111,462

Cash and cash equivalents, end of period $ 1,834,763 $ 494,820

Supplemental disclosure of cash flow information
Cash paid for income tax $ 154,538 $ 144,124
Cash paid for interests $ 102,457 $ 35,250

Non-cash investing and financing activities
Issuance of 15,000,000 shares of common stock in exchange for
95.14% ownership rights of a variable interest entity $ - $ 8,651,896
Issuance of common stock for advisory services $ 262,500 $ -
Issuance of 40,057 shares of common stock for conversion of
convertible notes $ 60,365 $ -

	Preferred Stock				Common Stock				Additional					Accumulated Other
	Number of Shares		Amount		Number of Shares		Amount		Paid-in Capital		Retained Earnings			Comprehensive Income (loss)			Non-controlling interest		Total
Balance at June 30, 2019		5,000,000	$	500		114,003,000	$	11,400	$	8,829,487	$	539,866		$	(45,840	)	$	441,961	$	9,777,374

Stock warrants issued with convertible notes		-		-		-		-		20,022		-			-			-		20,022

Net income		-		-		-		-		-		711,276			-			-		711,276

Foreign currency translation adjustment		-		-		-		-		-		-			(416,785	)		-		(416,785	)

Balance at September 30, 2019		5,000,000		500		114,003,000		11,400		8,849,509		1,251,142			(462,625	)		441,961		10,091,887

Stock warrants issued with convertible notes		-		-		-		-		84,613		-			-			-		84,613

Net income		-		-		-		-		-		135,658			-			-		135,658

Foreign currency translation adjustment		-		-		-		-		-		-			255,703			-		255,703

Balance at December 31, 2019		5,000,000		500		114,003,000		11,400		8,934,122		1,386,800			(206,922	)		441,961		10,567,861

Issuance of common stock for advisory services		-		-		150,000		15		262,485		-			-			-		262,500

Issuance of common stock for conversion of convertible notes		-		-		40,057		4		60,361		-			-			-		60,365

Stock warrants issued with convertible notes		-		-		-		-		42,857		-			-			-		42,857

Net loss		-		-		-		-		-		(636,222	)		-			-		(636,222	)

Foreign currency translation adjustment		-		-		-		-		-		-			(165,507	)		-		(165,507	)

Balance at March 31, 2020		5,000,000	$	500		114,193,057	$	11,419	$	9,299,825	$	750,578		$	(372,429	)	$	441,961	$	10,131,854

The accompanying notes are an integral part of these consolidated financial statements.

IONIX TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	For the Nine Months Ended
	March 31,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	(1,004,018	)	$	210,712
Adjustments required to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization		512,375			580,625
Deferred taxes		(25,908	)		1,306
Stock compensation for advisory services		-			79,891
Change in fair value of derivative liability		647,632			(86,602	)
Loss (gain) on extinguishment of debt		(202,588	)		15,074
Non-cash interest		177,205			351,474
Gain on disposal of property and equipment		-			(7,018	)
Changes in operating assets and liabilities:
Accounts receivable - non-related parties		262,424			37,312
Accounts receivable - related parties		-			(92,348	)
Inventory		(652,185	)		237,193
Advances to suppliers - non-related parties		(326,742	)		(232,695	)
Advances to suppliers - related parties		(40,072	)		(3,352	)
Prepaid expenses and other current assets		(620,374	)		(150,496	)
Accounts payable		(184,288	)		(83,000	)
Advance from customers		293,468			(52,380	)
Accrued expenses and other current liabilities		(248,380	)		(164,326	)
Net cash provided by (used in) operating activities		(1,411,451	)		641,370

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment		(190,190	)		(193,610	)
Acquisition of intangible assets		(2,334	)		-
Proceeds received from sale of equipment		-			121,715
Net cash used in investing activities		(192,524	)		(71,895	)

CASH FLOWS FROM FINANCING ACTIVITIES
Notes receivable		34,852			94,292
Proceeds from bank loans		1,405,792			-
Repayment of bank loans		(2,344,185	)		-
Proceeds from issuance of convertible notes payable		-			722,190
Proceeds from issuance of promissory notes		687,500			-
Proceeds from issuance of common stock for private placement		538,000			-
Repayment of convertible notes payable		(555,747	)		-
Proceeds from (repayment of) loans from related parties		1,021,130			(28,979	)
Net cash provided by financing activities		787,342			787,503

Effect of exchange rate changes on cash		73,352			(31,830	)

Net increase (decrease) in cash and cash equivalents		(743,281	)		1,325,148

Cash and cash equivalents, beginning of period		1,285,373			509,615

Cash and cash equivalents, end of period	$	542,092		$	1,834,763

Supplemental disclosure of cash flow information
Cash paid for income tax	$	10,751		$	154,538
Cash paid for interests	$	66,820		$	102,457

Non-cash investing and financing activities
Issuance of common stock for conversion of convertible notes	$	847,144		$	60,365
Issuance of 1,500,000 shares of common stock for exercise of warrants	$	67,028		$	-
Issuance of 3,026,164 shares of common stock as commitment shares for promissory note	$	155,213		$	-
Issuance of common stock for advisory services	$	-		$	262,500

The accompanying notes are an integral part of these consolidated financial statements.

IONIX TECHNOLOGY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2020~~2021

~~(UNAUDITED)~~(Unaudited)

NOTE 1 - NATURE OF OPERATIONS

Ionix Technology, Inc. (the “Company” or “Ionix”), formerly known as Cambridge Projects Inc., is a Nevada corporation that was formed on March 11, 2011. By and through its wholly owned subsidiaries and an entity controlled through VIE agreements in China, the Company sells the high-end intelligent electronic equipment, which includes the portable power banks for electronic devices, LCM and LCD screens and provides IT and solution-oriented services in China.

On February 7, 2021, the Board of Directors of the Company approved and ratified the incorporation of Shijirun (Yixing) Technology Co., Ltd. (“Shijirun”), a limited liability company formed under the laws of the Peoples Republic of China (PRC) on February 7, 2021. Well Best International Investment Limited, a limited liability company formed under the laws of Hong Kong Special Administrative Region (“Well Best”), and a wholly owned subsidiary of the Company, is the sole shareholder of Shijirun. As a result, Shijirun is an indirect, wholly-owned subsidiary of the Company. Shijirun will head up the Company’s advance into the new energy industry focusing on developing and producing high-end intelligent new energy equipment from Yixing City, Jiangsu Province, China.

On March 30, 2021, the Board of Directors of Ionix Technology, Inc. approved and ratified the incorporation of Huixiang Energy Technology (Suzhou) Co., Ltd. (“Huixiang Energy”), a limited liability company formed under the laws of the Peoples Republic of China (PRC) on March 18, 2021. Well Best is the sole shareholder of Huixiang Energy. As a result, Huixiang Energy is an indirect, wholly-owned subsidiary of the Company. Huixiang Energy shall conduct research and development of next generation advanced battery technologies, manufacture and sales of relevant battery products, including the solid-state rechargeable lithium ion battery for next generation EV and energy storage systems. Huixiang Energy will also focus on the operation of battery packs, battery systems and electric vehicles sharing business with its own internet sharing platform relating to the electric vehicles (online EV hailing services) and its relevant batteries and battery systems. Huixiang Energy will operate in Suzhou City, Jiangsu Province, China.

Acquisition

On December 27, 2018, the Company entered into a Share Purchase Agreement (the “Purchase Agreement”) with Jialin Liang and Xuemei Jiang, each of whom are shareholders (the “Shareholders”) of Changchun Fangguan Electronics Technology Co., Ltd. (“Fangguan Electronics”). Pursuant to the terms of the Purchase Agreement, the Shareholders, who together own 95.14% of the ownership rights in Fangguan Electronics, agreed to execute and deliver the Business Operation Agreement, the Equity Interest Pledge Agreement, the Equity Interest Purchase Agreement, the Exclusive Technical Support Service Agreement (the “Services Agreement”) and the Power of Attorney, all together dated December 27, 2018 are referred to the “VIE Agreements”, to the Company in exchange for the issuance of an aggregate of 15,000,000 shares of the Company’s common stock, par value $.0001 per share, thereby causing Fangguan Electronics to become the Company’s variable interest entity. Together with VIE agreements, the Shareholders also agreed to convert shareholder loan of RMB 30 million (approximately $4.4 million) to capital and make cash contribution of RMB 9.7 million (approximately $1.4 million) to capital. The entirety of the transaction will hereafter be referred to as the “Transaction”. As a result of the Transaction, the Company is able to exert effective control over Fangguan Electronics and receive 100% of the net profits or net losses derived from the business operations of Fangguan Electronics. Fangguan Electronics manufactures and sells Liquid Crystal Module (" LCM") and LCD screens in China based in Changchun City, Jilin Province, People’s Republic of China. (See Note 4).

The Transaction was accounted for as a business combination using the acquisition method of accounting. The assets, liabilities and the operations of Fangguan Electronics subsequent to the Transaction date were included in the Company’s consolidated financial statements.

NOTE 2 - GOING CONCERN

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company had an accumulated deficit of $741,820 as of March 31, 2021. The Company incurred loss from operation and did not generate sufficient cash flow from its operating activities for the nine months ended March 31, 2021. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company plans to rely on the proceeds from loans from both unrelated and related parties to provide the resources necessary to fund the development of the business plan and operations. The Company is also pursuing other revenue streams which could include strategic acquisitions or possible joint ventures of other business segments. However, no assurance can be given that the Company will be successful in raising additional capital.

NOTE 23 – BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of March 31, ~~2020~~2021 and the results of operations and cash flows for the periods ended March 31, ~~2020~~2021 and ~~2019.~~2020. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the three and nine months ended March 31, ~~2020~~2021 are not necessarily indicative of the results to be expected for the entire year ending June 30, ~~2020~~2021 or for any subsequent periods. The balance sheet at June 30, ~~2019~~2020 has been derived from the audited consolidated financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission's rules and regulations. These unaudited consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended June 30, ~~2019~~2020 as included in our Annual Report on Form 10-K as filed with the SEC on September ~~30, 2019.~~28, 2020.

Basis of consolidation

The consolidated financial statements include the accounts of Ionix, its wholly owned subsidiaries and an entity which the Company controls 95.14% and receives 100% of net income or net loss through VIE agreements. All significant inter-company balances and transactions have been eliminated upon consolidation.

Noncontrolling Interests

The Company follows FASB ASC Topic 810, “Consolidation,” governing the accounting for and reporting of noncontrolling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain ~~amounts have been reclassified~~provisions of this standard indicate, among other things, that NCIs (previously referred to ~~conform with current year presentation.~~as minority interests) be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially-owned consolidated subsidiary be allocated to NCIs even when such allocation might result in a deficit balance.

The net income (loss) attributed to NCIs was separately designated in the accompanying statements of comprehensive income (loss). Losses attributable to NCIs in a subsidiary may exceed an NCI’s interests in the subsidiary’s equity. The excess attributable to NCIs is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCI balance. The primary beneficiary receives 100% of the income and losses of the VIE as disclosed in Note 4, therefore no income or loss is allocated to NCI.

Use of Estimates

The Company’s consolidated financial statements have been prepared in accordance with US GAAP and this requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. The significant areas requiring the use of management estimates include, but are not limited to, the allowance for doubtful accounts receivable and advance to suppliers, the valuation of inventory, provision for staff benefit, the useful lives of property and equipment and intangible assets, the impairment of long-lived assets, recognition and measurement of deferred income taxes and valuation allowance for deferred tax assets. Although these estimates are based on management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately differ from those estimates and such differences may be material to our consolidated financial statements.

Cash and cash equivalents

Cash consists of cash on hand and cash in bank. Cash equivalents represent investment securities that are short-term, have high credit quality and are highly liquid. Cash equivalents are carried at fair market value and consist primarily of money market funds.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer's financial condition, the customer’s credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions may be taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. As of March 31, 2021 and June 30, 2020, the Company has accounts receivable balance from non-related party of $3,253,702 and $3,273,141, net of allowance for doubtful accounts of $150,406 and $139,609, respectively. No bad debt expense was recorded during the three and nine months ended March 31, 2021 and 2020.

Inventories

Inventories consist of raw materials, working-in-process and finished goods. Inventories are valued at the lower of cost or net realizable value. We determine cost on the basis of the weighted average method. The Company periodically reviews inventories for obsolescence and any inventories identified as obsolete are written down or written off. Although we believe that the assumptions we use to estimate inventory write-downs are reasonable, future changes in these assumptions could provide a significantly different result.

Advances to suppliers

Advances to suppliers represent prepayments for merchandise, which were purchased but had not been received. The balance of the advances to suppliers is reduced and reclassified to inventories when the raw materials are received and pass quality inspection.

Property, plant and equipment

Property, plant and equipment are recorded at cost less accumulated depreciation and any impairment. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its present working condition and location for its intended use. Repairs and maintenance costs are normally expensed as incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefits expected to be obtained from the use of the asset, the expenditure is capitalized as an additional cost of the asset.

When assets are retired or disposed of, the cost and accumulated depreciation are removed from the accounts, and any resulting gains or losses are included in the statement of comprehensive income (loss) in the reporting period of disposition.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets after taking into account their respective estimated residual value. The estimated useful life of the assets is as follows:

Buildings		10 – 20 years
Machinery and equipment		5 – 10 years
Office equipment		3 – 5 years
Automobiles		5 years

Intangible assets

Land use right is recorded as cost less accumulated amortization. Land use rights represent the prepayments for the use of the parcels of land in the PRC where the Company’s production facilities are located, and are charged to expense over their respective lease periods of 50 years. According to the laws of the PRC, the government owns all of the land in the PRC. Company or individuals are authorized to use the land only through land use rights granted by the PRC government for a certain period (usually 50 years).

Purchased intangible assets are recognized and measured at fair value upon acquisition. Intangible assets acquired separately and with finite useful lives are carried at costs less accumulated amortization and any accumulated impairment losses. Amortization for intangible assets with finite useful lives is provided on a straight-line basis over their estimated useful lives. Alternatively, intangible assets with indefinite useful lives are carried at cost less any subsequent accumulated impairment losses. The estimated useful lives of the intangible assets are as follows:

Land use right		50 years
Computer software		2-5 years

Gains or losses arising from derecognition of the intangible asset are measured at the difference between the net disposal proceeds and the carrying amount of the assets and are recognized in the statement of comprehensive income (loss) when the asset is disposed.

Impairment of long-lived assets

In accordance with the provisions of ASC Topic 360, “Impairment or Disposal of Long-Lived Assets”, all long-lived assets such as property, plant and equipment held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is evaluated by a comparison of the carrying amount of an asset to its estimated future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amounts of the assets exceed the fair value of the assets.

Revenue recognition

The Company adopted the new accounting standard, ASC 606, Revenue from Contracts with Customers, and all the related amendments (new revenue standard) to all contracts using the modified retrospective method beginning on July 1, 2018. The adoption did not result in an adjustment to the retained earnings as of June 30, 2018. The comparative information was not restated and continued to be reported under the accounting standards in effect for those periods. The adoption of the new revenue standard has no impact on either reported sales to customers or net earnings.

The Company estimates return based on historical results, taking into consideration the type of customers, the type of transactions and the specifics of each arrangement.

Revenues are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services. The Company applies the following five steps in order to determine the appropriate amount of revenue to be recognized as it fulfills its obligations under each of its agreements:

identify the contract with a customer;

identify the performance obligations in the contract;

determine the transaction price;

allocate the transaction price to performance obligations in the contract; and

recognize revenue as the performance obligation is satisfied.

Under these criteria, for revenues from sale of products, the Company generally recognizes revenue when its products are delivered to customers in accordance with the written sales terms. The control of the products is transferred to the customer upon receipt of goods by the customer. For service revenue, the Company recognizes revenue when services are performed and accepted by customers.

The following ~~table disaggregates~~tables disaggregate our revenue by major source for the three and nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively:

	For the Nine Months Ended March 31,
	2020		2019		For the Nine Months Ended March 31,
					2021		2020
Sales of LCM and LCD screens - Non-related parties	$	14,518,376	$	5,634,086	$	9,100,076	$	14,518,376
Sales of LCM and LCD screens - Related parties		718,194		115,897		-		718,194
Sales of portable power banks		1,719,127		1,831,387		-		1,719,127
Service contracts		629,771		260,067		2,018		629,771
Total	$	17,585,468	$	7,841,437	$	9,102,094	$	17,585,468

	For the Three Months Ended March 31,
	2020		2019		For the Three Months Ended March 31,
					2021		2020
Sales of LCM and LCD screens - Non-related parties	$	2,487,465	$	2,760,934	$	3,160,474	$	2,487,465
Sales of LCM and LCD screens - Related parties		73,802		-		-		73,802
Sales of portable power banks		181,033		-		-		181,033
Service contracts		9,870		133,868		272		9,870
Total	$	2,752,170	$	2,894,802	$	3,160,746	$	2,752,170

All the operating entities of the Company are domiciled in the PRC. All the Company’s revenues are derived in the PRC during the three and nine months ended March 31, 2021 and 2020.

