Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Oct. 13, 2021 | Dec. 31, 2020 | |
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Cang Bao Tian Xia International Art Trade Center, Inc. | ||
Entity Central Index Key | 0001006840 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2021 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --06-30 | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 50,448,375 | ||
Entity Common Stock, Shares Outstanding | 110,319,245 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation State Country Name | NV | ||
Entity File Number | 000-31091 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Current assets | ||
Cash and cash equivalents | $ 1,200,060 | $ 2,710,150 |
Accounts receivable, net | 3,364,041 | |
Other receivables, net | 38,266 | 50,152 |
Related party receivable | 1,197,938 | 28,055 |
Inventories | 109,381 | 439,811 |
Advance to suppliers | 9,252,512 | 2,233,063 |
Prepaid taxes | 23,986 | |
Total current assets | 11,798,157 | 8,849,258 |
Non-current assets | ||
Plant and equipment, net | 184,703 | 11,681 |
Intangible assets, net | 239,066 | 319,767 |
Right-of-use assets | 8,220,399 | |
Total non-current assets | 8,644,168 | 331,448 |
Total Assets | 20,442,325 | 9,180,706 |
Current liabilities | ||
Accounts payable | 8,160,433 | 13,284,912 |
Deferred revenues | 121,490 | 180,086 |
Taxes payable | 4,115 | 3,286 |
Accrued liabilities and other payables | 6,873 | 1,300 |
Advance from customers | 17,256,693 | |
Related party payable | 128,793 | 95,045 |
Lease payable-current portion | 3,233,130 | |
Total current liabilities | 28,911,527 | 13,564,629 |
Lease payable- non-current | 4,987,269 | |
Total Liabilities | 33,898,796 | 13,564,629 |
Stockholders' Deficit | ||
Series A Preferred Stock, 10,000,000 shares authorized at $0.001 per share: 9,920,000 shares issued and outstanding as of June 30, 2021 and 2020, respectively | 9,920 | 9,920 |
Common stock, par value $0.001 per share; 500,000,000 shares authorized; 110,319,245 shares issued and outstanding as of June 30, 2021 and 2020, respectively | 110,319 | 110,319 |
Additional paid-in capital | 20,434,840 | 20,434,840 |
Accumulated deficit | (33,499,423) | (25,054,266) |
Accumulated other comprehensive (loss) income | (512,127) | 115,264 |
Total Stockholders' Deficit | (13,456,471) | (4,383,923) |
Total Liabilities and Stockholders' Deficit | $ 20,442,325 | $ 9,180,706 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2021 | Jun. 30, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock share authorized | 10,000,000 | 10,000,000 |
Preferred stock share issued | 9,920,000 | 9,920,000 |
Preferred stock share Outstanding | 9,920,000 | 9,920,000 |
Common stock par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock share authorized | 500,000,000 | 500,000,000 |
Common stock share issued | 110,319,245 | 110,319,245 |
Common stock share outstanding | 110,319,245 | 110,319,245 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Income Statement [Abstract] | ||
Net revenues | $ 1,303,486 | $ 7,153,948 |
Cost of revenues | 1,730,812 | 4,005,174 |
Gross profit | (427,326) | 3,148,774 |
Operating expenses: | ||
Selling and marketing expenses | 4,651,912 | 2,649,541 |
General & administration expenses | 3,029,319 | 2,390,341 |
Total operating expenses | 7,681,231 | 5,039,882 |
Operating loss | (8,108,557) | (1,891,108) |
Other income (expenses): | ||
Interest income | 7,699 | 7,929 |
Interest expense | ||
Other income | 5,544 | 6,050 |
Other expenses | (348,031) | (70,189) |
Total other income (expenses) | (334,788) | (56,210) |
Loss before income taxes | (8,443,345) | (1,947,318) |
Provision for income taxes | 1,812 | 12,696 |
Net loss | (8,445,157) | (1,960,014) |
Other comprehensive income: | ||
Foreign currency translation (loss) gain | (627,391) | 115,264 |
Comprehensive loss | $ (9,072,548) | $ (1,844,750) |
Loss per share per common stock | ||
Basic and diluted | $ (0.08) | $ (0.02) |
Basic and diluted weighted average shares outstanding | 110,319,245 | 110,319,245 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY/(DEFICIENCY) - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Statutory Reserves | Unrestricted | Accumulated Other Comprehensive Income (Loss) | Total |
Balance at Jun. 30, 2019 | $ 9,920 | $ 110,319 | $ 20,434,840 | $ (23,094,252) | $ (2,539,173) | ||
Balance, shares at Jun. 30, 2019 | 9,920,000 | 110,319,245 | |||||
Net loss | (1,960,014) | (1,960,014) | |||||
Foreign currency translation adjustment | 115,264 | 115,264 | |||||
Balance at Jun. 30, 2020 | $ 9,920 | $ 110,319 | 20,434,840 | (25,054,266) | 115,264 | (4,383,923) | |
Balance, shares at Jun. 30, 2020 | 9,920,000 | 110,319,245 | |||||
Net loss | (8,445,157) | (8,445,157) | |||||
Foreign currency translation adjustment | (627,391) | (627,391) | |||||
Balance at Jun. 30, 2021 | $ 9,920 | $ 110,319 | $ 20,434,840 | $ (33,499,423) | $ (512,127) | $ (13,456,471) | |
Balance, shares at Jun. 30, 2021 | 9,920,000 | 110,319,245 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (8,445,157) | $ (1,960,014) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation of plant and equipment | 8,405 | 2,472 |
Amortization of intangible assets | 95,739 | 47,576 |
Accounts receivables | 3,593,579 | (3,364,041) |
Other receivables | 16,273 | (50,152) |
Related party receivable | (1,137,746) | (22,180) |
Inventories | 363,199 | (129,261) |
Prepayments | (6,608,026) | (1,107,794) |
Accounts payable | (6,241,761) | 7,790,515 |
Other payables and accrued liabilities | 11,740 | (1,211,974) |
Customer deposits | 16,747,375 | |
Taxes payable | 501 | 3,286 |
Net cash used in operating activities | (1,595,879) | (1,567) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Sales of intangible assets | 12,812 | 16,809 |
Purchase of equipment | (175,968) | (5,155) |
Net cash (used in) provided by investing activities | (163,156) | 11,654 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from related parties | 33,748 | 78,671 |
Net cash provided by financing activities | 33,748 | 78,671 |
EFFECT OF EXCHANGE RATE ON CASH | 215,197 | (438,545) |
NET DECREASE IN CASH | (1,510,090) | (349,787) |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 2,710,150 | 3,059,937 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 1,200,060 | 2,710,150 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for income tax | 1,812 | 12,696 |
Cash paid for interest |
ORGANIZATION AND BASIS OF ACCOU
ORGANIZATION AND BASIS OF ACCOUNTING | 12 Months Ended |
Jun. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF ACCOUNTING | NOTE 1 – ORGANIZATION AND BASIS OF ACCOUNTING Cang Bao Tian Xia International Art Trade Center, Inc., formerly Zhongchai Machinery, Inc., and before that Equicap, Inc., a Nevada corporation (the “Company”, was a manufacturer and distributor of gears and gearboxes and drive axles that were marketed and sold to equipment manufacturers in China. On July 6, 2007, the Board of Directors of Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”), the China based and 75% owned subsidiary of the Company, approved and finalized a Share Purchase Agreement (“Share Purchase Agreement”) with Xinchang Keyi Machinery Co., Ltd., (“Keyi”) a corporation incorporated in the People’s Republic of China. Pursuant to the Share Purchase Agreement, Zhejiang Zhongchai purchased all the outstanding equity of Zhejiang Shengte Transmission Co., Ltd. (“Shengte”) from Keyi, the sole owner of Shengte for approximately $3.7 million On March 7, 2007, the Company and Usunco Automotive, Ltd. (“Usunco”), a British Virgin Islands company, entered into a Share Exchange Agreement (“Exchange Agreement”) which was consummated on March 9, 2007. Under the terms of the Exchange Agreement, the Company acquired all of the outstanding equity securities of Usunco in exchange for 18,323,944 shares of the Company’s common stock. Since the Company had been a public shell company prior to the share exchange, the share exchange was treated as a recapitalization of the Company. As such, the historical financial information prior to the share exchange was that of Usunco and its subsidiaries. Historical share amounts were restated to reflect the effect of the share exchange. On June 18, 2006, Usunco acquired 100% of IBC Automotive Products Inc (“IBC”), a California Corporation as of May 14, 2004 (date of inception), through a Share Exchange Agreement of 28% of Usunco’s shares. IBC was considered a “predecessor” business to Usunco as its operations constituted the business activities of Usunco formed to consummate the acquisition of IBC. The consolidated financial statements at that time reflected all predecessor statements of income and cash flow activities from the inception of IBC in May 2004. On June 15, 2009, IBC was sold to certain management persons of IBC in exchange for the following: (i) the cancellation of an aggregate of 555,994 shares of common stock of the Company which those individuals owned, and (ii) the payment of $60,000 in installments pursuant to the terms of an unsecured promissory note, the final payment of which was made on November 15, 2010. As part of the transaction, the Company cancelled $428,261 through the closing date, of inter-company debt which funds had been used in the business of IBC prior to the transaction. On September 22, 2009, Xinchang Xian Lisheng Machinery Co., Ltd. (“Lisheng”) was incorporated by Zhejiang Zhongchai and two individual investors. Total registered capital of Lisheng was RMB 5 million, of which Zhejiang Zhongchai accounted for 60%. The Company started production of die casting products in 2010 for use in gearboxes, diesel engines and other machinery products. On December 16, 2009, Zhongchai Machinery and its wholly owned subsidiaries, Usunco and Zhongchai Holding (Hong Kong) Limited, a Hong Kong company (“Zhongchai Holding”), took action to approve transfer of the shares of Zhejiang Zhongchai Machinery Co., from Usunco to Zhongchai Holding. The transfer was completed on December 23, 2009. The purpose of the transfer was to take advantage of the tax treaty between the Peoples Republic of China and the Special Administrative Region of Hong Kong which reduces the withholding tax rate of the PRC on payments to entities outside of China. Usunco, which no longer had any assets after transferring all of them to Zhongchai Holding was subsequently dissolved. The consolidated financial statements continued to account for Zhejiang Zhongchai Machinery Co., in the same manner as before the transfer of the ownership. Shareholder approval by the shareholders of Zhongchai Machinery was not required under Nevada law, as there was no sale of all or substantially all the assets of the Company. The shareholder ownership and shareholder rights of Zhongchai Machinery remained the same as before the transaction. On April 26, 2010, Zhongchai Holding (Hong Kong) Limited (“Zhongchai Holding”), which owned 75% of the equity in Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”), executed a Share Purchase Agreement (“Share Purchase Agreement”) with Xinchang Keyi Machinery Co., Ltd., (“Keyi”) a corporation incorporated in the People’s Republic of China. Pursuant to the Share Purchase Agreement, Zhongchai Holding purchased the residual 25% equity of Zhejiang Zhongchai Machinery Co., Ltd. (“Zhejiang Zhongchai”) from Keyi at $2.6 million. The Share Purchase Agreement was approved by the local government agency and a new business license was issued as Wholly Foreign Owned Enterprise. On July 26, 2011, the Company held a Special Meeting of Shareholders. At the special meeting the Company’s shareholders approved an amendment to cease its periodic reporting obligation under the Securities Exchange Act of 1934 and thereby forego many of the expenses associates with operating as a public company subject to SEC reporting obligations. On July 27, 2011, the Company approved a 1 for 120 reverse stock split of its then outstanding shares of the Company’s Common Stock. On July 29, 2011, the Company terminated its registration as a reporting issuer with the Securities and Exchange Commission. As a result, it became unclear when and if the Company ceased conducting business operations, as no further information became publicly available. On May 11, 2018, the eighth judicial District Court of Nevada appointed Custodian Ventures, LLC as custodian for the Company, then known as Zhongchai Machinery, Inc., proper notice having been given to the officers and directors of Zhongchai Machinery, Inc. There was no opposition. On May 16, 2018, the Company filed a certificate of revival with the State of Nevada, appointing David Lazar as, President, Secretary, Treasurer and Director. On June 19, 2018, the Company issued 3,096,200 shares of common stock issued at par value of $0.001, to Custodian Ventures, LLC, for services valued at $3,096.20. On June 19, 2018, the Company issued 10,000,000 shares of Series A Preferred Stock issued at par value of $0.001, to Custodian Ventures, LLC, for services valued at $4,000,000. On July 24, 2018, the Company filed a Form 10 with the Securities and Exchange Commission, to again become a reporting issuer. On December 16, 2018, Custodian Ventures LLC (the “Seller”), entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) pursuant