| SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation The accompanying consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”)
and have been consistently applied. The accompanying consolidated financial statements include the financial statements of E-Home Household
Service Holdings Limited and its subsidiaries. All inter-company balances and transactions have been eliminated upon consolidation. Use of estimates In preparing the consolidated financial statements
in conformity with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. These estimates are based on information as of the date of the consolidated financial statements. Significant
estimates required to be made by management include, but are not limited to, the recoverability of accounts receivable, useful lives of
property and equipment and intangible assets, the recoverability of long-lived assets and warrant valuation. Actual results could differ
from those estimates. Cash and cash equivalents Cash and cash equivalents include cash on hand,
cash accounts, interest bearing savings accounts and time certificates of deposit with a maturity of three months or less when purchased.
The Company considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase
to be cash equivalents. The Company maintains most of the bank accounts in the PRC. Cash balances in bank accounts in PRC are not insured
by the Federal Deposit Insurance Corporation or other programs. Accounts receivable Accounts receivable are recognized and carried
at original invoiced amount less an estimated allowance for uncollectible accounts. The Company usually determines the adequacy of reserves
for doubtful accounts based on individual account analysis and historical collection trends. The Company establishes a provision for
doubtful receivables when there is objective evidence that the Company may not be able to collect amounts due. The allowance is based
on management’s best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections.
Based on management of customers’ credit and ongoing relationship, management makes conclusions whether any balances outstanding
at the end of the period will be deemed uncollectible on an individual basis and on aging analysis basis. The provision is recorded against
accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive income.
Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined that the likelihood
of collection is not probable. As of June 30, 2022 and 2021, the Company determined that all accounts receivable were collectible and
thus the allowance for doubtful accounts were $0 and $0. Inventories Inventories primarily include purchased accessories, appliances and
E-watches for senior care services. Cost of inventories is based on purchase costs. Inventories are stated at the lower of cost or net
realizable value. Net realizable value represents the anticipated selling price, net of distribution cost and other costs related to selling
the inventories. For the years ended June 30, 2022, 2021, and 2020, the Company recorded no impairment provision of inventories for lower
of cost or net realizable value, respectively. Property and equipment, net Property and equipment are stated at cost less accumulated depreciation.
Maintenance and repairs are charged to expense as incurred. Depreciation is provided on the straight-line method based on the estimated
useful lives of the assets as follows:
Useful Lives
Buildings 20 Years
Office Equipment 5 Years
Electronic Equipment 5 Years
Motor Vehicles 10 Years Expenditures for maintenance and repairs, which
do not materially extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterment
which substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired
or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and other
comprehensive income in other income or expenses. Intangible assets, net Intangible assets consist of acquired software and senior care service
application developed by the Company. The Company has purchased software from third parties used for operation management and developed
an application for its senior care service. Software is initially recorded at cost and amortized on a straight-line basis over the estimated
economic useful lives of five to ten years. Impairment of long-lived assets Long-lived assets are reviewed for impairment
when events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Long-lived assets with
carrying values that are not expected to be recovered through future cash flows are written down to their estimated fair values. The
carrying value of a long-lived asset is deemed not recoverable if it exceeds the sum of undiscounted cash flows expected to result from
the use and eventual disposition of the asset. If the asset’s carrying value exceeds the sum of its undiscounted cash flows, a
non-cash asset impairment charges equal to the excess of the asset’s carrying value over its estimated fair value is recorded.
Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction
between market participants at a specified measurement date. We measure fair value using market price indicators or, in the absence of
such data, appropriate valuation technique. Leases Leases are classified at lease commencement date
as either a finance lease or an operating lease. A lease is a finance lease if it meets any of the following criteria: (a) the lease
transfers ownership of the underlying asset to the lessee by the end of the lease term. (b) the lease grants the lessee an option to
purchase the underlying asset that the lessee is reasonably certain to exercise, (c) the lease term is for the major part of the remaining
economic life of the underlying asset, (d) the present value of the sum of the lease payments and any residual value guaranteed by the
lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset
or (e) the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of
the lease term. When none of the criteria meets, the lease shall be classified as an operating lease. For lessee, a lease is recognized as a right-of-use
asset with a corresponding liability at lease commencement date. The lease liability is calculated at the present value of the lease
payments not yet paid by using the lease term and discount rate determined at lease commencement. The right-of-use asset is calculated
as the lease liability, increased by any initial direct costs and prepaid lease payments, reduced by any lease incentives received before
lease commencement. The right-of-use asset itself is amortized on a straight-line basis unless another systematic method better reflects
how the underlying asset will be used by and benefits the lessee over the lease term. In February 2016, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). The amendments in
this ASU require an entity to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition,
measurement and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain
quantitative and qualitative disclosures about leasing arrangements. The Company adopted ASC 842 effective as of the beginning of the
first period presented by using a modified retrospective transition approach in the accompanying financial statements of the Company.
The adoption of this standard had a material impact on the Company’s financial position, with no material impact on the results
of operations and cash flows (see Note 9 and Note 10). Convertible note- cash conversion feature ASC 470, Debt Freestanding
instruments-warrants Per ASC 470-20-30-2, when detachable warrants (detachable call options)
are issued in conjunction with a debt instrument as consideration in purchase transactions, the amounts attributable to each class of
instrument issued shall be determined separately, based on values at the time of issuance. (1) The first step in determining the proper accounting
for warrants is to determine whether the equity-linked component is free standing financial instrument of embedded in a host instrument.
According to the warrant agreement, the debt and warrant agreements were both entered into by the parties on December 20, 2021 and May
13,2022 warrants were issued as part of the subscription agreement with the note holders. The holder can transfer the warrant to any person
or entity in accordance with the warrant agreement as long as there is a registration statement effective. The warrants can be exercised
any time after issuance dates and prior to the expiration date. The debt can remain outstanding even after the warrants are exercised.
Based on the above facts, the warrants should be considered as a freestanding instrument. (2) The next step is to determine whether the
free-standing instrument is within the scope of ASC 480. The warrants are not within the scope of ASC 480 because the warrant is not considered
a mandatorily redeemable financial instrument. The Company has no obligation to redeem the shares or settle the obligation by transferring
assets. (3) The last step is to determine if the freestanding instrument should
be accounted for as an equity instrument or liability within the guidance of ASC 815-40. The Company determines the value of the warrants
using the Black- Scholes Option Pricing Model (“Black-Scholes”) using the stock price on the date of issuance, the risk-free
interest rate associated with the life of the debt, and the volatility of the stock. Based on the above analysis, the Company concluded that the warrant shall be classified as equity and is recorded
at fair value. Subsequent re-measurement is not required. Convertible debt – derivative treatment When the Company issues debt with a conversion feature,
we must first assess whether the conversion feature meets the requirements to be treated as a derivative, as follows: a) one or more underlying,
typically the price of our common stock; b) one or more notional amounts or payment provisions or both, generally the number of shares
upon conversion; c) no initial net investment, which typically excludes the amount borrowed; and d) net settlement provisions, which in
the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. An embedded equity-linked
component that meets the definition of a derivative does not have to be separated from the host instrument if the component qualifies
for the scope exception for certain contracts involving an issuer’s own equity. The scope exception applies if the contract is both
a) indexed to its own stock; and b) classified in shareholders’ equity in its statement of financial position. If the conversion feature within convertible debt
meets the requirements to be treated as a derivative, we estimate the fair value of the convertible debt derivative upon the date of issuance.
