What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-06 compared with 2021-09-29 · 415 added, 461 removed, 26 unchanged (97% of the section changed)

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

following discussion and analysis of our company’s financial condition and results of operations should be read in conjunction

with our consolidated financial statements and the related notes included elsewhere in the report.

This discussion contains forward-looking

statements that involve risks and uncertainties.

Actual results and the timing of selected events could differ materially from those

anticipated in these forward-looking statements as a result of various factors.

has focused on providing customers with customized shipping agency and freight logistic services but has since begun looking aggressively

at diversifying its revenue and service mix by seeking new growth opportunities to expand its business due to increased margin compression.

These opportunities have ranged from complementary businesses to other service and product initiatives.

In fiscal year 2021, while we

continue to provide our current traditional logistics business, we will integrate the traditional business with modern technology to

develop new business model.

December 14, 2020, we incorporated a new entity named “Blumargo IT Solution Ltd.” with 80% ownership in partnership with

Tianjin Anboweiye Technology Co.

to build up hi-tech and information-based logistic services to meet the higher and complicate demand

of customers.

On June 30, 2021, we increased the ownership to 100%.

April 13, 2021, we formed a joint venture in which the Company owned 99% equity interest of Hainan Saimeinuo Trading Co., Ltd., in the

free tax zone in Hainan Province, China, with a register capital of approximately $1.5 million.

This subsidiary primarily engages in

freight logistics services.

April 21, 2021, we entered into a cooperation agreement with Mr.

Bangpin Yu to set up a 51% owned joint venture in U.S.

named “Brilliant

Warehouse Service Inc” to support our freight logistics services in the U.S.

from March 2021, we are pursuing the development of blockchain technology to leverage information technology and other innovative technologies

in our business platform.

These types of technology may be helpful in expanding our traditional logistics service expertise.

Over the last two months, national and local governments in China have

gradually restricted and banned cryptocurrency mining operations, causing owners of servers like the Products to cease operations.

Company has been advised that the operation of the mining has been paused by Yanghuai, which had continued to operate the products on

behalf of us.

Based on amended agreement signed by the Company and Yanghuai on September 17, 2021, the Company is not liable for rest

of the contract price and has title to half of the products.

The Company recorded impairment for the mining equipment in the last quarter

of 2021 in the amount of approximately $0.9 million.

outbreak of the novel coronavirus (“COVID-19”) starting from late January 2020 in the PRC has spread rapidly to many parts

of the world.

In March 2020, the World Health Organization declared the COVID-19 as a pandemic.

Given the continually expanding of COVID-19

pandemic in China and United States, our business, results of operations, and financial condition are still adversely affected.

The situation

remains highly uncertain for any further outbreak or resurgence of COVID-19.

It is therefore difficult for us to estimate the impact

on our business or operating results that might be adversely affected by any further outbreak or resurgence of COVID-19.

impacts of COVID-19 on our business, financial condition, and results of operations include but are not limited to, the following:

customers have been negatively impacted by the pandemic, which continue to reduce demand for the shipping agency and management as

well as freight logistics services in fiscal year 2021.

As a result, our revenue, gross profit and net income have been continually

impacted in fiscal year 2021.

Our revenue and gross profit for the year ended June 30, 2021 were down by approximately $1.4 million,

or 21.2%, and $2.7 million, or 93.8%, respectively.

suppliers have been and could continue to be negatively impacted by the COVID-19 outbreak, which may continually impact our cost

of freight, or result in higher cost of revenue, which may in turn materially adversely affect our financial condition and operating

results in coming months.

developments:

In July 2021, we registered

a new company Gorgeous Trading Ltd.

which is 100% owned by Sino-Global Shipping New York Inc.

This company will be mainly responsible

for our smart warehouse and related business in Texas.

August 31, 2021, the company formed a joint venture, Phi Electric Motor, Inc in New York, which is 51% owned by Sino-Global Shipping

New York Inc.

founded in 2001, are a non-asset based global shipping and freight logistics integrated solutions provider.

We provide tailored solutions

and value-added services for our customers to drive efficiency and control in related steps throughout the entire shipping and freight

logistics chain.

We conduct our business primarily through our wholly-owned subsidiaries in the People’s Republic of China (the

“PRC” or “China”) (including Hong Kong) and the U.S., where a majority of our clients are located.

operate in three operating segments, including (1) shipping agency and management services, operated by our subsidiaries in the U.S.;

(2) freight logistics services, operated by our subsidiaries in the PRC;

and (3) container trucking services, operated by our subsidiaries

corporate structure diagram as of the date of this report is as below:

of Operations

of the Years ended June 30, 2021 and 2020

decreased by $1,384,924, or approximately 21.2%, from $6,535,956 for the year ended June 30, 2020 to $5,151,032 for the same period in

The decrease was primarily due to the loss of revenue from several customer contracts for our shipping management services and

no revenue generated from our container trucking services during the period.

One of our shipping management services contracts we entered

into with customers starting in the first quarter of fiscal year 2020 expired during the year.

The decrease was also due to the decrease

in revenues from container trucking services as our service contracts with customers had expired and there was no new business for this

segment partly because of the stalled trade negotiations between the U.S.

As some of our existing freight logistics services

contacts has been executed during the year ended June 30, 2021, this segment was our main revenue source for the year ended June 30,

following tables present summary information by segments mainly regarding the top-line financial results for the years ended June 30,

2021 and 2020:

Management’s Discussion and Analysis

of Financial Condition and Results of Operations.

The following discussion

and analysis of the Company’s financial condition and results of operations should be read in conjunction with our consolidated

financial statements and the related notes included elsewhere in the Report.

This discussion contains forward-looking statements that

involve risks and uncertainties.

Actual results and the timing of selected events could differ materially from those anticipated in these

forward-looking statements as a result of various factors.

We previously focused on providing customized freight logistics services,

but starting in 2017, we began exploring new opportunities to expand our business and generate more revenue.

These opportunities ranged

from complementary businesses to other new service and product initiatives.

In the fiscal years 2021 and 2022, while we continued to provide

our freight logistics business, we expanded our services to include warehousing services provided by our US subsidiary Brilliant Warehouse

On January 3, 2022, we changed our corporate name to Singularity Future Technology Ltd.

to align with our entry into the

digital assets business through our U.S.

subsidiaries.