Cost of revenues

Cost of revenues includes cost of raw materials purchased, inbound freight cost, cost of direct labor, depreciation expense and other overhead. Write-down of inventory for lower of cost or net realizable value adjustments is also recorded in cost of revenues.

Related parties and transactions

The Company identifies related parties, and accounts for, discloses related party transactions in accordance with ASC 850, "Related Party Disclosures" and other relevant ASC standards.

Parties, which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also considered to be related if they are subject to common control or common significant influence.

Transactions between related parties commonly occurring in the normal course of business are considered to be related party transactions. Transactions between related parties are also considered to be related party transactions even though they may not be given accounting recognition. While ASC does not provide accounting or measurement guidance for such transactions, it requires their disclosure nonetheless.

Income taxes

Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and discloses in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

As of March 31, 2021 and June 30, 2020, the Company did not have any significant unrecognized uncertain tax positions.

Comprehensive income (loss)

Comprehensive income (loss) is defined as the change in equity of a company during a period from transactions and ~~2019.~~other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. Comprehensive income (loss) for the periods presented includes net income (loss), change in unrealized gains (losses) on marketable securities classified as available-for-sale (net of tax), foreign currency translation adjustments, and share of change in other comprehensive income of equity investments one quarter in arrears.

Leases

In February 2016, the FASB established Topic 842, Leases, by issuing Accounting Standards Update (ASU) No. 2016-02, which requires lessees to recognize leases on balance sheet and disclose key information about the leasing arrangements. The new standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months.

The new standard is effective for us on July 1, 2019, with early adoption permitted. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the financial statements as its date of initial application. The Company adopted the new standard on July 1, 2019 and use the effective date as our date of initial application. Consequently, financial information is not provided for the dates and periods before July 1, 2019. The new standard provides a number of optional expedients in transition. The Company elected the package of practical expedients which permits us not to reassess under the new standard our prior conclusions about lease identification, lease classification and initial direct costs.

The new standard has ano material effect on our consolidated financial ~~statements. The most significant effects are related to~~statements as the ~~recognition of new ROU assets and~~Company does not have a lease ~~liabilities on our balance sheet for our real estate operating leases. The Company has entered into an office lease arrangement in China~~ with a ~~lease~~ term longer than 12 months ~~under which we are the lessee.~~as of March 31, 2021 (See Note 5)6).

Earnings ~~Per Share~~(losses) per share

Basic ~~net income~~earnings (losses) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted ~~net income~~earnings (losses) per share is computed giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive potential common shares consist of incremental shares issuable upon exercise of stock options and warrants and conversion of convertible debt. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share or increase a net income per share.

~~The reconciliation of our basic to diluted weighted average common shares follows:~~

Three Months Ended
March 31 Nine Months Ended
March 31
2020 2019 2020 2019

Basic weighted average common shares 114,104,735 114,003,000 114,036,665 104,148,985
Effect of potentially dilutive securities
- Warrants (191,495 ) - - -
- Convertible notes - - - -
Diluted weighted average common shares 113,913,240 114,003,000 114,036,665 104,148,985

During the nine months ended March 31, 2021 and 2020, the Company had outstanding convertible notes and warrants which represent 1,096,705 and 899,753 shares of commons ~~stock.~~stock respectively. These shares of common stock were excluded from the computation of diluted earnings per share since their effect would have been antidilutive.

During the three months ended March 31, 2021 and 2020, the Company had outstanding convertible notes and warrants which represent 68,750 and 842,313 shares of commons stock ~~among which 613,147~~respectively. These shares of common stock ~~for convertible notes~~ were excluded from the computation of diluted earnings per share since their effect would have been antidilutive.

Foreign currencies translation

The reporting currency of the Company is the United States Dollar (“US$”). The Company’s subsidiaries in the People’s Republic of China (“PRC”) maintain their books and records in their local currency, the Renminbi Yuan (“RMB”), which is the functional currency as being the primary currency of the economic environment in which these entities operate.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “Translation of Financial Statement”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. Stockholders’ equity is translated at historical rates. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statements of stockholders’ equity.

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statements of comprehensive income (loss).

The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the consolidated financial statements are as follows:

March 31, 2020 June 30, 2019

Balance sheet items, except for equity accounts 7.0851 6.8747

	March 31, 2021		June 30, 2020

Balance sheet items, except for equity accounts		6.5713		7.0795

Nine Months Ended March 31,
2020 2019

Items in statements of comprehensive income (loss) and cash flows 6.9799 6.6639

	Nine Months Ended March 31,
	2021		2020

Items in statements of comprehensive income (loss) and cash flows		6.8254		6.9799

Fair Value of Financial Instruments

The carrying value of the Company’s financial instruments: cash and cash equivalents, accounts receivable, inventory, prepayments and other receivables, accounts payable, income tax payable, other payables and accrued liabilities approximate at their fair values because of the short-term nature of these financial instruments.

The Company also follows the guidance of the ASC Topic 820-10, “Fair Value Measurements and Disclosures” (“ASC 820-10”), with respect to financial assets and liabilities that are measured at fair value. ASC 820-10 establishes a three-tier fair value hierarchy that prioritizes the inputs used in measuring fair value as follows:

Level 1: Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets;

Level 2: Inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. Black-Scholes Option-Pricing model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs; and

Level 3: Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models.

Fair value estimates are made at a specific point in time based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

The Company has the derivative liabilities measured at fair value on a recurring basis which are valued at level 3 measurement (See Note ~~12)~~14).

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 “Derivatives and Hedging Activities”.

Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company accounts for convertible instruments (when it has been determined that the embedded conversion options should not be bifurcated from their host instruments) as follows: The Company records when necessary, discounts to convertible notes for the intrinsic value of conversion options embedded in debt instruments based upon the differences between the fair value of the underlying common stock at the commitment date of the note transaction and the effective conversion price embedded in the note. Debt discounts under these arrangements are amortized over the term of the related debt to their stated date of redemption.

The Company accounts for the conversion of convertible debt when a conversion option has been bifurcated using the general extinguishment standards. The debt and equity linked derivatives are removed at their carrying amounts and the shares issued are measured at their then-current fair value, with any difference recorded as a gain or loss on extinguishment of the two separate accounting liabilities.

Common Stock Purchase Warrants

The Company classifies as equity any contracts that require physical settlement or net-share settlement or provide a choice of net-cash settlement or settlement in the Company’s own shares (physical settlement or net-share settlement) provided that such contracts are indexed to our own stock as defined in ASC 815-40 ("Contracts in Entity's Own Equity"). The Company classifies as assets or liabilities any contracts that require net-cash settlement (including a requirement to net cash settle the contract if an event occurs and if that event is outside our control) or give the counterparty a choice of net-cash settlement or settlement in shares (physical settlement or net-share settlement).

Recent accounting pronouncements

~~From time to time,~~The Company considers the applicability and impact of all accounting standards updates (“ASUs”). Management periodically reviews new accounting ~~pronouncements~~standards that are ~~issues by~~issued.

Fair Value Measurement. In August 2018, the ~~Financial Accounting Standards Board~~FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. Under the guidance, public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The guidance is effective for all entities for Calendar years beginning after December 15, 2019 and for interim periods within those Calendar years, but entities are permitted to early adopt either the entire standard or only the provisions that eliminate or modify the requirements. The Company is currently in the process of evaluating the impact of the adoption of this guidance on its consolidated financial statements.

In January 2020, the FASB issued ASU 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) (“ASU 2020-01”), which is intended to clarify the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The guidance is effective for public entities for Calendar years beginning after December 15, 2020 and interim periods within those Calendar years and all other ~~standard bodies that may have an impact~~entities for Calendar years beginning after December 15, 2021 and interim periods within those Calendar years, with early adoption permitted. The Company is currently evaluating the effect of adopting this ASU on the Company’s accounting and reporting. The Company believes that any recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to itsconsolidated financial ~~position, results of operations, and cash flows when implemented.~~

statements.

~~Risk factor~~COVID-19

~~Due to~~The Company’s operations are affected by the recent and ongoing outbreak of the ~~Coronavirus Disease~~coronavirus disease 2019 (COVID-19) which in March 2020, was declared a pandemic by the ~~PRC,~~World Health Organization. The COVID-19 outbreak is causing lockdowns, travel restrictions, and closures of businesses. The Company’s business has been negatively impacted by the COVID-19 coronavirus outbreak to certain extent.

From late January 2020 to the middle of March 2020, the Company had to temporarily suspend our manufacturing activities due to government restrictions. During the temporary business closure period, our employees had very limited access to our manufacturing facilities and the shipping companies were not available and as a result, the Company experienced difficulty delivering our products to the customers on a timely basis. In addition, due to the COVID-19 outbreak, some of the customers or suppliers may experience financial distress, delay or default on their payments, reduce the scale of their business, or suffer disruptions in their business due to the outbreak.

As of the date of this filing, the COVID-19 coronavirus outbreak in China appears to have slowed down and most provinces and cities have resumed business activities under the guidance and support of the government. However, there is still significant uncertainty regarding the possibility of a second wave of infections, and the breadth and duration of business disruptions related to COVID-19, which could continue to have material impact to the Company’s ~~operational~~operations. Moreover, the COVID-19 resurgence which occurred early May 2021 would cause one and ~~financial performance has been affected by the epidemic during the three months period ended March 31, 2020. The Company has been keeping~~off traffic restrictions and lockdowns and put numerous business negotiations and sales contracts signing on hold. It would also have adverse impacts on our supply chains. Currently we keep our continuous attention on the situation of the COVID-19, ~~assessing~~assess and ~~reacting~~react actively to its impacts on our future business continuity plans or whether material resource constraints in implementing these plans. Up to the ~~financial position and operating results~~date of this report, the ~~Company as below:~~assessment is still in progress.

During PRC national economic shutdown that was imposed to limit the spread of COVID-19 from this early February to mid-March, our financial condition and results of operations were adversely affected. Since the restarting of our operation near the end of this March, our financial performances have been recovering continuously.

As the outbreak in China has been subsiding recently and the Chinese government responded with the package of support including tax-cut and financial assistance, we keep our continuous attention on the situation of the COVID-19, assess and react actively to its impacts on our future operating results or near-and-long-term financial condition. Up to the date of this report, the assessment is still in progress.

Since we restored our operation near the end of this March after signs that COVID-19 was under control, we assessed that 1) COVID-19-related impacts on our cost of capital or access to capital and funding sources and our sources or uses of cash have been insignificant; 2) There is no material uncertainty about our ongoing ability to meet the covenants of our credit agreements; 3) No any material liquidity deficiency has been identified and we do not expect to disclose or incur any material COVID-19-related contingencies;4) COVID-19-related impacts on the assets on our balance sheet or our ability to timely account for those assets have been insignificant; and 5) The possibilities for COVID-19 to trigger any material impairments, increases in allowances for credit losses, restructuring charges, other expenses, or changes in accounting judgments that have had or are reasonably likely to have a material impact on our financial statements are low. Looking forward, we keep our continuous attention on the situation of the COVID-19, assess and react actively to its impacts on issues mentioned above.

During PRC national economic shutdown that was imposed to limit the spread of COVID-19 from this early February to mid-March, COVID-19-related circumstances such as remote work arrangements adversely affected our ability to maintain operations. Since the lifting of the national shutdown order near the end of this March, our operations including financial reporting systems, internal control over financial reporting and disclosure controls and procedures have already resumed. Currently we keep our continuous attention on the situation of the COVID-19, assess and react actively to its impacts on our future business continuity plans or whether material resource constraints in implementing these plans. Up to the date of this report, the assessment is still in progress.

During PRC national economic shutdown that was imposed to limit the spread of COVID-19 from this early February to mid-March, the demands for our products or services were severely affected. Since the restarting of our operation near the end of this March, the demands have been rebounding continuously.

During PRC national economic shutdown that was imposed to limit the spread of COVID-19 from this early February to mid-March, our supply chain or the methods used to distribute our products or services were severely affected. Since the lift of the national shutdown order near the end of this March, we expect all of our supply chains or the methods would return to normal gradually.

NOTE ~~3 –~~4 - VARIABLE INTEREST ENTITY

The VIE contractual arrangements

On December 27, 2018, the Company entered into VIE agreements with two shareholders of ~~Changchun~~ Fangguan Electronics ~~Technology Co., Ltd. (PRC) (“Fangguan Electronics”)~~ to control 95.14% of the ownership rights and receive 100% of the net profit or net losses derived from the business operations of Fangguan Electronics. In exchange for VIE agreements and additional capital contribution, the Company issued 15 million shares of common stock to two shareholders of Fangguan Electronics. (See Note 1).

The transaction was accounted for as a business combination using the acquisition method of accounting. The assets, liabilities and the operations of Fangguan Electronics subsequent to the acquisition date were included in the Company’s consolidated financial statements.

Following unaudited pro forma combined statement of operations are based upon the historical financial statements of the Company and Fangguan Electronics for the nine months ended March 31, 2019 and are presented as if the acquisition had occurred at the beginning of the period.

For the Nine Months Ended March 31, 2019
Fangguan
Electronics Ionix
Technology Pro Forma
Adjustments Pro Forma
Combined

Revenues $ 7,722,432 $ 7,841,437 $ (1,606,120 ) $ 13,957,749
Cost of revenues 6,602,451 6,618,015 (1,173,150 ) 12,047,316
Gross profit 1,119,981 1,223,422 (432,970 ) 1,910,433
Operating expenses 926,013 844,694 - 1,770,707
Income (loss) from operations 193,968 378,728 (432,970 ) 139,726
Other income (expense) 5,155 (34,412 ) - (29,257 )
Income tax provision 29,972 139,245 - 169,217
Net income (loss) $ 169,151 $ 205,071 $ (432,970 ) $ (58,748 )

Through power of attorney, equity interest purchase agreement, and equity interest pledge agreement, 95.14% of the voting rights of Fangguan Electronics’ shareholders have been transferred to the Company so that the Company has effective control over Fangguan Electronics and have the power to direct the activities of Fangguan Electronics that most significantly impact its economic performance.

Through business operation agreement with the shareholders of VIE, the Company shall direct the business operations of Fangguan Electronics, including, but not limited to, adopting corporate policy regarding daily operations, financial management, and employment, and appointment of directors and senior officers.

Through the exclusive technical support service agreement with the shareholders of VIE, the Company shall provide VIE with necessary technical support and assistance as the exclusive provider. And at the request of the Company, VIE shall pay the performance fee, the depreciation and the service fee to the Company. The performance fee shall be equivalent to 5% of the total revenue of VIE in any ~~fiscal~~Calendar year. The depreciation amount on equipment shall be determined by accounting rules of China. The Company has the right to set and revise annually this service fee unilaterally with reference to the performance of VIE.

The service fee that the Company is entitled to earn shall be the total business incomes of the whole year minus performance fee and equipment depreciation. This agreement allows the Company to collect 100% of the net profits of the VIE. Except for technical support, the Company did not provide, nor does it intend to provide, any financial or other support either explicitly or implicitly during the periods presented to its variable interest entity.

If facts and circumstances change such that the conclusion to consolidate the VIE has changed, the Company shall disclose the primary factors that caused the change and the effect on the Company’s financial statements in the periods when the change occurs.

There are no restrictions on the consolidated VIE’s assets and on the settlement of its liabilities and all carrying amounts of VIE’s assets and liabilities are consolidated with the Company’s financial statements. In addition, the net income of Fangguan Electronics after Fangguan Electronics became the VIE of the Company is free of restrictions for payment of dividends to the shareholders of the Company.

Assets of Fangguan Electronics that are collateralized or pledged are not restricted to settle its own obligations. The creditors of Fangguan Electronics do not have recourse to the primary beneficiary’s general credit.