If the fair value of the convertible debt derivative is higher than the face value of the convertible debt, the excess is immediately
recognized as interest expense. Otherwise, the fair value of the convertible debt derivative is recorded as a liability with an offsetting
amount recorded as a debt discount, which offsets the carrying amount of the debt. The convertible debt derivative is revalued at the
end of each reporting period and any change in fair value is recorded as a gain or loss in the statement of operations. The debt discount
is amortized through interest expense over the life of the debt. The Company did not identify any derivative in their convertible notes
issued during the reporting period. Convertible debt – beneficial conversion feature If the conversion feature is not treated as a derivative, the Company assesses
whether it is a beneficial conversion feature (“BCF”). A BCF exists if the conversion price of the convertible debt instrument
is less than the stock price on the commitment date. This typically occurs when the conversion price is less than the fair value of the
stock on the date the instrument was issued. The value of a BCF is equal to the intrinsic value of the feature, the difference between
the conversion price and the common stock into which it is convertible and is recorded as additional paid in capital and as a debt discount
in the consolidated balance sheets. The Company amortizes the balance over the life of the underlying debt as amortization of debt discount
expense in the consolidated statements of operations. If the debt is retired early, the associated debt discount is then recognized immediately
as amortization of debt discount expense in the consolidated statements of operations. The Company did not identify any BCF in their convertible
notes issued during the reporting period. Fair Value of Financial Instruments The fair value of a financial instrument is defined
as the exchange price that would be received from an asset or paid to transfer a liability (as exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants at the measurement date. The carrying amounts
of financial assets and liabilities, such as cash and cash equivalents, time deposits, accounts receivable, prepaid expenses and other
current assets, accounts payable, and other current liabilities, approximate their fair values because of the short maturity of these
instruments and market rates of interest. ASC 820 requires certain disclosures regarding
the fair value of financial instruments. Fair value is defined as the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes
the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use
of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1 – Quoted prices in active
markets for identical assets and liabilities.
Level 2 – Quoted prices in active
markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly,
for substantially the full term of the financial instrument.
Level 3 – Unobservable inputs that
are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes
certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Company considers the carrying amount of
its financial assets and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, and accounts
payable to approximate the fair value of the respective assets and liabilities as of June 30, 2021 and 2020 owing to their
short-term or immediate nature. Revenue Recognition The Company adopted Accounting Standards Codification
No. 606, Revenue from Contracts with Customers The Company generates revenues primarily from
installation & maintenance services, housekeeping services, senior care services, sales of household appliance accessories and sales
of E-watches. The Company sells its goods and services through a third-party service provider WeChat platform. The Company’s revenues
are subject to value added tax (“VAT”). To record VAT payable, the Company uses the gross presentation method, which presents
the taxable services and the available input VAT amount (at the rate applicable to the supplier). Revenues are recorded net of VAT in
accordance with the ASC 606. The Company considers revenue realized or realizable and earned when all the five following criteria are
met: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction
price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the
entity satisfies a performance obligation. The recognition of revenues involves certain management judgments. The amount and timing of
our revenues could be materially different for any period if management made different judgments or utilized different estimates. Installation& maintenance Installation and maintenance services mainly
consisting of the following services: technical home installation and repair, maintenance and other after sale services. Revenues from
installation and maintenance services are recognized at a point in time once the service is transferred to the customer. For service
arrangements that include multiple performance obligations, revenues are allocated to each performance obligation based on its standalone
selling price. The Company allocates arrangement consideration in multiple-deliverable revenue arrangements at the inception of an arrangement
to all deliverables based on the relative selling price method, generally based on the best estimate of selling price. The Company considers
whether the nature of its promise is a performance obligation to provide the specified goods or services itself (that is, the entity
is a principal) or to arrange for the other party to provide those goods or services (that is, the entity is an agent). The Company acts
as principal and has contracts with third-party service providers (i.e., service outlets) who acts as agents. The Company is responsible
for market development and providing the customer information to the service provider, directing the outlet to provide services and coordination
with the customer, while the service provider provides the door-to-door service. The price of services is set by the Company and the
service provider is only responsible for collection of payments. When the Company’s end customers place orders online for services,
they pay either a required visit fee or the estimated full amount of service fee through third-party payment platforms, such as WeChat