During 2022, we engaged in purchases and sales of cryptocurrency mining machines

through our U.S.

subsidiaries.

For the fiscal year ended June

30, 2022, we operated in two operating segments, including (1) freight logistics services, through our subsidiaries in the U.S and PRC;

and (2) purchase and sales of crypto mining machines, through our subsidiary Thor Miner.

For the year ended June 30, 2021, the Company

also engaged in shipping agency and management services, which were carried out by its subsidiary in the U.S.

The Company no longer operates

in the shipping agency segment because it did not receive any new orders for its services due to the uncertainty of the shipping management

market which was negatively impacted by the COVID-19 pandemic.

Recent Developments

The following events had a

material impact on our financial statements.

For other recent developments, see “Item 1.

Business – Recent Developments.”

January 10, 2022, Thor Miner entered into a purchase agreement with HighSharp.

Pursuant to the agreement, Thor Miner agreed to purchase

certain cryptocurrency mining equipment from HighSharp.

In January and April 2022, Thor Miner made a total prepayment of $35,406,649 for

Thor Miner also entered into a PSA with SOSNY for the purchase of $200,000,000 in crypto mining rigs and received deposit

form SOSNY in the amount of $48,930,000.

Due to production issue from HighSharp,

Thor Miner was not able to timely deliver the products to SOSNY according to the delivery terms of the PSA and was sued by SOSNY for breach

of contract on December 9, 2022.

On December 23, 2022, the Company entered into the Settlement Agreement with SOSNY pursuant to which

the Company paid $13.0 million to SOSNY in exchange for SOSNY dismissing the lawsuit and will transfer any additional funds it receives

from HighSharp to SOSNY in an amount not to exceed $40,560,569.

As of December 22, 2022, the balance of advance to HighSharp and deposit

from SOSNY amounted to $27,927,583 and $40,560,569, respectively.

Thor Miner paid $13.0 million on December 28, 2022 to SOSNY and wrote

off the balance of the deposit it received from SOSNY and the balance of its payment to HighSharp.

of Previously Issued Financial Statements

From March to June 2019, the

Company’s subsidiary Trans Pacific Logistic Shanghai Ltd (“Trans Pacific Shanghai”) received approximately $6.2 million

(RMB 40 million) from a related party, Shanghai Baoyin Industrial Co., Ltd.

(“Shanghai Baoyin”), to pay for accounts receivable

of six different customers totaling RMB 40 million.

Shanghai Baoyin is 30% owned by Wang Qinggang, the CEO and legal representative of

Trans Pacific Shanghai.

Trans Pacific Shanghai subsequently paid RMB 20 million and RMB 10 million to Zhangjiakou Baoyu Trading Co.

(“Baoyu”), a third party, in April 2019 and July 2019, respectively, and it made an additional payment of RMB 10 million to

Hebei Baoxie Trading Co., Ltd.

(“Hebei Baoxie”), a third party, in July 2019.

As such, for the fiscal year

ended June 30, 2019, accounts receivable was understated by RMB 40 million, advance to supplier was overstated by RMB 20 million, and

other payables from Shanghai Baoyin, a related party, were understated by RMB 20 million.

There was an overstatement of RMB 20 million

in total assets and an understatement of total liabilities of RMB 20 million.

During the fiscal year ended

June 30, 2021, Hebei Baoxie repaid a total of RMB 10 million to Trans Pacific Shanghai, and Trans Pacific Shanghai advanced the RMB 10

million to Shanghai Baoyin.

The RMB 10 million paid to Shanghai Baoyin was recorded as other receivable, and the RMB 30 million advance

to Baoyu was reclassified from an advance to supplier to other receivable.

The Company provided a full allowance of its receivables totaling

RMB 40 million.

The Company evaluated this transaction and determined there is no impact on its assets, liabilities, or retained earnings

as of June 30, 2020.

During the fiscal year ended

June 30, 2021, Baoyu repaid a total of RMB 30 million to Trans Pacific Shanghai.

The RMB 30 million received was recorded as recovery

Trans Pacific Shanghai then loaned the same amount to Shanghai Baoyin.

Shanghai Baoyin subsequently repaid RMB 4 million

to Trans Pacific Shanghai, and Trans Pacific Shanghai loaned the same amount to Wang Qinggang.

The RMB 30 million received was recorded

as recovery of bad debt for other receivable and the RMB 30 million paid was recorded as a related party loan receivable.

The Company analyzed the transactions

and determined the RMB 30 million was originally from Shanghai Baoyin and eventually paid back to the same related parties.

bad debt and related party loan receivable was overstated by RMB 30 million for the fiscal year 2021.

The Company restated its fiscal

year 2021 financial statements to restate related party loans receivable and bad debt recovery.

Effects of the restatement are as follows:

Consolidate balance sheet as of June 30, 2021

Loan receivable - related parties

$ (4,644,969 )

Consolidated Statement of Stockholder’s Equity as of June 30, 2021

Accumulated deficit

$ (30,244,937 )

$ (4,076,825 )

$ (34,321,762 )

Accumulated other comprehensive income (loss)

Non-controlling Interest

$ (4,644,969 )

Consolidated statement of oeprations for the year ended June 30, 2021

Recovery (provision) for doubtful accounts, net

$ (4,529,806 )

$ (4,208,638 )

$ (6,773,047 )

$ (4,529,806 )

$ (11,302,853 )

Other comprehensive loss - foreign currency

Comprehensive loss

$ (6,773,535 )

$ (4,644,969 )

$ (11,418,504 )

Consolidated statement of cash flow for the year ended June 30, 2021

Cash flows from operating activities:

$ (6,773,047 )

$ (4,529,806 )

$ (11,302,853 )

(Recovery)/ Provision for doubtful accounts

Other receivable

Cash flows from investing activities:

Loan receivable - related parties

$ (4,529,806 )

The outbreak of the COVID-19

starting from late January 2020 in the PRC has spread rapidly to many parts of the world.

In March 2020, the World Health Organization

declared the COVID-19 as a pandemic.

Given the continually expanding of COVID-19 pandemic in China and United States, our business, results

of operations, and financial condition are still adversely affected.