Risks associated with the VIE structure

The Company believes that the contractual arrangements with its VIE and respective shareholders are in compliance with PRC laws and regulations and are legally enforceable. However, uncertainties in the PRC legal system could limit the Company’s ability to enforce the contractual arrangements. If the legal structure and contractual arrangements were found to be in violation of PRC laws and regulations, the PRC government could:

revoke the business and operating licenses of the Company’s PRC subsidiary and its VIE;

discontinue or restrict the operations of any related-party transactions between the Company’s PRC subsidiary and its VIE;

limit the Company’s business expansion in China by way of entering into contractual arrangements;

impose fines or other requirements with which the Company’s PRC subsidiary and its VIE may not be able to comply;

require the Company or the Company’s PRC subsidiary and its VIE to restructure the relevant ownership structure or operations; or

restrict or prohibit the Company’s use of the proceeds from public offering to finance the Company’s business and operations in China.

The Company’s ability to conduct its business through its VIE may be negatively affected if the PRC government were to carry out of any of the aforementioned actions. As a result, the Company may not be able to consolidate its VIE in its consolidated financial statements as it may lose the ability to exert effective control over its VIE and its respective shareholders and it may lose the ability to receive economic benefits from its VIE. The Company, however, does not believe such actions would result in the liquidation or dissolution of the Company, its PRC subsidiary and its VIE. There has been no change in facts and circumstances to consolidate the VIE. The following financial statement amounts and balances of its VIE were included in the accompanying consolidated financial statements after elimination of intercompany transactions and balances:

Balance as of
March 31, 2020 Balance as of
June 30, 2019

Cash and cash equivalents $ 1,665,104 $ 361,849
Notes receivable 23,721 120,182
Accounts receivable - non-related parties 3,226,121 3,402,986
Inventory 2,432,916 2,916,515
Advances to suppliers - non-related parties 346,160 106,146
Prepaid expenses and other current assets 49,655 63,756
Total Current Assets 7,743,677 6,971,434

Property, plant and equipment, net 6,807,436 7,506,849
Intangible assets, net 1,430,449 1,496,399
Deferred tax assets 45,854 54,361
Total Assets $ 16,027,416 $ 16,029,043

Short-term bank loan $ 2,540,543 $ 2,618,296
Accounts payable 2,528,657 2,637,039
Advance from customers 31,346 32,372
Due to related parties 1,406,033 1,449,064
Accrued expenses and other current liabilities 89,803 148,287
Total Current Liabilities 6,596,382 6,885,058
Total Liabilities $ 6,596,382 $ 6,885,058

	Balance as of March 31, 2021		Balance as of June 30, 2020
Cash and cash equivalents	$	326,885	$	1,266,426
Notes receivable		99,327		125,798
Accounts receivable - non-related parties		3,092,630		3,069,629
Inventory		3,648,512		2,639,839
Advances to suppliers - non-related parties		737,284		530,670
Prepaid expenses and other current assets		62,442		58,103
Total Current Assets		7,967,080		7,690,465

Property, plant and equipment, net		6,788,886		6,568,874
Intangible assets, net		1,491,089		1,424,404
Deferred tax assets		49,257		20,743
Total Assets	$	16,296,312	$	15,704,486

Short-term bank loan	$	1,217,415	$	2,034,735
Accounts payable		2,650,376		2,637,792
Advance from customers		16,648		27,501
Due to related parties		2,221,473		1,407,145
Accrued expenses and other current liabilities		29,076		61,856
Total Current Liabilities		6,134,988		6,169,029
Total Liabilities	$	6,134,988	$	6,169,029

NOTE 45 - INVENTORIES

Inventories are stated at the lower of cost (determined using the weighted average cost) or net realizable value. Inventories consist of the following:

	March 31, 2020		June 30, 2019		March 31, 2021		June 30, 2020
Raw materials	$	626,393	$	471,189	$	1,068,375	$	666,981
Work-in-process		436,945		1,719,426		1,128,040		500,331
Finished goods		1,981,789		1,188,531		1,997,253		2,096,538
Total Inventories	$	3,045,127	$	3,379,146	$	4,193,668	$	3,263,850

The Company recorded no inventory markdown for the three and nine months ended March 31, ~~2020~~2021 and ~~2019.~~2020.

NOTE 56 - OPERATING LEASE

For the nine months ended March 31, ~~2020,~~2021, the Company had ~~three~~two real estate operating leases for office, warehouses and manufacturing facilities ~~and two boat operating leases~~ under the terms ~~from four months to three years.~~of one year.

Lisite Science Technology (Shenzhen) Co., Ltd ("Lisite Science") leases office and warehouse space from Shenzhen Keenest Technology Co., Ltd. (“Keenest”), a related party, with annual rent of approximately $1,500 (RMB10,000) for one year until July 20, 2020. On July 20, 2020, Lisite Science further extended the lease with Keenest for one more year until July 20, 2021 with annual rent of approximately $1,500 (RMB10,000). (See Note 9)11).

Shenzhen Baileqi Electronic Technology Co., Ltd. ("Baileqi Electronic") leases office and warehouse space from Shenzhen Baileqi Science and Technology Co., Ltd. (“Shenzhen Baileqi S&T”), a related party, with monthly rent of approximately $2,500 (RMB17,525) and the lease period is from June 1, 2019 to May 31, 2020. ~~(See Note 9)~~

~~Dalian Shizhe New Energy Technology Co., Ltd. (“Shizhe New Energy”) leases a boat from a non-related party~~On June 5, 2020, Baileqi Electronic further extended the lease with Shenzhen Baileqi S&T for one more year until May 31, 2021 with monthly rent of approximately $7,200 (RMB50,000) for one year from March 1, 2019 to February 28, 2020. On July 1, 2019, Shizhe New Energy leased another boat from the same non-related party with monthly rent of approximately $7,200 (RMB50,000) for four months from July 10, 2019 to November 10, 2019.$2,500 (RMB17,525). (See Note 11).

The Company made an accounting policy election not to recognize lease assets and liabilities for the leases listed above as all lease terms are 12 months or shorter.

On November 1, 2019, the Company leased an office space located in Dalian, China as its principal executive office under non-cancelable operating lease agreement for three years, which expires through October 31, 2022. The monthly rent is approximately $715 (RMB5,000). The Company adopted the new standard to recognize lease asset and liability for this lease after examining the criteria established.

For the nine months ended March 31, 2020, the Company made $99,604 of fixed cash payments related to operating leases. Non-cash activities involving ROU assets obtained in exchange for lease liabilities were $19,711 for the nine months ended March 31, 2020, including the impact of adopting the new leases standard.

As of March 31, 2020, the Company recognized operating lease liabilities of $20,108, among which $7,646 is classified as current portion and $12,462 is classified as non-current portion, and Right-of-use assets of $20,825 based on the present value of the remaining minimum rental payments under the current leasing standards for existing operating leases.

March 31, 2020 June 30, 2019

Operating lease Right-of-use assets $ 20,825 $ -

Operating lease liabilities
Current portion of long-term debt $ 7,646 $ -
Long-term debt 12,462 -
Total operating lease liabilities $ 20,108 $ -

NOTE 67 – PROPERTY, PLANT AND EQUIPMENT, NET

The components of property, plant and equipment were as follows:

	March 31, 2020			June 30, 2019			March 31, 2021			June 30, 2020

Buildings	$	4,598,048		$	4,661,535		$	4,987,484		$	4,601,685
Machinery and equipment		2,934,748			3,036,339			3,207,568			2,822,686
Office equipment		64,853			60,052			73,317			67,091
Automobiles		98,769			101,793			106,492			98,848
Subtotal		7,696,418			7,859,719			8,374,861			7,590,310
Less: Accumulated depreciation		(883,508	)		(351,082	)		(1,581,266	)		(1,016,373	)
Property, plant and equipment, net	$	6,812,910		$	7,508,637		$	6,793,595		$	6,573,937

Depreciation expense related to property, plant and equipment was ~~$558,789~~$468,186 and ~~$176,458~~$558,789 for the nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Depreciation expense related to property, plant and equipment was ~~$174,381~~$167,245 and ~~$176,458~~$174,381 for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

As of March 31, 2021 and June 30, 2020, buildings were pledged as collateral for bank loans (See Note 8)9).

NOTE 78 – INTANGIBLE ASSETS, NET

Intangible assets consist of the following:

	March 31, 2020			June 30, 2019			March 31, 2021			June 30, 2020

Land use right	$	1,441,316		$	1,485,428		$	1,554,011		$	1,442,456
Computer software		25,019			25,785			29,399			25,039
Subtotal		1,466,335			1,511,213			1,583,410			1,467,495
Less: Accumulated amortization		(35,886	)		(14,814	)		(92,321	)		(43,091	)
Intangible assets, net	$	1,430,449		$	1,496,399		$	1,491,089		$	1,424,404

Amortization expense related to intangible assets was ~~$21,836~~$44,189 and ~~$7,714~~$21,836 for the nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Amortization expense related to intangible assets was ~~$7,164~~$10,063 and ~~$7,714~~$7,164 for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

Fangguan Electronics acquired the land use right from the local government in August 2012 which expires on August 15, 2062. As of March 31, 2021 and June 30, 2020, land use right was pledged as collateral for bank loans (See Note 8)9).

NOTE 89 – SHORT-TERM BANK LOAN

~~On November 12, 2018, Fangguan Electronics entered into a~~The Company’s short-term ~~loan agreement with Industrial Bank to borrow approximately US$2.5~~bank loans consist of the following:

		March 31, 2021		June 30, 2020
Loan payable to Industrial Bank, due November 2020	(1)	$	-	$	1,836,288
Loan payable to Industrial Bank, due May 2021	(2)		166,290		154,353
Loan payable to Industrial Bank, due June 2021	(2)		47,504		44,094
Loan payable to Industrial Bank, due August 2021	(3)		547,090		-
Loan payable to Industrial Bank, due June 2021	(4)		456,531		-
Total		$	1,217,415	$	2,034,735

(1)

On November 19, 2019, Fangguan Electronics entered into a short-term loan agreement with Industrial Bank to borrow approximately US$2.7 million (RMB 18 million) for a year until November 18, 2020 with annual interest rate of 5.22%. The borrowing was collateralized by the Company’s buildings and land use right. In addition, the borrowing was guaranteed by the Company’s shareholder and CEO of Fangguan Electronics, Mr. Jialin Liang, and his wife Ms. Dongjiao Su. On May 20, 2020, Fangguan Electronics partially repaid this bank loan of approximately US$760,000 (RMB5,000,000). On August 28, 2020 and September 21, 2020, Fangguan Electronics further partially repaid this bank loan of approximately US$457,000 (RMB3,000,000) and US$760,000 (RMB5,000,000) respectively. On November 18, 2020, Fangguan Electronics repaid the remaining balance in full of this bank loan of approximately US$760,000 (RMB5,000,000).

(2)

During May and Jun 2020, Fangguan Electronics issued two one-year commercial acceptance bills with amounts of approximately US$166,000 (RMB1,092,743) and US$48,000 (RMB312,161) and maturity dates at May 21, 2021 and June 11, 2021 respectively. On May 22, 2020 and June 16, 2020, the two commercial acceptance bills were discounted with Industrial Bank at an interest rate of 3.85% and the balance of the two commercial acceptance bills converted to bank loans with Industrial Bank based on a mutual agreement from both parties. This loan was also secured by the same collateral as the aforementioned RMB18 million loan under the same bank.

(3)

During August 2020, Fangguan Electronics issued a one-year commercial acceptance bill with amount of approximately US$547,000 (RMB3,595,096) and maturity date at August 6, 2021. During September 2020, Fangguan Electronics issued a six-month commercial acceptance bill with amount of approximately US$457,000 (RMB3,000,000) and maturity date at March 9, 2021. On August 11, 2020 and September 10, 2020, the two commercial acceptance bills were discounted with Industrial Bank at an interest rate of 3.80% and the balance of the two commercial acceptance bills converted to bank loans with Industrial Bank based on a mutual agreement from both parties. This loan was also secured by the same collateral as the above RMB18 million loan under the same bank. In March 2021, Fangguan Electronics repaid the commercial acceptance bill of approximately US$457,000 (RMB3,000,000) in full upon maturity.

(4)

During December 2020, Fangguan Electronics issued a six-month commercial acceptance bill with amount of approximately US$457,000 (RMB3,000,000) and maturity date at June 4, 2021. On December 7, 2020, the commercial acceptance bill was discounted with Industrial Bank at an interest rate of 3.85% and the balance of the commercial acceptance bill converted to bank loan with Industrial Bank based on a mutual agreement from both parties. This loan was also secured by the same collateral as the above RMB18 million loan under the same bank.

NOTE 10 - STOCKHOLDERS' EQUITY

Stock Issued for Conversion of Convertible Debt

During the nine months ended March 31, 2021, the Company issued a total of 9,470,630 shares of common stock for the conversion of debt in the principal amount of $273,200 together with all accrued and unpaid interest, according to the conditions of the convertible notes. All these conversions resulted in a total loss on extinguishment of debt of $256,639 for the nine months ended March 31, 2021. The remaining principal balance due under convertible notes after these conversions and other debt settlements (See Note 14) is zero.

Stock Issued for Exercise of Warrants

On December 21, 2020, the Company issued a total of 1,500,000 shares of common stock to FirstFire Global Opportunities Fund, LLC for the exercise of warrants in full, according to the conditions of the convertible note dated as September 11, 2019. The exercise of warrants resulted in a loss of $67,028 for the nine months ended March 31, 2021. (See Note 14)

Stock Issued for Private Placement

In December 2020, the Company issued a total of 28,869,999 shares of common stock to nine individual subscribers for an aggregate purchase price of $433,000 at $0.015 per share, according to the conditions of the subscription agreements signed between the Company and subscribers.

On January 13, 2021, the Company issued a total of 7,000,000 shares of common stock to one individual subscriber for purchase price of $105,000 at $0.015 per share, according to the conditions of the subscription agreement signed by both parties.

Stock Issued as Commitment Shares for Promissory Note

On December 21, 2020, the Company issued a self-amortization promissory note to Labrys Fund, L.P in the aggregate principal amount of $300,000. The promissory note is due on or before December 21, 2021 and bears an interest rate of ~~5.22%.~~five percent (5%) per annum. The ~~borrowing was collateralized by~~note is not convertible unless in default, as defined in the agreement. The Company agreed to reserve 7,052,239 shares of its common stock for issuance if any debt is converted.

On December 31, 2020, the Company issued 447,762 shares of common stock (the “First Commitment Shares”) and 1,119,402 shares of common stock (the “Second Commitment Shares”) related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s ~~buildings~~treasury if the promissory note is fully repaid and ~~land use right. In addition,~~satisfied on or prior to the ~~borrowing was guaranteed by~~maturity date. The Company recorded the First Commitment Shares as debt discount valued at $68,060 based on the quoted market price at issue date and amortized over the term of the promissory note. The Company recorded the Second Commitment Shares at par for the nine months ended March 31, 2021. (See Note 15)

On March 10, 2021, the Company issued a self-amortization promissory note to Labrys Fund, L.P in the aggregate principal amount of $500,000. The promissory note is due on or before March 10, 2022 and bears an interest rate of five percent (5%) per annum. The note is not convertible unless in default, as defined in the agreement. The Company agreed to reserve 6,562,500 shares of its common stock for issuance if any debt is converted.

On March 10, 2021, the Company issued 417,000 shares of common stock (the “First Commitment Shares”) and 1,042,000 shares of common stock (the “Second Commitment Shares”) related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s ~~shareholder~~treasury if the promissory note is fully repaid and ~~CEO~~satisfied on or prior to the maturity date. The Company recorded the First Commitment Shares as debt discount valued at $87,153 based on the quoted market price at issue date and amortized over the term of ~~Fangguan Electronics, Mr. Jialin Liang, and his wife Ms. Dongjiao Su.~~the promissory note. The ~~loan was renewed~~Company recorded the Second Commitment Shares at par for ~~one year from November 19, 2019 to November 18, 2020.~~the nine months ended March 31, 2021. (See Note 15)

NOTE 911 - RELATED PARTY TRANSACTIONS AND BALANCES

Purchase from related party

During the nine months ended March 31, 2020, the Company purchased $1,642,532 and $37,495 from Keenest and Shenzhen Baileqi S&T which were owned by the Company’s stockholders who own approximately ~~1.7%~~1.3% and ~~1.3%~~0.7% respectively of the Company’s outstanding common ~~stock as of March 31, 2020.~~stock. The amounts of $1,642,532 and $37,495 were included in the cost of revenue for the nine months ended March 31, 2020.

During the nine months ended March 31, 2019, the Company’s subsidiaries, Lisite Science and Baileqi Electronic, purchased $1,610,058 and $629,438 from Keenest and Shenzhen Baileqi S&T which were owned by the Company’s stockholders who own approximately 1.7% and 1.3% respectively of the Company’s outstanding common stock as of March 31, 2019. The amounts of $1,610,058 and $565,165 were included in the cost of revenue for the nine months ended March 31, 2019.