to which the Seller agreed to sell to Xingtao Zhou and Yaqin Fu (together, the “Purchaser”), the 3,096,200 common shares and the 10,000,000 preferred shares of the Company (together, the “Shares”) owned by the Seller, for a total purchase price of $375,000. As a result of the sale, and David Lazar’s resignation as sole officer and director of the Company, there was a change of control of the Company. There is no family relationship or other relationship between the Seller and the Purchaser. On January 08, 2019, the corporate name of the Company was changed to Cang Bao Tian Xia International Art Trade Center, Inc., and shortly thereafter the Company’s trading symbol was changed to TXCB. On July 27, 2020 (the “Closing Date”), and as reported in the Company’s Form 8-K filed with the SEC on that same date, we entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among (i) the Company, (ii) Zhi Yuan Limited, a Cayman Islands company (“Cayman Company”), and (iii) the three beneficial shareholders of Cayman Company (each, a “Cayman Company Shareholder” and collectively, the “Cayman Company Shareholders”). Pursuant to the terms of the Exchange Agreement, the Cayman Company Shareholders agreed to sell to Cang Bao, and Cang Bao agreed to purchase, all shares of Cayman Company held by them, which shares represent 100% of the issued and outstanding shares of Cayman Company. In exchange, Cang Bao agreed to issue to the Cayman Company Shareholders an aggregate of 75,000,000 shares of Cang Bao common stock, representing approximately 67.98% of Cang Bao’s total issued and outstanding common stock (the “Share Exchange”). Our directors approved the Exchange Agreement and the transactions contemplated thereby. Simultaneously, the directors of Cayman Company also approved the Exchange Agreement and the transactions contemplated thereby. The Share Exchange closed on July 27, 2020. Both Yaqin Fu, who is the wife of one of our directors, and Mr. Xingtao Zhou, our President, Chief Executive Officer, Chief Financial Officer, Chairman of the Board and principal shareholder, were Cayman Company Shareholders who exchanged their Cayman Company shares for shares of the Company. After giving effect to the Share Exchange, Mr. Zhou owns 59,839,271 shares of our common stock, which represents 54.24% of our outstanding common stock, and 100% of our issued and outstanding preferred shares. As a result of the Share Exchange, Cayman Company became our wholly owned subsidiary and we are its public holding company. After giving effect to the Share Exchange, the Company acquired 100% of the assets and operations of Cayman Company and its subsidiaries, the business and operations of which now constitutes our primary business and operations. After giving effect to the Share Exchange, we own 100% of the issued and outstanding shares of capital stock of Cayman Company. Cayman Company is a holding company that owns Cangyun (Hong Kong) Limited (“Hong Kong Company”), which in turn owns and controls Shanghai Cangyun Management Consulting Co., Ltd. (“Management Consulting”), which has entered into contractual agreements to control Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan”) and Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd. (“Tianxia Cultural Relic,” and together with Hainan, the “Target Companies” or “VIEs”). The Exchange Agreement contains customary representations, warranties, covenants and conditions for a transaction of this type for the benefit of the parties. For federal income tax purposes, it is intended that the Share Exchange qualify as a reorganization under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”). However, we did not obtain any tax opinion and there can be no assurance that our intent that the Share Exchange qualify as a reorganization under the provisions of Section 368(a) of the Code is correct. Cayman Company is considered the acquirer for accounting and financial reporting purposes. The assets and liabilities of Cayman Company have been brought forward at their book value and no goodwill has been recognized. As a result of the acquisition of all the issued and outstanding shares of Cayman Company, we have now assumed Cayman Company’s business operations as our own. Immediately prior to the closing of the Share Exchange described above pursuant to which Cayman Company became a wholly owned subsidiary of the Company, the Company was a “shell company,” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a result of the Share Exchange, we are no longer a “shell company.” The Share Exchange was accounted as a business combination under common control, in which all of the combining entities or businesses are ultimately controlled by the same party or parties, both before and after the business combination, and that control is not transitory. The business combination under common control of accounting is based on the historical consolidated financial statements of the Company and Cayman Company. In accordance with ASC 805-50-45-5, for transactions between entities under common control, financial statements and financial information presented for prior periods have been retroactively adjusted to furnish comparative information. Zhi Yuan Limited (“Zhi Yuan”) was incorporated on April 15, 2019 under the laws of the Cayman Islands as a holding company. On May 22, 2019, ZhiYuan incorporated a wholly owned subsidiary Cang Yun (Hong Kong) Limited (“Cang Yun HK”) in Hong Kong. On July 30, 2019, Cang Yun HK incorporated a wholly foreign owned enterprise (“WFOE”) Shanghai Cangyun Management Consulting Co., Ltd. (“Shanghai Cangyun”) in Shanghai, China. On August 8, 2019, Shanghai Cangyun entered into a series of Variable Interest Entity (“VIE”) agreements with the owners of Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan Cangbao”) and Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd. (“Shanghai Cangbao”). Pursuant to the VIE agreements, Hainan Cangbao and Shanghai Cangbao became Shanghai Cangyun’s contractually controlled affiliate. The purpose and effect of the VIE Agreements is to provide Shanghai Cangyun with all management control and net profits earned by Hainan Cangbao and Shanghai Cangbao. Hainan Cangbao was incorporated on May 30, 2018 and Shanghai Cangbao was incorporated on June 28, 2019. The entities operate an online and offline cultural exchange service platform, through which dedicated to create industry standards for art investment and creating a model of online art exchanges and transactions, which allows collectors, artists, art dealers and owners to access a much larger art trading market, allowing them to engage with a wide range of collectibles or artwork investors. Upon executing a series of VIE agreements, Hainan Cangbao and Shanghai Cangbao are considered Variable Interest entities (“VIE”) and Shanghai Cangbao is the primary beneficiary. Accordingly, Hainan Cangbao and Shanghai Cangbao are consolidated under the guidance of FASB Accounting Standards Codification (“ASC”) 810, Consolidation. Cang Bao Tian Xia International Art Trade Center, Inc. and its consolidated subsidiaries and VIE are collectively referred to herein as the “Company” unless specific reference is made to an entity. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying audited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). This basis of accounting differs in certain material respects from that used for the preparation of the books of Hainan Cangbao and Shanghai Cangbao, which are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises with limited liabilities established in the PRC (“PRC GAAP”), the accounting standards used in the places of their domicile. The accompanying audited consolidated financial statements reflect necessary adjustments not recorded in the books of Hainan Cangbao and Shanghai Cangbao to present them in conformity with U.S. GAAP. Principals of Consolidation The audited consolidated financial statements include the accounts of the Company, its wholly and majority owned subsidiaries, and consolidated VIE and its subsidiaries for which the Company is the primary beneficiary. All transactions and balances among the Company, its subsidiaries and consolidated VIE have been eliminated upon consolidation. The accompanying audited consolidated financial statements of Cang Bao Tian Xia International Art Trade Center, Inc. reflect the activities of the following entities: Name Background Ownership Cang Bao Tian Xia International Art Trade Center, Inc.(“Cang Bao”) · A holding company · A Nevada company Zhi Yuan Limited (“Zhi Yuan”) · A Cayman Island company · Incorporated on April 15, 2019 100% owned by Cang Bao Cang Yun (Hong Kong) Limited (“Cang Yun HK”) · A Hong Kong company · Incorporated on May 22, 2019 · A holding company 100% owned by Zhi Yuan Shanghai Cangyun Management Consulting Co., Ltd. (“Shanghai Cangyun”) · A PRC company and deemed a wholly foreign owned enterprise · Incorporated on July 30, 2019 · Subscribed capital of $10,000 · A holding company 100% owned by Cang Yun HK Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan Cangbao”) · A PRC limited liability company · Incorporated on May 30, 2018 · Subscribed capital of $1,454,491 (RMB 10,000,000) · Operate online and offline cultural exchange service platform VIE of Shanghai Cangyun WFOE Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd. (“Shanghai Cangbao”) · A PRC limited liability company · Incorporated on May 30, 2018 · Subscribed capital of $4,799,821 (RMB 33,000,000) · Operate online and offline cultural exchange service platform VIE of Shanghai Cangyun WFO VIE Agreements with Shanghai Cangyun Under the laws and regulations of the PRC, foreign persons and foreign companies are restricted from investing directly in certain businesses within the PRC. As such, Hainan Cangbao and Shanghai Cangbao are controlled through VIE Arrangements in lieu of direct equity ownership. Such VIE arrangements consist of a series of four agreements (collectively, the “VIE Arrangements”), which were signed on August 8, 2019. The significant terms of the VIE Arrangements are as follows: Exclusive Management Consultation Service Agreement Pursuant to the Exclusive Management Consultation Service Agreement between Management Consulting and Hainan Cangbao Tianxia Cultural Relic Co., Ltd. and Cangbao Tianxia (Shanghai) Cultural Relic Co. (the “Target Companies” or “VIEs”), dated August 8, 2019, Management Consulting has the exclusive right to provide consultation and services to the Target Companies in the areas of funding, human resources, technology and intellectual property rights. For such services, the Target Companies have agreed to pay service fees in the amount of 100% of their net income and also have the obligation to absorb 100% of their own losses. Management Consulting exclusively owns any intellectual property rights arising from the performance of this Management Consultation Service Agreement. The Management Consultation Service Agreement terminates at the same time as the Equity Pledge Agreement, described in the next paragraph. Equity Pledge Agreement Pursuant to those Equity Pledge Agreement dated August 8, 2019, among Management Consulting, the Target Companies, the Target Companies’ shareholders, who are our CEO Mr. Zhou, Yaqin Fu (the wife of Liang Tan, a director of the Company), and Wei Wang (collectively, the “Pledgors”), each of three persons pledged all of their equity interests in the Target Companies to Management Consulting to guarantee the Target Companies’ performance of relevant obligations and indebtedness under the Management Consultation Service Agreement and the other control agreements (collectively, the “Control Agreements”). If the Pledgors breach their obligations under the Control Agreements, Management Consulting, as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interests in order to recover the damages associated with such breaches. The Pledgors’ obligations shall be continuously valid until all of the Pledgors are no longer shareholders of the Target Companies, or until the satisfaction of all of the Pledgors’ obligations under the Control Agreements. Call Option Agreement Pursuant to the Call Option Agreement among Management Consulting, the Target Companies and the Pledgors, dated August 8, 2019, Management Consulting has the exclusive right to require that the Pledgors fulfill and complete all approval and registration procedures required under PRC laws for Management Consulting to purchase, or designate one or more persons to purchase, such shareholders’ equity interests in the Target Companies , in one or multiple transactions, at any time or from time to time, at Management Consulting’s sole and absolute discretion. The purchase price shall be the lowest price allowed by PRC laws. The Equity Option Agreements shall remain effective until all the equity interests in the Target Companies owned by the Pledgors have been legally transferred to Management Consulting or its designee(s). Proxy Agreement Pursuant to the Proxy Agreement among Management Consulting, the Pledgors and the Target Companies, dated August 8, 2019, the Pledgors irrevocably appointed Management Consulting or Management Consulting’s designee to