E-Home Household Service Holdings Ltd 20-F/A for FY2022
E-Home Household Service Holdings Ltd (EJH)
About this 20-F/A
E-Home Household Service Holdings Ltd filed this 20-F/A on April 6, 2023, covering the fiscal year ended June 30, 2022 (FY2022).
Headline figures
Fiscal year ended June 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $63.75M
- down 14.5% from $74.53M a year earlier
- Net loss
- $5.43M
- compared with net income of $6.4M a year earlier
- Diluted EPS
- -$2.99
- compared with $4.47 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Amendment No. 1)
(Mark One)
OR
For the fiscal year ended
OR
For the transition period from ___________ to ___________
OR
Date of event requiring this shell company report _________________________
Commission file number:
(Exact Name of Registrant as Specified in Its Charter)
Not Applicable
(Translation of Registrant’s Name Into English)
(Jurisdiction of Incorporation or Organization)
People’s Republic
of
+86-591-87590668
(Address of Principal Executive Offices)
Mr.
People’s Republic
of
Tel:
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange On Which Registered | ||
Securities registered or to be registered pursuant to Section 12(g) of the Act.
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s
classes of capital or common stock as of the close of the period covered by the annual report (June 30, 2022): There were
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Yes ☐
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
| Large Accelerated Filer ☐ | Accelerated Filer ☐ | Emerging growth company |
If an emerging growth company that prepares its
financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| International Financial Reporting ☐ | Other ☐ | |
| Standards as issued by the International | ||
| Accounting Standards Board |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No
Annual Report on Form 20-F
Year Ended June 30, 2022
Explanatory Note
As required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certificates of our principal executive officer, principal financial officer, and auditor are being filed as exhibits to this Amendment No. 1 on Form 20-F/A as Exhibits 12.1, 12.2, 13.1, 13.2 and 15.2.
Except as described in this Explanatory Note, no other changes have been made to the Original Filing. The Original Filing continues to speak as of the date of the Original Filing and we have not updated the disclosures contained therein to reflect any events which may have taken place at a date subsequent to the filing of the Original Filing. Accordingly, this Amendment No. 1 on Form 20-F/A should be read in conjunction with our filings with the SEC subsequent to the date of the Original Filing.
The following sections of this Form 20-F/A contain information that has been amended where necessary to reflect the above-referenced changes to the Original Filing:
| ● | Part I Item 6. Directors, Senior Management and Employees |
| ● | Part I Item 7. Major Shareholders And Related Party Transactions |
| ● | Part III Item 17. Consolidated Financial Statements |
| ● | Part III Item 18. Consolidated Financial Statements |
TABLE OF CONTENTS
| Page | ||
| PART I | 1 | |
| ITEM 6. | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES | 1 |
| A. Directors and Senior Management | 1 | |
| B. Compensation | 2 | |
| C. Board Practices | 3 | |
| D. Employees | 5 | |
| E. Share Ownership | 6 | |
| ITEM 7. | MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS | 7 |
| A. Major Shareholders | 7 | |
| B. Related Party Transactions | 7 | |
| C. Interests of Experts and Counsel | 7 | |
| PART III | 8 | |
| ITEM 17. | CONSOLIDATED FINANCIAL STATEMENTS | 8 |
| ITEM 18. | 8 | |
| ITEM 19. | EXHIBITS | 8 |
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INTRODUCTORY NOTES
Use of Certain Defined Terms
Except as otherwise indicated by the context and for the purposes of this report only, references in this report to:
| ● | “we,” “us,” “our” or “our company,” are to the combined business of E-Home Household Service Holdings Limited, a Cayman Islands company, and its consolidated subsidiaries; |
| ● | “E-Home WFOE” are to E-Home Household Service Technology Co., Ltd., a limited liability company established under the laws of the PRC as a wholly foreign owned enterprise; |
| ● | “E-Home Pingtan” are to E-Home (Pingtan) Home Service Co., Ltd., previously named Pingtan Comprehensive Experimental Area E Home Service Co., Ltd., a limited liability company established under the laws of the PRC; |
| ● | “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
| ● | “Fuzhou Bangchang” are to Fuzhou Bangchang Technology Co. Ltd., a limited liability company established under the laws of the PRC; |
| ● | “Hong Kong” are to the Hong Kong Special Administrative Region of the People’s Republic of China; |
| ● | “PRC” and “China” are to the People’s Republic of China, excluding, for the purpose of this annual report, Taiwan and the special administrative regions of Hong Kong and Macau; |
| ● | “Renminbi” and “RMB” are to the legal currency of China; |
| ● | “SEC” are to the Securities and Exchange Commission; |
| ● | “Securities Act” are to the Securities Act of 1933, as amended |
| ● | “U.S. dollars,” “dollars,” “US$” and “$” are to the legal currency of the United States; and |
Our reporting currency is U.S. dollar and our functional currency is Renminbi. This annual report contains translations of certain foreign currency amounts into U.S. dollars for the convenience of the reader. We make no representation that the Renminbi or U.S. dollar amounts referred to in this annual report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. On June 30, 2022, the noon buying rate for RMB was RMB6.7114 to US$1, as set forth in the H.10 statistical release of the U.S. Federal Reserve Board.
Forward-Looking Information
In addition to historical information, this annual report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. We use words such as “believe,” “expect,” “anticipate,” “project,” “target,” “plan,” “optimistic,” “intend,” “aim,” “will” or similar expressions which are intended to identify forward-looking statements. Such statements include, among others, those concerning market and industry segment growth and demand and acceptance of new and existing products; any projections of sales, earnings, revenue, margins or other financial items; any statements of the plans, strategies and objectives of management for future operations; and any statements regarding future economic conditions or performance, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, as well as assumptions, which, if they were to ever materialize or prove incorrect, could cause the results of the Company to differ materially from those expressed or implied by such forward-looking statements. Potential risks and uncertainties include, among other things, the possibility that third parties hold proprietary rights that preclude us from marketing our products, the emergence of additional competing technologies, changes in domestic and foreign laws, regulations and taxes, changes in economic conditions, uncertainties related to legal system and economic, political and social events in China, a general economic downturn, a downturn in the securities markets, and other risks and uncertainties which are generally set forth under Item 3 “Key information—D. Risk Factors” and elsewhere in this annual report.
Readers are urged to carefully review and consider the various disclosures made by us in this report and our other filings with the SEC. These reports attempt to advise interested parties of the risks and factors that may affect our business, financial condition and results of operations and prospects. The forward-looking statements made in this report speak only as of the date hereof and we disclaim any obligation, except as required by law, to provide updates, revisions or amendments to any forward-looking statements to reflect changes in our expectations or future events.
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PART I
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
The following table sets forth certain information regarding our directors and executive officers.
| NAME | AGE | POSITION | ||
| Wenshan Xie | 49 | Chairman and Chief Executive Officer | ||
| Chunsheng Zhu | 57 | Chief Financial Officer and Director | ||
| Mingxiang He | 46 | Chief Marketing Officer and Director | ||
| Yang Chen | 31 | Chief Technology Officer | ||
| Yijing Ye | 57 | Independent Director | ||
| Ratansha B. Vakil | 61 | Independent Director | ||
| Jianhua Wang | 50 | Independent Director | ||
| Mark Willis | 66 | Independent Director |
Wenshan Xie. Mr. Xie is our founder and has served as our Chief Executive Officer and Chairman since May 23, 2019. He has served as Chief Executive Officer of E-Home Pingtan since 2014. Since 2007, Mr. Xie has also been the executive director and general manager of Fuzhou Bangchang. Mr. Xie is a pioneer in China’s home appliance service industry and has devoted himself to this industry for 15 years. He received his Executive Master of Business Administration degree from the School of Continuing Education at Tsinghua University in 2010.
Chunshen Zhu. Mr. Zhu has served as our Chief Financial Officer since November 23, 2020 and our director since November 30, 2020. Mr. Zhu has served as financial manager of E-Home Pingtan since July 2020. Before joining us, he was the finance director of Fujian Haixing Entertainment Company from January 1992 to June 1999 and financial manager at Fuzhou Mawei Shipping Co., Ltd. from February 2002 to September 2009. From July 2010 to March 2020, Mr. Zhu was the chief financial officer of Fujian Entrepreneurship Cooperation Electric Co., Ltd., a Chinese company with shares quoted on the National Equities Exchange and Quotations. Mr. Zhu graduated from Fujian Jimei Institute of Finance and Economics, where he majored in Industrial Accounting.