In early December 2022, Chinese

government eased the strict control measure for COVID-19, which has led to surge in increased infections and disruption in our business

Any future impact of COVID-19 on the Company’s China operation results will depend on, to a large extent, future developments

and new information that may emerge regarding the duration and resurgence of COVID-19 variants and the actions taken by government authorities

to contain COVID-19 or treat its impact, almost all of which are beyond our control.

The impacts of COVID-19 on

our business, financial condition, and results of operations include, but are not limited to, the following:

Our customers have been negatively impacted by the pandemic, which reduced their demand for freight logistics services.

As a result, our revenue for the year ended June 30, 2022 was down by approximately $1.2 million, or 22.6%.

Due to travel restrictions between US and China, our new business development for existing segments or new ventures has been slowed down.

Our sales of crypto mining machines were materially adversely affected by COVID-19.

Specifically, Crypto mining machine manufacturers have been impacted by the constrained supply of the semiconductors used in the production of the highly specialized crypto mining machines;

COVID-related issues have exacerbated port congestion and intermittent supplier shutdowns and delays, resulting in delayed shipments and additional expenses to expedite delivery;

as a result, we were unable to fulfil our customer orders on a timely basis, resulting cancellation of orders and partial refund of purchase price, as evident from the settlement in SOSNY.

We have been, and may continue

to be, negatively impacted by the ongoing COVID-19, which may continually impact our cost of freight, or result in higher cost of revenue,

which may in turn materially adversely affect our financial condition and operating results in coming months.

Any future impact of COVID-19

on the Company’s operation results will depend on, to a large extent, future developments and new information that may emerge regarding

the duration and resurgence of COVID-19 variants and the actions taken by government authorities to contain COVID-19 or treat its impact,

almost all of which are beyond our control.

Results of Operations

Comparison of the Years Ended June 30, 2022 and 2021

The following table sets forth

the results of our operations for the periods indicated:

For the Years Ended June 30,

2021(restated)

Cost of revenues

Selling expenses

General and administrative expenses

Impairment loss of Cryptocurrencies

Impairment loss of fixed assets and right of use asset

Provision for doubtful accounts, net of recovery

Stock-based compensation

Total costs and expenses

Revenues decreased by $1,162,617, or approximately 22.6%, to $3,988,415

for the year ended June 30, 2022 from $5,151,032 for the year ended June 30, 2021.

The decrease was primarily due to decrease in shipping

agency and management services and freight logistics services.

The following tables present summary information

by segments for the years ended June 30, 2022 and 2021:

For the Year Ended June 30, 2022

Net revenues*

Cost of revenues

and amortization

capital expenditures

Depreciation and amortization

Total capital expenditures

* Including related party revenue of $222,963 from Zhejiang Jinbang Fuel

Energy Co., Ltd for the year ended June 30, 2022.

For the Year Ended June 30, 2021

$ 4,368,596 *

$ 2,795,859 *

and amortization

capital expenditures

the year ended June 30, 2020, gross revenues and gross cost of revenues related to these contracts amounted to approximately $25.8

million and $24.3 million, respectively.

There was no such transaction for the year ended June 30, 2021.

Changes For the Year ended June 30, 2021 to 2020

Cost of revenues

and amortization

capital expenditures

Disaggregated

information of revenues by geographic locations are as follows:

the Years Ended

Depreciation and amortization

Total capital expenditures

% Changes For the Years Ended June 30, 2022 and 2021

Cost of revenues

Depreciation and amortization

Total capital expenditures

Disaggregated information of revenues by geographic

locations are as follows:

For the Years Ended

Total revenues

Shipping Agency and Management Services

the years ended June 30, 2021 and 2020, shipping agency and management services generated revenues of $206,845 and $2,105,651, respectively,

representing an approximately 90.2% decrease in revenues.

The decrease in this segment was because the shipping agency and management

services agreements we entered in fiscal year 2020 have expired and were not renewed due to the uncertainty of the shipping management

market which has been negatively impacted by the COVID-19 pandemic.

Revenues from Freight Logistics Services

logistics services primarily consist of cargo forwarding, brokerage and other freight services.

During the year ended June 30, 2021,

revenues increased by approximately 13.2% compared to the same period in 2020.

The increase was due to increase from our major customer

due to its shipping demand in China.

In addition, we established a wholly owned entity in March 2021 and formed two joint ventures in

April 2021 to support our freight logistics services.

We believe our revenues from freight logistics services will continue to grow with

the operations of these three entities.

the year ended June 30, 2020, we acted as an agent in arranging the relationship between the customers and the third-party service providers

and did not control the services rendered to the customers and our revenues on freight logistics contacts were accounted for on a net

For all the freight logistics services that we provided to our clients for the year ended June 30, 2021, we acted as the principal

and controlled the freight logistics services which we can recognize our revenue much faster in comparison with the same period in 2020.

Revenues from Container Trucking Services

the years ended June 30, 2021 and 2020, revenues generated from container trucking services were nil and $61,709, respectively.

revenues from this segment decreased by $61,709 or 100.0%.

The decrease in revenues from this segment was primarily due to expiration

of container trucking services contracts with our customers as the pending trade negotiations between the U.S.

gross profit decreased by $6,395 from $6,395 gross profit for the year ended June 30, 2020 to nil for the same period in 2021.

not expect an increase in revenue from this segment in the foreseeable future due to the current U.S.

and China trade dynamics.

we plan to continue to provide services on an as needed basis on short-term contracts.

Costs and Expenses

costs and expenses decreased by $12,863,192 or approximately 53.0%, from $24,274,060 for the year ended June 30, 2020 to $11,410,868

for the year ended June 30, 2021.

This decrease was mainly due to the decrease in selling expenses, impairment loss of fixed assets and

intangible asset, provision for doubtful accounts and stock-based compensation, offset by cost of revenues and general and administrative

expenses as discussed below.

following table sets forth the components of our costs and expenses for the periods indicated:

the Years Ended June 30,

and administrative expenses

loss of fixed assets and intangible asset

for doubtful accounts, net of recovery

(15,231,670 )

costs and expenses

(12,862,028 )

of revenues consisted primarily of freight costs to various freight carriers, cost of labor, other overhead and sundry costs.

revenues was $4,974,394 for the year ended June 30, 2021, an increase of $1,295,531, or approximately 35.2%, as compared to $3,678,863

For the years ended June 30,

2022 and 2021, we did not generate any revenue from shipping agency and management services as we did not receive any new orders for our

services due to the uncertainty of the shipping management market which was negatively impacted by the COVID-19 pandemic.