exercise all of their rights as a shareholder of the Target Companies, including but not limited to the power to exercise all such shareholder’s voting rights with respect to all matters to be discussed and voted in shareholder meetings of the Target Companies. The Proxy Agreement remains effective until all equity interests in the Target Companies owned by the Pledgors have been legally transferred to Management Consulting or its designee(s). Based on the foregoing VIE Arrangements, Shanghai Cangyun deemed to have effective control over Hainan Cangbao and Shanghai Cangbao, which enables Shanghai Cangyun to receive all of their expected residual returns and absorb the expected losses of the VIE, and Shanghai Cangyun is deemed the primary beneficiary of Hainan Cangbao and Shanghai Cangbao. The reorganization through VIE above are accounted as a transaction of entities under common control for accounting purposes where the shareholder of Hainan Cangbao and Shanghai Cangbao are the controlling shareholder of Cang Bao before and after the reorganization. Accordingly, the accompanying consolidated financial statements have been prepared as if the current corporate structure had been in existence throughout the periods presented. The carrying amount of the VIE’s assets and liabilities are as follows: June 30, June 30, 2021 2020 Current assets $ 11,850,943 $ 9,188,265 Plants and equipment, intangible assets 423,769 331,448 Other noncurrent assets 8,220,399 - Total assets 20,495,111 9,519,713 Current liabilities 28,819,519 13,792,591 Non-current liabilities 4,987,269 - Total liabilities 33,806,788 13,792,591 Net assets $ (13,311,677 ) $ (4,272,878 ) June 30, June 30, 2021 2020 Accounts payable $ 8,076,065 $ 13,212,544 Other payables and accrued liabilities 249,516 576,761 Tax payables 4,115 3,286 Customer advances 17,256,693 - Lease liabilities 3,233,130 - Total current liabilities 28,819,519 13,792,591 Lease liabilities - noncurrent 4,987,269 - Total liabilities $ 33,806,788 $ 13,792,591 The summarized operating results of the VIE’s are as follows: For the Operating revenues $ 1,645,126 Gross profit (1,430,284 ) Loss from operations (8,409,597 ) Net loss $ (8,411,409 ) Foreign Currency Translation The accompanying audited consolidated financial statements are presented in United States dollar (“$”), which is the reporting currency of the Company. The functional currency of Cang Bao, Cayman Company and Hongkong Company is United States dollar. The functional currency of the Company’s subsidiaries and VIEs located in the PRC is Renminbi (“RMB”). For the entities whose functional currencies are RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income. Transaction gains and losses are reflected in the consolidated statements of income. 2021 2020 Year-end RMB: US$ exchange rate 6.4601 7.0795 Annual average RMB: US$ exchange rate 6.6273 7.0198 Year-end HKD:US$ exchange rate 7.7638 7.7504 Annual average HKD:US$ exchange rate 7.7558 7.7937 The RMB is not freely convertible into foreign currencies and all foreign exchange transactions must be conducted through authorized financial institutions. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for doubtful accounts, income taxes including the valuation allowance for deferred tax assets. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed, and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. Cash and Cash Equivalents Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid instruments with original maturities of three months or less. Inventories Inventories, mainly consisting of stock items prepared as gifts for the member customers and multi-functional demonstration machine, are stated at the lower of cost or net realizable value utilizing the weighted average method. Cost includes all costs of purchase, cost of conversion and other costs incurred to bring the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion of the service and the estimated costs necessary to delivering the service. The valuation of inventory requires the Company to estimate excess and slow-moving inventories. The Company evaluates the recoverability of the inventory based on expected demand and market conditions of art trading service. Impairment of Long-Lived Assets The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial position. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. Plant and Equipment Plant and equipment consist of computer, office furniture and equipment, and leasehold improvement. All plant and equipment are stated at historical cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred. Plant and equipment are depreciated on a straight-line basis over the following periods: Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Electronic equipment 3-5 years Furniture and Fixture 5 years Motor vehicles 4 years Computer software 5 years Leasehold improvements 5 years Fair Value of Financial Instruments The Company adopted ASC 820 “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measures. Current assets and current liabilities qualified as financial instruments and management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their current interest rate is equivalent to interest rates currently available. The three levels are defined as follow: Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value. As of the balance sheet date, the estimated fair values of the financial instruments approximated their fair values due to the short-term nature of these instruments. The Company evaluates the hierarchy disclosures each year to determine which category an asset or liability falls within the hierarchy. Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The initial measurement of the right-of-use asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Revenue Recognition The Company adopted ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes. The Company operates an online and offline cultural service platform, through which dedicated to create industry standards for art investment and creating a model of online art exchanges and transactions, which allows collectors, artists, art dealers and owners to access a much larger art trading market, allowing them to engage with a wide range of collectibles or artwork investors. The service includes trading facilitation, appraisal of treasures, consignment of artworks, storage of artworks and all-in-one advertising service, etc. The Company derives its revenues from (1) platform membership service fee for member customers and (2) trading commission income, and (3) sales of all-in-one demonstration machine. Membership service income The Company recognizes membership fee revenue as the performance obligations are satisfied over time, usually, recognized on an average over the life of membership. The general contract terms of membership service include timeframe of the service, pricing and payment terms, rights and obligations of parties, performance test criteria, and liability for breach of contract. Payments received in advance from customers are recorded as “advance from customers” in the audited consolidated balance sheets. Advance from customers is recognized as revenue over the passage of time. Such advance payment received are non-refundable. The cost of revenue consists primarily of platform maintenance expenses which are directly attributable to the membership fee revenue, including but not limited to service charges for cloud computing, items prepared as gifts for the member, Artwork Trading Service commission income Artwork trading service commission income includes commission from artwork price guarantee service, and artwork ownership transfer facilitate service through the online platform. The Company charges both the buyer and the seller a commission based on the artwork trading amount. The revenue is derived from contracts with customers, which primarily include payment terms, rights and obligations of parties, acceptance criteria, and liability for breach of contract. The Company’s sales arrangements do not contain variable consideration. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied and the related artworks transactions has been successfully completed. Sales of multi-functional demonstration machine and tablets The Company recognizes revenue when the transaction price is allocated to the performance obligations identified in the contracts or agreements with customer upon the delivery of multi-functional demonstration machine has completed. The Company did not recognize any trading commission income for the year ended June 30, 2021 and 2020. Advertising Expenses Advertising costs, mainly including promotion expense for the APP launching, are expensed as incurred and the total amounts charged to “selling and marketing expenses” in the audited consolidated statements of income and comprehensive loss were $2,845,139 and $499,954 for the year ended June 30, 2021 and 2020, respectively. Shipping and handling All outbound shipping and handling costs are expensed as incurred. New Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides an exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The standard is effective for the Company for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In February 2020, the FASB issued ASU 2020-02, “Financial Instruments – Credit Losses (Topic 326) and Leases (topic 842) Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (topic 842)”. This ASU provides guidance regarding methodologies, documentation, and internal controls related to expected credit losses. This ASU is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in this Update modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential impacts of ASU 2018-13 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The guidance supersedes existing guidance on accounting for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. For operating leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the guidance is permitted. In transition, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company adopted ASU 2016-02 on July 1, 2019 and recognize operating lease liabilities with corresponding right of use (“ROU”) assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases with a term longer than 12 months. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material impact on its the consolidated financial position, statements of operations and cash flows. |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Jun. 30, 2021 | |
Going Concern | |
GOING CONCERN | NOTE 3 – GOING CONCERN The accompanying audited consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, the Company has incurred a net loss of $8,445,157 for the year ended June 30, 2021. As of June 30, 2021, the Company had an accumulated deficit of $33,499,423, working capital deficit of $17,113,370. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking third party equity and/or debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
ACCOUNT RECEIVABLES
ACCOUNT RECEIVABLES | 12 Months Ended |
Jun. 30, 2021 | |
Credit Loss [Abstract] | |
ACCOUNT RECEIVABLES | NOTE 4 – ACCOUNT RECEIVABLES June 30, June 30, 2021 2020 Account receivables $ - $ 3,364,041 Less: allowance for doubtful accounts - - Total, net $ - $ 3,364,041 |
INVENTORY
INVENTORY | 12 Months Ended |
Jun. 30, 2021 | |
Inventory Disclosure [Abstract] | |
INVENTORY | NOTE 5 – INVENTORY Inventory consisted of the following: June 30, June 30, 2021 2020 Finished goods $ 109,381 $ 439,811 Less: allowance for obsolete inventory - - Total, net $ 109,381 $ 439,811 Inventory consists of gifts for members and multi-functional demonstration machine. Obsolete inventory amounted to $Nil and $Nil for the year ended June 30, 2021 and 2020. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 6 – INTANGIBLE ASSETS Intangible assets consisted of the following: June 30 June 30, 2021 2020 Membership management system $ 466,322 $ 437,516 Accounting system 1,712 1,562 468,034 439,078 Less: Accumulated amortization (228,968 ) (119,311 ) Total, net $ 239,066 $ 319,767 Amortization expense amounted to $95,739 and $47,576 for the year ended June 30, 2021 and 2020, respectively. The membership management system was acquired from Guangdong Cangbaotianxia Art Co., Ltd, a related party of the Company on March 31, 2019. |
PLANT & EQUIPMENT
PLANT & EQUIPMENT | 12 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
PLANT & EQUIPMENT | NOTE 7 – PLANT & EQUIPMENT Plant and equipment, net, is consisted of the following: June 30, 2021 June 30, 2020 Furniture and fixtures $ 18,257 $ 16,659 Automobile 180,523 198,780 16,659 Less: Accumulate depreciation (14,077 ) (4,978 ) Total, net $ 184,703 $ 11,681 Depreciation expenses was $8,405 and $2,472 for the year ended June 30, 2021 and 2020, respectively. |
ADVANCE TO SUPPLIERS
ADVANCE TO SUPPLIERS | 12 Months Ended |
Jun. 30, 2021 | |
Notes to Financial Statements | |
ADVANCE TO SUPPLIERS | NOTE 8 - ADVANCE TO SUPPLIERS Advance to suppliers consisted of the following: June 30, June 30, 2021 2020 Multimedia tablets $ 5,228,488 $ - Marketing services 3,652,262 1,384,437 Gifts for members 139,549 380,307 Others 232,213 468,319 Total, net $ 9,252,512 $ 2,233,063 The Company is required to make advance payments to the suppliers for the customized multimedia tablets to be manufactured and for firmware updates and maintenance services covering a period of three years to be provided by the supplier. According to the agreement, the remaining balance is due upon delivery of the tablets, and the advances are non-refundable while only defective goods can be exchanged. |