Mingxiang He. Mr. He has served as our Chief Marketing Officer and Director since August 19, 2021. Prior to that, he served as an operations manager at E-Home Pingtan since May 2021. Before joining the Company, Mr. He was the general manager of Fujian Magic New Technology Co., Ltd from May 2017 to April 2021, and a manager of Xiamen Chaohong Electronics Co., Ltd. from January 2015 to April 2017. He studied and researched in the UK from 2005 to 2012. Prior to that, he was a teacher from 1994 to 2005 and was selected as a member at a teaching research association. He had substantial work and research experience in the fields of e-commerce, foreign trade, Internet of Things and blockchain. Mr. He graduated from Fujian Yuanhong Normal School in 1994 where he majored in Professional Teachers.
Yang Chen. Mr. Chen has served as our Chief Technology Officer since May 23, 2019 and he has served as IT manager of E-Home Pingtan since 2015. He has four years’ experience in website development. Mr. Chen worked in the new media product operation department in Fuzhou Yeats Optoelectronic Technology Co, Ltd., an LED product sales company in Fujian, from 2014 to 2015. Mr. Chen received his bachelor’s degree in mechanical design from Fuzhou University Zhicheng College in 2014.
Yijing Ye. Ms. Ye has served as our independent director since May 14, 2021. She has more than 20 years of extensive experience relating to financial analysis, accounting and financial management. Since 2009, Ms. Ye has been the Chief Financial Officer of Easen International, Inc., an international firm headquartered in San Diego that provides environmental and financial services for industrial clients, international development organizations and government agencies. From 2005 to 2009, she was a financial specialist at Easen International, Inc.’s Shanghai office. From 1999 to present, Ms. Ye has also acted as a freelance international consultant and participated in more than 30 international projects financed by various international organizations, such as the Asian Development Bank, the World Bank and the International Finance Corporation, in which she served as the international financial specialist, performing institutional, accounting, financial and economic assessment, forecasting, and comprehensive analysis using self-designed models or models approved by the banks. Ms. Ye holds a Master’s degree in financial engineering from Shanghai Jiao Tong University, a Master of law in economics from Wuhan University, and a BS degree in finance and banking from Shanghai University of Finance and Economics.
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Ratansha B Vakil. Mr. Vakil has served as our independent director since May 14, 2021. Since April 2017, Mr. Vakil has been President of SkyFi Capital Partners Inc., a firm based in New York City that provides financial and management consulting services. From April 2012 to April 2017, he was an advisor of IT and funding at Prestige Investment Associates Inc. Prior to that, he provided consulting services on accounting, financial, management and analytical software systems to companies. Mr. Vakil received an MBA in international business and finance from the University of San Diego and a bachelor’s degree in computer science and economics with a minor in mathematics from the National University of Singapore.
Jianhua Wang. Mr. Wang has served as our independent director since May 14, 2021. Since 2009, Mr. Wang has acted as a senior manager at China Taiping Insurance Group Ltd, one of the largest insurance companies in China. From October 2016 to December 2018, he was a director of Yanguangwo (Beijing) Culture Development Co., Ltd. Mr. Wang holds a bachelor’s degree in financial management from Zhongnan University of Economics and Law.
Mark Willis. Mr. Willis has served as our independent director since May 14, 2021. Mr. Willis is the President and CEO of ParQuest Consulting since October 2014. Prior to his current position, Mr. Willis was a Managing Director with Morgan Stanley and Citi Smith Barney. He held several executive positions including Director of Investment Products Distribution, Head of Funds Sales, Head of Diversity, and Director of Training. Mr. Willis currently serves on the Board of Directors of the South Bronx Overall Economic Development Corporation. He served on the board of the National Association of Securities Professionals (NASP) from 1995-2012 and was the Chairman of the Board during the financial crisis of 2008 and 2009. Mr. Willis earned a Bachelor of Business Administration in Finance and Investments and a Master of Business Administration in Computer Methodology from Bernard Baruch College in New York, New York.
No family relationship exists between any of our directors and executive officers. There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any person referred to above was selected as a director or member of senior management.
B. Compensation
Executive Compensation
For the fiscal year ended June 30, 2022, the aggregate cash compensation and benefits that we paid to our executive officers was approximately $372,762.
Director Compensation
For the fiscal year ended June 30, 2022, we granted 5,000 ordinary shares to each of our independent directors, Yijing Ye, Ratansha Vakil, Yijing Ye and Mark W. Willis, under the 2022 Equity Incentive Plan as compensation for their services. For the fiscal year ended June 30, 2022, we granted an aggregate of 500,000 shares to Wenshan Xie, chairman of the board and chief executive officer of the Company, under the 2022 Equity Incentive Plan as compensation for his services. We did not pay other compensation to our directors. Other than as described above, none of our directors or executive officers received any equity awards, including, options, restricted shares or other equity incentives in the year ended June 30, 2022. We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our non-employee directors. Our PRC subsidiaries are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance and other statutory benefits and a housing provident fund.
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C. Board Practices
Board Composition and Committees
The Nasdaq Marketplace Rules generally require that a majority of an issuer’s board of directors must consist of independent directors. Our board of directors currently consists of seven directors, including four independent directors, namely, Ms. Yijing Ye, Mr. Ratansha Vakil, Mr. Jianhua Wang and Mr. Mark Willis, so that a majority of our board of directors is independent.
A director is not required to hold any shares in our company to qualify to serve as a director. Our board of directors may exercise all the powers of our company to borrow money, mortgage or charge its undertaking, property and uncalled capital, and to issue debentures, bonds and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third-party.
A director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with our company is required to declare the nature of his interest at a meeting of our directors. A director may vote in respect of any contract, proposed contract, or arrangement notwithstanding that he may be interested therein, and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of our directors at which any such contract or proposed contract or arrangement is considered.
Board Committees
The Board has established three standing committees: Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. Each of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee is comprised entirely of independent directors. From time to time, the Board may establish other committees. The Board has adopted a written charter for each of the Committees which are available on the corporate governance page of our website at www.ej111.com. Printed copies of these charters may be obtained, without charge, by contacting the Corporate Secretary, E-Home Household Service Holdings Limited, E-Home, 18/F, East Tower, Building B, Dongbai Center, Yangqiao Road, Gulou District, Fuzhou City 350001, People’s Republic of China
Each committee’s members and functions are described below.
Audit Committee
Our audit committee consists of three directors, namely, Ms. Yijing Ye, Mr. Ratansha Vakil and Mr. Jianhua Wang, each of whom satisfies the “independence” requirements of Rule 10A-3 under the Exchange Act and Section 5605 of the Nasdaq Marketplace Rules. Ms. Ye is the chairperson of our audit committee. The board of directors has also determined that Ms. Ye qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:
| ● | appointing the independent auditors and pre-approving all auditing and non-auditing services permitted to be performed by the independent auditors; |
| ● | reviewing with the independent auditors any audit problems or difficulties and management’s response; |
| ● | discussing the annual audited financial statements with management and the independent auditors; |
| ● | reviewing the adequacy and effectiveness of our accounting and internal control policies and procedures and any steps taken to monitor and control major financial risk exposures; |
| ● | reviewing and approving all proposed related party transactions; |
| ● | meeting separately and periodically with management and the independent auditors; and |
| ● | monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance. |
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Compensation Committee
Our compensation committee consists of three directors, namely, Ms. Yijing Ye, Mr. Ratansha Vakil and Mr. Jianhua Wang, each of whom satisfies the “independence” requirements of Rule 10A-3 under the Exchange Act and Section 5605 of the Nasdaq Marketplace Rules. Mr. Vakil is the chairperson of our compensation committee. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated. The compensation committee is responsible for, among other things:
| ● | reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers; |
| ● | reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors; |
| ● | reviewing periodically and approving any incentive compensation or equity plans, programs or similar arrangements; and |
| ● | selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management. |
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of four directors, namely, Ms. Yijing Ye, Mr. Ratansha Vakil, Mr. Jianhua Wang and Mr. Mark Willis, each of whom satisfies the “independence” requirements of Rule 10A-3 under the Exchange Act and Section 5605 of the Nasdaq Marketplace Rules. Mr. Willis is the chairperson of our nominating and corporate governance committee. The nominating and corporate governance committee assists the board of directors in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:
| ● | selecting and recommending to the board nominees for election by the shareholders or appointment by the board; |
| ● | reviewing annually with the board the current composition of the board with regards to characteristics such as independence, knowledge, skills, experience and diversity; |
| ● | making recommendations on the frequency and structure of board meetings and monitoring the functioning of the committees of the board; and |
| ● | advising the board periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. |
Duties of Directors
Under Cayman Islands law, our directors have a fiduciary duty to our company to act honestly, in good faith and with a view to our best interests. Our directors also owe to our company a duty to act with skill and care. It was previously considered that a director need not exhibit in the performance of his duties a greater degree of skill than may reasonably be expected from a person of his knowledge and experience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty of care to us, our directors must ensure compliance with our amended and restated memorandum and articles of association, as amended and restated from time to time. Our company has the right to seek damages if a duty owed by our directors is breached. In limited exceptional circumstances, a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached. You should refer to “Item. Additional Information – B. Memorandum and Articles of Association - Differences in Corporate Law” for additional information on our standard of corporate governance under Cayman Islands law.