Pay and Alipay. If the customer is not satisfied with the chosen provider, the service provider can be re-selected. Regardless of the
service provider’s performance, the Company is still liable to complete the orders. If the end customer fails to pay after satisfactory
service is provided and the service provider is unable to collect payment from the end customer, the Company will communicate directly
with the end customer. The service provider is not obligated to pay the Company. To minimize our risk, the service provider will remit
payment of any outstanding receivables each month. Housekeeping services Housekeeping services refer to services including housecleaning and
personnel staffing. Revenues from housekeeping are recognized at a point in time upon completion of services to the customer based on
the relative selling price method. Senior care services Senior care services refer to services including
BP, heart rate test, daily steps count, location, and track record, call for help by Wechat or phone, and other care services rendered
to senior customers through an E-watch, which is given to the customers when they pay the annual fees. The customers sign a contract for
the services with the Company. The contract term is normally one year. The revenues from senior care services are allocated into the revenue
from the E-watch sold and the revenue of the services provided. Revenues from the E-watch sold are recognized at a point in time once
customers receive the E-watch and the revenues from the services provided are recognized over the service period. Disaggregation of revenue from contracts with customers During the process of performing the installation
and maintenance services, the Company also sells household appliance accessories such as air conditioner parts to its customers according
to the customers’ needs. The Company did not sell these household appliance accessories separately. Consequently, the Company regards
sales of household appliance accessories as a component of its installation and maintenance segment, but separates revenue generated
from sale of household appliance accessories as a disaggregated revenue stream. The senior care services consist of the sale of E-watch
and the care services. The E-watch cannot be sold to the customers solely without the care services, and the care services should be
rendered by the E-watch. Consequently, the Company regards these operating activities as operating in one material segment, being the
revenue of senior care services. Based on the above discussion, the Company disaggregated
sales of household appliance accessories from installation and maintenance revenue and senior care services revenue into the sales of
the E-watch and the care service. Sales of household appliance accessories and E-watches are recognized in revenue at a point in time
while revenue from care service is recognized over a period of time. Sublease The Company subleases its operating leased right-of-use
asset. For the years ended June 30, 2022, 2021 and 2020, the sublease income of operating lease right-of-use asset were $0 Cost of revenues Cost of revenues consists of service fees paid
to staff, outlets, suppliers and the cost of accessories sold. Government subsidies Government subsidies as the compensation for
expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related cost
are recognized in profit or loss in the period in which they become receivable. Government subsidies are recognized when received and
all the conditions for their receipt have been met. For the years ended June 30, 2022, 2021 and 2020,
the Company received government subsidies of $7,733, $908,051 and $0, respectively. The grants were recorded as other income in the consolidated
financial statements. Income taxes Income taxes are provided on an asset and liability
approach for financial accounting and reporting of income taxes. Any PRC tax paid by subsidiaries during the year is recorded. Deferred
income taxes are recognized for all significant temporary differences at enacted rates and classified as current or non-current based
upon the classification of the related asset or liability in the financial statements. A valuation allowance is provided to reduce the
amount of deferred tax assets if it is considered more likely than not that some portion of, or all, the deferred tax asset will not
be realized. Ordinary shares The Company accounts for repurchased ordinary shares under the cost
method and includes such treasury stock as a component of the common shareholders’ equity. Related parties Parties are considered to be related if one party
has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making
financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence,
such as a family member or relative, shareholder, or a related corporation. Earnings per share The Company computes earnings per share (“EPS”)
in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies with complex capital structures to present basic
and diluted EPS. Basic EPS is measured as net income divided by the weighted average ordinary shares outstanding for the period. Diluted
EPS is similar to basic EPS but presents the dilutive effect on a per share basis of potential ordinary shares (e.g., convertible securities,
options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential
ordinary shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded
from the calculation of diluted EPS. There were no potentially dilutive ordinary shares during the fiscal years ended June 30, 2022,
2021 and 2020. Comprehensive income/(loss) ASC Topic 220 establishes standards for reporting
comprehensive income and its components. Comprehensive income or loss is defined as the change in equity during a period from transactions
and other events from non-owner sources. During the fiscal years ended June 30, 2022, 2021 and 2020, foreign currency translation gain
(loss) adjustments of $(2,265,859), $3,261,889 and $(837,040), respectively, were recognized as a component of accumulated other comprehensive
income (loss), respectively. Foreign currency translation The Company’s principal country of operations
is the PRC. The financial position and results of its operations are determined using RMB, the local currency, as the functional currency.