ADVANCE FROM CUSTOMERS
ADVANCE FROM CUSTOMERS | 12 Months Ended |
Jun. 30, 2021 | |
Notes to Financial Statements | |
ADVANCE FROM CUSTOMERS | NOTE 9 – ADVANCE FROM CUSTOMERS Advance from customers consisted of the following: June 30, 2021 June 30, 2020 Multimedia demonstration machines $ - $ - Multimedia tablets 17,256,693 - Total, net $ 17,256,693 $ - The Company collects payments in advance for multimedia tablets. Such advances are partially refundable prior to delivery of goods and defective goods can be exchanged for replacement. Such advances may be recognized as revenues when the goods are delivered to and accepted by customers. |
REVENUE AND COST OF REVENUE
REVENUE AND COST OF REVENUE | 12 Months Ended |
Jun. 30, 2021 | |
Notes to Financial Statements | |
REVENUE AND COST OF REVENUE | NOTE 10 – REVENUE AND COST OF REVENUE June 30, June 30, 2021 2020 Revenue Membership service income $ 455,957 $ 6,470,168 Multimedia tablets 847,529 683,780 1,303,486 7,153,948 Cost of revenue Membership service income 214,842 3,633,369 Multimedia tablets 1,515,970 371,805 1,730,812 4,005,174 Gross profit $ (427,326 ) $ 3,148,774 |
LEASE
LEASE | 12 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
LEASE | NOTE 11 – LEASE The Company has operating leases for multimedia tablets which the Company sublease to customers. These leases have remaining lease terms of 1 year to 3 years. The Company has elected to not recognize lease assets and liabilities for leases with a term less than twelve months. Operating lease right-of-use assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is incremental borrowing rate or, if available, the rate implicit in the lease. The Company determines the incremental borrowing rate for each lease based primarily on its lease term in PRC which is approximately 4.75%. Operating lease expenses were $1,499,902 and $Nil for the year ended June 30, 2021 and 2020, respectively. The future minimum lease payment schedule as follows: As of June 30, 2022 $ 3,233,130 2023 3,233,130 2024 1,643,681 2025 110,458 Thereafter - Total $ 8,220,399 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12 – RELATED PARTY TRANSACTIONS The related parties consisted of the following: Name of related party Nature of relationship Mr. Xingtao Zhou Majority shareholder of the Company Guangdong Cangbaotianxia Art Co., Ltd A Company with significant influence Xi 'an Cangbaotianxia Art Co., Ltd A Company with significant influence Related party sale and Account receivable - related parties During the year ended June 30, 2021, the Company made sales of $92,878 to Guangdong Cangbaotianxia Art Co., Ltd. As of June 30, 2021 and 2020, the outstanding balance of accounts receivable - related parties was $92,878 and $0, respectively. During the year ended June 30, 2021, the Company made sales of $21,486 to Xi 'an Cangbaotianxia Art Co., Ltd. As of June 30, 2021 and 2020, the outstanding balance of accounts receivable - related parties was $21,486 and $0, respectively. Due to related parties During the year ended June 30, 2021, the Company received $33,748 in advance from Mr. Xingtao Zhou. As of June 30, 2021 and 2020, the outstanding balance payable to Mr. Xingtao Zhou was $128,793 and $95,045 respectively. Due from related parties During the year ended June 30, 2021, the Company paid $1,083,575 to Mr. Xingtao Zhou. As of June 30, 2021 and 2020, the balance receivable from Mr. Xingtao Zhou was $1,083,575 and $28,055 respectively. The amount is due on demand and non-interest bearing without any formal agreement. |
EQUITY
EQUITY | 12 Months Ended |
Jun. 30, 2021 | |
Equity [Abstract] | |
EQUITY | NOTE 13 – EQUITY Preferred Stock The Company is authorized to issue 10,000,000 shares of $.001 par value preferred shares. On June 19, 2018, the Company created 10,000,000 shares of Series A Preferred Stock, out of the 10,000,000 shares that were already authorized. On that same date, the Company issued 10,000,000 shares of the Series A preferred stock to Custodian Ventures LLC, the company controlled by David Lazar, Chief Executive Officer for services valued at $4,000,000. The following is a description of the material rights of our Series A Preferred Stock: Each share of Series A Preferred Stock shall have a par value of $0.001 per share. The Series A Preferred Stock shall vote on any matter that may from time to time be submitted to the Company’s shareholders for a vote, on a 1 for one basis. If the Company effects a stock split which either increases or decreases the number of shares of Common Stock outstanding and entitled to vote, the voting rights of the Series A shall not be subject to adjustment unless specifically authorized. Each share of Series A Preferred Stock shall be convertible at a rate of $0.0000025 per share of Common Stock (“Conversion Ratio”), at the option of a Holder, at any time and from time to time, from and after the issuance of the Series A Preferred Stock. Subject to the rights of any existing series of Preferred Stock or to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the holders of shares of Series A Preferred Stock shall be entitled to receive dividends, out of any assets legally available therefor, upon any payment of any dividend (payable other than in Common Stock or other securities and rights convertible into or entitling the holder thereof to receive, directly or indirectly, additional shares of Common Stock of the Corporation) on the Common Stock of the Corporation, as and if declared by the Board of Directors, as if the Series A Preferred Stock had been converted into Common Stock. Subject to the rights of any existing series of Preferred Stock or to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the payment of any dividends on the any series or classes of stock of the Corporation shall be subject to any priority set forth in Paragraph (I)(c)(3) of Article FIFTH of the Articles of Incorporation, as such may from time to time be amended. In the event of any liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, subject to the rights of any existing series of Preferred Stock or to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Corporation to the holders of Common Stock by reason of their ownership thereof, an amount per share equal to the price per share actually paid to the Corporation upon the initial issuance of the Series A Preferred Stock (each, the “the Original Issue Price”) for each share of Series A Preferred Stock then held by them, plus declared but unpaid dividends. Unless the Corporation can establish a different Original Issue Price in connection with a particular sale of Series A Preferred Stock, the Original issue price shall be $0.001 per share for the Series A Preferred Stock. If, upon the occurrence of any liquidation, dissolution or winding up of the Corporation, the assets and funds thus distributed among the holders of the Series A Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid preferential amounts, then, subject to the rights of any existing series of Preferred Stock or to the rights of any series of Preferred Stock which may from time to time hereafter come into existence, the entire assets and funds of the corporation legally available for distribution shall be distributed ratably among the holders of the each series of Preferred Stock in proportion to the preferential amount each such holder is otherwise entitled to receive. The Series A Preferred Stock shares are nonredeemable other than upon the mutual agreement of the Company and the holder of shares to be redeemed, and even in such case only to the extent permitted by this Certificate of Designation, the Corporation’s Articles of Incorporation and applicable law. Series A Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for such stock, into such number of fully paid and nonassessable shares of Common Stock as is determined by dividing the Original Issue Price of the Series A Preferred Stock by the Series A Conversion Price applicable to such share, determined as hereafter provided, in effect on the date the certificate is surrendered for conversion. The initial Series A Conversion Price per share shall be $0.0000025 for shares of Series A Preferred Stock. Each share of Series A Preferred Stock shall automatically be converted into shares of Common Stock at the applicable Series A Conversion Price in effect for such share immediately upon the earlier of (i) except as provided below in Section 4(c), the Corporation’s sale of its Common Stock in a public offering pursuant to a registration statement under the Securities Act of 1933, as amended; (ii) a liquidation, dissolution or winding up of the Corporation as defined in section 2(c) above but subject to any liquidation preference required by section 2(a) above; or (iii) the date specified by written consent or agreement of the holders of a majority of the then outstanding shares of Series A Preferred Stock. The holder of each share of Series A Preferred Stock shall have the right to one vote for each share of Series A Preferred Stock, and with respect to such vote, such holder shall have full voting rights and powers equal to the voting rights and powers of the holders of Common Stock, and shall be entitled to notice of any stockholders’ meeting in accordance with the bylaws of the Corporation, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote. Fractional votes shall not, however, be permitted and any fractional voting rights shall be rounded to the nearest whole number (with one-half being rounded upward). On February 14, 2019, the Company issued 32,000,000 common shares to shareholders pursuant to the conversion of 80,000 shares of Series A Preferred Stock at a conversion price of $0.0000025 per common share. As of June 30, 2021, 9,920,000 preferred shares remain outstanding, which are owned by Xingtao Zhou, CEO. Common Stock On June 19, 2018, the Company issued 3,096,200 shares of common stock issued at par value of $0.001, for services valued at $3,096 to Custodian Ventures, LLC, the company controlled by David Lazar. On February 14, 2019, the Company issued 32,000,000 common shares to shareholders pursuant to the conversion of 80,000 shares of Series A Preferred Stock at a conversion price of $0.0000025 per common share. On July 27, 2020 (the “Closing Date”), Cang Bao entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among (i) Cang Bao, (ii) Zhi Yuan Limited, a Cayman Islands company (“Cayman Company”), and (iii) the three beneficial shareholders of Cayman Company (each, a “Cayman Company Shareholder” and collectively, the “Cayman Company Shareholders”) Pursuant to the terms of the Exchange Agreement, the Cayman Company Shareholders agreed to sell to Cang Bao, and Cang Bao agreed to purchase, all shares of Cayman Company held by them, which shares represent 100% of the issued and outstanding shares of Cayman Company. In exchange, Cang Bao agreed to issue to the Cayman Company Shareholders an aggregate of 75,000,000 shares of common stock, representing approximately 67.98% of Cang Bao’s total issued and outstanding common stock (the “Share Exchange”). As of June 30, 2021, 110,319,245 common shares are issued and outstanding with a par value of 0.001. Restricted net assets The Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from its subsidiary or VIE. Relevant PRC statutory laws and regulations permit payments of dividends by Shanghai Cangyun, Hainan Cangbao, and Shanghai Cangbao only out of its retained earnings, if any, as determined in accordance with PRC accounting standards and regulations and after it has met the PRC requirements for appropriation to statutory reserves. Paid in capital of the PRC subsidiary and VIE and VIE’s subsidiaries included in the Company’s consolidated net assets are also non-distributable for dividend purposes. The results of operations reflected in the accompanying consolidated financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of Shanghai Cangyun, Hainan Cangbao, and Shanghai Cangbao. The Company is required to set aside at least 10% of their after-tax profits each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In addition, the Company may allocate a portion of its after-tax profits based on PRC accounting standards to enterprise expansion fund and staff bonus and welfare fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. The ability of the Company’s PRC subsidiary and VIE and VIE’s subsidiaries to make dividends and other payments to the Company may also be restricted by changes in applicable foreign exchange and other laws and regulations. Foreign currency exchange regulation in China is primarily governed by the following rules: ● Foreign Exchange Administration Rules (1996), as amended in August 2008, or the Exchange Rules; ● Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or the Administration Rules. Currently, under the Administration Rules, Renminbi is freely convertible for current