During the three months ended March 31, 2020, the Company purchased $177,995 and $0 from Keenest and Shenzhen Baileqi S&T which were owned by the Company’s stockholders who own approximately ~~1.7%~~1.3% and ~~1.3%~~0.7% respectively of the Company’s outstanding common ~~stock as of March 31, 2020.~~stock. The amounts of $177,995 and $0 were included in the cost of revenue for the three months ended March 31, 2020.

During the three months ended March 31, 2019, Lisite Science and Baileqi Electronic purchased $0 and $112,176 from Keenest and Shenzhen Baileqi S&T which were owned by the Company’s stockholders who own approximately 1.7% and 1.3% respectively of the Company’s outstanding common stock as of March 31, 2019. The amounts of $0 and $111,116 were included in the cost of revenue for the three months ended March 31, 2019.

During the three and nine months ended March 31, 2019, the Company’s subsidiary, Changchun Fangguan Photoelectric Display Technology Co. Ltd ("Fangguan Photoelectric"), purchased $0 and $1,498,744 from Fangguan Electronics before Fangguan Electronics became a variable interest entity of the Company on December 27, 2018 (See Note 3). The president of Fangguan Electronics was the president and a member of the board of directors of Fangguan Photoelectric before he resigned and left Fangguan Photoelectric in October 2018. The amounts of $0 and $1,130,052 were included in the cost of revenue for the three and nine months ended March 31, 2019.

Advances to suppliers - related parties

Lisite Science made advances of ~~$264,797~~$426,852 and ~~$269,498~~$357,577 to Keenest for future purchases as of March 31, ~~2020~~2021 and June 30, ~~2019,~~2020, respectively.

Sales to ~~related party and accounts receivable from~~ related party

During the nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, Baileqi Electronic sold materials of ~~$718,194~~$0 and ~~$93,838~~$718,194 respectively to Shenzhen Baileqi S&T.

During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, Baileqi Electronic sold materials of ~~$73,802~~$0 and $0$73,802 respectively to Shenzhen Baileqi S&T. ~~The trade-related balance receivable from Shenzhen Baileqi S&T was $420,906 and $340,026 as of March 31, 2020 and June 30, 2019, respectively.~~

During the three and nine months ended March 31, 2019, Fangguan Photoelectric sold products of $0 and $22,059 to Fangguan Electronics before Fangguan Electronics became a variable interest entity of the Company on December 27, 2018 (See Note 3).

Lease from related party

Lisite Science leases office and warehouse space from Keenest, a related party, with annual rent of approximately $1,500 (RMB10,000) for one year until July 20, 2020. On July 20, 2020, Lisite Science further extended the lease with Keenest for one more year until July 20, 2021 with annual rent of approximately $1,500 (RMB10,000). (See Note 6).

Baileqi Electronic leases office and warehouse space from Shenzhen Baileqi S&T, a related party, with monthly rent of approximately $2,500 (RMB17,525) and the lease period is from June 1, 2019 to May 31, 2020. On June 5, 2020, Baileqi Electronic further extended the lease with Shenzhen Baileqi S&T for one more year until May 31, 2021 with monthly rent of approximately $2,500 (RMB17,525). (See Note 6).

Due to related parties

Due to related parties represents certain advances to the Company or its subsidiaries by related parties. The amounts are non-interest bearing, unsecured and due on demand.

March 31, 2020 June 30, 2019

Ben Wong (1 ) $ 143,792 $ 143,792
Yubao Liu (2 ) 452,544 498,769
Xin Sui (3 ) 2,016 2,016
Baozhen Deng (4 ) 6,606 3,900
Baozhu Deng (5 ) - 5,303
Jialin Liang (6 ) 900,747 928,314
Xuemei Jiang (7 ) 505,286 520,750
Liang Zhang (8 ) - 625
Zijian Yang (9 ) - 1,869
Shikui Zhang (10 ) 21,732 -
$ 2,032,723 $ 2,105,338

		March 31, 2021		June 30, 2020

Ben Wong	(1)	$	143,792	$	143,792
Yubao Liu	(2)		398,866		102,938
Xin Sui	(3)		2,016		2,016
Baozhen Deng	(4)		5,601		9,437
Shenzhen Baileqi S&T	(5)		23,937		-
Jialin Liang	(6)(11)		1,676,679		901,460
Xuemei Jiang	(7)(10)		544,793		505,685
Shikui Zhang	(8)		51,800		28,528
Changyong Yang	(9)		32,151		23,063
		$	2,879,635	$	1,716,919

(1) Ben Wong was the controlling shareholder of Shinning Glory until April 20, 2017, which holds majority shares in Ionix Technology, Inc.

(2) Yubao Liu is the controlling shareholder of Shinning Glory since April 20, 2017, which holds majority shares in Ionix Technology, Inc.

(3) Xin Sui is a member of the board of directors of Welly Surplus.

(4) Baozhen Deng is a stockholder of the Company, who owns approximately ~~1.3%~~0.7% of the Company’s outstanding common stock, and the owner of Shenzhen Baileqi S&T.

(5) ~~Baozhu Deng~~Shenzhen Baileqi S&T is a ~~relative of~~company owned by Baozhen Deng, a stockholder of the Company.

(6) Jialin Liang is a stockholder of the Company and the president, CEO, and director of Fangguan Electronics.

(7) Xuemei Jiang is a stockholder of the Company and the vice president and director of Fangguan Electronics.

(8) ~~Liang~~Shikui Zhang is a stockholder of the ~~legal representative of Shizhe New Energy until May 2019.~~

~~(9) Zijian Yang is the supervisor of Shizhe New Energy.~~

~~(10) Shikui Zhang~~Company and serves as the legal representative and general manager of Shizhe New Energy since May 2019.

(9) Changyong Yang is a stockholder of the Company, who owns approximately 1.3% of the Company’s outstanding common stock, and the owner of Keenest.

(10) The liability was assumed from the acquisition of Fangguan Electronics.

(11) The Company assumed liability of approximately $5.8 million (RMB39,581,883) from Jialin Liang during the acquisition of Fangguan Electronics. During the year ended June 30, 2019, approximately $4.4 million (RMB30,000,000) liability assumed was forgiven and converted to capital.

During the nine months ended March 31, 2021, Yubao Liu advanced $295,928 to Well Best after netting off the refund paid to him.

During the nine months ended March 31, 2021, Baileqi Electronic refunded $3,836 to Baozhen Deng and Shenzhen Baileqi S&T advanced $23,937 to Baileqi Electronic. Shikui Zhang advanced approximately $23,000 to Shizhe New Energy. Changyong Yang, a stockholder of the Company, advanced approximately $9,000 to Lisite Science.

On September 23, 2020, Jialin Liang entered into a short-term loan agreement with Bank of Communications to borrow an individual loan of approximately US$457,000 (RMB 3 million) for one year with annual interest rate of 3.85%. The borrowing was guaranteed by Fangguan Electronics. Pursuant to the loan agreement, the proceed from the bank loan could only be used in the operation of Fangguan Electronics. On September 23, 2020, Jialin Liang advanced all of the proceeds from this bank loan to Fangguan Electronics. In March 2021, Jialin Liang further advanced approximately $249,000 (RMB 1,636,080) to Fangguan Electronics for operational needs.

During the nine months ended March 31, 2020, Yubao Liu was refunded $46,225 by Welly Surplus and Well Best after netting off his advances to Well Best. Baileqi Electronic refunded $5,303 to Baozhu Deng and Baozhen Deng advanced $2,706 to Baileqi Electronic. Shizhe New Energy refunded $625 and $1,869 to Liang Zhang and Zijian Yang respectively. Shikui Zhang advanced $21,732 to Shizhe New Energy.

During the nine months ended March 31, 2019, Yubao Liu advanced $327,286 to Well Best. Baileqi Electronic borrowed $4,470 from Baozhu Deng. In addition, Baozhen Deng refunded $7,680 to Baileqi Electronic. Liang Zhang and Zijian Yang advanced $7,370 and $4,856 to Shizhe New Energy, respectively. Jialin Liang advanced $270,112 (RMB 1.8 million) to Fangguan Electronics.

F-20

NOTE 1012 – CONCENTRATION

Major customers

Customers who accounted for 10% or more of the Company’s revenues (goods sold and services) and its outstanding balance of accounts receivable are presented as follows:

For the Nine Months Ended
March 31, 2020 As of March 31, 2020

Revenue Percentage of
revenue Accounts
receivable Percentage of
accounts
receivable

Customer A $ 2,047,553 12 % $ 24,960 1 %
Customer B 2,009,817 11 % 376,704 10 %
Total $ 4,057,370 23 % $ 401,664 11 %

	For the Nine Months Ended March 31, 2021					As of March 31, 2021
	Revenue		Percentage of total revenue			Accounts receivable		Percentage of total accounts receivable

Customer A	$	1,666,368		18	%	$	229,336		7	%
Customer B		1,352,195		15	%		-		-	%
Customer C		950,501		10	%		184,584		5	%
Total	$	3,969,064		43	%	$	413,920		12	%

For the Nine Months Ended
March 31, 2019 As of March 31, 2019

Revenue Percentage of
total revenue Accounts
receivable Percentage of
total accounts
receivable

Customer A $ 1,497,073 19 % $ - -%
Customer B 2,603,631 33 % 205,266 7 %
Total $ 4,100,704 52 % $ 205,266 7 %

	For the Nine Months Ended March 31, 2020					As of March 31, 2020
	Revenue		Percentage of total revenue			Accounts receivable		Percentage of total accounts receivable

Customer A	$	2,047,553		12	%	$	24,960		1	%
Customer B		2,009,817		11	%		376,704		10	%
Total	$	4,057,370		23	%	$	401,664		11	%

For the Three Months Ended
March 31, 2020 As of March 31, 2020

Revenue Percentage of
revenue Accounts
receivable Percentage of
accounts
receivable

Customer A $ 315,541 11 % $ 24,960 1 %
Customer B 748,422 27 % 376,704 10 %
Total $ 1,063,963 38 % $ 401,664 11 %

	For the Three Months Ended March 31, 2021					As of March 31, 2021
	Revenue		Percentage of total revenue			Accounts receivable		Percentage of total accounts receivable

Customer A	$	612,781		19	%	$	229,336		7	%
Customer B		484,802		15	%		-		-	%
Customer C		441,260		14	%		184,584		5	%
Total	$	1,538,843		48	%	$	413,920		12	%

	For the Three Months Ended March 31, 2019				As of March 31, 2019
									For the Three Months Ended March 31, 2020					As of March 31, 2020
		Revenue	Percentage of total revenue			Accounts receivable	Percentage of total accounts receivable		Revenue		Percentage of total revenue			Accounts receivable		Percentage of total accounts receivable

Customer A	$	654,209	23	%	$	205,266	7	%	$	315,541		11	%	$	24,960		1	%
Customer B		320,756	11	%		149,798	5	%		748,422		27	%		376,704		10	%
Total	$	974,965	34	%	$	355,064	12	%	$	1,063,963		38	%	$	401,664		11	%

Primarily all customers are located in the PRC.

Major suppliers

The suppliers who accounted for 10% or more of the Company’s total purchases (materials and services) and its outstanding balance of accounts payable are presented as follows:

For the Nine Months Ended
March 31, 2020 As of March 31, 2020
Total Purchase Percentage of
total purchase Accounts
payable Percentage of
total accounts
payable

Supplier A - related party $ 1,642,532 12 % $ - - %
Supplier B 2,582,034 19 % - - %
Total $ 4,224,566 31 % $ - - %

	For the Nine Months Ended March 31, 2021					As of March 31, 2021
	Purchase		Percentage of total purchase			Accounts payable		Percentage of total accounts payable

Supplier A	$	1,148,322		14	%	$	65,123		2	%
Supplier B		796,553		10	%		364,146		14	%
Total	$	1,944,875		24	%	$	429,269		16	%

For the Nine Months Ended
March 31, 2019 As of March 31, 2019
Total Purchase Percentage of
total purchase Accounts
payable Percentage of
total accounts
payable

Supplier A - related party $ 1,610,058 23 % $ - - %
Supplier B - related party 1,498,744 21 % - - %
Supplier C 1,165,459 16 % 79,965 2 %
Total $ 4,274,261 60 % $ 79,965 2 %

	For the Nine Months Ended March 31, 2020					As of March 31, 2020
	Purchase		Percentage of total purchase			Accounts payable		Percentage of total accounts payable

Supplier A – related party	$	1,642,532		12	%	$	-		-	%
Supplier B		2,582,034		19	%		-		-	%
Total	$	4,224,566		31	%	$	-		-	%

For the Three Months Ended
March 31, 2020 As of March 31, 2020
Total Purchase Percentage of
total purchase Accounts
payable Percentage of
total accounts
payable

Supplier A $ 413,924 18 % $ - - %
Total $ 413,924 18 % $ - - %

	For the Three Months Ended March 31, 2021					As of March 31, 2021
	Purchase		Percentage of total purchase			Accounts payable		Percentage of total accounts payable

Supplier A	$	404,404		13	%	$	65,123		2	%
Supplier B		371,731		12	%		-		-	%
Total	$	776,135		25	%	$	65,123		2	%

	For the Three Months Ended March 31, 2019					As of March 31, 2019					For the Three Months Ended March 31, 2020					As of March 31, 2020
	Total Purchase		Percentage of total purchase			Accounts payable		Percentage of total accounts payable			Purchase		Percentage of total purchase			Accounts payable		Percentage of total accounts payable

Supplier A	$	366,985		15	%	$	79,965		2	%	$	413,924		18	%	$	-		-	%
Supplier B		231,080		9	%		347,047		10	%
Total	$	598,065		24	%	$	427,012		12	%	$	413,924		18	%	$	-		-	%

All suppliers of the Company are located in the PRC.

NOTE 1113 - INCOME TAXES

The effective tax rate in the periods presented is the result of the mix of income earned in various tax jurisdictions that apply a broad range of income tax rate. The Company operates in United States of America, Hong Kong and the PRC that are subject to taxes in the jurisdictions in which they operate.

United States of America

The Company is registered in the State of Nevada and is subject to the tax laws of United States of ~~America.~~America and subject to the corporate tax rate of 21% on its taxable income.

For the three and nine months ended March 31, 2021 and 2020, ~~and 2019, there is no assessable~~the Company did not generate income ~~chargeable to profit tax~~ in United States of ~~America.~~America and no provision for income tax was made. Under normal circumstances, the Internal Revenue Service is authorized to audit income tax returns during a three-year period after the returns are filed. In unusual circumstances, the period may be longer. Tax returns for the years ended June 30, 2016 and after were still open to audit as of March 31, ~~2020.~~2021.

Hong Kong

The Company’s subsidiaries, Well Best and Welly Surplus, are registered in Hong Kong and subject to income tax rate of 16.5%. For the three and nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, there is no assessable income chargeable to profit tax in Hong Kong.

The PRC

The Company’s subsidiaries in China are subject to a unified income tax rate of 25%. Fangguan Electronics was certified as high-tech enterprises for three calendar years from ~~November~~ 2016 to ~~November~~ 2019 and is taxed at a unified income tax rate of 15%. Fangguan Electronics has renewed the high-tech enterprise certificate which granted it the tax rate of 15% for the three whole calendar years of 2019 to 2021.

The reconciliation of income tax expense (benefit) at the U.S. statutory rate of 21% to the Company's effective tax rate is as follows:

	For the Nine Months Ended March 31,					For the Nine Months Ended March 31,
	2020			2019		2021			2020

Tax at U.S. statutory rate	$	76,062		$	72,306
Tax (benefit) at U.S. statutory rate						$	(215,790	)	$	76,062
Tax rate difference between foreign operations and U.S.		(88,730	)		21,437		26,511			(88,730	)
Change in valuation allowance		168,429			36,163		155,922			168,429
Permanent difference		(4,274	)		9,339		9,802			(4,274	)
Effective tax	$	151,487		$	139,245
Effective tax (benefit)						$	(23,555	)	$	151,487

The provisions for income taxes (benefits) are summarized as follows:

For the Nine Months Ended March 31,
2020 2019
Current $ 150,181 $ 154,977
Deferred 1,306 (15,732 )
Total $ 151,487 $ 139,245

	For the Nine Months Ended March 31,
	2021			2020
Current	$	2,353		$	150,181
Deferred		(25,908	)		1,306
Total	$	(23,555	)	$	151,487

As of March 31, ~~2020,~~2021, the Company has approximately ~~$1,959,000~~$3,778,000 net operating loss carryforwards available in the U.S., Hong Kong and China to reduce future taxable income which will begin to expire from 2035. ~~Except for the net operating loss carryforwards of $209,542 from Fangguan Electronics and Shizhe New Energy incurred in the three months ended March 31, 2020, it~~It is more likely than not that the deferred tax assets resulted from net operating loss carryforward cannot be utilized in the future because there will not be significant future earnings from the entities which generated the net operating loss. Therefore, the Company recorded a full valuation allowance on its deferred tax assets ~~except for the deferred tax assets of Fangguan Electronics and Shizhe New Energy of $51,460~~resulted from net operating loss carryforward as of March 31, ~~2020.~~

In accordance with the current tax laws in the U.S., the Company is subject to a corporate tax rate of 21% on its taxable income. No provision for taxes is made for U.S. income tax for the nine months ended March 31, 2020 and 2019 as it has no taxable income in the U.S.2021.