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A director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with our company is required to declare the nature of his interest at a meeting of our directors. A director may vote in respect of any contract, proposed contract, or arrangement notwithstanding that he may be interested therein, and if he does so his vote shall be counted and he may be counted in the quorum at any meeting of our directors at which any such contract or proposed contract or arrangement is considered. Our board of directors may exercise all the powers of our company to borrow money, mortgage or charge its undertaking, property and uncalled capital, and to issue debentures, bonds and other securities whenever money is borrowed or as security for any debt, liability or obligation of the company or of any third party.
The functions and powers of our board of directors include, among others:
| ● | convening shareholders’ annual general meetings and reporting its work to shareholders at such meetings; |
| ● | declaring dividends and distributions; |
| ● | appointing officers and determining the term of office of officers; |
| ● | exercising the borrowing powers of our company and mortgaging the property of our company; and |
| ● | approving the transfer of shares of our company, including the registering of such shares in our share register. |
Terms of Directors and Officers
Our officers are elected by and serve at the discretion of our board of directors. Our directors are not subject to a term of office and hold office until such time as they are removed from office by ordinary resolution of the shareholders or until the expiration of his term or his successor has been elected and qualified. A director will be removed from office automatically if, among other thing, the director (i) dies; (ii) becomes bankrupt or makes any arrangement or composition with his creditors generally; (iii) is found to be or becomes of unsound mind; (iv) resigns his office by notice in writing to our company; (v) is prohibited by law from being a director; and (vi) is removed from the office pursuant to any other provisions of our amended and restated memorandum and articles of association.
D. Employees
As of June 30, 2022, we had a total of 526 employees. The following table shows the number of our employees by function.
| Function |
Number of |
||
| Management | 7 | ||
| Finance | 25 | ||
| Product Development | 20 | ||
| Human Resource Administration | 26 | ||
| Sales Center-Director | 2 | ||
| Sales Center-Warehouse Logistics | 10 | ||
| Sales Center-Purchasing | 8 | ||
| Sales Center-Planning | 15 | ||
| Sales Center-Customer Service | 69 | ||
| Sales Center-Marketing | 313 | ||
| Sales Center-Senior Care Service | 22 | ||
| Sales Center-Housekeeping | 9 | ||
| Total | 526 |
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As required by laws and regulations in China, we contribute to various statutory employee benefit plans that are organized by municipal and provincial governments, including pension, medical insurance, unemployment insurance, work-related injury insurance and maternity insurance plans as well as the housing provident fund. We are required under Chinese law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time.
We enter into standard labor contracts with our key employees. The labor contract with our key personnel typically includes a standard non-compete covenant that prohibits the employee from competing with us, directly or indirectly, during his or her employment. It also has a standard confidentiality and intellectual property provision prohibiting employees from disclosing our confidential information obtained during the employment to any third party.
E. Share Ownership
The following table sets forth information with respect to beneficial ownership of our share capital as of October 30, 2022 by:
| ● | Each of our directors (including our director nominees) and named executive officers; | |
| ● | All directors (including our director nominees) and named executive officers as a group; and | |
| ● | Each person who is known by us to beneficially own 5% or more of each class of our voting securities. |
| Ordinary
Shares Beneficially Owned | ||||||||
| Number(1) | Percent of Class(2) | |||||||
| Directors and Executive Officers: | ||||||||
| Wenshan Xie, Chairman and Chief Executive Officer(3) | 646,275 | 10.66 | % | |||||
| Chunsheng Zhu, Chief Financial Officer and Director | 0 | 0 | ||||||
| Mingxiang He, Chief Marketing Officer and Director | 0 | 0 | ||||||
| Yang Chen, Chief Technology Officer | 0 | 0 | ||||||
| Yijing Ye, Independent Director | * | * | ||||||
| Ratansha Vakil, Independent Director | * | * | ||||||
| Jianhua Wang, Independent Director | * | * | ||||||
| Mark Willis, Independent Director | * | * | ||||||
| All directors and executive officers as a group | 647,575 | 10.68 | % | |||||
| Other Principal Shareholders: | ||||||||
| Streeterville Capital LLC(4) | 539,758 | 8.90 | % | |||||
| * | Less than 1%. |
| (1) | Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as noted below, each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to ordinary shares. For each beneficial owner above, any options exercisable within 60 days have been included in the denominator. |
| (2) | A total of 6,063,517 ordinary shares are considered to be outstanding pursuant to SEC Rule 13d-3(d)(1) as of October 30, 2022. |
| (3) | Includes (i) 414,401 ordinary shares held by Mr. Wenshan Xie and (ii) 231,874 ordinary shares held by E-home Group Limited. Mr. Xie is the director and sole shareholder of E-home Group Limited and has voting and investment power over the shares held by it. |
| (4) | Includes 539,758 ordinary shares held by Streeterville Capital LLC, a limited liability company incorporated in Utah, USA. Streeterville Capital LLC is wholly owned by Streeterville Management LLC, a limited liability company incorporated in Utah, USA. The beneficial owner of Streeterville Management LLC is John M. Fife, a U.S. citizen. The principle office of Streeterville Capital LLC and Streeterville Management LLC is 303 E Wacker Drive, Suite 1040, Chicago, IL 60601. |
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None of our major shareholders have different voting rights from other shareholders. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
Please refer to Item 6 “Directors, Senior Management and Employees—E. Share Ownership.”
B. Related Party Transactions
As of June 30, 2022 and 2021, the Company had $327,985 and $30,925 payable balances from Mr. Wenshan Xie, one of its major shareholders, for purchase of goods and services.
During the year ended June 30, 2022, Mr. Xie made payment of $339,045 for purchase of goods and services for the Company and the Company repaid $29,514 to Mr. Xie. During the year ended June 30, 2021, Mr. Xie made payment of $63,975 for purchase of goods and services for the Company and the Company repaid $24,575 to Mr. Xie. During the year ended June 30, 2020, the Company paid $8,475 in advance to Mr. Xie for purchase of goods and services.
On June 22, 2022, the Company granted an aggregate of 520,000 ordinary shares to its directors and officers under its 2022 Equity Incentive Plan as compensations for their services at a fair value of $167,700 (par value of $52 and additional paid-in capital of $167,648).
On June 21, 2021, the Company granted 6,000 ordinary shares to three of its independent directors (2,000 shares for each director) as their compensations at a fair value of $213,840 (par value of $1 and additional paid-in capital of $213,839).
C. Interests of Experts and Counsel
Not applicable.
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PART III
ITEM 17. FINANCIAL STATEMENTS
We have elected to provide our financial statements pursuant to Item 18.
ITEM 18. FINANCIAL STATEMENTS
The full text of our audited consolidated financial statements begins on page F-1 of this annual report.