account items, including the distribution of dividends, interest payments, trade and service related foreign exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities outside of China, unless the prior approval of the State Administration of Foreign Exchange (the “SAFE”) is obtained and prior registration with the SAFE is made. Foreign-invested enterprises like Rise King WFOE that need foreign exchange for the distribution of profits to its shareholders may affect payment from their foreign exchange accounts or purchase and pay foreign exchange rates at the designated foreign exchange banks to their foreign shareholders by producing board resolutions for such profit distribution. Based on their needs, foreign-invested enterprises are permitted to open foreign exchange settlement accounts for current account receipts and payments of foreign exchange along with specialized accounts for capital account receipts and payments of foreign exchange at certain designated foreign exchange banks. Although the current Exchange Rules allow the convertibility of Chinese Renminbi into foreign currency for current account items, conversion of Chinese Renminbi into foreign exchange for capital items, such as foreign direct investment, loans or securities, requires the approval of SAFE, which is under the authority of the People’s Bank of China. These approvals, however, do not guarantee the availability of foreign currency conversion. The Company cannot be sure that it will be able to obtain all required conversion approvals for its operations or the Chinese regulatory authorities will not impose greater restrictions on the convertibility of Chinese Renminbi in the future. Currently, most of the Company’s retained earnings are generated in Renminbi. Any future restrictions on currency exchanges may limit the Company’s ability to use its retained earnings generated in Renminbi to make dividends or other payments in U.S. dollars or fund possible business activities outside China. The Company’s VIE and its subsidiaries in Renminbi included in the Company’ consolidated net assets, aside from statutory reserve funds, that may be affected by increased restrictions on currency exchanges in the future and accordingly may further limit the Company’s PRC subsidiary and VIE and VIE’s subsidiaries’ ability to make dividends or other payments in U.S. dollars to the Company, in addition to restricted net assets as discussed above. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jun. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 14 – INCOME TAXES United States of America Cang Bao Tian Xia International Art Trade Center Inc is incorporated in the State of Nevada and is subject to Nevada and US Federal tax laws. Cang Bao has not recognized an income tax benefit for its operating losses based on uncertainties concerning its ability to generate taxable in future period. The components of deferred tax assets and liabilities as follows: June 30, 2021 June 30, 2020 Deferred tax asset Net operating losses carry forwards $ 33,748 $ 84,539 Valuation allowance (33,748 ) (84,539 ) Deferred tax asset, net $ - $ - Cayman Islands Under the current laws of Cayman Islands, Zhi Yuan Limited is not subject to tax on income or capital gain. In addition, payments of dividends by the Company to their shareholders are not subject to withholding tax in the Cayman Islands. Hong Kong Cang Yun (Hong Kong) Limited was incorporated under the Hong Kong tax laws, and the statutory income tax rate was 16.5%. Cang Yun (Hong Kong) Limited has no operating profit or tax liabilities as of June 30, 2021 and 2020. China, PRC Shanghai Cangyun Management Consulting Co.,Ltd., Hainan Cangbao Tianxia Cultural Relic Co., Ltd. and Cangbao Tianxia (Shanghai) Cultural Relic Co.,Ltd. were incorporated in the PRC and are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. On March 16, 2007, the National People’s Congress enacted a new enterprise income tax law, which took effect on January 1, 2008. The law applies a uniform 25% enterprise income tax rate to both foreign invested enterprises and domestic enterprises. The Company has not recognized an income tax benefit for its operating losses based on uncertainties concerning its ability to generate taxable income in future periods. The components of deferred tax assets and liabilities as follows: June 30, 2021 June 30, 2020 Net operating losses carry forwards $ 8,411,409 $ 1,875,475 Valuation allowance (8,411,409 ) (1,875,475 ) Deferred tax asset, net $ - $ - Accounting for Uncertainty in Income Taxes The tax authority of the PRC government conducts periodic and ad hoc tax filing reviews on business enterprises operating in the PRC after those enterprises complete their relevant tax filings. Therefore, the Company’s PRC entities’ tax filings results are subject to change. It is therefore uncertain as to whether the PRC tax authority may take different views about the Company’s PRC entities’ tax filings, which may lead to additional tax liabilities. ASC 740 requires recognition and measurement of uncertain income tax positions using a “more-likely-than-not” approach. The management evaluated the Company’s tax positions and concluded that no provision for uncertainty in income taxes was necessary as of June 30, 2021 and 2020. |
CONCENTRATIONS, RISKS AND UNCER
CONCENTRATIONS, RISKS AND UNCERTAINTIES | 12 Months Ended |
Jun. 30, 2021 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS, RISKS AND UNCERTAINTIES | NOTE 15 – CONCENTRATIONS, RISKS AND UNCERTAINTIES Credit risk Cash deposits with banks are held in financial institutions in PRC, which are insured with deposit protection up to RMB500,000 (approximately $70,089). Accordingly, the Company has a concentration of credit risk related to the uninsured part of bank deposits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant credit risk. Concentration The Company has a concentration risk related to the suppliers. Failure to maintain existing relationships with the suppliers or to establish new relationships in the future could negatively affect the Company’s operations. The concentration on purchases from suppliers’ as follows: For the year ended For the year ended June 30, 2021 June 30, 2020 Amount % Amount % Supplier A $ 3,710,000 67.1 % $ - - Supplier B 965,055 17.4 % - - Supplier C 756,017 13.7 % - - Supplier D - - 4,597,300 30.4% Supplier E - - 4,597,300 30.4% Supplier F - - 3,765,043 24.9% $ 5,431,072 98.2 % $ 12,959,643 85.6% Risks of Variable Interest Entities Structure Although the structure the Company has adopted is consistent with longstanding industry practice, and is commonly adopted by comparable companies in China, the PRC government may not agree that these arrangements comply with PRC licensing, registration or other regulatory requirements, with existing policies or with requirements or policies that may be adopted in the future. There are uncertainties regarding the interpretation and application of PRC laws and regulations including those that govern the Company’s contractual arrangements, which could limit the Company’s ability to enforce these contractual arrangements. If the Company or any of its variable interest entities are found to be in violation of any existing or future PRC laws, rules or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including levying fines, revoking business and other licenses of the Company’s variable interest entities, requiring the Company to discontinue or restrict its operations, restricting its right to collect revenue, requiring the Company to restructure its operations or taking other regulatory or enforcement actions against the Company. In addition, it is unclear what impact the PRC government actions would have on the Company and on its ability to consolidate the financial results of its variable interest entities in the consolidated financial statements, if the PRC government authorities were to find the Company’s legal structure and contractual arrangements to be in violation of PRC laws, rules and regulations. If the imposition of any of these government actions causes the Company to lose its right to direct the activities of Hainan Cangbao and Shanghai Cangbao or the right to receive their economic benefits, the Company would no longer be able to consolidate the Hainan Cangbao and Shanghai Cangbao. COVID-19 outbreak In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. The COVID-19 pandemic has negatively impacted the global economy, workforces, customers, and created significant volatility and disruption of financial markets. It has also disrupted the normal operations of many businesses, including ours. This outbreak could decrease spending, adversely affect demand for our services and harm our business and results of operations. It is not possible for us to predict the duration or magnitude of the adverse results of the outbreak and its effects on our business or results of operations at this time. Since April 2020, the Company gradually resumed operations and is now operating at full capacity. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 16 – SUBSEQUENT EVENTS The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. There are two types of subsequent events: (1) recognized, or those that provide additional evidence with respect to conditions that existed at the dates of the balance sheets, including the estimates inherent in the process of preparing financial statements, and (2) non-recognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date. The Company evaluates subsequent events that have occurred after the balance sheet date but before the financial statements are issued. Based on this evaluation, the Company concluded that subsequent to June 30, 2021 but prior to the date the financial statements were available to be issued, and has determined that it does not have any material events to disclose. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying audited consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). This basis of accounting differs in certain material respects from that used for the preparation of the books of Hainan Cangbao and Shanghai Cangbao, which are prepared in accordance with the accounting principles and the relevant financial regulations applicable to enterprises with limited liabilities established in the PRC (“PRC GAAP”), the accounting standards used in the places of their domicile. The accompanying audited consolidated financial statements reflect necessary adjustments not recorded in the books of Hainan Cangbao and Shanghai Cangbao to present them in conformity with U.S. GAAP. |
Principals of Consolidation | Principals of Consolidation The audited consolidated financial statements include the accounts of the Company, its wholly and majority owned subsidiaries, and consolidated VIE and its subsidiaries for which the Company is the primary beneficiary. All transactions and balances among the Company, its subsidiaries and consolidated VIE have been eliminated upon consolidation. The accompanying audited consolidated financial statements of Cang Bao Tian Xia International Art Trade Center, Inc. reflect the activities of the following entities: Name Background Ownership Cang Bao Tian Xia International Art Trade Center, Inc.(“Cang Bao”) · A holding company · A Nevada company Zhi Yuan Limited (“Zhi Yuan”) · A Cayman Island company · Incorporated on April 15, 2019 100% owned by Cang Bao Cang Yun (Hong Kong) Limited (“Cang Yun HK”) · A Hong Kong company · Incorporated on May 22, 2019 · A holding company 100% owned by Zhi Yuan Shanghai Cangyun Management Consulting Co., Ltd. (“Shanghai Cangyun”) · A PRC company and deemed a wholly foreign owned enterprise · Incorporated on July 30, 2019 · Subscribed capital of $10,000 · A holding company 100% owned by Cang Yun HK Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan Cangbao”) · A PRC limited liability company · Incorporated on May 30, 2018 · Subscribed capital of $1,454,491 (RMB 10,000,000) · Operate online and offline cultural exchange service platform VIE of Shanghai Cangyun WFOE Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd. (“Shanghai Cangbao”) · A PRC limited liability company · Incorporated on May 30, 2018 · Subscribed capital of $4,799,821 (RMB 33,000,000) · Operate online and offline cultural exchange service platform VIE of Shanghai Cangyun WFO VIE Agreements with Shanghai Cangyun Under the laws and regulations of the PRC, foreign persons and foreign companies are restricted from investing directly in certain businesses within the PRC. As such, Hainan Cangbao and Shanghai Cangbao are controlled through VIE Arrangements in lieu of direct equity ownership. Such VIE arrangements consist of a series of four agreements (collectively, the “VIE Arrangements”), which were signed on August 8, 2019. The significant terms of the VIE Arrangements are as follows: Exclusive Management Consultation Service Agreement Pursuant to the Exclusive Management Consultation Service Agreement between Management Consulting and Hainan Cangbao Tianxia Cultural Relic Co., Ltd. and Cangbao Tianxia (Shanghai) Cultural Relic Co. (the “Target Companies” or “VIEs”), dated August 8, 2019, Management Consulting has the exclusive right to provide consultation and services