The consolidated financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows denominated
in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities denominated in
foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated
in the functional currency is translated at the historical rate of exchange at the time of capital contribution. Because cash flows are
translated based on the average translation rate, amounts related to assets and liabilities reported on the consolidated statements of
cash flows will not necessarily agree with changes in the corresponding balances on the consolidated balance sheets. Translation adjustments
are included as a separate component of accumulated other comprehensive income (loss). The value of RMB against U.S. Dollar may fluctuate
and is affected by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of
RMB may materially affect the Company’s consolidated financial condition in terms of U.S. Dollar reporting. The following table
outlines the currency exchange rates that were used in the consolidated financial statements:
June
30, June
30, June
30,
Year-end spot rate US$1= 6.7114 RMB US$1= 6.4601 RMB US$1= 7.0795 RMB
Average rate US$1= 6.4661 RMB US$1= 6.6076 RMB US$1= 7.0293 RMB Segment reporting Operating segments, and the amounts of each segment
item reported in the consolidated financial statements, are identified from the financial information provided regularly to the Company’s
most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Company’s various
lines of business and geographical locations. Individually material operating segments are
not aggregated for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect
of the nature of products and services, the nature of production processes, the type or class of customers, the methods used to distribute
the products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material
may be aggregated if they share a majority of these criteria. The Company’s three segments are installation & maintenance,
housekeeping and senior care services. Operation of senior care services began in August 2019. The Company started generating revenue
from this new segment in August 2019. Commitments and contingencies The Company follows subtopic 450-20 of the FASB
Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated
financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events
occur or fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.
There are no known commitments or contingencies as of June 30, 2022 and 2021. Concentration of risks Exchange rate risks The Company’s Chinese subsidiaries may
be exposed to significant foreign currency risks from exchange rate fluctuations and the degree of volatility of foreign exchange rates
between the U.S. Dollar and the RMB. As of June 30, 2022 and 2021, the RMB denominated cash and cash equivalents amounted to $53,946,205
and $52,410,472, respectively. Currency convertibility risks Substantially all of the Company’s operating
activities are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place
either through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted
by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory institutions
requires submitting a payment application form together with other information such as suppliers’ invoices, shipping documents
and signed contracts. Concentration of credit risks Financial instruments that potentially subject
the Company to concentration of credit risks consist primarily of cash and cash equivalents and accounts receivable, the balances of
which stated on the consolidated balance sheets represented the Company’s maximum exposure. The Company places its cash and cash
equivalents in good credit quality financial institutions in China. Risks and uncertainties The operations of the Company are located in
the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by political, economic,
and legal environments in the PRC, as well as by the general state of the PRC economy. The Company’s results may be adversely affected
by changes in the political, regulatory and social conditions in the PRC. Although the Company has not experienced losses from these
situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed
in Note 1, this may not be indicative of future results. Revisions The Company determined that previously issued
unaudited condensed consolidated financial statements for the year ended June 30, 2022 contained in the Company’s registration
statement on Form F-1/A filed on November 4, 2022 should be amended to clarify and correct certain statements and typographical errors
about the Company’s grant of shares under its 2022 Equity Incentive Plan to certain directors, officers, and employees as compensations
for their services. The Company evaluated these revisions in compliance
with ASC 250-10 as well as SAB 99 and concluded that the error in previously issued financial statements was immaterial both quantitatively
and qualitatively. Correcting the immaterial error was referred as to as “revisions” of prior period financial statements.
As the effect of the error corrections on the prior periods was immaterial, column headings of “restatements” were not required. Recent accounting pronouncements The Company considers the applicability and impact
of all ASUs. Management periodically reviews new accounting standards that are issued. In June 2016, the FASB issued ASU No. 2016-13,
“Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This amends guidelines
on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized
cost basis, Topic 326 eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity to reflect
its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized
cost basis of the financial assets to present the n |