ITEM 19. EXHIBITS
8
| * | Filed with this amendment to annual report on Form 20-F |
| ** | Furnished with the previously filed annual report on Form 20-F |
9
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| E-Home Household Service Holdings Limited | ||
| By: | /s/ Wenshan Xie | |
| Name: | Wenshan Xie | |
| Title: | Chief Executive Officer | |
Date: April 5, 2023
10
E-HOME HOUSEHOLD SERVICE HOLDINGS LIMITED
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
E-Home Household Service Holdings Limited
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of E-Home Household Service Holdings Limited (the Company) as of June 30, 2022, and 2021, and the related consolidated statements of operations and other comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended June 30, 2022, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2022, and 2021, and the consolidated results of its operations and its consolidated cash flows for each of the three years in the period ended June 30, 2022, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ | |
| We have served as the Company’s auditor since 2020 | |
| November 4, 2022, except for Notes 19 and Note 24, as to which the date is April 5, 2023. | |
F-2
E-Home Household Service Holdings Limited
Consolidated Balance Sheets
As of June 30, 2022 and 2021
(In U.S. Dollars, except for Share Data)
| 2022 | 2021 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepayments, deposits and other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Long-term investment | - | |||||||
| Operating lease – right-of-use assets, net | ||||||||
| Finance lease – right-of-use assets, net | ||||||||
| Long-term prepayments and other non-current assets | ||||||||
| Deferred income tax assets | ||||||||
| Total non-current assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Advance from customers | ||||||||
| Taxes payable | ||||||||
| Current maturities of operating lease liabilities | ||||||||
| Current maturities of finance lease liabilities | ||||||||
| Total current liabilities | ||||||||
| Long-term portion of operating lease liabilities | ||||||||
| Long-term portion of finance lease liabilities | ||||||||
| Convertible notes | - | |||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies | ||||||||
| SHAREHOLDERS’ EQUITY | ||||||||
Ordinary shares, $ | ||||||||
| Additional paid-in capital | ||||||||
| Statutory reserve | ||||||||
| Retained earnings | ||||||||
| Accumulated other comprehensive (loss) income | ( | ) | ||||||
| Total equity attributable to E-Home shareholders | ||||||||
| Non-controlling interest | ( | ) | ( | ) | ||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
E-Home Household Service Holdings Limited
Consolidated Statements of Operations and Other Comprehensive Income
For the Years Ended June 30, 2022, 2021 and 2020
(In U.S. Dollars, except for Share Data)
| 2022 | 2021 | 2020 | ||||||||||
| Revenues | ||||||||||||
| Installation and maintenance | $ | $ | $ | |||||||||
| Housekeeping | ||||||||||||
| Senior care services | ||||||||||||
| Sublease | ||||||||||||
| Total revenues | ||||||||||||
| Cost of revenues | ||||||||||||
| Installation and maintenance | ||||||||||||
| Housekeeping | ||||||||||||
| Senior care services | ||||||||||||
| Total cost of revenues | ||||||||||||
| Gross profit | ||||||||||||
| Operating expenses | ||||||||||||
| Sales and marketing expenses | ||||||||||||
| General and administrative expenses | ||||||||||||
| Total operating expenses | ||||||||||||
| Income (Loss) from operations | ( | ) | ||||||||||
| Other income (expense) | ||||||||||||
| Interest income | ||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ||||||
| Accretion of financing cost | ( | ) | - | - | ||||||||
| Fair value loss – Financial instruments | ( | ) | - | - | ||||||||
| Government subsidy | ||||||||||||
| Foreign currency exchange income (loss) | ( | ) | ( | ) | ||||||||
| Total other income (loss) | ( | ) | ||||||||||
| Income (Loss) before income taxes | ( | ) | ||||||||||
| Income tax expense | ( | ) | ( | ) | ( | ) | ||||||
| Net (loss) income | $ | ( | ) | $ | $ | |||||||
| Net (loss) income attributable to shareholders | ( | ) | ||||||||||
| Net (loss) attributable to non-controlling interests | - | ( | ) | ( | ) | |||||||
| Net (loss) income | $ | ( | ) | $ | $ | |||||||
| Other comprehensive income (loss) | ||||||||||||
| Foreign currency translation adjustment, net of nil tax | ( | ) | ( | ) | ||||||||
| Total comprehensive (loss) income | $ | ( | ) | $ | $ | |||||||
| $ | ( | ) | $ | $ | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
E-Home Household Service Holdings Limited
Consolidated Statements of Changes in Shareholders’ Equity
For the Years Ended June 30, 2022, 2021 and 2020
(In U.S. Dollars, except for Share Data)
| Number
of Shares | Par value | Additional
paid-in capital | Statutory reserve | Retained Earnings | Accumulated other comprehensive loss | Equity attributable to the Company’s shareholders | Non-controlling interest | Total equity | ||||||||||||||||||||||||||||
| Balance at June 30, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Profit (loss) for the year | - | ( | ) | |||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Repayment to shareholders | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Divestment of YLS | - | |||||||||||||||||||||||||||||||||||
| Balance at June 30, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Net Proceeds from the initial public offering | ||||||||||||||||||||||||||||||||||||
| Shares issued to directors | ||||||||||||||||||||||||||||||||||||
| Profit (loss) for the year | - | ( | ) | |||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | |||||||||||||||||||||||||||||||||
| Balance at June 30, 2021 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Loss for the year | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Acquisition of former non-controlling interest in HAPPY | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Disposal of | - | |||||||||||||||||||||||||||||||||||
| Potential acquisition of | ||||||||||||||||||||||||||||||||||||
| Potential acquisition of | ||||||||||||||||||||||||||||||||||||
| Shares issued to directors, employee, and consultants | ||||||||||||||||||||||||||||||||||||
| Issuance of the convertible notes – equity portion | - | |||||||||||||||||||||||||||||||||||
| Issuance of the warrants | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
| Issuance of shares for convertible note interest settlement | ||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
E-Home Household Service Holdings Limited
Consolidated Statements of Cash Flows
For the Years Ended June 30, 2022, 2021 and 2020
(In U.S. Dollars)
| 2022 | 2021 | 2020 | ||||||||||
| Cash generated from operating activities | ||||||||||||
| Net (loss) income | $ | ( | ) | $ | $ | |||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||||||
| Income tax expense | ||||||||||||
| Interest expense | ||||||||||||
| Depreciation and amortization | ||||||||||||
| Amortization of right-of-use assets | ||||||||||||
| Loss on disposal of right-of-use assets | ||||||||||||
| Shares issued to directors, employee, and consultants | ||||||||||||
| Convertible note - Accretion of financing cost | ||||||||||||
| Fair value loss – Financial instruments | ||||||||||||
| Changes in operating assets and liabilities | ||||||||||||
| Accounts receivables, net | ( | ) | ( | ) | ||||||||
| Inventories | ( | ) | ||||||||||
| Prepayments, deposits and other current assets | ( | ) | ( | ) | ( | ) | ||||||
| Long-term prepayments and other non-current assets | ||||||||||||
| Accounts payable and accrued expenses | ||||||||||||
| Taxes payable | ( | ) | ( | ) | ( | ) | ||||||
| Cash provided by operating activities | ||||||||||||
| Investing Activities | ||||||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ( | ) | ||||||
| Purchase of intangible assets | ( | ) | ||||||||||
| Right-of-use-asset costs | ( | ) | ( | ) | ( | ) | ||||||
| Long-term investment | ( | ) | ||||||||||
| Lease principal refund | ||||||||||||
| Deposits for acquisition of land and properties | ( | ) | ( | ) | ||||||||
| Cash paid to former non-controlling shareholders of HAPPY | ( | ) | ||||||||||
| Refunds (Deposits) made for potential acquisitions | ( | ) | ||||||||||
| Cash used in provided by investing activities | ( | ) | ( | ) | ( | ) | ||||||
| Financing Activities | ||||||||||||
| Net proceeds from initial public offering | ||||||||||||
| Distributions to shareholders | ( | ) | ||||||||||
| Proceeds from convertible notes | ||||||||||||
| Payment of convertible notes issuance cost | ( | ) | ||||||||||
| Cash provided by (used in) financing activities | ( | ) | ||||||||||
| Net increase in cash and cash equivalents | ||||||||||||
| Effects of currency translation | ( | ) | ( | ) | ||||||||
| Cash and cash equivalents at beginning of year | ||||||||||||
| Cash and cash equivalents at end of year | $ | $ | $ | |||||||||
| SUPPLEMENTAL DISCLOSURES | ||||||||||||
| Income taxes paid | $ | $ | $ | |||||||||
| Interest paid | $ | $ | $ | |||||||||
| Non-cash transactions | ||||||||||||
| Issuance of shares for potential acquisition of | $ | $ | $ | |||||||||
| Issuance of shares for potential acquisition of | $ | $ | $ | |||||||||
| Issuance of shares to directors and consultants | $ | $ | $ | |||||||||
| Issuance of shares for convertible note interest settlement | $ | $ | $ | |||||||||
| Issuance of the warrants | $ | $ | $ | |||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
NOTE 1 – ORGANIZATION AND NATURE OF OPERATIONS
E-Home Household Service Holdings Limited (the “Company”) was incorporated as a limited company under the law of Cayman Islands on September 24, 2018. The Company does not conduct any substantive operations on its own but instead conducts its business operations through its subsidiaries. The Company and its subsidiaries are hereinafter collectively referred to as “the Company”. The Company is principally engaged in the operation of household services, e.g. installation and maintenance of home appliances, housekeeping and senior care in the People’s Republic of China (the “PRC”) through on-line APP platform or call center. As described below, the Company, through a series of transactions which is accounted for as a reorganization of entities under common control (the “Reorganization”), became the ultimate parent entity of its subsidiaries. Accordingly, these consolidated financial statements reflect the historical operations of the Company as if the current organization structure had been in existence throughout the periods presented.