to the Target Companies in the areas of funding, human resources, technology and intellectual property rights. For such services, the Target Companies have agreed to pay service fees in the amount of 100% of their net income and also have the obligation to absorb 100% of their own losses. Management Consulting exclusively owns any intellectual property rights arising from the performance of this Management Consultation Service Agreement. The Management Consultation Service Agreement terminates at the same time as the Equity Pledge Agreement, described in the next paragraph. Equity Pledge Agreement Pursuant to those Equity Pledge Agreement dated August 8, 2019, among Management Consulting, the Target Companies, the Target Companies’ shareholders, who are our CEO Mr. Zhou, Yaqin Fu (the wife of Liang Tan, a director of the Company), and Wei Wang (collectively, the “Pledgors”), each of three persons pledged all of their equity interests in the Target Companies to Management Consulting to guarantee the Target Companies’ performance of relevant obligations and indebtedness under the Management Consultation Service Agreement and the other control agreements (collectively, the “Control Agreements”). If the Pledgors breach their obligations under the Control Agreements, Management Consulting, as pledgee, will be entitled to certain rights, including the right to dispose of the pledged equity interests in order to recover the damages associated with such breaches. The Pledgors’ obligations shall be continuously valid until all of the Pledgors are no longer shareholders of the Target Companies, or until the satisfaction of all of the Pledgors’ obligations under the Control Agreements. Call Option Agreement Pursuant to the Call Option Agreement among Management Consulting, the Target Companies and the Pledgors, dated August 8, 2019, Management Consulting has the exclusive right to require that the Pledgors fulfill and complete all approval and registration procedures required under PRC laws for Management Consulting to purchase, or designate one or more persons to purchase, such shareholders’ equity interests in the Target Companies , in one or multiple transactions, at any time or from time to time, at Management Consulting’s sole and absolute discretion. The purchase price shall be the lowest price allowed by PRC laws. The Equity Option Agreements shall remain effective until all the equity interests in the Target Companies owned by the Pledgors have been legally transferred to Management Consulting or its designee(s). Proxy Agreement Pursuant to the Proxy Agreement among Management Consulting, the Pledgors and the Target Companies, dated August 8, 2019, the Pledgors irrevocably appointed Management Consulting or Management Consulting’s designee to exercise all of their rights as a shareholder of the Target Companies, including but not limited to the power to exercise all such shareholder’s voting rights with respect to all matters to be discussed and voted in shareholder meetings of the Target Companies. The Proxy Agreement remains effective until all equity interests in the Target Companies owned by the Pledgors have been legally transferred to Management Consulting or its designee(s). Based on the foregoing VIE Arrangements, Shanghai Cangyun deemed to have effective control over Hainan Cangbao and Shanghai Cangbao, which enables Shanghai Cangyun to receive all of their expected residual returns and absorb the expected losses of the VIE, and Shanghai Cangyun is deemed the primary beneficiary of Hainan Cangbao and Shanghai Cangbao. The reorganization through VIE above are accounted as a transaction of entities under common control for accounting purposes where the shareholder of Hainan Cangbao and Shanghai Cangbao are the controlling shareholder of Cang Bao before and after the reorganization. Accordingly, the accompanying consolidated financial statements have been prepared as if the current corporate structure had been in existence throughout the periods presented. The carrying amount of the VIE’s assets and liabilities are as follows: June 30, June 30, 2021 2020 Current assets $ 11,850,943 $ 9,188,265 Plants and equipment, iIntangible assets 423,769 331,448 Other noncurrent assets 8,220,399 - Total assets 20,495,111 9,519,713 Current liabilities 28,819,519 13,792,591 Non-current liabilities 4,987,269 - Total liabilities 33,806,788 13,792,591 Net assets $ (13,311,677 ) $ (4,272,878 ) June 30, June 30, 2021 2020 Accounts payable $ 8,076,065 $ 13,212,544 Other payables and accrued liabilities 249,516 576,761 Tax payables 4,115 3,286 Customer advances 17,256,693 - Lease liabilities 3,233,130 - Total current liabilities 28,819,519 13,792,591 Lease liabilities - noncurrent 4,987,269 - Total liabilities $ 33,806,788 $ 13,792,591 The summarized operating results of the VIE’s are as follows: For the Operating revenues $ 1,645,126 Gross profit (1,430,284 ) Loss from operations (8,409,597 ) Net loss $ (8,411,409 ) |
Foreign Currency Translation | Foreign Currency Translation The accompanying audited consolidated financial statements are presented in United States dollar (“$”), which is the reporting currency of the Company. The functional currency of Cang Bao, Cayman Company and Hongkong Company is United States dollar. The functional currency of the Company’s subsidiaries and VIEs located in the PRC is Renminbi (“RMB”). For the entities whose functional currencies are RMB, results of operations and cash flows are translated at average exchange rates during the period, assets and liabilities are translated at the unified exchange rate at the end of the period, and equity is translated at historical exchange rates. The resulting translation adjustments are included in determining other comprehensive income. Transaction gains and losses are reflected in the consolidated statements of income. 2021 2020 Year-end RMB: US$ exchange rate 6.4601 7.0795 Annual average RMB: US$ exchange rate 6.6273 7.0198 Year-end HKD:US$ exchange rate 7.7638 7.7504 Annual average HKD:US$ exchange rate 7.7558 7.7937 The RMB is not freely convertible into foreign currencies and all foreign exchange transactions must be conducted through authorized financial institutions. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and judgments on historical experience and on various other assumptions and information that are believed to be reasonable under the circumstances. Estimates and assumptions of future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. Significant estimates and assumptions by management include, among others, useful lives and impairment of long-lived assets, allowance for doubtful accounts, income taxes including the valuation allowance for deferred tax assets. While the Company believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from those estimates. Estimates and assumptions are periodically reviewed, and the effects of revisions are reflected in the financial statements in the period they are determined to be necessary. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid instruments with original maturities of three months or less. |
Inventories | Inventories Inventories, mainly consisting of stock items prepared as gifts for the member customers and multi-functional demonstration machine, are stated at the lower of cost or net realizable value utilizing the weighted average method. Cost includes all costs of purchase, cost of conversion and other costs incurred to bring the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion of the service and the estimated costs necessary to delivering the service. The valuation of inventory requires the Company to estimate excess and slow-moving inventories. The Company evaluates the recoverability of the inventory based on expected demand and market conditions of art trading service. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company’s long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Recoverability of an asset to be held and used is measured by a comparison of the carrying amount of the asset to the future undiscounted cash flows expected to be generated by the asset. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Impairment evaluations involve management’s estimates on asset useful lives and future cash flows. Actual useful lives and cash flows could be different from those estimated by management which could have a material effect on our reporting results and financial position. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third-party independent appraisals, as considered necessary. |
Plant and Equipment | Plant and Equipment Plant and equipment consist of computer, office furniture and equipment, and leasehold improvement. All plant and equipment are stated at historical cost net of accumulated depreciation. Repairs and maintenance are expensed as incurred. Plant and equipment are depreciated on a straight-line basis over the following periods: Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Electronic equipment 3-5 years Furniture and Fixture 5 years Motor vehicles 4 years Computer software 5 years Leasehold improvements 5 years |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company adopted ASC 820 “Fair Value Measurements,” which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measures. Current assets and current liabilities qualified as financial instruments and management believes their carrying amounts are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their current interest rate is equivalent to interest rates currently available. The three levels are defined as follow: Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value. As of the balance sheet date, the estimated fair values of the financial instruments approximated their fair values due to the short-term nature of these instruments. The Company evaluates the hierarchy disclosures each year to determine which category an asset or liability falls within the hierarchy. |
Leases | Leases We determine if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets, operating lease liabilities - current, and operating lease liabilities - noncurrent on the balance sheets. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our balance sheets. The initial lease liability is equal to the future fixed minimum lease payments discounted using the Company’s incremental borrowing rate, on a secured basis. The initial measurement of the right-of-use asset is equal to the initial lease liability plus any initial direct costs and prepayments, less any lease incentives. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. |
Revenue Recognition | Revenue Recognition The Company adopted ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires entities to exercise judgment when considering the terms of contracts, which includes (1) identifying the contracts or agreements with a customer, (2) identifying our performance obligations in the contract or agreement, (3) determining the transaction price, (4) allocating the transaction price to the separate performance obligations, and (5) recognizing revenue as each performance obligation is satisfied. The Company has concluded that the new guidance did not require any significant change to its revenue recognition processes. The Company operates an online and offline cultural service platform, through which dedicated to create industry standards for art investment and creating a model of online art exchanges and transactions, which allows collectors, artists, art dealers and owners to access a much larger art trading market, allowing them to engage with a wide range of collectibles or artwork investors. The service includes trading facilitation, appraisal of treasures, consignment of artworks, storage of artworks and all-in-one advertising service, etc. The Company derives its revenues from (1) platform membership service fee for member customers and (2) trading commission income, and (3) sales of all-in-one demonstration machine. Membership service income The Company recognizes membership fee revenue as the performance obligations are satisfied over time, usually, recognized on an average over the life of membership. The general contract terms of membership service include timeframe of the service, pricing and payment terms, rights and obligations of parties, performance test criteria, and liability for breach of contract. Payments received in advance from customers are recorded as “advance from customers” in the audited consolidated balance sheets. Advance from customers is recognized as revenue over the passage of time. Such advance payment received are non-refundable. The cost of revenue consists primarily of platform maintenance expenses which are directly attributable to the membership fee revenue, including but not limited to service charges for cloud computing, items prepared as gifts for the member, Artwork Trading Service commission income Artwork trading service commission income includes commission from artwork price guarantee service, and artwork ownership transfer facilitate service through the online platform. The Company charges both the buyer and the seller a commission based on the artwork trading amount. The revenue is derived from contracts with customers, which primarily include payment terms, rights and obligations of parties, acceptance criteria, and liability for breach of contract. The Company’s sales arrangements do not contain variable consideration. The Company recognizes revenue at a point in time based on management’s evaluation of when performance obligations under the terms of a contract with the customer are satisfied and the related artworks transactions has been successfully completed. Sales of multi-functional demonstration machine and tablets The Company recognizes revenue when the transaction price is allocated to the performance obligations identified in the contracts or agreements with customer upon the delivery of multi-functional demonstration machine has completed. The Company did not recognize any trading commission income for the year ended June 30, 2021 and 2020. |