Freight Logistics Services

Freight logistics services primarily consist of cargo forwarding, brokerage,

warehouse and other freight services.

Revenues from freight logistics services were $3,830,615 for the year ended June 30, 2022, a decrease

of $1,113,572, or approximately 22.5%, as compared to $4,944,187 for the year ended June 30, 2021.

This decrease in revenue was mainly due to a decrease of approximately

$1.9 million from the transportation services of our PRC operations where demand was impacted by various business disruptions due to the

resurgence of COVID-19 variants which caused a decrease in spending by our major customers.

The decrease was offset by approximately $0.8

million of warehouse and logistics services that we started to provide in the fiscal year 2022 through our subsidiaries, Gorgeous Trading

and Brilliant Warehouse Service, Inc.

Sales of Crypto Mining Machines

On January 10, 2022, Thor Miner entered into the PSA with SOSNY, a

wholly owned subsidiary of SOS Ltd.

Pursuant to the PSA, Thor Miner agreed to sell to SOSNY certain cryptocurrency mining hardware and

other equipment.

The total purchase price was $200,000,000 and the purchase was expected to be completed under separate purchase orders.

Thor Miner made two shipments in June 2022 and we recognized net revenue of $157,800.

We recognized the sales of cryptocurrency

mining equipment based on a net basis as the manufacturer of the products is responsible for shipping and custom clearing for the products.

Gross revenue and the gross cost of revenue amounted to $1,483,320 and $1,325,520, respectively, for the year ended June 30, 2022.

Cost of Revenues

of revenues for our freight logistics services segment mainly consisted of freight costs to various freight carriers, cost of labor,

warehouse rent and other overhead and sundry costs.

Cost of revenues for our freight logistics services segment was $4,136,474 for the

year ended June 30, 2022, a decrease of $660,953, or approximately 13.8%, as compared to $4,797,427 for the year ended June 30, 2021

as a result of the decrease in freight costs of our PRC operations caused by the decrease in shipping volume due to the pandemic.

Our gross margin was (3.7%) and 3.4% for the years ended June 30, 2022

and 2021, respectively.

This decrease in gross margin in freight logistics segment was mainly due to rising costs for our PRC operations

as we are not able to negotiate better price with our freight carrier due to decrease in volume.

In addition, we started our warehouse

services this year and we have higher fixed costs including warehouse rent and salaries when we are developing the business.

Our cost of revenue for the

sale of crypto-mining equipment was nil as we recognized revenue on a net basis and hence the higher margin which increased the Company’s

margin of (8.0)% from freight logistics segment to (3.7%).

Operating Costs and Expenses

Operating costs and expenses increased by $10,737,621

or approximately 67.4% from $26,679,459 for the year ended June 30, 2022 compared to $15,941,838 for the year ended June 30, 2021.

increase was mainly due to the increase in selling expenses, stock-based compensation, general and administrative expenses and impairment

expenses as more fully discussed below.

Selling Expenses

Our selling expenses consisted

primarily of salaries and travel expenses for our sales representatives.

For the year ended June 30, 2022, we had $385,890 in selling

expenses, as compared to $297,906 for the year ended June 30, 2021, which represents an increase of $87,984 or approximately 29.5%.

increase was due to an increase of marketing expenses of approximately $0.2 million to promote our freight logistics business.

General and Administrative Expenses

Our general and administrative

expenses consist primarily of salaries and benefits, travel expenses for our administration department, office expenses, and regulatory

filing and professional service fees for auditing, legal and IT consulting.

For the year ended June 30, 2022, we had $9,301,784 general

and administrative expenses, as compared to $5,605,670 for the year ended June 30, 2021, representing an increase of $3,696,114, or approximately

This significant increase was mainly due to the increase in salaries, wages and office related costs of approximately $3.0 million

as we hired more employees and rented new warehouses for our subsidiaries Gorgeous Trading Ltd.

and Brilliant Warehouse Service, Inc.

This was also due to additional professional fees of approximately $0.5 million mainly fees made for the Company’s special investigation.

Impairment Loss of Cryptocurrencies

We recorded $170,880 in impairment

loss for the year ended June 30, 2022 due to a recent price drop in bitcoin, which the Company deemed a triggering event for impairment

Impairment Loss of Fixed Assets and Right of

We performed our annual goodwill

impairment analysis as of June 30, 2022 and concluded we had approximately $1.0 million in impairment loss for fixed assets and right

of use assets, as our carrying value exceeds the fair value.

The fair values are determined by income approach where projected future

cash flows discounted at rates commensurate with the risks involved, (“Discounted Cash Flow” or “DCF” of the income

Assumptions used in a DCF analysis require the exercise of significant judgment, including judgment about appropriate discount

rates and terminal values, growth rates, and the amount and timing of expected future cash flows.

We recorded impairment loss

of $855,230 for the year ended June 30, 2021 primarily for our mining equipment due to a regulation change in China that banned cryptocurrency

Provision for Doubtful Accounts, Net of Recovery

Our total bad debt expenses amounted to approximately $2.0 million,

mostly because we estimated that we cannot timely collect the advances we made to certain related parties, which includes approximately

$1.3 million to Shanghai Baoyin which is 30% owned by Wang Qinggang, and approximately $0.6

million in advances to LSM trading Ltd, of which we hold a 40% ownership interest .

The advances were non-interest bearing and due

We had net recovery of other receivable of approximately $0.4 million from other receivable as we continued collection of the

receivables that were previously reserved.

We had approximately $4.2 million of provision for the fiscal year 2021 for our accounts receivable

and long-term deposits, representing a decrease of $2,595,134, or approximately 61.7%.

Stock-based Compensation

Stock-based compensation was $10,064,622 for the year ended June

30, 2022, an increase of $10,064,622 or 100.0%, as compared to nil for the year ended June 30, 2021 due to stock grants to our directors,

employees and consultants in the fiscal year 2022.

Loss from disposal of subsidiaries and VIE

December 31, 2021, the Company entered into a series of agreements to terminate its VIE structure and deconsolidated its formerly controlled

entity Sino-China.