Reorganization
In preparation of its initial public offering in the United States (“IPO”), the following transactions were undertaken to reorganize the legal structure of the Company. The reorganization involved (i) the incorporation of the Company in the Cayman Islands as a holding company; (ii) the establishment of E-Home Household Service Holdings Limited (“E-Home Hong Kong”) as a wholly-owned subsidiary in Hong Kong, PRC; (iii) the establishment of E-Home Household Service Technology Co., Ltd. (“WOFE”), as a wholly-owned subsidiary of E-Home Hong Kong in Fujian, PRC; (iv) the entry by WFOE into contractual arrangements with Pingtan Comprehensive Experimental Area E Home Service Co., Ltd. (“E-Home Pingtan”) and Fuzhou Bangchang Technology Co. Ltd. (“Fuzhou Bangchang”) and their shareholders. The Company, E-Home Hong Kong and WFOE are all holding companies and had not commenced operation until this reorganization was complete. A reorganization of the Company’s legal structure was completed in February 2019.
As all the entities involved in the process of the Reorganization are under common control before and after the Reorganization, the Reorganization is accounted for in a manner similar to a pooling-of-interest with the assets and liabilities of the parties to the Reorganization carried over at their historical amounts.
Dissolution of the Company’s variable interest entity structure
On October 18, 2021, E-Home WFOE entered into an equity transfer agreement with each of E-Home Pingtan and Fuzhou Bangchang and their respective shareholders, pursuant to which E-Home WFOE exercised the options to acquire all of the equity interests in each of E-Home Pingtan and Fuzhou Bangchang from their respective shareholders. Upon the registration of the equity transfers with the local governmental authorities as of October 27, 2021, the equity transfers were closed, the company’s VIE structure was dissolved and each of E-Home Pingtan and Fuzhou Bangchang became a wholly owned indirect subsidiary of the Company.
Equity transfer agreements
Acquisition of non-controlling interest in HAPPY
On August 10, 2021, the Company’s PRC subsidiary
| In USD | ||||
| Purchase consideration | ||||
| Noncontrolling interests | ( | ) | ||
| Additional paid-in capital | ||||
F-7
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
Reverse stock split
On October 3, 2022, the Company's board of directors
approved to effect a one-for-twenty reverse stock split of its ordinary shares (the “Reverse Stock Split”) with the market
effective on October 4, 2022, such that the number of the Company's authorized preferred and ordinary shares remain unchanged, and the
par value of each ordinary share is increased from US$
The number of ordinary shares outstanding as of June 30, 2022 and 2021 and for the years ended June 30, 2022, 2021 and 2020 were retrospectively adjusted for effect of reverse stock split on October 4, 2022.
The Company’s major consolidated subsidiaries as of June 30, 2022 are as follows:
| Name | Date of Incorporation | Place of Organization | % of Ownership | ||||||
| E-Home Household Service Holdings Limited | % | ||||||||
| E-Home Household Service Technology Co., Ltd. | % | ||||||||
| Pingtan Comprehensive Experimental Area E Home Service Co., Ltd. | % | ||||||||
| Fuzhou Bangchang Technology Co. Ltd. | % | ||||||||
| Fuzhou Yongheng Xin Electric Co., Ltd. (“YHX”) | % | ||||||||
| Fujian Happiness Yijia Family Service Co., Ltd. | % | ||||||||
| Yaxing Human Resource Management (Pingtan)Co., Ltd. | % | ||||||||
| Fuzhou Gulou Jiajiale Family Service Co. Ltd. | % | ||||||||
| Yaxin Human Resource Management (Fuzhou) Co., Ltd. | % | ||||||||
The accompanying consolidated financial statements include the financial statements of the Company and its subsidiaries.
F-8
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
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 $
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.
F-9
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
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 | ||
| Office Equipment | ||
| Electronic Equipment | ||
| Motor Vehicles |
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
F-10
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
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, requires the liability and equity components of convertible debt instruments that may be settled in cash upon conversion to be separately accounted for in a manner that reflects the issuer’s nonconvertible debt borrowing rate. ASC 470-20 requires that the initial proceeds from the sale of these notes be allocated between a liability component and an equity component in a manner that reflects interest expense at the interest rate of similar nonconvertible debt that could have been issued by the Company at such time. We measured the estimated fair value of the debt component of our convertible notes as of the issuance date based on our nonconvertible debt borrowing rate. The equity components of the convertible senior notes have been reflected within additional paid-in capital in our audited consolidated balance sheet, and the resulting debt discount is amortized over the period during which the convertible notes are expected to be outstanding (through the maturity date) as additional non-cash interest expense.
F-11
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
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.
F-12
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
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 (ASC 606) beginning January 1, 2018 and elected to adopt ASC 606 under the modified retrospective method. This guidance was applied retrospectively to the most current period presented in the Company’s consolidated financial statements. The adoption of ASC 606 did not have a material impact on the consolidated financial statements of the Company.
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.
F-13
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
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 , $
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 $
F-14
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
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 $(
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, 2022 |
June
30, 2021 |
June
30, 2020 |
||||||||||
| Year-end spot rate | US$1= |
US$1= |
US$1= |
|||||||||
| Average rate | US$1= |
US$1= |
US$1= |
F-15
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
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
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.
F-16
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
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 net amount expected to be collected. For available-for-sale debt securities, credit losses should be measured in a manner similar to current U.S. GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities, trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU will be effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates, which amended the effective date of ASU 2016-13. The amendments in these ASUs are effective for the Company’s fiscal years, and interim periods within those fiscal years beginning July 1, 2022. Early adoption is permitted. The Company does not expect to early adopt this guidance and is in the process of evaluating the impact of adoption of this guidance on the Company’s consolidated financial statements.
In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while maintaining or improving the usefulness of the information provided to users of financial statements. Among other changes, the new guidance removes from GAAP separation models for convertible debt that require the convertible debt to be separated into a debt and equity component, unless the conversion feature is required to be bifurcated and accounted for as a derivative or the debt is issued at a substantial premium. As a result, after adopting the guidance, entities will no longer separately present such embedded conversion features in equity, and will instead account for the convertible debt wholly as debt. The new guidance also requires use of the “if-converted” method when calculating the dilutive impact of convertible debt on earnings per share, which is consistent with the Company’s current accounting treatment under the current guidance. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, but only at the beginning of the fiscal year. Early adoption is permitted. The Company does not expect to early adopt this guidance and is in the process of evaluating the impact of adoption of this guidance on the Company’s consolidated financial statements.
The Company does not believe other recently issued but not yet effective accounting statements, if recently adopted, would have a material effect on the Company’s consolidated balance sheets, statements of comprehensive income (loss) and statements of cash flows.
NOTE 3 – ACCOUNTS RECEIVABLE
Accounts receivable consisted of the following as of June 30, 2022 and 2021:
| 2022 | 2021 | |||||||
| Accounts receivable, gross | $ | $ | ||||||
| Less: allowance for doubtful accounts | ||||||||
| Accounts receivable, net | $ | $ | ||||||
The Company recorded no allowance for doubtful accounts as of June 30, 2022 and 2021. The Company gives its customers credit periods from 30 days to 90 days and continually assesses the recoverability of uncollected accounts receivable. As of June 30, 2022 and 2021, the balances of the Company’s accounts receivable were all due within the credit periods. Management believes the balances of accounts receivable will be collected in full.