Advertising Expenses | Advertising Expenses Advertising costs, mainly including promotion expense for the APP launching, are expensed as incurred and the total amounts charged to “selling and marketing expenses” in the audited consolidated statements of income and comprehensive loss were $2,845,139 and $499,954 for the year ended June 30, 2021 and 2020, respectively. |
Shipping and handling | Shipping and handling All outbound shipping and handling costs are expensed as incurred. |
New Accounting Pronouncements | New Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12 - Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This ASU provides an exception to the general methodology for calculating income taxes in an interim period when a year-to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill should be considered part of the business combination in which goodwill was originally recognized for accounting purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The standard is effective for the Company for fiscal years beginning after December 15, 2020, with early adoption permitted. The Company is currently in the process of evaluating the impact of the adoption on its consolidated financial statements. In February 2020, the FASB issued ASU 2020-02, “Financial Instruments – Credit Losses (Topic 326) and Leases (topic 842) Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 119 and Update to SEC Section on Effective Date Related to Accounting Standards Update No. 2016-02, Leases (topic 842)”. This ASU provides guidance regarding methodologies, documentation, and internal controls related to expected credit losses. This ASU is effective for interim and annual periods beginning after December 15, 2019, and early adoption is permitted. The Company is evaluating the impact of this guidance on its consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. The amendments in this Update modify the disclosure requirements on fair value measurements based on the concepts in FASB Concepts Statement, Conceptual Framework for Financial Reporting—Chapter 8: Notes to Financial Statements, including the consideration of costs and benefits. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for all entities for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the potential impacts of ASU 2018-13 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” The guidance supersedes existing guidance on accounting for leases with the main difference being that operating leases are to be recorded in the statement of financial position as right-of-use assets and lease liabilities, initially measured at the present value of the lease payments. For operating leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. For public business entities, the guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application of the guidance is permitted. In transition, entities are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The Company adopted ASU 2016-02 on July 1, 2019 and recognize operating lease liabilities with corresponding right of use (“ROU”) assets of the same amount based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases with a term longer than 12 months. The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material impact on its the consolidated financial position, statements of operations and cash flows. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Schedule of consolidated financial statements activities | The accompanying audited consolidated financial statements of Cang Bao Tian Xia International Art Trade Center, Inc. reflect the activities of the following entities: Name Background Ownership Cang Bao Tian Xia International Art Trade Center, Inc.(“Cang Bao”) · A holding company · A Nevada company Zhi Yuan Limited (“Zhi Yuan”) · A Cayman Island company · Incorporated on April 15, 2019 100% owned by Cang Bao Cang Yun (Hong Kong) Limited (“Cang Yun HK”) · A Hong Kong company · Incorporated on May 22, 2019 · A holding company 100% owned by Zhi Yuan Shanghai Cangyun Management Consulting Co., Ltd. (“Shanghai Cangyun”) · A PRC company and deemed a wholly foreign owned enterprise · Incorporated on July 30, 2019 · Subscribed capital of $10,000 · A holding company 100% owned by Cang Yun HK Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan Cangbao”) · A PRC limited liability company · Incorporated on May 30, 2018 · Subscribed capital of $1,454,491 (RMB 10,000,000) · Operate online and offline cultural exchange service platform VIE of Shanghai Cangyun WFOE Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd. (“Shanghai Cangbao”) · A PRC limited liability company · Incorporated on May 30, 2018 · Subscribed capital of $4,799,821 (RMB 33,000,000) · Operate online and offline cultural exchange service platform VIE of Shanghai Cangyun WFO |
Significant carrying amount and classification of the assets and liabilities of VIEs | The carrying amount of the VIE’s assets and liabilities are as follows: June 30, June 30, 2021 2020 Current assets $ 11,850,943 $ 9,188,265 Plants and equipment, intangible assets 423,769 331,448 Other noncurrent assets 8,220,399 - Total assets 20,495,111 9,519,713 Current liabilities 28,819,519 13,792,591 Non-current liabilities 4,987,269 - Total liabilities 33,806,788 13,792,591 Net assets $ (13,311,677 ) $ (4,272,878 ) June 30, June 30, 2021 2020 Accounts payable $ 8,076,065 $ 13,212,544 Other payables and accrued liabilities 249,516 576,761 Tax payables 4,115 3,286 Customer advances 17,256,693 - Lease liabilities 3,233,130 - Total current liabilities 28,819,519 13,792,591 Lease liabilities - noncurrent 4,987,269 - Total liabilities $ 33,806,788 $ 13,792,591 |
Schedule of operating results of the VIE's | The summarized operating results of the VIE’s are as follows: For the Operating revenues $ 1,645,126 Gross profit (1,430,284 ) Loss from operations (8,409,597 ) Net loss $ (8,411,409 ) |
Schedule of exchange rates | The resulting translation adjustments are included in determining other comprehensive income. Transaction gains and losses are reflected in the consolidated statements of income. 2021 2020 Year-end RMB: US$ exchange rate 6.4601 7.0795 Annual average RMB: US$ exchange rate 6.6273 7.0198 Year-end HKD:US$ exchange rate 7.7638 7.7504 Annual average HKD:US$ exchange rate 7.7558 7.7937 |
Property and equipment estimated useful lives | Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Electronic equipment 3-5 years Furniture and Fixture 5 years Motor vehicles 4 years Computer software 5 years Leasehold improvements 5 years |
ACCOUNT RECEIVABLES (Tables)
ACCOUNT RECEIVABLES (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Credit Loss [Abstract] | |
Schedule of accounts receivables | June 30, June 30, 2021 2020 Account receivables $ - $ 3,364,041 Less: allowance for doubtful accounts - - Total, net $ - $ 3,364,041 |
INVENTORY (Tables)
INVENTORY (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory consisted of the following: June 30, June 30, 2021 2020 Finished goods $ 109,381 $ 439,811 Less: allowance for obsolete inventory - - Total, net $ 109,381 $ 439,811 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible assets consisted of the following: June 30 June 30, 2021 2020 Membership management system $ 466,322 $ 437,516 Accounting system 1,712 1,562 468,034 439,078 Less: Accumulated amortization (228,968 ) (119,311 ) Total, net $ 239,066 $ 319,767 |
PLANT & EQUIPMENT (Tables)
PLANT & EQUIPMENT (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Plant & Equipment | Plant and equipment, net, is consisted of the following: June 30, 2021 June 30, 2020 Furniture and fixtures $ 18,257 $ 16,659 Automobile 180,523 198,780 16,659 Less: Accumulate depreciation (14,077 ) (4,978 ) Total, net $ 184,703 $ 11,681 |
ADVANCE TO SUPPLIERS (Tables)
ADVANCE TO SUPPLIERS (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Notes to Financial Statements | |
Schedule of Advance to suppliers | Advance to suppliers consisted of the following: June 30, June 30, 2021 2020 Multimedia tablets $ 5,228,488 $ - Marketing services 3,652,262 1,384,437 Gifts for members 139,549 380,307 Others 232,213 468,319 Total, net $ 9,252,512 $ 2,233,063 |
ADVANCE FROM CUSTOMERS (Tables)
ADVANCE FROM CUSTOMERS (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Notes to Financial Statements | |
Schedule of Advance from customers | Advance from customers consisted of the following: June 30, 2021 June 30, 2020 Multimedia demonstration machines $ - $ - Multimedia tablets 17,256,693 - Total, net $ 17,256,693 $ - |
REVENUE AND COST OF REVENUE (Ta
REVENUE AND COST OF REVENUE (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Notes to Financial Statements | |
Schedule of revenue and cost of revenue | June 30, June 30, 2021 2020 Revenue Membership service income $ 455,957 $ 6,470,168 Multimedia tablets 847,529 683,780 1,303,486 7,153,948 Cost of revenue Membership service income 214,842 3,633,369 Multimedia tablets 1,515,970 371,805 1,730,812 4,005,174 Gross profit $ (427,326 ) $ 3,148,774 |
LEASE (Tables)
LEASE (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Future lease payments | The future minimum lease payment schedule as follows: As of June 30, 2022 $ 3,233,130 2023 3,233,130 2024 1,643,681 2025 110,458 Thereafter - Total $ 8,220,399 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Related Party Transactions [Abstract] | |
Schedule of related party transactions | The related parties consisted of the following: Name of related party Nature of relationship Mr. Xingtao Zhou Majority shareholder of the Company Guangdong Cangbaotianxia Art Co., Ltd A Company with significant influence Xi 'an Cangbaotianxia Art Co., Ltd A Company with significant influence |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Deferred tax assets | The components of deferred tax assets and liabilities as follows: June 30, 2021 June 30, 2020 Deferred tax asset Net operating losses carry forwards $ 33,748 $ 84,539 Valuation allowance (33,748 ) (84,539 ) Deferred tax asset, net $ - $ - |
China [Member] | |
Deferred tax assets | The components of deferred tax assets and liabilities as follows: June 30, 2021 June 30, 2020 Net operating losses carry forwards $ 8,411,409 $ 1,875,475 Valuation allowance (8,411,409 ) (1,875,475 ) Deferred tax asset, net $ - $ - |
CONCENTRATIONS, RISKS AND UNC_2
CONCENTRATIONS, RISKS AND UNCERTAINTIES (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
Risks and Uncertainties [Abstract] | |
Concentration on purchases from suppliers | The concentration on purchases from suppliers’ as follows: For the year ended For the year ended June 30, 2021 June 30, 2020 Amount % Amount % Supplier A $ 3,710,000 67.1 % $ - - Supplier B 965,055 17.4 % - - Supplier C 756,017 13.7 % - - Supplier D - - 4,597,300 30.4% Supplier E - - 4,597,300 30.4% Supplier F - - 3,765,043 24.9% $ 5,431,072 98.2 % $ 12,959,643 85.6% |
ORGANIZATION AND BASIS OF ACC_2
ORGANIZATION AND BASIS OF ACCOUNTING (Details Narrative) | Jun. 19, 2018USD ($)$ / sharesshares | Mar. 07, 2007shares | Jul. 27, 2020shares | Dec. 16, 2018USD ($)shares | Jul. 27, 2011 | Nov. 15, 2010USD ($)shares | Jun. 15, 2009shares | Jul. 26, 2020 | Apr. 26, 2010USD ($) | Sep. 22, 2009CNY (¥) | Jul. 06, 2007USD ($) | Jun. 18, 2006 |
Reverse Stock split | 1 for 120 | |||||||||||
Lisheng [Member] | ||||||||||||
Equity Method Investment, Ownership Percentage | 60.00% | |||||||||||
Registered Capital | ¥ | ¥ 5,000,000 | |||||||||||
Share Purchase Agreement [Member] | Keyi [Member] | ||||||||||||
Equity Method Investment, Ownership Percentage | 75.00% | |||||||||||
Equity cost | $ | $ 3,700,000 | |||||||||||
Share Purchase Agreement [Member] | Zhongchai Holding [Member] | ||||||||||||
Equity Method Investment, Ownership Percentage | 75.00% | |||||||||||
Equity Method Investment, Ownership Percentage purchased | 25.00% | |||||||||||
Equity cost | $ | $ 2,600,000 | |||||||||||
Share Exchange Agreement [Member] | Usunco [Member] | ||||||||||||
Equity Method Investment, Ownership Percentage | 28.00% | |||||||||||
Stock Issued During Period, Shares, Acquisitions | 18,323,944 | |||||||||||
Share Exchange Agreement [Member] | IBC [Member] | ||||||||||||
Cancellation of common stock | 428,261 | 555,994 | ||||||||||
Payment of unsecured promissory note | $ | $ 60,000 | |||||||||||
Common Stock [Member] | Cang Bao [Member] | ||||||||||||
Stock issued pursuant to exchange agreement | 75,000,000 | |||||||||||