The Company controlled Sino-China through its wholly owned subsidiary Trans Pacific Beijing.

The Company made the decision

to dissolve the VIE structure and Sino-China because Sino-China has no active operations and the Company wanted to remove any potential

risks associated with any VIE structures.

The Company also dissolved its subsidiary Sino-Global Shipping LA, Inc., and on March 14, 2022,

the Company discontinued its subsidiary Sino-Global Shipping Canada, Inc.

The total loss of three disposals amounted to approximately

$6.1 million.

Since these entities did not have any active operations prior to their disposal, the disposal did not represent a strategic

change in the Company’s business.

As such, the disposal was not presented as a discontinued operation.

Other Expenses, Net

expenses, net for the year ended June 30, 2022 mainly consists of interest expenses for our convertible debts of approximately $0.1 million

and other finance charges, net of interest earned.

Total other expenses, net was approximately

$ 0.5 million for the year ended June 30, 2021

which mainly consisted of a settlement payment

loss of a dispute on cooperative profit sharing of approximately $0.8 million, offset by the PPP loan forgiveness which we recorded as

a gain of approximately $0.1 million and the income generated from cryptocurrencies mining of approximately $0.3 million.

Our income tax expenses amounted

to nil and $3,450 for the years ended June 30, 2022 and 2021, respectively.

We have incurred a cumulative

federal net operating loss (“NOL”) of approximately $12,543,000 as of June 30, 2021, which may reduce future federal

taxable income.

During the year ended June 30, 2022, approximately $9,700,000 of NOL was generated and the tax benefit derived from such

NOL was approximately 2,000,000.

Our operations in China incurred a cumulative a cumulative NOL of approximately

$6,026,000 as of June 30, 2021, which was mainly from Sino-China which we disposed of during the year ended June 30, 2022.

year ended June 30, 2022, we generated an additional NOL of approximately $4,845,000.

As of June 30, 2022, our PRC subsidiaries’

cumulative NOL amounted to approximately $1,283,000 which may reduce future taxable income and will expire by 2026.

We periodically evaluate the

likelihood of the realization of deferred tax assets and reduce the carrying amount of the deferred tax assets by a valuation allowance

to the extent we believe a portion will not be realized.

Management considers new evidence, both positive and negative, that could affect

our future realization of deferred tax assets, including our recent cumulative earnings experience, expectations of future income, the

carry forward periods available for tax reporting purposes and other relevant factors.

We determined that it is more likely than not that

our deferred tax assets would not be realized due to uncertainty for future earnings due to the Company’s reorganization and venture

into new businesses.

We provided a 100% allowance for deferred tax assets as of June 30, 2022.

The net decrease in valuation for the year

ended June 30, 2022 amounted to approximately $1.0 million based on management’s reassessment of the amount of our deferred tax assets

that are more likely than not to be realized.

As a result of the foregoing,

we had a net loss of $28,928,369 for the year ended June 30, 2022, compared to $11,302,853 for the year ended June 30, 2021.

deduction of non-controlling interest, net loss attributable to us was $28,257,830 for the year ended June 30, 2022, compared to $10,900,168

for the same period in 2021.

The overall cost of revenues as a percentage of our revenues increased from approximately 56.3% for the

year ended June 30, 2020, to approximately 96.6% for the same period in 2021.

The increase of costs was mainly due to the fact that the

costs of our PRC domestic and export services to our freight carriers were higher for the year ended June 30, 2021 compared to the same

period in 2020 due to the overall increase in freight costs by shipping carriers since the pandemic while we are not able to transfer

all the costs to our customers.

In addition, our gross margin further decreased due to decrease in shipping management segment where

we have incurred certain fixed cost.

As a result, our gross profit margin decreased by approximately 40.3% from approximately 43.7% for

the year ended June 30, 2020 to approximately 3.4% for the same period in 2021.

Our selling expenses consisted primarily of salaries and travel expenses

for our sales representatives.

For the year ended June 30, 2021, we had $297,906 of selling expenses, as compared to $393,617 for the

same period in 2020, which represents a decrease of $95,711 or approximately 24.3%.

The decrease was mainly due to approximately $96,000

decrease in salaries and travel expenses as we have fewer employees and limited activities for our selling team under COVID-19 comparing

to the same period of 2020.

and Administrative Expenses

general and administrative expenses consist primarily of salaries and benefits, travel expenses for administration department,

office expenses, regulatory filing and professional service fees including audit, legal and IT consulting.

Comprehensive loss attributable to us was $27,482,995 for the year ended June 30, 2022, as compared to $10,545,234

for the year ended June 30, 2021.

30, 2021, we had $5,605,670 of general and administrative expenses, as compared to $3,386,690 for the same period in 2020,

representing an increase of $2,218,980, or approximately 65.5%.

The increase was mainly due to the increase in professional expenses

of approximately $1,415,000 as we spend more resources on business development to expand our business, with expenses including due

diligence and professional fees for seeking potential acquisition target, and consulting expenses for new business development, the

increase in employees, offices and other general and administrative expenses of approximately $1,150,000 as we hired more employees

and opened more office locations to expand our freight logistics services, offset by the decrease in IT expense of approximately

loss of fixed assets and intangible asset

the year ended June 30, 2020, we recorded $327,632 of impairment loss of fixed assets and intangible asset due to the continued decrease

in revenues generated from the inland transportation management segment.

Impairment loss of $855,230 was recorded for the year ended

June 30, 2021 mainly for our mining equipment as a result of regulation change in China to ban cryptocurrency mining.

for Doubtful Accounts, net of recovery

made $1,378,459 provision for doubtful accounts for accounts receivable and $3,098,852 for long term deposits offset by the recoveries

of other receivable of $4,798,479 for the year ended June 30, 2021 compared to $15,051,209 provision for doubtful accounts and offset

by the recoveries of accounts receivable of $99,366 and other receivable - related party of $41,341 for the same period in 2020, a decrease

of $15,231,670, or approximately 102.2%.

This change is mainly due to collection of other receivables.

Stock-based compensation was nil for the year ended June 30, 2021,

a decrease of $1,576,756 or 100.0%, as compared to $1,576,756 for the same period in 2020.