NOTE 4 – INVENTORIES
Inventories as of June 30, 2022 and 2021 consisted of the following:
| 2022 | 2021 | |||||||
| E-watches | $ | $ | ||||||
| Total inventories, net | $ | $ | ||||||
F-17
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
NOTE 5 – PREPAYMENTS, DEPOSITS AND OTHER CURRENT ASSETS
Prepayments, deposits and other current assets as of June 30, 2022 and 2021 consisted of the following:
| 2022 | 2021 | |||||||
Deposits for potential acquisitions* | $ | $ | ||||||
| Prepaid for marketing fee** | ||||||||
| Performance deposits*** | ||||||||
| Prepaid consulting services fee | ||||||||
| Prepaid office deposit**** | ||||||||
| Other current assets | ||||||||
| Prepaid income tax expenses | ||||||||
| Prepaid office rental fee | ||||||||
| Total prepayments, deposits and other current assets | $ | $ | ||||||
| * | On April 30, 2021, the Company entered into
On January 20, 2022, the Company and E-Home Pingtan entered into an equity transfer agreement to acquire 60% equity interests in YouYou Cleaning Co., Ltd. (“Youyou”) in consideration of (i) RMB4 million (approximately $0.60 million) in cash and (ii) 2,702,826 ordinary shares of the Company at a fair value of $2,000,091 (par value of $270 and additional paid-in capital of $1,999,821). The Company paid the consideration on February 3, 2022 however, the legal formalities to transfer the control to the Company were not completed as of June 30, 2022 and recorded paid consideration of $
On January 20, 2022, the Company and E-Home Pingtan entered into an
equity transfer agreement to acquire
On June 1, 2021, the Company entered into an equity transfer agreement with the shareholder of South Pacific Holding Group Limited (“South Pacific”) in which the Company will acquire |
| ** |
| *** |
| **** |
F-18
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
NOTE 6 – PROPERTY AND EQUIPMENT, NET
Property and equipment consisted of the following as of June 30, 2022 and 2021:
| 2022 | 2021 | |||||||
| Buildings | $ | $ | ||||||
| Office equipment | ||||||||
| Electronic equipment | ||||||||
| Motor vehicles | ||||||||
| Total property and equipment, at cost | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Property and equipment, net | $ | $ | ||||||
As of June 30, 2022 and 2021, there were not
any pledged property or equipment. The Company recorded depreciation expense of $
For the years ended June 30, 2022 and 2021, the Company purchased new property
and equipment of $
NOTE 7 – INTANGIBLE ASSETS, NET
Intangible assets consisted of the following as of June 30, 2022 and 2021:
| 2022 | 2021 | |||||||
| Software | $ | $ | ||||||
| Senior care service App | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | $ | $ | ||||||
As of June 30, 2022 and 2021, there were no any
pledged intangible assets to secure bank loans. The Company recorded amortization expense of $
Estimated future amortization expense is as follows as of June 30, 2022:
| Years ending June 30, | Amortization expense | |||
| 2023 | $ | |||
| 2024 | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| Thereafter | ||||
| $ | ||||
NOTE 8 – LONG-TERM INVESTMENT
The Company initiated the divestment process during
July 2021 and on September 15, 2021 formally reduced its ownership in Fuzhou Fumao from
F-19
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
NOTE 9 – OPERATING LEASE RIGHT-OF-USE ASSETS, NET
Operating lease right -of-use assets, net were as follows as of June 30, 2022 and 2021:
| 2021 | Increase/ (Decrease) | Exchange Rate Translation | 2022 | |||||||||||||
| Shou Hill Valley Area | $ | $ | - | $ | ( | ) | $ | |||||||||
| Villas | - | ( | ) | |||||||||||||
| Base Station Tower | - | ( | ) | |||||||||||||
| Farmland* | ( | ) | ||||||||||||||
| Office | - | ( | ) | |||||||||||||
| Total right-of-use assets, at cost | ( | ) | ||||||||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||||||
| Right-of-use assets, net | $ | $ | ( | ) | $ | |||||||||||
| * |
The Company recognized lease expense for the
operating lease right-of-use assets Shou Hill Valley Area and Villas over the lease periods which are
NOTE 10 – FINANCE LEASE RIGHT-OF-USE ASSETS, NET
Finance lease right -of-use assets, net were as follows as of June 30, 2022 and 2021:
| 2021 | Increase/ (Decrease) | Exchange Rate Translation | 2022 | |||||||||||||
| Company vehicles | $ | $ | $ | ( | ) | $ | ||||||||||
| Total right-of-use assets, at cost | ( | ) | ||||||||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ( | ) | ||||||||||
| Right-of-use assets, net | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||
The finance lease right-of-use asset is amortized
over a
NOTE 11 – LONG-TERM PREPAYMENTS AND OTHER NON-CURRENT ASSETS
Long-term prepayments and other non-current assets as of June 30, 2022 and 2021 consisted of the following:
| 2022 | 2021 | |||||||
| Deposits paid for lease assets | $ | $ | ||||||
| Deposits paid for land* | ||||||||
| Total | $ | $ | ||||||
| * |
NOTE 12 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES
The following is a summary of accounts payable and accrued expenses as of June 30, 2022 and 2021:
| 2022 | 2021 | |||||||
| Payable to suppliers | $ | $ | ||||||
| Salary and welfare payables | ||||||||
| Accrued expenses and other current liabilities | ||||||||
| Total | ||||||||
F-20
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
NOTE 13 – ADVANCE FROM CUSTOMERS
Advance from customers as of June 30, 2022 and 2021 consisted of the following:
| 2022 | 2021 | |||||||
| Senior care services | $ | $ | ||||||
| Housekeeping services | ||||||||
| Total | $ | $ | ||||||
E-Home received annual fees from senior care
services customers and recognized revenues over the contract period. The amounts advanced from customers from senior care services were
$
NOTE 14 – OPERATING LEASE LIABILITIES
Operating lease liabilities as of June 30, 2022 and 2021 consisted of the following:
| 2022 | 2021 | |||||||
| Villas* | $ | $ | ||||||
| Base Station Tower** | ||||||||
| Office*** | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
Analyzed for reporting purposes as:
| 2022 | 2021 | |||||||
| Long-term portion of operating lease liabilities | $ | $ | ||||||
| Current maturities of operating lease liabilities | ||||||||
| Total | $ | $ | ||||||
The operating lease liabilities is the net present value of the remaining lease payments as of June 30, 2022 and 2021.
The discount rates used for the Villas, Base
Station Tower and Office were
The Company recorded no operating lease liability
for the operating lease of Shou Hill Valley Area as of June 30, 2022 and 2021, respectively, since the Company prepaid the total lease
expense of $
For the years ended June 30, 2022 and 2021, the operating lease expense
were $
| * |
| ** |
| *** |
F-21
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
Maturity analysis of operating lease liabilities as of June 30, 2022 is as follows:
| Operating lease payment | Villas | Base station tower | Office | Total undiscounted cash flows | ||||||||||||
| Discount rate at commencement | % | % | % | |||||||||||||
| One year | $ | $ | $ | $ | ||||||||||||
| Two years | ||||||||||||||||
| Three years | ||||||||||||||||
| Four years | ||||||||||||||||
| Five years | ||||||||||||||||
| Beyond five years | ||||||||||||||||
| Total undiscounted cash flows | $ | $ | $ | |||||||||||||
| Total financing lease liabilities | ||||||||||||||||
| Difference between undiscounted cash flows and discounted cash flows | ||||||||||||||||
Maturity analysis of operating lease liabilities as of June 30, 2021 is as follows:
| Operating lease payment | Villas | Base station tower | Total undiscounted cash flows | |||||||||
| Discount rate at commencement | % | % | ||||||||||
| One year | $ | $ | $ | |||||||||
| Two years | ||||||||||||
| Three years | ||||||||||||
| Four years | ||||||||||||
| Five years | ||||||||||||
| Beyond five years | ||||||||||||
| Total undiscounted cash flows | $ | $ | $ | |||||||||
| Total financing lease liabilities | ||||||||||||
| Difference between undiscounted cash flows and discounted cash flows | ||||||||||||
NOTE 15 – FINANCE LEASE LIABILITIES
Financing lease liabilities as of June 30, 2022 and 2021 consisted of the following:
| 2021 | Increase/ (Decrease) | Payment | Exchange Rate Translation | 2022 | ||||||||||||||||
| Company vehicles | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
| Add: Unrecognized finance expense | ( | ) | ||||||||||||||||||
| Total financing lease liabilities | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||
Analyzed for reporting purposes as:
| 2022 | 2021 | |||||||
| Long-term portion of finance lease liabilities | $ | $ | ||||||
| Current maturities of finance lease liabilities | ||||||||
| Total | $ | $ | ||||||
The lease agreement was entered into on September
11, 2017, bears interest at about
F-22
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
Maturity analysis of financial lease liabilities as of June 30, 2022 is as follows:
| Financial lease payments | Company vehicles | |||
| Discount rate at commencement | % | |||
| One year | $ | |||
| Two years | ||||
| Three years | ||||
| Four years | ||||
| Five years | ||||
| Beyond five years | ||||
| Total undiscounted cash flows | $ | |||
| Total financing lease liabilities | ||||
| Difference between undiscounted cash flows and discounted cash flows | ||||
Maturity analysis of financial lease liabilities as of June 30, 2021 is as follows:
| Financial lease payments | Company vehicles | |||
| Discount rate at commencement | % | |||
| One year | $ | |||
| Two years | ||||
| Three years | ||||
| Four years | ||||
| Five years | ||||
| Beyond five years | ||||
| Total undiscounted cash flows | $ | |||
| Total financing lease liabilities | ||||
| Difference between undiscounted cash flows and discounted cash flows | ||||
F-23
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
NOTE 16 – CONVERTIBLE NOTES
On December 20, 2021, the Company entered into
a Securities Purchase Agreement with an institutional investor pursuant to which the Company issued an unsecured convertible promissory
note with a two-year maturity (the “Convertible Note 2021”) to Investor. The Convertible Note 2021 has the original principal
amount of $
Material Terms of the Convertible Note 2021:
| ● | Interest accrues on the outstanding balance of the Convertible Note at |
| ● | Upon the occurrence of a Trigger Event, Investor may increase the outstanding balance payable under the Convertible Note by |
| ● | Investor may convert all or any part of the outstanding balance of the Convertible Note, at any time after six months from the issue date, into ordinary shares of the Company at a price equal to |
| ● | Joseph Stone Capital, LLC (“JSC”) acted as the exclusive placement agent in connection with the offering. The Company agreed to pay JSC a cash fee equal to |
| ● | Lender has the right at any time after the date that is six (6) months from the Purchase Price Date until the Outstanding Balance has been paid in full, at its election, to convert (“Conversion”) all or any portion of the Outstanding Balance into fully paid and non-assessable Ordinary Shares, par value $ |
In accounting for the issuance of the Convertible
Note 2021, the Company separated the Convertible Note into liability and equity components. The carrying amount of the equity component
of the Convertible Note 2021 and the warrants was $
Debt issuance costs related to the original Convertible Note 2021 comprised of commissions paid to third party placement agent and lawyers of $667,920 which included original issue discount of $250,000, Investor’s legal and other transaction costs of $25,000 and commission of $392,920. The Company allocated the total amount incurred to the liability and equity components of the original Convertible Note 2021 based on their relative values. Issuance costs attributable to the liability component were $697,771 and will be amortized to interest expense using the effective interest method over the contractual term. Issuance costs attributable to the equity component were $182,255 and netted with the equity component in stockholders’ equity of $1,092,460 and warrant value of $212,105.