On December 22, 2017, the “Tax Cuts and Jobs Act” (“The 2017 Tax Act”) was enacted in the United States. Under the provisions of the Act, the U.S. corporate tax rate decreased from 34% to 21%. Accordingly, the Company has re-measured its deferred tax assets on net operating loss carry forwards in the U.S at the lower enacted cooperated tax rate of 21%. However, this re-measurement has no effect on the Company’s income tax expenses as the Company has provided a 100% valuation allowance on its deferred tax assets previously.

Additionally, the 2017 Tax Act implemented a modified territorial tax system and imposing a tax on previously untaxed accumulated earnings and profits (“E&P”) of foreign subsidiaries (the “Toll Charge”). The Toll Charge is based in part on the amount of E&P held in cash and other specific assets as of December 31, 2017. The Toll Charge can be paid over an eight-year period, starting in 2018, and will not accrue interest. The 2017 Tax Act also imposed a global intangible low-taxed income tax (“GILTI”), which is a new tax on certain off-shore earnings at an effective rate of 10.5% for tax years beginning after December 31, 2017 (increasing to 13.125% for tax years beginning after December 31, 2025) with a partial offset for foreign tax credits.

The Company has determined that this one-time Toll Charge has no effect on the Company’s income tax expenses as the Company has no undistributed foreign earnings at either of the two testing dates of November 2, 2017 and December 31, 2017.

For purposes of the inclusion of GILTI, the Company ~~has~~ determined that the Company ~~has~~did not have tax liabilities resulting from GILTI for the three and nine months ended March 31, 2021 and 2020 due to net operating loss carryforwards available in the U.S. Therefore, there was no ~~taxable off-shore earnings~~accrual of GILTI liability as of March 31, ~~2020~~2021 and ~~2019, respectively. Therefore, this is no accrual of US income tax for GILTI as of March 31,~~June 30, 2020.

The extent of the Company’s operations involves dealing with uncertainties and judgments in the application of complex tax regulations in a multitude of jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state and international tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due.

NOTE 1214 - CONVERTIBLE DEBT

Convertible notes

AsConvertible notes payable balance was zero as of March 31, 2021.

As of June 30, 2020, convertible notes payable consists of:

Note Balance Debt discount Carrying Value

Power Up Lending Group Ltd (1 ) $ 69,000 $ (16,031 ) $ 52,969
Firstfire Global Opportunities Fund LLC (2 ) 165,000 (73,934 ) 91,066
Power Up Lending Group Ltd (3 ) 53,000 (24,036 ) 28,964
Crown Bridge Partners (4 ) 55,000 (27,056 ) 27,944
Morningview Financial LLC (5 ) 165,000 (105,441 ) 59,559
BHP Capital NY (6 ) 102,900 (61,069 ) 41,831
Labrys Fund, LP (7 ) 146,850 (101,756 ) 45,094
Total $ 756,750 $ (409,323 ) $ 347,427

		Note Balance		Debt discount			Carrying Value

Power Up Lending Group Ltd	(1)	$	39,000	$	(1,953	)	$	37,047
Firstfire Global Opportunities Fund LLC	(2)		165,000		(32,909	)		132,091
Power Up Lending Group Ltd	(3)		53,000		(13,995	)		39,005
Crown Bridge Partners	(4)		51,384		(15,095	)		36,289
Morningview Financial LLC	(5)		165,000		(64,416	)		100,584
BHP Capital NY	(6)		91,789		-			91,789
Labrys Fund, LP	(7)		146,850		(69,265	)		77,585
Total		$	712,023	$	(197,633	)	$	514,390

(1)

On July 25, 2019, the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $103,000 and received $94,840 in cash on August 1, 2019 after deducting legal fees and other costs. The convertible note bears interest rate at 6% per annum and due on July 25, 2020. The convertible note can be converted into shares of the Company’s common stock at 65% of the average of the two lowest trading prices during the fifteen trading day prior to the conversion date.

During the ~~three~~nine months ended March 31, ~~2020,~~2021, Power Up Lending Group Ltd elected to convert ~~$34,000~~$39,000 of the principal amount together with $4,916 of accrued and unpaid interest of the convertible notes into ~~40,057~~264,970 shares of the Company’s common stock. The conversion resulted in a loss on extinguishment of debt of ~~$15,074.~~$32,778. (See Note ~~13)~~10)

The remaining principal balance due under this convertible note after all conversions is zero as of March 31, 2021.

(2)

On September 11, 2019, the Company entered into a Securities Purchase Agreement with Firstfire Global Opportunities Fund LLC to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $165,000 and received $143,500 in cash on September 18, 2019 after deducting an original issue discount in the amount of $15,000 (the “OID”), legal fees and other costs. The convertible note bears interest rate at 5% per annum and payable in one year. Conversion price shall be equal to the lower of (i) $2.00 or (ii) 75% multiplied by the lowest traded price of the common stock during the twenty consecutive trading day period immediately preceding the date of the respective conversion.

During the nine months ended March 31, 2021, Firstfire Global Opportunities Fund LLC elected to convert $68,850 of the principal amount of the convertible notes into 4,125,000 shares of the Company’s common stock. The conversion resulted in a loss on extinguishment of debt of $67,512 (See Note 10).

After the foregoing conversions, on November 12, 2020, the Company paid Firstfire Global Opportunities Fund LLC, the holder of the Company’s convertible debt an aggregate of $130,500 in order to terminate their convertible note dated September 11, 2019, including all accrued and unpaid interest. The payment was made by Yubao Liu on behalf of the Company and the note holder confirmed this full settlement on November 13, 2020. The debt settlement resulted in a gain on extinguishment of debt of $94,928.

The remaining principal balance due under this convertible note after all conversions and settlement is zero as of March 31, 2021.

(3)

On November 4, 2019, the Company entered into a Securities Purchase Agreement with Power Up Lending Group Ltd to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $53,000 and received $47,350 in cash on November 12, 2019 after deducting legal fees and other costs. The convertible note bears interest rate at 6% per annum and due on November 4, 2020. The convertible note can be converted into shares of the Company’s common stock at 65% of the average of the two lowest trading prices during the fifteen trading day prior to the conversion date.

On September 16, 2020, the Company entered into a Note Settlement Agreement with Power Up Lending Group Ltd., the holder of the Company’s convertible debt. The Note Settlement Agreement terminated their convertible note dated November 4, 2019, including all accrued and unpaid interest, after the Company paid an aggregate of $75,000 on September 16, 2020. The debt settlement resulted in a gain on extinguishment of debt of $15,346.

(4)

On November 12, 2019, the Company entered into a Securities Purchase Agreement with Crown Bridge Partners, LLC to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount sum up to $165,000 with a purchase price sum up to $156,750. During November 2019, First Tranche of the agreement was executed in the principal amount of $55,000 and the Company received $50,750 in cash on November 15, 2019 after deducting an OID in the amount of $2,750, legal fees and other costs. The convertible note bears interest rate at 5% per annum and due on November 12, 2020. The convertible note can be converted into shares of the Company’s common stock at 75% multiplied by the lowest traded price of the common stock during the twenty consecutive trading day period immediately preceding the date of the respective conversion.

On October 16, 2020, the Company issued a total of 500,000 shares of common stock to Crown Bridge Partners, LLC for the conversion of debt in the principal amount of $3,500 according to the conditions of the convertible note dated as November 12, 2019. The conversion resulted in a loss on extinguishment of debt of $22,424. (See Note 10)

After the foregoing conversions, on December 7, 2020, the Company paid Crown Bridge Partners, LLC, the holder of the Company’s convertible debt an aggregate of $82,500 in order to terminate their convertible note dated November 12, 2019, including all accrued and unpaid interest. Among the total, payment of $60,000 was made by Yubao Liu on behalf of the Company while the remaining payment of $22,500 was made directly by the Company. The note holder confirmed this full settlement on December 10, 2020. The debt settlement resulted in a gain on extinguishment of debt of $206,377.

The remaining principal balance due under this convertible note after all conversions and settlement is zero as of March 31, 2021.

(5)

On November 20, 2019, the Company entered into a Securities Purchase Agreement with Morningview Financial, LLC to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $165,000 and received $153,250 in cash on November 22, 2019 after deducting an OID in the amount of $8,250, legal fees and other costs. The convertible note bears interest rate at 5% per annum and due on November 20, 2020. Conversion price shall be equal to the lower of (i) $2.00 or (ii) 75% multiplied by the lowest traded price of the common stock during the twenty consecutive trading day period immediately preceding the date of the respective conversion.

On September 24, 2020, Morningview Financial, LLC elected to convert $15,000 of the principal amount of the convertible notes into 568,182 shares of the Company’s common stock. The conversion resulted in a loss on extinguishment of debt of $5,907. (See Note 10)

After the foregoing conversions, on November 12, 2020, the Company paid Morningview Financial, LLC, the holder of the Company’s convertible debt an aggregate of $175,000 in order to terminate their convertible note dated November 20, 2019, including all accrued and unpaid interest. The payment was made by Yubao Liu on behalf of the Company and the note holder confirmed this full settlement on November 14, 2020. The debt settlement resulted in a gain on extinguishment of debt of $209,604.

The remaining principal balance due under this convertible note after all conversions and settlement is zero as of March 31 ,2021.

(6)

On December 3, 2019, the Company entered into a Securities Purchase Agreement with BHP Capital NY, Inc to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $102,900 and received $95,500 in cash on December 13, 2019 after deducting and OID in the amount of $4,900, legal fees and other costs. The convertible note bears interest rate at 5% per annum and due on December 3, 2020. The convertible note can be converted into shares of the Company’s common stock at 75% of the average of the two lowest trading prices during the fifteen trading day prior to the conversion date.

On April 14, 2020, the Company entered into an Amendment to Securities Purchase Agreement with BHP Capital NY, Inc dated on December 3, 2019. The Company agreed to pay off this note holder in 6 installments of $23,186.79 each, with an aggregate amount of $139,121 (including principal of $137,114 and interest of $2,007). The repayment resulted in a loss on extinguishment of debt of $4,703, which was included in other income and expense in the consolidated statement of comprehensive income (loss) for the year ended June 30, 2020.

In May and June 2020, the Company paid two installments totaling $46,373 (including principal of $45,325 and interest of $1,048) and note payable balance decreased to $91,789 as of June 30, 2020. During the period from July to September 2020, the Company continued to pay 4 installments of an aggregate amount of $92,748 (including principal of $91,789 and interest of $959).

As of the date of this report, the Company has made total six installments payment of an aggregate amount of $139,121 (including principal of $137,114 and interest of $2,007). The note payable balance decreased to zero as of March 31, 2021.

(7)

On January 10, 2020, the Company entered into a convertible promissory note with Labrys Fund, LP to issue and sell, upon the terms and conditions set forth in the agreement a convertible note of the Company, in the aggregate principal amount of $146,850 and received $137,000 in cash on January 13, 2020 after deducting an OID in the amount of $7,350, legal fees and other costs. The note is due on January 10, 2021 and bears interest at 5% per annum. The conversion price shall be equal to 75% multiplied by the lesser of the lowest closing bid price or lowest traded price of the Common Stock during the twenty (20) consecutive trading day period immediately preceding the date of the respective conversion.

~~For~~During the ~~three and~~ nine months ended March 31, 2021, Labrys Fund, LP elected to convert $146,850 of the principal amount together with all accrued and unpaid interest of the convertible notes into 4,012,478 shares of the Company’s common stock. The conversion resulted in a loss on extinguishment of debt of $128,018. The remaining principal balance due under this convertible note after all conversions is zero as of March 31, 2021. (See Note 10)

All convertible notes aforementioned

For the nine months ended March 31, 2021 and 2020, the Company recorded the amortization of debt discount of ~~$170,138~~$138,399 and $351,474 for the convertible notes issued, which were included in other income and ~~expenses~~expense in the consolidated statement of comprehensive income (loss).

For the three months ended March 31, 2021 and 2020, the Company recorded the amortization of debt discount of $0 and $170,138 for the convertible notes issued, which were included in other income and expense in the consolidated statement of comprehensive income (loss).

Derivative liability

Upon issuing of the convertible notes, the Company determined that the conversion feature embedded in the notes referred to above that contain a potential variable conversion amount constitutes a derivative which has been bifurcated from the note and accounted for as a derivative liability, with a corresponding discount recorded to the associated debt. The excess of the derivative value over the face amount of the note, if any, is recorded immediately to interest expense at inception.

The derivative liability in connection with the conversion feature of the convertible debt is the only financial liability measured at fair value on a recurring basis.

The change of derivative liabilities is as follows:

Issued during the nine months ended March 31, 2020	$	555,696
Balance at July 1, 2020				$	276,266
Converted		(22,242	)		(357,868	)
Debt settlement					(566,030	)
Change in fair value recognized in operations		(86,602	)		647,632
Balance at March 31, 2020	$	446,852
Balance at March 31, 2021				$	-

The estimated fair value of the derivative instruments was valued using the Black-Scholes option pricing model ~~at issuance date and~~during the nine months ended March 31, ~~2020,~~2021, using the following assumptions:

Estimated dividends	None
Expected volatility	~~55.87%~~78.55% to ~~75.76%~~	253.30%
Risk free interest rate	~~0.70%~~0.61% to ~~2.08%~~	0.93%
Expected term	~~3.8~~0 to 126 months

Warrants

In connection with the issuance of the $165,000 convertible promissory note on September 11, 2019, FirstFire Global Opportunities Fund, LLC is entitled, upon the terms and subject to the limitations on exercise and the conditions set forth in the agreement, at any time on or after the date of issuance hereof to purchase from the Company up to 68,750 shares of common stock. Exercise price shall be $2.40, and the warrants can be exercised within 5 years which is before September 11, 2024.

On December 21, 2020, the Company issued a total of 1,500,000 shares of common stock to FirstFire Global Opportunities Fund, LLC for the exercise of warrants in full. The exercise of warrants resulted in a loss of $67,028 for the nine months ended March 31, 2021. After this exercise, FirstFire Global Opportunities Fund, LLC is not entitled to any warrant to purchase shares. (See Note 10)

In connection with the issuance of the $55,000 convertible promissory note on November 12, 2019, Crown Bridge Partners, LLC is entitled, upon the terms and subject to the limitations on exercise and the conditions set forth in the agreement, at any time on or after the date of issuance hereof to purchase from the Company up to 22,916 shares of common stock. Exercise price shall be $2.80, and the warrants can be exercised within 5 years which is before November 12, 2024.

In December 2020, the Company paid a total of $82,500 to fully settle the convertible note dated November 12, 2019 with Crown Bridge Partners, LLC, including all accrued and unpaid interest and unexercised warrants. After this settlement, Crown Bridge Partners, LLC is not entitled to any warrant to purchase shares.

In connection with the issuance of the $165,000 convertible promissory note on November 20, 2019, Morningview Financial LLC is entitled, upon the terms and subject to the limitations on exercise and the conditions set forth in the agreement, at any time on or after the date of issuance hereof to purchase from the Company up to 68,750 shares of common stock. Exercise price shall be $2.80, and the warrants can be exercised within 5 years which is before November 20, 2024.

In November 2020, the Company paid a total of $175,000 to fully settle the convertible note dated November 20, 2019 with Morningview Financial LLC, including all accrued and unpaid interest and unexercised warrants. After this settlement, Morningview Financial LLC is not entitled to any warrant to purchase shares.

In connection with the issuance of the $146,850 convertible promissory note on January 10, 2020, Labrys Fund, LP is entitled, upon the terms and subject to the limitations on exercise and the conditions set forth in the agreement, at any time on or after the date of issuance hereof to purchase from the Company up to 68,750 shares of common stock. Exercise price shall be $2.80, and the warrants can be exercised within 5 years which is before January 10, 2025.