Stock-based compensation decreased significantly

from the year ended June 30, 2020 to the same period in 2021 because no stock award was granted.

had an operating loss of $6,261,000 for the year ended June 30, 2021, compared to $17,738,104 for the same period in 2020.

was the result of the combination of the changes discussed above.

expenses, net

Total other expenses, net was

$508,597 for the year ended June 30, 2021, an increase of approximately $504,075 or 11,147%, as compared to $4,522 for the same period

The change was caused by increase in other expenses due to the increase in a settlement payment of a dispute on cooperative profit

sharing of approximately $0.8 million.

The increase was offset by the PPP loan forgiveness which we recorded as a gain of approximately

$0.1 million and the income generated from cryptocurrencies mining of approximately $0.3 million.

recorded income tax expense $3,450 and $186,021 for the years ended June 30, 2021 and 2020, respectively.

have incurred a cumulative U.S.

federal NOL of approximately $6,456,000 as of June 30, 2020, which may reduce future federal taxable

The NOL generated prior to the year ended June 30, 2017 amounted to approximately $1,400,000 will expire in 2037 and the remaining

balance carried forward indefinitely.

During the year ended June 30, 2021, approximately $6,087,000 of additional NOL was generated and

the tax benefit derived from such NOL was approximately $1,278,000.

operations in China have incurred a cumulative a cumulative NOL of approximately $5,961,000 as of June 30, 2020, which may reduce future

taxable income.

The NOL amounted to approximately $700,000 start expiring from 2023 and the remaining balance of NOL will be expired

During the year ended June 30, 2021, approximately $65,000 of additional NOL was generated and the tax benefit derived from

such NOL was approximately $16,000.

We periodically evaluate the likelihood of the realization of deferred

tax assets, and reduce the carrying amount of the deferred tax assets by a valuation allowance to the extent we believe a portion will

not be realized.

Management considers new evidence, both positive and negative, that could affect our future realization of deferred tax

assets including its recent cumulative earnings experience, expectation of future income, the carry forward periods available for tax

reporting purposes and other relevant factors.

We determined that it is more likely than not our deferred tax assets could not be realized

due to uncertainty on future earnings as a result of the deterioration of trade negotiation between the U.S.

We provided a

100% allowance for its deferred tax assets as of June 30, 2021.

The net increase in valuation for the year ended June 30, 2021 amounted

to approximately $1,890,000 based on management’s reassessment of the amount of our deferred tax assets that are more likely than

not to be realized.

As a result of the foregoing, we had a net loss of $6,773,047 for the

year ended June 30, 2021, compared to $17,928,647 for the same period in 2020.

After the deduction of non-controlling interest, net loss

attributable to us was $6,823,343 for the year ended June 30, 2021, compared to $16,452,894 for the same period in 2020.

Comprehensive

loss attributable to us was $6,364,762 for the year ended June 30, 2021, compared to $16,943,111 for the same period in 2020.

and Capital Resources

Flows and Working Capital

Liquidity and Capital Resources

Cash Flows and Working Capital

As of June 30, 2022, we had

in cash (cash on hand and cash in bank).

We held approximately 98.6% of our cash in banks located in the U.S., Australia and Hong Kong

and held approximately 1.4% of our cash in banks located in the PRC.

of June 30, 2021, we had the following loans outstanding:

business administration loan

following table sets forth a summary of our cash flows for the periods as indicated:

For the Years Ended

Net cash used in operating activities

$ (4,150,112 )

$55,833,282 in cash (including cash on hand and cash in bank).

The majority of our cash is in banks located in the U.S.

On December 19, 2021, the

Company issued two convertible notes to two non-U.S.

investors for an aggregate purchase price of $10,000,000 (the “December 2021

Convertible Notes”).

December 2021 Convertible Notes bear interest at 5% annually and may be converted into shares of the Company’s common stock at a

conversion price of $3.76 per share.

At the investors’ request, we prepaid $5,000,000 in the aggregate principal amount, without

interest, of the December 2021 Convertible Notes on March 8, 2022.

Interest for the principal of $5,000,000 repaid was waived.

As of June 30, 2022, we had

the following loans outstanding:

Convertible Notes

December 2023

The following table sets forth

a summary of our cash flows for the periods as indicated:

For the Years

Ended June 30,

Net cash provided by (used in) operating activities

$ (8,679,918 )

1 unchanged sentence

$ (3,581,676 )

$ (1,510,379 )

Net cash provided by financing activities

Effect of exchange rate fluctuations on cash

Net increase (decrease) in cash

$ (3,011,468 )

Cash at the beginning of year

Cash at the end of year

following table sets forth a summary of our working capital:

Net increase in cash

Cash at the beginning of period

Cash at the end of period

The following table sets forth a summary

of our working capital:

Total Current Assets

Total Current Liabilities

Working Capital (Deficit)

Working Capital

$ (3,571,198 )

6 unchanged sentences

$55.8 million.

We believe our revenues and operations will continue to grow and the current working capital is sufficient to support our

operations and debt obligations as they become due for at least the next twelve months.

We believe our current working capital is sufficient to support our operations and debt obligations as they become due

within one year from the date of this Report.

Operating Activities

Our net cash provided by operating

activities was approximately $5.9 million for the year ended June 30, 2022.

The operating cash outflow for the year ended June 30, 2022

was primarily attributable to our net loss of approximately $28.9 million, adjusted by non-cash stock-based compensation of approximately

$10.0 million, loss on disposal of subsidiaries and VIE of approximately $6.1 million and provision for doubtful accounts of approximately

$1.6 million.

We had an increase in cash inflow of other receivables of approximately $1.4 million and we received a total of $47.0 million

from SOSNY, approximately $34.1 million was advanced payment for the sale of cryptocurrency mining machines while we are to refund SOSNY

$13.0 million in December 2022.

Our cash inflow was decreased by an advance to a related party supplier of approximately $34.1 million

which was for the purchase of cryptocurrency mining machines.

Our net cash used in operating activities was approximately $8.7 million

1 unchanged sentence

The operating cash outflow for the year ended June 30, 2021 was primarily attributable to our net loss

of $6.8 million, non-cash items of approximately $1.0 million such as depreciation and amortization and impairment.