Percentage owned | 67.98% | |||||||||||
Custodian Ventures, LLC [Member] | Common Stock [Member] | ||||||||||||
Stock issued for services, Shares | 3,096,200 | |||||||||||
Stock issued for services, Value | $ | $ 3,096 | |||||||||||
Share Price (Per Share) | $ / shares | $ 0.001 | |||||||||||
Custodian Ventures, LLC [Member] | Series A Preferred Stock [Member] | ||||||||||||
Stock issued for services, Shares | 10,000,000 | |||||||||||
Stock issued for services, Value | $ | $ 4,000,000 | |||||||||||
Share Price (Per Share) | $ / shares | $ 0.001 | |||||||||||
Xingtao Zhou [Member] | Common Stock [Member] | ||||||||||||
Stock transferred, shares | 2,432,351 | |||||||||||
Shares owned | 59,839,271 | |||||||||||
Percentage owned | 54.24% | |||||||||||
Xingtao Zhou [Member] | Series A Preferred Stock [Member] | ||||||||||||
Stock transferred, value | $ | $ 375,000 | |||||||||||
Xingtao Zhou [Member] | Preferred Stock [Member] | ||||||||||||
Stock transferred, shares | 10,000,000 | |||||||||||
Percentage owned | 100.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Activities) (Details) - 12 months ended Jun. 30, 2021 | USD ($) | CNY (¥) |
Shares Subscription Receivable | $ 6,125,418 | |
Cang Bao Tian Xia International Art Trade Center [Member] | ||
Name | Cang Bao Tian Xia International Art Trade Center, Inc.(“Cang Bao”) | |
Background | • A holding company • A Nevada company | |
Shares Subscription Receivable | $ 4,799,821 | |
Cang Bao Tian Xia International Art Trade Center [Member] | China, Yuan Renminbi | ||
Shares Subscription Receivable | ¥ | ¥ 33,000,000 | |
Zhi Yuan Limited [Member] | ||
Name | Zhi Yuan Limited (“Zhi Yuan”) | |
Background | • A Cayman Island company • Incorporated on April 15, 2019 | |
Ownership | 100% owned by Cang Bao | |
Cang Yun HK [Member] | ||
Name | Cang Yun (Hong Kong) Limited (“Cang Yun HK”) | |
Background | • A Hong Kong company • Incorporated on May 22, 2019 • A holding company | |
Ownership | 100% owned by Zhi Yuan | |
Shanghai Cangyun Management Consulting Co., Ltd. [Member] | ||
Name | Shanghai Cangyun Management Consulting Co., Ltd. (“Shanghai Cangyun”) | |
Background | • A PRC company and deemed a wholly foreign owned enterprise • Incorporated on July 30, 2019 • Subscribed capital of $10,000 • A holding company | |
Ownership | 100% owned by Cang Yun HK | |
Shares Subscription Receivable | $ 10,000 | |
Hainan Cangbao Tianxia Cultural Relic C. [Member] | ||
Name | Hainan Cangbao Tianxia Cultural Relic Co., Ltd. (“Hainan Cangbao”) | |
Background | • A PRC limited liability company • Incorporated on May 30, 2018 • Subscribed capital of $1,454,491 (RMB 10,000,000) • Operate online and offline cultural exchange service platform | |
Ownership | VIE of Shanghai Cangyun WFOE | |
Shares Subscription Receivable | $ 1,454,491 | |
Hainan Cangbao Tianxia Cultural Relic C. [Member] | China, Yuan Renminbi | ||
Shares Subscription Receivable | ¥ | ¥ 10,000,000 | |
Cangbao Tianxia [Member] | ||
Name | Cangbao Tianxia (Shanghai) Cultural Relic Co., Ltd. (“Shanghai Cangbao”) | |
Background | • A PRC limited liability company • Incorporated on May 30, 2018 • Subscribed capital of $4,799,821 (RMB 33,000,000) • Operate online and offline cultural exchange service platform | |
Ownership | VIE of Shanghai Cangyun WFO |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (VIE - Balance sheet) (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 |
Current assets | |||
Cash and cash equivalents | $ 1,200,060 | $ 2,710,150 | $ 3,059,937 |
Plants and equipment, intangible assets | 184,703 | 11,681 | |
Total non-current assets | 8,644,168 | 331,448 | |
Total assets | 20,442,325 | 9,180,706 | |
Current liabilities | 28,911,527 | 13,564,629 | |
Total liabilities | 33,898,796 | 13,564,629 | |
Accounts payable | 8,160,433 | 13,284,912 | |
Tax payables | 4,115 | 3,286 | |
Customer advances | 17,256,693 | ||
Lease liabilities | 3,233,130 | ||
Total current liabilities | 28,911,527 | 13,564,629 | |
Lease liabilities - noncurrent | 4,987,269 | ||
VIE [Member] | |||
Current assets | |||
Cash and cash equivalents | 11,850,943 | 9,188,265 | |
Plants and equipment, intangible assets | 423,769 | 331,448 | |
Total non-current assets | 8,220,399 | ||
Total assets | 20,495,111 | 9,519,713 | |
Current liabilities | 28,819,519 | 13,792,591 | |
Non-current liabilities | 4,987,269 | ||
Total liabilities | 33,806,788 | 13,792,591 | |
Net assets | (13,311,677) | (4,272,878) | |
Accounts payable | 8,076,065 | 13,212,544 | |
Other payables and accrued liabilities | 249,516 | 576,761 | |
Tax payables | 4,115 | 3,286 | |
Customer advances | 17,256,693 | ||
Lease liabilities | 3,233,130 | ||
Total current liabilities | 28,819,519 | 13,792,591 | |
Lease liabilities - noncurrent | 4,987,269 | ||
Total liabilities | $ 33,806,788 | $ 13,792,591 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (VIE - Operation) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Operating revenues | $ 1,303,486 | $ 7,153,948 |
Gross profit | (427,326) | 3,148,774 |
Loss from operations | (8,443,345) | (1,947,318) |
Net loss | $ (8,445,157) | (1,960,014) |
VIE [Member] | ||
Operating revenues | 1,645,126 | |
Gross profit | (1,430,284) | |
Loss from operations | (8,409,597) | |
Net loss | $ (8,411,409) |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Foreign Currency Translation) (Details) | Jun. 30, 2021 | Jun. 30, 2020 |
Year End [Member] | China, Yuan Renminbi | ||
Foreign Currency Translation | 6.4601 | 7.7558 |
Year End [Member] | Hong Kong, Dollars | ||
Foreign Currency Translation | 7.7638 | 7.7504 |
Annual average [Member] | China, Yuan Renminbi | ||
Foreign Currency Translation | 6.6273 | 7.0198 |
Annual average [Member] | Hong Kong, Dollars | ||
Foreign Currency Translation | 7.0795 | 7.7937 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Property and Equipment) (Details) | 12 Months Ended |
Jun. 30, 2021 | |
Furniture And Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Motor vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 4 years |
Computer Software [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Leasehold Improvements [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Minimum [Member] | Electronic equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Maximum [Member] | Electronic equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Accounting Policies [Abstract] | ||
Trading service commission income | $ 0 | $ 0 |
Advertising | $ 2,845,139 | $ 499,954 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Going Concern | ||
Accumulated net loss | $ (8,445,157) | $ (1,960,014) |
Accumulated deficit | (33,499,423) | $ (25,054,266) |
Working capital deficit | $ (17,113,370) |
ACCOUNT RECEIVABLES (Details)
ACCOUNT RECEIVABLES (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Credit Loss [Abstract] | ||
Account receivables | $ 3,364,041 | |
Less: allowance for doubtful accounts | ||
Total, net | $ 3,364,041 |
INVENTORY (Details)
INVENTORY (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 109,381 | $ 439,811 |
Less: allowance for obsolete inventory | ||
Total, net | $ 109,381 | $ 439,811 |
INVENTORY (Details Narrative)
INVENTORY (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Inventory Disclosure [Abstract] | ||
Obsolete inventory | $ 0 | $ 0 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Intangible assets, gross | $ 468,034 | $ 439,078 |
Less: Accumulated amortization | (228,968) | (119,311) |
Total, net | 239,066 | 319,767 |
Membership management system [Member] | ||
Intangible assets, gross | 466,322 | 437,516 |
Accounting System [Member] | ||
Intangible assets, gross | $ 1,712 | $ 1,562 |
INTANGIBLE ASSETS (Details Narr
INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization expense | $ 95,739 | $ 47,576 |
PLANT & EQUIPMENT (Details)
PLANT & EQUIPMENT (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Property and equipment, gross | $ 198,780 | $ 16,659 |
Accumulated depreciation | (14,077) | (4,978) |
Property and equipment, net | 184,703 | 11,681 |
Furniture And Fixtures [Member] | ||
Property and equipment, gross | 18,257 | 16,659 |
Automobiles [Member] | ||
Property and equipment, gross | $ 180,523 |
PLANT & EQUIPMENT (Details Narr
PLANT & EQUIPMENT (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation | $ 8,405 | $ 2,472 |
ADVANCE TO SUPPLIERS (Details)
ADVANCE TO SUPPLIERS (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Notes to Financial Statements | ||
Multimedia tablets | $ 5,228,488 | |
Marketing services | 3,652,262 | 1,384,437 |
Gifts for members | 139,549 | 380,307 |
Other | 232,213 | 468,319 |
Total, net | $ 9,252,512 | $ 2,233,063 |
ADVANCE FROM CUSTOMERS (Details
ADVANCE FROM CUSTOMERS (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Notes to Financial Statements | ||
Multimedia demonstration machines | ||
Multimedia tablets | 17,256,693 | |
Total, net | $ 17,256,693 |
REVENUE AND COST OF REVENUE (De
REVENUE AND COST OF REVENUE (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Revenues | $ 1,303,486 | $ 7,153,948 |
Cost of revenues | 1,730,812 | 4,005,174 |
Gross profit | (427,326) | 3,148,774 |
Membership Service Income [Member] | ||
Revenues | 455,957 | 6,470,168 |
Cost of revenues | 214,842 | 3,633,369 |
Multimedia Tablets [Member] | ||
Revenues | 847,529 | 683,780 |
Cost of revenues | $ 1,515,970 | $ 371,805 |
LEASE (Details)
LEASE (Details) | Jun. 30, 2021USD ($) |
Leases [Abstract] | |
2022 | $ 3,233,130 |
2023 | 3,233,130 |
2024 | 1,643,681 |
2025 | 110,458 |
Thereafter | |
Total | $ 8,220,399 |
LEASE (Details Narrative)
LEASE (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Leases [Abstract] | ||
Incremental borrowing rate | 4.75% | |
Operating lease expenses | $ 1,499,902 | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Advance from related party | $ 33,748 | $ 78,671 |
Related party receivable | 1,197,938 | 28,055 |
Guangdong Cangbaotianxia Art [Member] | ||
Revenue from Related Parties | 92,878 | |
Account receivable - related parties | 92,878 | 0 |
Xi 'an Cangbaotianxia Art Co [Member] | ||
Revenue from Related Parties | 21,486 | |
Account receivable - related parties | 21,486 | 0 |
Xingtao Zhou [Member] | ||
Due to related party | 128,793 | 95,045 |
Advance from related party | 33,748 | |
Related party receivable | 1,083,575 | $ 28,055 |
Payment of related party debt | $ 1,083,575 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | Feb. 14, 2019 | Jun. 19, 2018 | Jul. 27, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 |
Common stock outstanding | 110,319,245 | 110,319,245 | 110,319,245 | |||
Preferred Stock Authorized | 10,000,000 | 10,000,000 | 10,000,000 | |||
Preferred Stock Par value | $ 0.001 | $ 0.001 | $ 0.001 | |||
Preferred Stock, Voting Rights | 1 for one basis | |||||
Conversion Price | $ 0.0000025 | $ 0.0000025 | $ 0.0000025 | |||
Preferred Stock Outstanding | 9,920,000 | 9,920,000 | 9,920,000 | |||
Shares Subscription Receivable | $ 6,125,418 | |||||
Common Stock [Member] | ||||||
Common stock issued pursuant to conversion of preferred stock, shares | 32,000,000 | |||||
Series A Preferred Stock [Member] | ||||||
Conversion of preferred stock into common stock, shares | 80,000 | |||||
Custodian Ventures, LLC [Member] | Common Stock [Member] | ||||||
Stock issued for services, Shares | 3,096,200 | |||||
Stock issued for services, Value | $ 3,096 | |||||
Share Price (Per Share) | $ 0.001 | |||||
Custodian Ventures, LLC [Member] | Series A Preferred Stock [Member] | ||||||
Stock issued for services, Shares | 10,000,000 | |||||
Stock issued for services, Value | $ 4,000,000 | |||||
Share Price (Per Share) | $ 0.001 | |||||
Cang Bao [Member] | Common Stock [Member] | ||||||
Stock issued pursuant to exchange agreement | 75,000,000 |
INCOME TAXES (Deferred tax asse
INCOME TAXES (Deferred tax assets) (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Net operating losses carry forwards | $ 33,748 | $ 84,539 |
Valuation allowance | (33,748) | (84,539) |
Deferred tax asset, net | ||
China [Member] | ||
Net operating losses carry forwards | 8,411,409 | 1,875,475 |
Valuation allowance | (8,411,409) | (1,875,475) |
Deferred tax asset, net |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Income Tax Disclosure [Abstract] | ||
Provision for uncertainty in income taxes |
CONCENTRATIONS, RISKS AND UNC_3
CONCENTRATIONS, RISKS AND UNCERTAINTIES (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Purchases from suppliers | $ 5,431,072 | $ 12,959,643 |
Percentage | 98.20% | 85.60% |
Supplier A [Member] | ||
Purchases from suppliers | $ 3,710,000 | |
Percentage | 67.10% | |
Supplier B [Member] | ||
Purchases from suppliers | $ 965,055 | |
Percentage | 17.40% | |
Supplier C [Member] | ||
Purchases from suppliers | $ 756,017 | |
Percentage | 13.70% | |
Supplier D [Member] | ||
Purchases from suppliers | $ 4,597,300 | |
Percentage | 30.40% | |
Supplier E [Member] | ||
Purchases from suppliers | $ 4,597,300 | |
Percentage | 30.40% | |
Supplier F [Member] | ||
Purchases from suppliers | $ 3,765,043 | |
Percentage | 24.90% |
CONCENTRATIONS, RISKS AND UNC_4
CONCENTRATIONS, RISKS AND UNCERTAINTIES (Details Narrative) - Jun. 30, 2021 | USD ($) | CNY (¥) |
Cash deposits insured | $ | $ 70,089 | |
China, Yuan Renminbi | ||
Cash deposits insured | ¥ | ¥ 500,000 |