The estimated fair value of the warrants was valued using the Black-Scholes option pricing model at grant date, using the following assumptions:

Estimated dividends			None
Expected volatility			56.23% to 71.08%
Risk free interest rate			1.73% to 1.92%
Expected term			5 years

Since the warrants can be exercised at $2.4 or $2.8 and are not liabilities, the face value of convertible notes was allocated between convertible note and warrant based on the fair values of the conversion ~~debt~~feature and warrants. Accordingly, $147,492 was allocated to warrants and recorded in additional paid in capital account during the ~~nine months~~year ended ~~March 31,~~June 30, 2020.

The details of the outstanding warrants are as follows:

Number of
shares

Weighted Average
Exercise Price

Remaining
Contractual Term
(years)

Outstanding at July 1, 2019 - $ - -
Granted 229,166 2.68 5
Exercised - - -
Cancelled or expired - - -
Outstanding at March 31, 2020 229,166 $ 2.68 4.45 to 4.78

	Number of shares			Weighted Average Exercise Price		Remaining Contractual Term (years)

Outstanding at July 1, 2020		229,166		$	2.68		4.2 to 4.53
Granted		-			-		-
Exercised or settled		(160,416	)		2.63		4.05 to 4.16
Cancelled or expired		-			-		-
Outstanding at March 31, 2021		68,750		$	2.80		3.78

NOTE 1315 – ~~STOCKHOLDER’S EQUITY~~PROMISSORY NOTE

~~Stock Issued for Services~~

The Company engaged Maxim Group LLC as its financial advisor to assist the Company in articulating its growth strategy to the investment community and up-list its securities to a National Securities Exchange. On ~~February 10,~~December 21, 2020, the Company issued ~~150,000~~a self-amortization promissory note to Labrys Fund, L.P in the aggregate principal amount of $300,000. The promissory note is due on or before December 21, 2021 and bears an interest rate of five percent (5%) per annum. The note is not convertible unless in default, as defined in the agreement. The Company agreed to reserve 7,052,239 shares of its common stock for issuance if any debt is converted. The Company executed and closed the transaction on December 31, 2020 and received $253,500 in cash after deducting an OID in the amount of $30,000, legal fees of $3,000 and other costs of $13,500. The self-amortization promissory note has an amortization schedule of $35,000 payment at each month end beginning April 23, 2021 through December 21, 2021.

In connection with the issuance of promissory note, on December 31, 2020, the Company issued 447,762 shares of common stock (the “First Commitment Shares”) and 1,119,402 shares of common stock (the “Second Commitment Shares”) related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date. The Company recorded the First Commitment Shares as debt discount valued at ~~$262,500~~$68,060 based on the quoted market price at issue date and amortized over the term of the promissory note. The Company recorded the Second Commitment Shares at par for the nine months ended March 31, 2021. (See Note 10)

On March 10, 2021, the Company issued a self-amortization promissory note to ~~Maxim Group LLC~~Labrys Fund, L.P in the aggregate principal amount of $500,000. The promissory note is due on or before March 10, 2022 and bears an interest rate of five percent (5%) per annum. The note is not convertible unless in default, as defined in the agreement. The Company agreed to reserve 6,562,500 shares of its common stock for issuance if any debt is converted. The Company executed and closed the transaction on March 19, 2021 and received $434,000 in cash after deducting an OID in the amount of $50,000, legal fees of $2,500 and other costs of $13,500. The self-amortization promissory note has an amortization schedule of $58,333.33 payment at each month beginning July 9, 2021 through March 10, 2022.

In connection with the issuance of promissory note, on March 10, 2021, the Company issued 417,000 shares of common stock (the “First Commitment Shares”) and 1,042,000 shares of common stock (the “Second Commitment Shares”) related to the promissory note as a ~~part of its compensation.~~commitment fee. The ~~share-based compensation~~Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date. The Company recorded the First Commitment Shares as debt discount valued at $87,153 based on the quoted market price at issue date and amortized over ~~service period from December 16, 2019 to November 30, 2020 and~~ the ~~amortization expense was $79,891~~term of the promissory note. The Company recorded the Second Commitment Shares at par for the nine months ended March 31, 2021. (See Note 10)

For the three and nine months ended March 31, ~~2020.~~

~~Stock Issued for Conversion of Convertible Debt~~

~~On January 31, 2020,~~2021, the Company ~~issued a total~~recorded the amortization of ~~12,775 shares~~debt discount of ~~common stock to Power Up Lending Group Ltd~~$37,532 and $38,806 for the ~~conversion of debt~~self-amortization promissory notes issued, which was included in other income and expense in the ~~principal amount~~consolidated statement of ~~$12,000 according to the conditions of the convertible note dated as July 25, 2019. The conversion resulted in a loss on extinguishment of debt of $7,813.~~comprehensive income (loss).

On February 18, 2020, the Company issued a total of 11,834 shares of common stock to Power Up Lending Group Ltd for the conversion of debt in the principal amount of $10,000 according to the conditions of the convertible note dated as July 25, 2019. The conversion resulted in a loss on extinguishment of debt of $2,901.

On February 28, 2020, the Company issued a total of 15,448 shares of common stock to Power Up Lending Group Ltd for the conversion of debt in the principal amount of $12,000 according to the conditions of the convertible note dated as July 25, 2019. The conversion resulted in a loss on extinguishment of debt of $4,360.

NOTE 1416 – SEGMENT INFORMATION

The Company’s business is classified by management into three reportable business segments (smart energy, photoelectric display and service contracts) supported by a corporate group which conducts activities that are non-segment specific. The smart energy reportable segment derives revenue from the sales of portable power banks that is intended to be utilized as a power source for electronic devices such as the iphone, ipad, mp3/mp4 players, PSP gaming systems, and cameras. The photoelectric display reportable segment derives revenue from the sales of LCM and LCD screens manufactured for small devices such as video capable baby monitors, electronic devices such as tablets and cell phones, and for use in televisions or computer monitors. The service contracts reportable segment derives revenue from providing IT and solution-oriented services. Unallocated items comprise mainly corporate expenses and corporate assets.

Although all of the Company’s revenue is generated from Mainland China, the Company is organizationally structured along business segments. The accounting policies of each operating segments are same and are described in Note 2,3, “Summary of Significant Accounting ~~Policies.”~~

Policies”.

The following tables provide the business segment information for the three and nine months ended March 31, ~~2020~~2021 and ~~2019.~~2020.

	For the Nine Months Ended March 31, 2021
	Smart energy			Photoelectric display			Service contracts			Unallocated items			Total

Revenues	$	-		$	9,100,076		$	2,018		$	-		$	9,102,094
Cost of Revenues		-			8,061,782			10,159			-			8,071,941
Gross profit (loss)		-			1,038,294			(8,141	)		-			1,030,153
Operating expenses		8,374			1,202,101			23,641			176,268			1,410,384
Loss from operations		(8,374	)		(163,807	)		(31,782	)		(176,268	)		(380,231	)
Net loss	$	(8,213	)	$	(147,074	)	$	(31,781	)	$	(816,950	)	$	(1,004,018	)

	For the Nine Months Ended March 31, 2020
	Smart energy		Photoelectric display		Service contracts		Unallocated items			Total

Revenues	$	1,719,127	$	15,236,570	$	629,771	$	-		$	17,585,468
Cost of Revenues		1,642,532		12,786,020		421,642		-			14,850,194
Gross profit		76,595		2,450,550		208,129		-			2,735,274
Operating expenses		10,094		1,491,200		25,326		497,501			2,024,121
Income (loss) from operations		66,501		959,350		182,803		(497,501	)		711,153
Net income (loss)	$	59,915	$	779,838	$	165,603	$	(794,644	)	$	210,712

	For the Nine Months Ended March 31, 2019											For the Three Months Ended March 31, 2021
	Smart energy		Photoelectric display		Service contracts		Unallocated items			Total		Smart energy			Photoelectric display			Service contracts			Unallocated items			Total

Revenues	$	1,831,387	$	5,749,983	$	260,067	$	-		$	7,841,437	$	-		$	3,160,474		$	272		$	-		$	3,160,746
Cost of Revenues		1,630,188		4,789,880		197,947		-			6,618,015		-			2,802,520			(23	)		-			2,802,497
Gross profit		201,199		960,103		62,120		-			1,223,422		-			357,954			295			-			358,249
Operating expenses		11,728		574,524		39,270		219,172			844,694		2,842			428,842			5,893			37,666			475,243
Income (loss) from operations		189,471		385,579		22,850		(219,172	)		378,728
Net income (loss)	$	141,214	$	261,823	$	21,204	$	(219,170	)	$	205,071
Loss from operations													(2,842	)		(70,888	)		(5,598	)		(37,666	)		(116,994	)
Net loss												$	(2,841	)	$	(26,820	)	$	(5,598	)	$	(80,335	)	$	(115,594	)

	For the Three Months Ended March 31, 2020
	Smart energy			Photoelectric display			Service contracts			Unallocated items			Total

Revenues	$	181,033		$	2,561,267		$	9,870		$	-		$	2,752,170
Cost of Revenues		177,995			2,256,426			72,097			-			2,506,518
Gross profit (loss)		3,038			304,841			(62,227	)		-			245,652
Operating expenses		3,960			377,641			8,109			248,935			638,645
Loss from operations		(922	)		(72,800	)		(70,336	)		(248,935	)		(392,993	)
Net income (loss)	$	347		$	(83,297	)	$	(64,462	)	$	(488,810	)	$	(636,222	)

~~F-23~~

For the Three Months Ended March 31, 2019
Smart
energy
Photoelectric
display

Service
contracts

Unallocated
items
Total

Revenues $ - $ 2,760,934 $ 133,868 $ - $ 2,894,802
Cost of Revenues - 2,184,085 87,295 - 2,271,380
Gross profit - 576,849 46,573 - 623,422
Total operating expenses 2,882 486,969 26,403 34,675 550,929
Income (loss) from operations (2,882 ) 89,880 20,170 (34,675 ) 72,493
Net income (loss) $ (2,866 ) $ 39,811 $ 18,792 $ (34,673 ) $ 21,064

NOTE 1517 - SUBSEQUENT EVENTS

~~The Company has evaluated~~On May 6, 2021, our Board of Directors (the “Board”) approved the ~~existence~~following actions which are also taken by written consent in lieu of ~~significant events subsequent to~~a meeting by the ~~balance sheet date through~~holders of a majority of the ~~date~~voting power of our outstanding capital stock as of the ~~financial statements were issued and has determined that there were no subsequent events or transactions which would require recognition or disclosure in the financial statements.~~same date:

(1)

An increase in the total number of authorized stock of the Company from 200,000,000 to 400,000,000 shares consisting of: (i) 395,000,000 shares of common stock, par value $0.0001 per share (“Common Stock”); and (ii) 5,000,000 shares of preferred stock par value $0.0001 per share (“Preferred Stock”) (the “Authorized Share Increase”) and related Certificate of Amendment to Articles of Incorporation;

(2)

To effect, at the discretion of the Company’s Board, a reverse stock split of all outstanding shares of the Company’s Common Stock, at a ratio of not less than 1-for-2 and not greater than 1-for-10, such ratio to be determined by the Company’s Board at any time before April 30, 2022, without further approval or authorization of our stockholders (the “Reverse Stock Split”) and related amendment to our Articles of Incorporation.

END NOTES TO FINANCIAL STATEMENTS

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our audited financial statements and notes thereto included herein. We caution readers regarding certain forward-looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by, or our behalf. We disclaim any obligation to update forward-looking statements.

Results of Operation for the Three and Nine months Ended March 31, 2021 and 2020

Calendar year 2020 was challenging and disruptive for the world, with the COVID-19 pandemic adding to the headwind of an already challenging global economy. Almost no industry was unaffected by the pandemic. The unprecedentedly adverse global operating environment had a major impact on our business and reversed the Company's continuous growth.

The operations of the Company during the nine months ended March 31, 2021 experienced some minor delays and were adversely affected by the COVID-19 travel restrictions and lockdowns implemented nationwide. Decreases in revenue and operating profits during the nine months ended March 31, 2021 were a result of the unprecedented adverse market condition caused by the outbreak of COVID-19 pandemic since January 2020.

During the nine months ended March 31, 2021, the significant decrease in sales revenue is mainly attributable to the adverse impact of COVID-19 in various ways, from the continuous weakening demand in the PRC consumer market and continuous competition from other brands against the goods which the Company has been trading coupled with the unfavorable and ongoing adverse trading environment and the disruptions caused by COVID-19, limitation of marketing efforts, disruptions of product delivery to the Company’s customers due to certain customers 's reducing their budgets or delaying their procurement plans, leading to a decrease in the new orders placed with the Company. The Company believes that such effect is temporary and will not have major impact on the long-term performance of the Company.

During the nine months ended March 31, 2021, the gross profit decreases were mainly attributable to: (1) the drop in production volume of the Company as a result of the adverse impact of the COVID-19; (2) in certain areas in Northeast of China, the PRC government, as a preventive measure in response to the COVID-19, had implemented the movement control order which involved prohibition of movement of people which adversely affected the Company’s supply chain in raw materials. And the poor market sentiment has led to the significant drop in demand and selling prices of the Company’s products, while the prices of glass, which is the raw material for the Company's production, have increased substantially due to tightened supply of glass from the supply chain reform in the PRC; and (3) in addition to the economic contraction caused by prolonged outbreak of COVID-19, the fact that Changchun City where Fangguan Electronics was located had endured dozens of blizzards in November and December 2020, also led to the slow-down of the businesses of the Company.

The significant decrease in net income from the nine months ended March 31, 2020 to the nine months ended March 31, 2021 is primarily attributed to: (1) a decrease in the Company’s revenue by approximately 48% resulting from the disruption of the Company’s business operations caused by the COVID-19; (2) a decrease in the Company's gross profit margin from 16% for the nine months ended March 31, 2020 to approximately 11% for the nine months ended March 31, 2021 resulting from the drop in sales price and increase in raw material price, mainly as a result of the reduction in operation efficiency during the outbreak of COVID-19; (3) a significant increase in non-recurring other expenses such as change in fair value of derivative liability; and offset by (4) a decrease in the Company’s operating expenses by approximately 30% resulting from cost saving measures including but not limited to reduction in salary, rent and R&D expenditures. Excluding the aforementioned non-recurring change in fair value of derivative liability, the reduction in net profit for the nine months ended March 31, 2021 as compared with the corresponding period of last year would be narrowed down from approximately $1.2 million to approximately $0.6 million instead.

Nevertheless the Company survived and thrived against all odds: besides carrying out a more stringent cost control through the Company’s persistent effort in cost reduction, the Company implemented the workplace safety measures as per government guidelines, including work from home arrangements whenever appropriate, and protected the client relationships by maintaining communication and working with them to deal with the delaying or canceling orders. With the gradual stabilization of the domestic photoelectric display industry, the Company would anticipate a steady increase in the sales of LCM and LCD.

Based on the Company’s well-established reputation in the market, management of the Company believes that the demand for the Company's products would increase during the economic rebounding and the overall financial and business positions of the Company would remain sound, and the Company is well positioned to take advantage of any upturn in the market.

Considering that such effects of COVID-19 is temporary and will not have major impact on the long-term performance of the Company, the Company believes that the increase in turnover and gross profit margin of the Company as caused by the gradual recovery of the economy of PRC would maintain in the future. As such, the Company remains cautiously optimistic about its sustainable development.

During the Spring of calendar year 2021, the anticipated recovery in the economy of PRC realized gradually while the negative impact of COVID-19 remains. The Company maintains optimistic cautious and is paying close attention to the evolving development of, and the disruption to business and economic activities caused by the COVID-19 outbreak and evaluates its impact on the financial position, cash flows and operating results of the Company. Given the dynamic nature of the COVID-19 outbreak, it is not practicable to provide a reasonable estimate of its impacts on the Company’s financial position, cash flows and operating results at the present.

Revenues

During the three and nine months ended March 31, 2021, COVID-19 continued to affect the operational and financial performance of the Company. However, the gradual recovery of revenue that was ever expected previously already realized.

During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, total revenues were ~~$2,752,170~~$3,160,746 and ~~$2,894,802~~$2,752,170 respectively. The total revenues ~~decreased~~increased by ~~$142,632~~$408,576 or 5%15% from the three months ended March 31, ~~2019~~2020 to the three months ended March 31, ~~2020.During the three months ended March 31, 2020, COVID-19 affected the operational and financial performance of the Company:~~ PRC national economic shutdown that was imposed to limit the spread of COVID-19 from this early February to mid-March. At the same time we temporarily closed all of our factories as transportations in or out of them were suspended, and experienced an unprecedented “supplier chain break”. Since the restarting of our operations near the end of this March, our financial performances have been recovering continuously while transportations have returned to normal, all of the supplier chain restored and all of our factories resumed working.2021.