We had an increase

in advances to suppliers - third parties as we made advances to our suppliers of approximately $1.3 million, and a decrease in accrued

expenses and other current liabilities of approximately $1.1 million offset by a decrease in other receivables of approximately $4.2 million

as we collected our outstanding balances.

net cash used in operating activities was approximately $3.9 million for the year ended June 30, 2020 compared to net cash used in operating

activities of approximately $4.3 million for the same period in 2019.

The operating cash outflow for the year ended June 30, 2020 was

primarily attributable to our net loss of approximately $17.9 million, of which approximately $1.6 million of stock compensation expense,

approximately $0.3 million of impairment loss of fixed assets, approximately $0.4 million of depreciation and amortization expenses of

fixed assets and intangible asset and approximately $14.9 million for provision of doubtful accounts were non-cash expenses.

increase in other receivables of approximately $5.8 million as we prepaid certain costs of commodities on behalf of our customers offset

by a decrease of approximately $1.1 million in accounts receivable, approximately $0.4 million of notes receivable and approximately

$0.4 million of due from related parties as a result of collections made during the year.

Net cash used in investing activities

was $6,040,185 for the year ended June 30, 2021 due to the acquisition of property and equipment of approximately $1.5 million, loan receivable

of approximately $3.9 million and loan to related party of approximately $0.6 million.

cash used in investing activities was $1,358 for the year ended June 30, 2020, mainly for the purchase of computer equipment and making

office leasehold improvement of $6,984.

The cash outflow was offset by proceeds from disposal of vehicle of $5,626.

cash provided by financing activities was approximately $54.2 million for the year ended June 30, 2021 due to cash proceeds received

from issuance of common stock to private investors for approximately $52.8 million and cash proceeds received from issuance of preferred

stock to a private investor for approximately $1.4 million.

cash provided by financing activities was approximately $1.2 million for the year ended June 30, 2020, due to cash proceeds received

from issuance of common stock to a private investor for approximately $0.9 million and approximately $0.3 million from SBA and PPP

Accounting Policies

of Presentation

accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the

United States of America (“US GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”).

The consolidated financial statements include the accounts of us and include the assets, liabilities, revenues and expenses of the subsidiaries

All intercompany transactions and balances have been eliminated in consolidation.

Consolidation of VIE

Shipping Agency Ltd., a PRC corporation (“Sino-China”), is considered a variable interest entity (“VIE”), with

us as the primary beneficiary.

We, through Trans Pacific Shipping Ltd., entered into certain agreements with Sino-China, pursuant to

which we receive 90% of Sino-China’s net income.

a VIE, Sino-China’s revenues are included in our total revenues, and any income/loss from operations is consolidated with that

Because of contractual arrangements between us and Sino-China, we have a pecuniary interest in Sino-China that requires consolidation

of the financial statements of us and Sino-China.

have consolidated Sino-China’s operating results in accordance with Accounting Standards Codification (“ASC”)

810-10, “Consolidation”.

The agency relationship between us and Sino-China and its branches is governed by a series of contractual

arrangements pursuant to which we have substantial control over Sino-China.

Management makes ongoing reassessments of whether we remain

the primary beneficiary of Sino-China.

of Estimates and Assumptions

preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that

affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial

statements and the reported amounts of revenues and expenses during the reporting periods.

Estimates are adjusted to reflect actual experience

when necessary.

Significant accounting estimates reflected in the our consolidated financial statements include revenue recognition,

fair value of stock based compensation, cost of revenues, allowance for doubtful accounts, impairment loss, deferred income taxes, income

tax expense and the useful lives of property and equipment.

The inputs into our judgments and estimates consider the economic implications

of COVID-19 on our critical and significant accounting estimates.

Since the use of estimates is an integral component of the financial

reporting process, actual results could differ from those estimates.

recognize revenue which represents the transfer of goods and services to customers in an amount that reflects the consideration to which

we expect to be entitled in such exchange.

We identified contractual performance obligations and determine whether revenue should be

recognized at a point in time or over time, based on when control of goods and services transfers to a customer.

Our revenue streams

are recognized at a point in time.

use a five-step model to recognize revenue from customer contracts.

The five-step model requires that we (i) identify the contract with

the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, including variable consideration

to the extent that it is probable that a significant future reversal will not occur, (iv) allocate the transaction price to the respective

performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy the performance obligation.

continue to derive revenues from sales contracts with customers with revenues being recognized upon performance of services.

evidence of an arrangement is demonstrated via sales contract and invoice;

and the sales price to the customer is fixed upon acceptance

of the sales contract and there is no separate sales rebate, discount, or other incentive.

Our revenues are recognized at a point

in time after all performance obligations are satisfied.

record receivables related to revenue when we have an unconditional right to invoice and receive payment.

revenue consists primarily of customer billings made in advance of performance obligations being satisfied and revenue being recognized.

we and our subsidiaries and Sino-China were incorporated in different jurisdictions, they file separate income tax returns.

asset and liability method of accounting for income taxes in accordance with U.S.

Deferred taxes, if any, are recognized for the

future tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts in the consolidated

financial statements.

A valuation allowance is provided against deferred tax assets if it is more likely than not that the asset will

not be utilized in the future.

recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on

examination by the taxing authorities, based on the technical merits of the position.

We recognize interest and penalties, if any, related

to unrecognized tax benefits as income tax expense.

We had no uncertain tax positions as of June 30, 2021 and 2020.

tax returns for the years prior to 2016 are no longer subject to examination by U.S.

tax authorities.

Enterprise Income Tax

enterprise income tax is calculated based on taxable income determined under the PRC Generally Accepted Accounting Principles (“PRC

GAAP”) at 25%.

Sino-China and Trans Pacific are registered in PRC and governed by the Enterprise Income Tax Laws of the PRC.

Value Added Taxes and Surcharges

are subject to value added tax (“VAT”).

Revenue from services provided by the our PRC subsidiaries and affiliates, including

Sino-China and Trans Pacific are subject to VAT at rates ranging from 9% to 13%.

Entities that are VAT general taxpayers are allowed

to offset qualified VAT paid to suppliers against their VAT liability.

Net VAT liability is recorded in taxes payable on the consolidated

balance sheets.

addition, under the PRC regulations, our PRC subsidiaries and affiliates are required to pay the city construction tax (7%) and education

surcharges (3%) based on the net VAT payments.

prepare our consolidated financial statements in accordance with U.S.