F-24
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
On May 13, 2022, the Company entered into a Securities
Purchase Agreement with an institutional investor pursuant to which the Company issued an unsecured convertible promissory note with a
two-year maturity (the “Convertible Note 2022”) to Investor. The Convertible Note 2022 has the original principal amount of
$
Material Terms of the Convertible Note 2022:
| ● | Interest accrues on the outstanding balance of the Convertible Note at |
| ● | Upon the occurrence of a Trigger Event, Investor may increase the outstanding balance payable under the Convertible Note by |
| ● | Investor may convert all or any part of the outstanding balance of
the Convertible Note, at any time after six months from the issue date, into ordinary shares of the Company at a price equal to |
| ● | Joseph Stone Capital, LLC (“JSC”) acted as the exclusive placement agent in connection with the offering. The Company agreed to pay JSC a cash fee equal to |
| ● | Lender has the right at any time after the date that is six (6) months from the Purchase Price Date until the Outstanding Balance has been paid in full, at its election, to convert (“Conversion”) all or any portion of the Outstanding Balance into fully paid and non-assessable Ordinary Shares, par value $ |
In accounting for the issuance of the Convertible
Note 2022, the Company separated the Convertible Note into liability and equity components. The carrying amount of the equity component
of the Convertible Note and the warrants was $
Debt issuance costs related to the original Convertible
Note 2022 comprised of commissions paid to third party placement agent and lawyers of $426,095 which includes original issue discount
of $
F-25
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
Net carrying amount of the liability component Convertible Notes dated as of June 30, 2022 were as following:
| Principal outstanding | Unamortized cost | Net carrying value | ||||||||||
| Convertible Note 2021 | $ | $ | ( | ) | $ | |||||||
| Convertible Note 2022 | ( | ) | ||||||||||
| Convertible Notes - liability portion | $ | $ | ( | ) | $ | |||||||
Net carrying amount of the equity component of the Convertible Notes as of June 30, 2022 were as following:
Amount allocated | Issuance cost | Equity net | ||||||||||
| Convertible Note 2021 | $ | $ | ( | ) | $ | |||||||
| Convertible Note 2022 | ( | ) | ||||||||||
| Convertible Notes – equity portion | $ | $ | ( | ) | $ | |||||||
Amortization of issuance cost, debt discount and interest cost for the year ended June 30, 2022 were as follows:
| Issuance costs and debt discount | Convertible note interest | Total | ||||||||||
| Convertible Note 2021 | $ | $ | $ | |||||||||
| Convertible Note 2022 | ||||||||||||
| Convertible Notes | $ | $ | $ | |||||||||
The effective interest rate to derive
the liability component fair value were
Note 17- Warrants
On December 20, 2021 and May 13, 2022, The Company
issued warrants to settle the commission of the agent in connection with the issuance of the convertible notes during the year ended June
30, 2022. The warrants entitle the holder to purchase
For the years ended June 30, 2022 and 2021, the
Company had approximately
The 2021 warrants were valued using the Black-Scholes
value option pricing model with the following inputs: volatility of
The 2022 warrants were valued using the Black-Scholes value option pricing model with the following inputs: volatility
of
NOTE 18 – TAXES
The Company is registered in the Cayman Islands. The Company generated substantially all of its income/ (loss) from its PRC operations for the years ended June 30, 2022, 2021 and 2020.
Cayman Islands
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain. Additionally, upon payments of dividends to the shareholders, no Cayman Islands withholding tax will be imposed.
Hong Kong
E-Home Hong Kong is not subject to tax on income or capital gain since there has no operations in Hong Kong for the years ended June 30, 2022, 2021 and 2020.
F-26
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
PRC
Income Tax
On March 16, 2007, the National People’s
Congress of PRC enacted an Enterprise Income Tax Law (“EIT Law”), under which Foreign Investment Enterprises (“FIEs”)
and domestic companies would be subject to enterprise income tax (“EIT”) at a uniform rate of
The provision for income tax for the years ended June 30, 2022, 2021 and 2020, consisted of the following:
| 2022 | 2021 | 2020 | ||||||||||
| Current income tax provision | $ | $ | $ | |||||||||
| Deferred income tax provision | ||||||||||||
| Total | $ | $ | $ | |||||||||
The following table sets forth reconciliation between the statutory EIT rate and the effective tax for the years ended June 30, 2022, 2021 and 2020, respectively:
| 2022 | 2021 | 2020 | ||||||||||
| Income before income taxes | $ | $ | $ | |||||||||
| Provision for income taxes at statutory tax rate in the PRC | ||||||||||||
| Effect of expense for which no income tax is deductible | ||||||||||||
| Income tax expense | $ | $ | $ | |||||||||
The significant components of deferred tax assets as of June 30, 2022 and 2021 were as follows:
| 2022 | 2021 | |||||||
| Deferred tax assets | ||||||||
| Advanced from customers | $ | |||||||
| Total | $ | |||||||
Value Added Tax (“VAT”)
Business tax changed to VAT in China since May
1, 2016. The Company’s revenue of installation is subject to a VAT rate of
The maintenance and accessories sales were subject to a VAT rate of 17% before May 1, 2018 and were reduced to 16% since then. The VAT rate was reduced to 13% since April 1, 2019.
According to the regulations (Fiscal and Tax [2016] 36), no VAT will be levied if an enterprise provides employee-based household services. E-Home Pingtan applied for the tax exemption in July 2017 and was approved by the State Administration of Taxation (China), so the VAT rate of installation, maintenance, after-sales and cleaning service is since July 2017.
Taxes payable
The Company’s taxes payable as of June 30, 2022 and 2021, consisted of the following:
| 2022 | 2021 | |||||||
| Income tax payable | $ | $ | ||||||
| VAT payable | ||||||||
| Other tax payables | ||||||||
| Total | $ | $ | ||||||
F-27
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
NOTE 19 - EQUITY
Ordinary Shares
At the reorganization event described in Note
1, the Company issued
Prior to the reorganization, the Company had
$
The reorganization has been accounted for at
historical cost and prepared on the basis as if the reorganization had become effective as of the beginning of the first period presented
in the accompanying financial statements of the Company. On May 23, 2019, the Company split its
On October 18, 2021, E-Home WFOE entered into an equity transfer agreement with each of E-Home Pingtan and Fuzhou Bangchang and their respective shareholders, pursuant to which E-Home WFOE exercised the options to acquire all of the equity interests in each of E-Home Pingtan and Fuzhou Bangchang from their respective shareholders. Upon the registration of the equity transfers with the local governmental authorities as of October 27, 2021, the equity transfers were closed, the company’s VIE structure was dissolved and each of E-Home Pingtan and Fuzhou Bangchang became a wholly owned indirect subsidiary of the Company.