During the nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, total revenues were ~~$17,585,468~~$9,102,094 and ~~$7,841,437~~$17,585,468 respectively. The total revenues ~~increased~~decreased by ~~$9,744,031~~$8,483,374 or ~~124%~~48% from the nine months ended March 31, ~~2019~~2020 to the nine months ended March 31, ~~2020.~~2021.

Among the ~~significant increase~~decrease of ~~$9,744,031~~$8,483,374 in total revenues for the nine months ended March 31, ~~2020 compared~~2021, $5,199,704 decrease was due to ~~2019, $11,581,460 increase was~~ the revenue decrease from Fangguan Electronics which was acquired on December 27, 2018. ~~The acquisition expanded~~In addition, the ~~Company’s operations in the fields of LCM in the PRC and significantly increased the volume of goods (LCD, etc.) being sold.~~

~~The increase~~decrease in total revenues ~~due to acquisition of Fangguan Electronics was partially offset by the decreases of $1,837,429 related to the other business (excluding Fangguan Electronics) for~~during the nine months ended March 31, ~~2020~~2021 was partially attributed to the decreases of $2,346,880 in service contract and smart energy segments as compared ~~to 2019. After Fangguan Electronics was acquired, all business of Fangguan Photoelectric was replaced by Fangguan Electronics, which caused total revenues to decrease by $2,407,535 respectively for~~with the nine months ended March 31, 2020. The decrease during the nine months ended March 31, 2021 can be directly attributed to the fact that the continuous outbreak of COVID-19 induced the numerous shutdowns and suspensions of commercial activities in certain cities and provinces which have caused the significantly adverse effects on the business of the Company during calendar year of 2020.

Among the increase of $408,576 in total revenues for the three months ended March 31, 2021, revenue from Fangguan Electronics increased by $824,073, offset by the decrease of $190,631 in service contract and smart energy segments. The increase during the three months ended March 31, 2021 can be attributed to the gradual recovery of the Company's business following the economic rebound in the spring of the calendar year of 2021.

The decrease in smart energy revenue for the three and nine months ended March 31, 2021 as compared with 2020 was due to the fact that the global economy is on track to contract in calendar year of 2020 as a result of the COVID-19 pandemic and the overseas enterprises ceased placing orders from our major customers in smart energy segment. Then our business was hit by the chain reaction. As for the service contract business, mainly due to COVID-19, all old contracts were completed while new contracts have not been signed.

Cost of Revenue

Cost of revenues included the cost of raw materials, labor, depreciation, overhead and finished products purchased.

During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, the total cost of revenues was ~~$2,506,518~~$2,802,497 and ~~$2,271,380,~~$2,506,518 respectively. The total cost of revenues increased by ~~$235,138~~$295,979 or ~~10%~~12% from the three months ended March 31, ~~2019~~2020 to the three months ended March 31, 2021.

During the nine months ended March 31, 2021 and 2020, the total cost of revenues was $8,071,941 and $14,850,194 respectively. The total cost of revenues decreased by $6,778,253 or 46% from the nine months ended March 31, 2020 to the nine months ended March 31, 2021.

Among the increase of $295,979 in total cost of revenues for the three months ended March 31, 2021, $710,723 increase came from Fangguan Electronics, offset by the decrease of $250,115 in total cost of revenues from service contract and smart energy segments. Among the decrease of $6,778,253 in total cost of revenues for the nine months ended March 31, 2021, $4,070,831 decrease came from Fangguan Electronics and $2,054,015 decrease came from service contract and smart energy segments.

The fluctuation in cost of revenues can be directly attributed to the fluctuation of revenues.

Gross Profit

During the three months ended March 31, 2021 and 2020, the gross profit was $358,249 and $245,652, respectively.

The gross profit increased by 46% from the three months ended March 31, 2020 to the three months ended March 31, 2021, which is primarily attributed to the gradual recovery of revenue following the rebound of economy in the spring of the calendar year of 2021. Our gross profit margin maintained at 11% during the three months ended March 31, 2021 as compared to 9% for the three months ended March 31, 2020.

During the nine months ended March 31, 2021 and 2020, the gross profit was $1,030,153 and ~~2019, the total cost of revenues was $14,850,194 and $6,618,015~~$2,735,274, respectively.

The ~~total cost of revenues increased~~gross profit decreased by ~~$8,232,179 or 124%~~62% from the nine months ended March 31, ~~2019~~2020 to the nine months ended March 31, ~~2020.~~

~~Among~~2021. Our gross profit margin maintained at 11% during the ~~significant increase of $8,232,179 in total cost of revenues~~nine months ended March 31, 2021 as compared to 16% for the nine months ended March 31, ~~2020 compared to 2019, $9,991,514 increase can be directly~~2020. The decrease in the Company's gross profit margin is attributed to the ~~acquisition~~drop in sales price and increase in raw material price in calendar year of ~~Fangguan Electronics on December 27, 2018.~~2020, mainly as a result of the reduction in operation efficiency during the outbreak of COVID-19.

The increase in total cost of revenues due to acquisition of Fangguan Electronics was partially offset by the decreases of $1,759,335 related to the other business (excluding Fangguan Electronics) for the nine months ended March 31, 2020 compared to 2019. After Fangguan Electronics was acquired, all business of Fangguan Photoelectric was replaced by Fangguan Electronics, which caused total cost of revenues to decrease by $2,076,990 for the nine months ended March 31, 2020.

~~Gross Profit~~

~~During the three months ended March 31, 2020 and 2019, the gross profit was $245,652 and $623,422, respectively.~~

~~Our gross profit margin was 9% for the three months ended March 31, 2020 as compared to 22% for the three months ended March 31, 2019.~~

The decrease in both gross profit and gross profit margin can be attributed to the fact that starting from second fiscal quarter, the Company adopted the new business strategy to have low gross profits and increase sales volume.

~~During the nine months ended March 31, 2020 and 2019, the gross profit was $2,735,274 and $1,223,422 respectively.~~

~~Our gross profit margin maintained at 16% during both the nine months ended March 31, 2020 and the nine months ended March 31, 2019.~~

Selling, General and Administrative Expenses

Our selling, general and administrative expenses are mainly comprised of payroll expenses, transportation, office expense, professional fees, freight and shipping costs, rent, and other miscellaneous expenses.

During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, selling, general and administrative expenses were ~~$499,616~~$327,372 and ~~$392,367,~~$499,616, respectively.

During the nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, selling, general and administrative expenses were ~~$1,378,241~~$985,273 and ~~$686,132,~~$1,378,241, respectively.

The ~~difference~~decrease in selling, general and administrative expenses can be attributed to the ~~depreciation and amortization expenses, payroll expenses, professional fees and other expenses incurred~~stricter cost control during the three and nine months ended March 31, ~~2020 after Fangguan Electronics became a variable interest entity of the Company on December 27, 2018.~~2021.

Research and Development Expenses

Our research and development expenses are mainly comprised of payroll expenses of research staff, costs of materials used for research and other miscellaneous expenses.

During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, research and development expenses were $147,871 and $139,029, ~~and $158,562,~~ respectively.

During the nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, research and development expenses were ~~$645,880~~$425,111 and ~~$158,562,~~$645,880 respectively. All research and development expenses were incurred by Fangguan ~~Electronics.~~Electronics (a variable interest entity of the Company since December 27, 2018).

The decrease in research and development expenses during the nine months ended March 31, 2021 can be attributed to the decrease of materials expenditures during the period.

Other Incomes ~~(Expenses)~~(Expenses)

Other expenses consisted of interest expense, net of interest income. Other incomes consisted primarily of subsidy income and gain on extinguishment of debt, net of loss on extinguishment of debt. ~~Other incomes consisted primarily of a change~~Change in fair value of derivative liability was an expense for the nine months ended March 31, 2021 and ~~subsidy income.~~an income for the nine months ended March 31, 2020.

During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, other incomes (expenses) were $3,349 and $(273,191) ~~and $(34,412),~~ respectively. The other income (expense) increased by $276,540 or 101% from the three months ended March 31, 2020 to the three months ended March 31, 2021.

During the nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, other incomes (expenses) were $(647,342) and $(348,954) ~~and $(34,412),~~ respectively. The other income (expense) decreased by $298,388 or 86% from the nine months ended March 31, 2020 to the nine months ended March 31, 2021.

The difference of interest expense was mainly due to the ~~new issuances~~decrease of debt discount as the convertible notes either approached the maturity date or were settled during the ~~three and~~ nine months ended March 31, ~~2020. In addition,~~2021 as compared with the ~~acquisition~~same period of ~~Fangguan Electronics on December 27, 2018 also contributed to the increase of interest expense as Fangguan Electronics borrowed short-term bank loan during the three and nine months ended March 31,~~ 2020.

The subsidy income was from Fangguan Electronics and Baileqi Electronic which received government subsidies ~~in July~~during the three and ~~December 2019.~~nine months ended March 31, 2021 and 2020.

The change in fair value of derivative liability can be attributed to the ~~new issuances~~fact that stock price of ~~convertible notes~~the Company were more volatile during the ~~three and~~ nine months ended March 31, 2021 as compared with same period of 2020.

The gain on extinguishment of debt of $202,588 during the nine months ended March 31, 2021 can be primarily attributed to the gain of $459,227 from settlement of four convertible notes (including warrants and all accrued and unpaid interests), offset by loss of $256,639 from the conversion of convertible notes to 9,470,630 common shares in the principal amount of $273,200 for the nine months ended March 31, 2021. The loss on extinguishment of debt can be attributed to the conversion of convertible notes in the principal amount of $34,000 during the three and nine months ended March 31, 2020.

Net Income (Loss)

During the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, our net income (loss) was $(115,594) and $(636,222) ~~and $21,064,~~ respectively.

The ~~change can be attributed to the decrease in gross profits and the increase of expenses during~~total net loss decreased by $520,628 or 82% from the three months ended March 31, ~~2020.~~2020 to the three months ended March 31, 2021.

During the nine months ended March 31, ~~2020~~2021 and ~~2019,~~2020, our net income (loss) was $(1,004,018) and $210,712, ~~and $205,071,~~ respectively.

The ~~difference can be attributed to increase in gross profits netting off~~total net income (loss) decreased by ~~the increase of expenses during~~$1,214,730 or 576% from the nine months ended March 31, 2020 ~~due~~ to the ~~acquisition~~nine months ended March 31, 2021.

The significant decrease in net income from the nine months ended March 31, 2020 to the nine months ended March 31, 2021 is primarily attributed to: (1) a decrease in the Company’s revenue by approximately 48% resulting from the disruption of ~~Fangguan Electronics.~~the Company’s business operations caused by the COVID-19; (2) a decrease in the Company's gross profit margin from 16% for the nine months ended March 31, 2020 to approximately 11% for the nine months ended March 31, 2021 resulting from the drop in sales price and increase in raw material price, mainly as a result of the reduction in operation efficiency during the outbreak of COVID-19; (3) a significant increase in non-recurring other expenses such as change in fair value of derivative liability; and offset by (4) a decrease in the Company’s operating expenses by approximately 30% resulting from cost saving measures including but not limited to reduction in salary, rent and R&D expenditures. Excluding the aforementioned non-recurring change in fair value of derivative liability, the reduction in net profit for the nine months ended March 31, 2021 as compared with the corresponding period of last year would be narrowed down from approximately $1.2 million to approximately $0.6 million instead.

The significant decrease in net loss from the three months ended March 31, 2020 to the three months ended March 31, 2021 is primarily attributed to the gradual recovery of revenue following the rebound of economy in the spring of calendar year of 2021.

Liquidity and Capital ~~Resources~~Resource

Cash Flow from Operating Activities

During the nine months ended March 31, ~~2020, net cash provided by operating activities was $641,370 compared to~~2021, net cash used in operating activities was $1,411,451 compared to the cash provided by operating activities of ~~$900,588~~$641,370 for the nine months ended March 31, ~~2019.~~2020. The change was mainly due to ~~the increase~~a decrease of ~~$5,641~~$1,214,730 in ~~the~~ net income and an increase of ~~$766,310 resulting from adjustments to net income for non-cash items, and a decrease of $770,007~~$1,012,057 in cash outflow from changes in operating assets and liabilities in the nine months ended March 31, ~~2020~~2021 compared to the same period in ~~2019.~~2020.

Cash Flow from Investing Activities

During the nine months ended March 31, ~~2020,~~2021, net cash used in investing activities was ~~$71,895~~$192,524 compared to net cash ~~provided by~~used in investing activities of ~~$649,216~~$71,895 for the ~~nine months ended March 31, 2019. Cash used~~same period in 2020. The change was primarily due to the ~~acquisition~~fact that there were proceeds from sale of ~~the~~ equipment ~~increased by $155,235 in~~of $121,715 during the nine months ended March 31, 2020 ~~compared to~~while no sales of fixed assets or intangible assets during the same period in ~~2019 due to acquisition of Fangguan Electronics. In addition, the Company also received cash of $687,591 in December 2018 due to the acquisition of Fangguan Electronics.~~2021.

Cash Flow from Financing Activities

During the nine months ended March 31, ~~2020,~~2021, cash provided by financing activities was $787,342 compared to net cash provided by financing activities of $787,503 ~~which~~for the same period in 2020. The change was ~~primarily due to the proceeds received from issuance of convertible notes. During~~immaterial during the nine months ended March 31, ~~2019, the Company received $588,062 in cash for financing activities, which was primarily attributable~~2021 compared to ~~the proceeds from the related party loans offsetting by the return~~same period of ~~capital to non-controlling interests.~~2020.

As of March 31, ~~2020,~~2021, we have a working capital of ~~$1,828,672.~~$2,165,185.

Our total current liabilities as of March 31, ~~2020~~2021 were ~~$8,202,791~~$7,748,280 and mainly ~~consist~~consisted of ~~$2,540,543~~$1,217,415 for a short-term bank ~~loan, $2,569,420~~loans, $2,650,376 in accounts payable, the amount due to related parties of ~~$2,032,723,~~$2,879,635, advance from customers of $351,225 and the ~~convertible~~self-amortized promissory notes ~~payable net~~ of ~~debt discount and loan cost of $347,427, the derivative liability of $446,852.~~$571,093. The Company’s ~~President~~major shareholder is committed to providing for our minimum working capital needs for the next 12 months, and we do not expect the previous related party loan be payable for the next 12 months. However, we do not have a formal agreement that states any of these facts. The remaining balance of our current liabilities relates to audit and consulting fees and such payments are due on demand and we expect to settle such amounts on a timely basis based upon shareholder loans to be granted to us in the next 12 months.

Going Concern

Future Financings

We consider taking on any long-term or short-term debt from financial institutions in the immediate future. Besides for the bank funding, we are dependent upon our director and the major shareholder to provide continued funding and capital resources. If continued funding and capital resources are unavailable at reasonable terms, we may not be able to implement our plan of operations. The financial statements do not include any adjustments related to the recoverability of assets and classification of liabilities that might be necessary should the Company be unable to continue in operation.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Critical Accounting Policies

Our critical accounting policies are disclosed Note 3 to the consolidated financial statements.

Recently Issued Accounting Pronouncements

There were no recent accounting pronouncements that have or will have a material effect on the Company’s financial position or results of operations.

Contractual Obligations

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of March 31, ~~2020.~~2021.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting subsequent to the fiscal year ended June 30, ~~2019,~~2020, which were identified in connection with our management’s evaluation required by paragraph (d) of rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

Limitations of the Effectiveness of Disclosure Controls and Internal Controls

Our management, including our Principal Executive Officer and Principal Financial Officer, does not expect that our disclosure controls and internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control.

The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving our stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, the Company may become subject to various legal proceedings that are incidental to the ordinary conduct of its business. Although the Company cannot accurately predict the amount of any liability that may ultimately arise with respect to any of these matters, it makes provision for potential liabilities when it deems them probable and reasonably estimable. These provisions are based on current information and legal advice and may be adjusted from time to time according to developments.

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

Item 1A. Risk Factors.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Recent Sales of Unregistered Equity Securities

The following sets forth information regarding all unregistered securities ~~sold~~issued since ~~January~~July 1, 2020:

On ~~February 10, 2020, the Company issued 150,000 shares of common stock to Maxim Group LLC as a part of its compensation, which were valued at $262,500 based on the quoted market price at issuance.~~

~~On January 31,~~July 9, 2020, the Company issued a total of ~~12,775~~42,079 shares of common stock to Power Up Lending Group Ltd for the conversion of debt in the principal amount of ~~$12,000~~$20,000 according to the conditions of the convertible note dated as July 25, 2019.