On May 18, 2021, the Company completed the closing
of its initial public offering of
On June 21, 2021, the Company granted
On January 20, 2022, the Company and E-Home Pingtan
entered into an equity transfer agreement to acquire
On January 20, 2022, the Company and E-Home Pingtan
entered into an equity transfer agreement to acquire
On March 18, 2022, the Company granted
Statutory Reserve
The Company is required to make
Dividends
Dividends declared by the Company are based on the distributable profits as reported in its statutory financial statements reported in accordance with PRC GAAP, which may differ from the results of operations reflected in the consolidated financial statements prepared in accordance with US GAAP. The Company’s ability to pay dividends is primarily from cash received from its operating activities in PRC. For the years ended June 30, 2022 and 2021, there were no Company dividend declared.
F-28
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
NOTE 20 –REVENUE
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. Deferred portion of senior care service is recorded as a liability (advances from customers) in the company’s balance sheet.
| 2022 | 2021 | |||||||
| Installation and maintenance | $ | $ | ||||||
| Sales of household appliance accessories | ||||||||
| Housekeeping | ||||||||
| Senior care services | ||||||||
| Sales of E-watch | ||||||||
| Sublease | - | |||||||
| Total | $ | $ | ||||||
NOTE 21 – SEGMENT INFORMATION
Operating segments are reported in a manner consistent with the internal reporting provided to the management for decision making. Management has identified three operating segments which are installation and maintenance, housekeeping and senior care services. Operations for senior care services began in August 2019. The Company started generating revenue from this new segment in August 2019. These operating segments are monitored and strategic decisions are made on the basis of segmental profit margins. Segment profit is defined as net sales reduced by cost of revenue and other related operating expenses. The results are shown as follows for the years ended June 30, 2022, 2021 and 2020:
| Revenue | 2022 | 2021 | 2020 | |||||||||
| Installation and Maintenance | $ | $ | $ | |||||||||
| Housekeeping | ||||||||||||
| Senior care services | ||||||||||||
| Sublease | ||||||||||||
| Total | $ | $ | $ | |||||||||
| Cost of revenue | 2022 | 2021 | 2020 | |||||||||
| Installation and Maintenance | $ | $ | $ | |||||||||
| Housekeeping | ||||||||||||
| Senior care services | ||||||||||||
| Sublease | ||||||||||||
| Total | $ | $ | $ | |||||||||
| Gross profit | 2022 | 2021 | 2020 | |||||||||
| Installation and Maintenance | $ | $ | $ | |||||||||
| Housekeeping | |
|||||||||||
| Senior care services | |
|||||||||||
| Sublease | ||||||||||||
| Total | $ | $ | $ | |||||||||
| Sales and marketing expenses | 2022 | 2021 | 2020 | |||||||||
| Installation and Maintenance | $ | $ | $ | |||||||||
| Housekeeping | ||||||||||||
| Senior care services | ||||||||||||
| Sublease | ||||||||||||
| Unallocated | ||||||||||||
| Total | $ | $ | $ | |||||||||
| General and administrative expenses | 2022 | 2021 | 2020 | |||||||||
| Installation and Maintenance | $ | $ | $ | |||||||||
| Housekeeping | ||||||||||||
| Senior care services | ||||||||||||
| Sublease | ||||||||||||
| Unallocated | ||||||||||||
| Total | $ | $ | $ | |||||||||
F-29
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
| Current assets | 2022 | 2021 | ||||||
| Installation and Maintenance | $ | $ | ||||||
| Housekeeping | ||||||||
| Senior care services | ||||||||
| Sublease | ||||||||
| Unallocated current assets | ||||||||
| Total | $ | $ | ||||||
| Non-current assets | 2022 | 2021 | ||||||
| Installation and Maintenance | $ | $ | ||||||
| Housekeeping | ||||||||
| Senior care services | ||||||||
| Sublease | ||||||||
| Unallocated non-current assets | ||||||||
| Total | $ | $ | ||||||
On account of the Company’s business model, assets, operating expense, profit or loss, liabilities and other material items could not be separated into each operating segment. As the Company’s long-lived assets and revenue are substantially located in and derived from the PRC, no geographical segments are presented.
NOTE 22 – COMMITMENTS AND CONTINGENCIES
As of June 30, 2022, the Company had following lease commitments under non-cancelable agreements:
| Future Lease Payments | Operating Lease | Finance Lease | Total | |||||||||
| July 2022 to June 2023 | $ | $ | $ | |||||||||
| July 2023 to June 2024 | ||||||||||||
| July 2024 to June 2025 | ||||||||||||
| July 2025 to June 2026 | ||||||||||||
| July 2026 to June 2027 | ||||||||||||
| Thereafter | ||||||||||||
| Total | $ | $ | $ | |||||||||
NOTE 23 – CUSTOMER AND SUPPLIER CONCENTRATION
Significant customers and suppliers are those
that account for greater than
The Company’s sales are made to customers
that are located primarily in China. For the years ended June 30, 2022, 2021 and 2020, no individual customer or supplier accounted for
more than
F-30
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
NOTE 24 – RELATED PARTY BALANCES AND TRANSACTIONS
As of June 30, 2022 and 2021, the Company had $
During the year ended June 30, 2022, Mr. Xie made payment of $
On June 22, 2022, the Company granted
On June 21, 2021, the Company granted
NOTE 25 – SUBSEQUENT EVENTS
Equity transfer agreements
On June 14, 2022, the Company and its wholly owned
Hong Kong subsidiary, E-Home Household Service Holdings Limited (“E-Home Hong Kong”) entered into an equity transfer agreement
with Zhongrun (Fujian) Pharmaceutical Co., Ltd., a limited liability company established in China (“Zhongrun”) and Ms. Ling
Chen, the sole shareholder of Zhongrun, pursuant to which Ms. Chen agreed to transfer
As of the date of these consolidated financial statements, the Company is still evaluating the purchase price allocation for this business combination.
Reverse stock split
On September 23, 2022, the Company's board of
directors approved to effect a one-for-twenty reverse stock split of its ordinary shares (the “Reverse Stock Split”) with
the market effective on October 4, 2022, such that the number of the Company's authorized preferred and ordinary shares remain unchanged,
and the par value of each ordinary share is increased from US$
F-31
E-Home Household Service Holdings Limited
Notes to the Consolidated Financial Statements
June 30, 2022 and 2021
Other subsequent events
On July 30, 2022, the Company’s board of directors approved proposal
per Mr. Xie to acquire
On August 15, 2022, the Company’s board of directors approved
proposal per Mr.Xie regarding financing by the Company in the amount of $
On September 19, 2022, the Company’s board of directors approved
proposal per Mr.Xie for issuance and sale of the Company's ordinary shares up to an aggregate offering price of US$
In accordance with ASC 855-10, the Company evaluated all events and transactions that occurred after June 30, 2022 up through the date the Company issued these financial statements on November 4, 2022 and concluded that no other material subsequent events except for the disclosed above.
F-32
Exhibit 12.1
CERTIFICATIONS
I, Wenshan Xie, certify that:
| 1. | I have reviewed this amendment to the annual report on Form 20-F/A of E-Home Household Service Holdings Limited; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15I and 15d-15I) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the amendment to the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: April 5, 2023
| /s/ Wenshan Xie | |
| Wenshan Xie | |
| Chief Executive Officer |
Exhibit 12.2
CERTIFICATIONS
I, Chunsheng Zhu, certify that:
| 1. | I have reviewed this amendment to the annual report on Form 20-F/A of E-Home Household Service Holdings Limited; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
| 4. | The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15I and 15d-15I) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| (c) | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| (d) | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the amendment to the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: April 5, 2023
| /s/ Chunsheng Zhu | |
| Chunsheng Zhu | |
| Chief Financial Officer |
Exhibit 13.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Amendment to the Annual Report of E-Home Household Service Holdings Limited (the “Company”) on Form 20-F/A for the year ended June 30, 2022 filed with the SEC on the date hereof (the “Report”), I, Wenshan Xie, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 5, 2023
| By: | /s/ Wenshan Xie | |
| Name: | Wenshan Xie | |
| Title: | Chief Executive Officer |
Exhibit 13.2
CERTIFICATION BY THE PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Amendment to the Annual Report of E-Home Household Service Holdings Limited (the “Company”) on Form 20-F/A for the year ended June 30, 2022, filed with the SEC on the date hereof (the “Report”), I, Chunsheng Zhu, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: April 5, 2023 | ||
| By: | /s/ Chunsheng Zhu | |
| Name: | Chunsheng Zhu | |
| Title: | Chief Financial Officer | |
Exhibit 15.2
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption “Experts” and to the use of our report dated November 4, 2022, except for Note 19 and Note 24, was to which the date is April 5, 2023, with respect to the consolidated financial statements of E-Home Household Service Holdings Limited, which appears in this Form 20-F/A.
| /s/ TPS Thayer, LLC | |
| Sugar Land, Texas | |
| April 5, 2023 |