On ~~February 18,~~July 13, 2020, the Company issued a total of ~~11,834~~68,500 shares of common stock to Labrys Fund, LP for the conversion of debt in the principal amount of $37,503.75 according to the conditions of the convertible note dated as January 10, 2020.

On August 19, 2020, the Company issued a total of 222,891 shares of common stock to Power Up Lending Group Ltd for the conversion of debt in $19,000 of the principal amount of ~~$10,000~~the Note together with $4,916.22 of accrued and unpaid interest thereto, totaling $23,916.22 according to the conditions of the convertible note dated as July 25, 2019.

On ~~February 28,~~August 20, 2020, the Company issued a total of ~~15,448~~600,000 shares of common stock to ~~Power Up Lending Group Ltd~~Labrys Fund, LP for the conversion of debt in the principal amount of ~~$12,000~~$54,180 according to the conditions of the convertible note dated as ~~July 25,~~January 10, 2020.

On September 1, 2020, the Company issued a total of 75,000 shares of common stock to Firstfire Global Opportunities Fund LLC for the conversion of debt in the principal amount of $10,200 according to the conditions of the convertible note dated as September 11, 2019.

On September 14, 2020, the Company issued a total of 350,000 shares of common stock to Firstfire Global Opportunities Fund LLC for the conversion of debt in the principal amount of $13,550 according to the conditions of the convertible note dated as September 11, 2019.

On September 24, 2020, the Company issued a total of 568,182 shares of common stock to Morningview Financial, LLC for the conversion of debt in the principal amount of $15,000 according to the conditions of the convertible note dated as November 20, 2019.

On September 24, 2020, the Company issued a total of 400,000 shares of common stock to Labrys Fund, LP for the conversion of debt in the principal amount of $6,065.11 according to the conditions of the convertible note dated as January 10, 2020.

On October 12, 2020, the Company issued a total of 650,000 shares of common stock to Labrys Fund, LP for the conversion of debt in the principal amount of $14,844.39 according to the conditions of the convertible note dated as January 10, 2020.

On October 16, 2020, the Company issued a total of 181,500 shares of common stock to Labrys Fund, LP for the conversion of debt in the principal amount of $2,722.5 according to the conditions of the convertible note dated as January 10, 2020.

On October 16, 2020, the Company issued a total of 1,200,000 shares of common stock to Firstfire Global Opportunities Fund LLC for the conversion of debt in the principal amount of $14,100 according to the conditions of the convertible note dated as September 11, 2019.

On October 19, 2020, the Company issued a total of 2,112,478 shares of common stock to Labrys Fund, LP for the conversion of debt in the principal amount of $31,674.16 according to the conditions of the convertible note dated as January 10, 2020.

On October 29, 2020, the Company issued a total of 2,500,000 shares of common stock to Firstfire Global Opportunities Fund LLC for the conversion of debt in the principal amount of $31,000 according to the conditions of the convertible note dated as September 11, 2019.

On December 5, 2020, the Company issued a total of 20,370,000 shares of common stock to five Chinese citizen subscribers for an aggregate purchase price of $305,500 at $0.015 per share, according to the conditions of the five subscription agreements dated as November 20, 2020 signed by the between the Company and the subscribers.

On December 21, 2020, the Company issued a total of 1,500,000 shares of common stock to FirstFire Global Opportunities Fund, LLC for the full exercise of the warrants, according to the conditions of the convertible note dated as September 11, 2019.

On December 29, 2020, the Company issued a total of 8,499,999 shares of common stock to four Chinese citizen subscribers for an aggregate purchase price of $127,500 at $0.015 per share, according to the conditions of the four subscription agreements dated as December 9, 2020 and December 28, 2020 signed by the between the Company and the subscribers.

On December 31, 2020, the Company issued a total of 447,762 shares of common stock (the “First Commitment Shares”) and 1,119,402 shares of common stock (the “Second Commitment Shares”) to Labrys Fund, LLP related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date.

On January 13, 2021, the Company issued a total of 7,000,000 shares of common stock to a Chinese citizen subscriber for an aggregate purchase price of $105,000 at $0.015 per share, according to the conditions of the subscription agreement dated as January 13, 2021 between the Company and the subscriber.

On March 10, 2021, the Company issued 417,000 shares of common stock (the “First Commitment Shares”) and 1,042,000 shares of common stock (the “Second Commitment Shares”) to Labrys Fund, LLP related to the promissory note as a commitment fee. The Second Commitment Shares must be returned to the Company’s treasury if the promissory note is fully repaid and satisfied on or prior to the maturity date.

The sales of the above securities were exempt from registration under the Securities Act of 1933, as amended (Securities Act), in reliance upon Section 4(2) of the Securities Act, or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

Exemption From Registration. The shares of Common Stock referenced herein were issued in reliance upon one of the following exemptions:

(a)The shares of Common Stock referenced herein were issued in reliance upon the exemption from securities registration afforded by the provisions of Section 4(2) of the Securities Act of 1933, as amended, ("Securities Act"), based upon the following: (a) each of the persons to whom the shares of Common Stock were issued (each such person, an "Investor") confirmed to the Company that it or he is an "accredited investor," as defined in Rule 501 of Regulation D promulgated under the Securities Act and has such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities, (b) there was no public offering or general solicitation with respect to the offering of such shares, (c) each Investor was provided with certain disclosure materials and all other information requested with respect to the Company, (d) each Investor acknowledged that all securities being purchased were being purchased for investment intent and were "restricted securities" for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act and (e) a legend has been, or will be, placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.

(b)The shares of common stock referenced herein were issued pursuant to and in accordance with Rule 506 of Regulation D and Section 4(2) of the Securities Act. We made this determination in part based on the representations of the Investor(s), which included, in pertinent part, that such Investor(s) was an “accredited investor” as defined in Rule 501(a) under the Securities Act, and upon such further representations from the Investor(s) that (a) the Investor is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the Investor agrees not to sell or otherwise transfer the purchased securities unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the Investor either alone or together with its representatives has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, and (d) the Investor has no need for the liquidity in its investment in us and could afford the complete loss of such investment. Our determination is made based further upon our action of (a) making written disclosure to each Investor prior to the closing of sale that the securities have not been registered under the Securities Act and therefore cannot be resold unless they are registered or unless an exemption from registration is available, (b) making written descriptions of the securities being offered, the use of the proceeds from the offering and any material changes in the Company’s affairs that are not disclosed in the documents furnished, and (c) placement of a legend on the certificate that evidences the securities stating that the securities have not been registered under the Securities Act and setting forth the restrictions on transferability and sale of the securities, and upon such inaction of the Company of any general solicitation or advertising for securities herein issued in reliance upon Rule 506 of Regulation D and Section 4(2) of the Securities Act.

(c) The shares of Common Stock referenced herein were issued pursuant to and in accordance with Rule 903 of Regulation S of the Act. We completed the offering of the shares pursuant to Rule 903 of Regulation S of the Act on the basis that the sale of the shares was completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the shares. Each investor represented to us that the investor was not a "U.S. person", as defined in Regulation S, and was not acquiring the shares for the account or benefit of a U.S. person. The agreement executed between us and each investor included statements that the securities had not been registered pursuant to the Act and that the securities may not be offered or sold in the United States unless the securities are registered under the Act or pursuant to an exemption from the Act. Each investor agreed by execution of the agreement for the shares: (i) to resell the securities purchased only in accordance with the provisions of Regulation S, pursuant to registration under the Act or pursuant to an exemption from registration under the Act; (ii) that we are required to refuse to register any sale of the securities purchased unless the transfer is in accordance with the provisions of Regulation S, pursuant to registration under the Act or pursuant to an exemption from registration under the Act; and (iii) not to engage in hedging transactions with regards to the securities purchased unless in compliance with the Act. All certificates representing the shares were or upon issuance will be endorsed with a restrictive legend confirming that the securities had been issued pursuant to Regulation S of the Act and could not be resold without registration under the Act or an applicable exemption from the registration requirements of the Act.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

N/A.

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit
Number	Description of Exhibit
3.01a	Articles of Incorporation, dated March 11, 2011	Filed with the SEC on October 13, 2017 as part of our Annual Report on Form 10-K
3.01b	Certificate of Amendment to Articles of Incorporation, dated August 7, 2014	Filed with the SEC on September 3, 2014 as part of our Current Report on Form 8-K
3.01c	Certificate of Amendment to Articles of Incorporation, dated December 3, 2015	Filed with the SEC on December 10, 2015 as part of our Current Report on Form 8-K
3.02a	Bylaws	Filed with the SEC on August 23, 2011 as an exhibit to our Registration Statement on Form 10.
3.02b	Amended Bylaws, dated August 7, 2014	Filed with the SEC on September 3, 2014 as part of our Current Report on Form 8-K
10.01	~~Stock Purchase Agreement between Locksley Samuels and Shining Glory Investments Limited, dated November 20, 2015~~	~~Filed with the SEC on November 23, 2015 as part of our Current Report on Form 8-K~~
~~10.02~~	Manufacturing Agreement, dated as of August 19, 2016, by and between Jiangxi Huanming Technology Limited Company and XinyuIonix Technology Company Limited.	Filed with the SEC on August 24, 2016 as part of our Current Report on Form 8-K
~~10.03~~10.02	Share Transfer Agreement, dated as of August 19, 2016, by and between GuoEn Li and Well Best International Investment Limited	Filed with the SEC on August 24, 2016 as part of our Current Report on Form 8-K
~~10.04~~10.03	Share Purchase Agreement dated December 27, 2018 by and between Ionix Technology, Inc., Changchun Fangguan Electronics Technology Co., Ltd. and the shareholders of Changchun Fangguan Electronics Technology Co., Ltd.	Filed with the SEC on December 27, 2018 as part of our Current Report on Form 8-K
~~10.05~~10.04	Business Operation Agreement dated December 27, 2018 by and between Changchun Fangguan Photoelectric Display Technology Co., Ltd., Changchun Fangguan Electronics Technology Co., Ltd., Jialin Liang and Xuemei Jiang.	Filed with the SEC on December 27, 2018 as part of our Current Report on Form 8-K
~~10.06~~10.05	Exclusive Technical Support Service Agreement dated December 27, 2018 by and between Changchun Fangguan Photoelectric Display Technology Co., Ltd. and Changchun Fangguan Electronics Technology Co., Ltd.	Filed with the SEC on December 27, 2018 as part of our Current Report on Form 8-K

~~10.07~~10.06

Equity Interest Purchase Agreement dated December 27, 2018 by and between Changchun Fangguan Photoelectric Display Technology Co., Ltd., Changchun Fangguan Electronics Technology Co., Ltd., Jialin Liang and Xuemei Jiang.

Filed with the SEC on December 27, 2018 as part of our Current Report on Form 8-K

~~10.08~~10.07

Equity Interest Pledge Agreement dated December 27, 2018 by and between Changchun Fangguan Photoelectric Display Technology Co., Jialin Liang and Xuemei Jiang

Filed with the SEC on December 27, 2018 as part of our Current Report on Form 8-K

10.08	Compilation of Labrys Securities Purchase Agreement, Self-Amortization Promissory Note and Other Agreements (Filed herewith)	File with SEC on January 5, 2021 as part of our Current Report on Form 8-K
21.1	List of Subsidiaries	Filed ~~with the SEC on September 30, 2019 as part of our Annual Report on Form 10-K~~herewith.
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14	Filed herewith.
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14	Filed herewith.
32.01	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
32.02	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
101.INS*	XBRL Instance Document	Filed herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document	Filed herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

SIGNATURES

~~SIGNATURES~~

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Ionix Technology, Inc.

Date: May ~~15, 2020~~17, 2021	By:	/s/ Cheng Li
	Name:	Cheng Li
	Title:	Chief Executive Officer and Director
	(Principal Executive Officer)

Date: May ~~15, 2020~~17, 2021	By:	/s/ Yue Kou
	Name:	Yue Kou
	Title:	Chief Financial Officer
	(Principal Financial and Principal Accounting Officer)

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

	Ionix Technology, Inc.

Date: May ~~15, 2020~~17, 2021	By:	/s/ Cheng Li
	Name:	Cheng Li
	Title:	Chief Executive Officer, Director
	(Principal Executive Officer)

Date: May ~~15, 2020~~17, 2021	By:	/s/ Yue Kou
	Name:	Yue Kou
	Title:	Chief Financial Officer (Principal
	Financial and Principal Accounting Officer)

Date: May 17, 2021	By:	/s/ Yang Yan
	Name:	Yang Yan
	Title:	President and Treasurer

Date: May ~~15, 2020~~17, 2021	By:	/s/ ~~Yan Yang~~Yubao Liu
	Name: ~~Yan Yang~~ ~~Title: President and Treasurer~~
~~Date: May 15, 2020~~	~~By:~~	/s/ Yubao Liu
	~~Name: Yubao Liu~~ Title:	Director

Date: May ~~15, 2020~~17, 2021

By:

/s/ Jialin Liang

Name:

Jialin Liang

Title:

Director

Date: May ~~15, 2020~~17, 2021

By:

/s/ Xuemei Jiang

Name:

Xuemei Jiang

Title:

Director

Date: May ~~15, 2020~~17, 2021

By:

/s/ ~~Anthony Saviano~~Yongping Wang

Name: ~~Anthony Saviano~~

Yongping Wang

Title:

Independent Director

Date: May ~~15, 2020~~17, 2021

By:

/s/ ~~Hui Zhang~~Yongsheng Fu

Name: ~~Hui Zhang~~

Yongsheng Fu

Title:

Independent Director

Date: May ~~15, 2020~~17, 2021

By:

/s/ ~~Yongsheng Fu~~Zhenyu Wang

Name: ~~Yongsheng Fu~~

Zhenyu Wang

Title:

Independent Director

Date: May ~~15, 2020~~17, 2021

By:

/s/ ~~Zhenyu Wang~~Xiaolin Wei

Name: ~~Zhenyu Wang~~

Xiaolin Wei

Title:

Independent Director

Date: May ~~15, 2020~~17, 2021

By:

/s/ ~~Qinghua Shi~~Liyan Wang

Name: ~~Qinghua Shi~~

LiyanWang

Title:

Independent Director

	Three Months Ended March 31					Nine Months Ended March 31
	2020			2019		2020		2019

Basic weighted average common shares		114,104,735			114,003,000		114,036,665		104,148,985
Effect of potentially dilutive securities
- Warrants		(191,495	)		-		-		-
- Convertible notes		-			-		-		-
Diluted weighted average common shares		113,913,240			114,003,000		114,036,665		104,148,985

	For the Nine Months Ended March 31, 2019
	Fangguan Electronics		Ionix Technology			Pro Forma Adjustments			Pro Forma Combined

Revenues	$	7,722,432	$	7,841,437		$	(1,606,120	)	$	13,957,749
Cost of revenues		6,602,451		6,618,015			(1,173,150	)		12,047,316
Gross profit		1,119,981		1,223,422			(432,970	)		1,910,433
Operating expenses		926,013		844,694			-			1,770,707
Income (loss) from operations		193,968		378,728			(432,970	)		139,726
Other income (expense)		5,155		(34,412	)		-			(29,257	)
Income tax provision		29,972		139,245			-			169,217
Net income (loss)	$	169,151	$	205,071		$	(432,970	)	$	(58,748	)

	Balance as of March 31, 2020		Balance as of June 30, 2019

Cash and cash equivalents	$	1,665,104	$	361,849
Notes receivable		23,721		120,182
Accounts receivable - non-related parties		3,226,121		3,402,986
Inventory		2,432,916		2,916,515
Advances to suppliers - non-related parties		346,160		106,146
Prepaid expenses and other current assets		49,655		63,756
Total Current Assets		7,743,677		6,971,434

Property, plant and equipment, net		6,807,436		7,506,849
Intangible assets, net		1,430,449		1,496,399
Deferred tax assets		45,854		54,361
Total Assets	$	16,027,416	$	16,029,043

Short-term bank loan	$	2,540,543	$	2,618,296
Accounts payable		2,528,657		2,637,039
Advance from customers		31,346		32,372
Due to related parties		1,406,033		1,449,064
Accrued expenses and other current liabilities		89,803		148,287
Total Current Liabilities		6,596,382		6,885,058
Total Liabilities	$	6,596,382	$	6,885,058

	March 31, 2020		June 30, 2019

Operating lease Right-of-use assets	$	20,825	$	-

Operating lease liabilities
Current portion of long-term debt	$	7,646	$	-
Long-term debt		12,462		-
Total operating lease liabilities	$	20,108	$	-