These accounting principles require us to make judgments,

estimates and assumptions on the reported amounts of assets and liabilities at the end of each fiscal period, and the reported amounts

of revenues and expenses during each fiscal period.

We continually evaluate these judgments and estimates based on our own historical

experience, knowledge and assessment of current business and other conditions, our expectations regarding the future based on available

information and assumptions that we believe to be reasonable.

Accounting Pronouncements

Pronouncements

August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820):

Disclosure Framework—Changes to the Disclosure

Requirements for Fair Value Measurement” (“ASU 2018-13”).

ASU 2018-13 removes, modifies and adds certain disclosure

requirements in Topic 820 “Fair Value Measurement”.

ASU 2018-13 eliminates certain disclosures related to transfers and the

valuations process, modifies disclosures for investments that are valued based on net asset value, clarifies the measurement uncertainty

disclosure, and requires additional disclosures for Level 3 fair value measurements.

We adopted this ASU on July 1, 2020 and the adoption

has no significant impact to our consolidated financial statements as a whole.

Pronouncements

not yet adopted

May 2019, the FASB issued ASU 2019-05, which is an update to ASU Update No.

2016-13, Financial Instruments—Credit Losses (Topic

Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement

of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology.

The amendments

in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, and made several consequential amendments to the Codification.

Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses

when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale

Debt Securities.

The amendments in this ASU address those stakeholders’ concerns by providing an option to irrevocably elect the

fair value option for certain financial assets previously measured at amortized cost basis.

For those entities, the targeted transition

relief will increase comparability of financial statement information by providing an option to align measurement methodologies for similar

financial assets.

Furthermore, the targeted transition relief also may reduce the costs for some entities to comply with the amendments

in Update 2016-13 while still providing financial statement users with decision-useful information.

In November 2019, the FASB issued

2019-10, which to update the effective date of ASU No.

2016-13 for private companies, not-for-profit organizations and certain

smaller reporting companies applying for credit losses standard.

The new effective date for these preparers is for fiscal years beginning

after July 1, 2023, including interim periods within those fiscal years.

We have not early adopted this update and it will become effective

on July 1, 2023 assuming we will remain eligible to be smaller reporting company.

We are currently evaluating the impact of this new

standard on our consolidated financial statements and related disclosures.

In December 2019, the FASB

issued ASU 2019-12, “Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes”.

The amendments in this Update

simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740.

The amendments also improve

consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance.

ASU 2019-12 is

effective for the Company for annual and interim reporting periods beginning July 1, 2021.

Early adoption of the amendments is permitted,

including adoption in any interim period for public business entities for periods for which financial statements have not yet been issued.

An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual

period that includes that interim period.

Additionally, an entity that elects early adoption must adopt all the amendments in the same

We believe the adoption of this new standard will not have material impact on our consolidated financial statements and related

In August 2020, the FASB issued

ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in

Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity”.

The amendments in this Update to address issues identified as a result of the complexity associated with applying generally accepted accounting

principles for certain financial instruments with characteristics of liabilities and equity.

ASU 2020-06 is effective for the Company

for annual and interim reporting periods beginning July 1, 2022.

Early adoption is permitted, but no earlier than fiscal years beginning

after July 1, 2021, including interim periods within those fiscal years.

An entity that elects to early adopt the amendments in an interim

period should reflect any adjustments as of the beginning of the annual period that includes that interim period.

We believe the adoption

of this new standard will not have material impact on our consolidated financial statements and related disclosures.

In October 2020, the FASB

issued ASU 2020-08, “Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs”.

The amendments in this Update represent changes to clarify the Codification.

The amendments make the Codification easier to understand

and easier to apply by eliminating inconsistencies and providing clarifications.

ASU 2020-08 is effective for the Company for annual and

interim reporting periods beginning July 1, 2021.

Early application is not permitted.

All entities should apply the amendments in this

Update on a prospective basis as of the beginning of the period of adoption for existing or newly purchased callable debt securities.

These amendments do not change the effective dates for Update 2017-08.

We believe the adoption of this new standard will not have material

impact on our consolidated financial statements and related disclosures.

In October 2020, the FASB

issued ASU 2020-10, “Codification Improvements”.

The amendments in this Update represent changes to clarify the Codification

or correct unintended application of guidance that are not expected to have a significant effect on current accounting practice or create

a significant administrative cost to most entities.

The amendments in this Update affect a wide variety of Topics in the Codification

and apply to all reporting entities within the scope of the affected accounting guidance.

ASU 2020-10 is effective for annual periods

beginning after July 1, 2021 for public business entities.

Early application is permitted.

The amendments in this Update should be applied

retrospectively.

We are currently evaluating the impact of this new standard on our consolidated financial statements and related disclosures.

We believe the adoption of this new standard will not have material impact on our consolidated financial statements.

Quantitative and Qualitative Disclosures about Market Risk.

Financial Statements and Supplementary Data.

The Company’s financial statements and the related notes, together

with the report of Audit Alliance LLP, are set forth following the signature pages of this Report.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

of approximately $11.3 million, consisting of non-cash items including approximately $0.4 million in depreciation and amortization, approximately

$0.9 million in impairment and approximately $4.2 million in allowance for deposit.

We had an increase in advances to suppliers - third

parties as we made deposits to our freight carriers of approximately $0.8 million, and a decrease in accrued expenses and other current

liabilities of approximately $1.1 million offset by a decrease in other receivables of approximately $0.3 million as we collected our

outstanding balances.

Investing Activities

Net cash used in investing activities was approximately $3.5 million

for the year ended June 30, 2022 due to the acquisition of property and equipment of approximately $0.9 million and an investment of approximately

$0.2 million to a 40% owned joint venture.

We made an additional loan of $0.5 million to Wang Qinggang, a related party to the Company,

and CEO and legal representative of Trans Pacific Shanghai which is due in June 2024.

related party advances of approximately $1.9 million, which includes $1.3 million to Shanghai

Baoyin which is 30% owned by Wang Qinggang, and approximately $0.6 million in advances to LSM Trading Ltd, of which we hold a 40%

ownership interest.

Net cash used in investing

activities was approximately $1.5 million for the year ended June 30, 2021 due to the acquisition of property and equipment.

Financing Activities

Net cash provided by financing

activities was approximately $8.3 million for the year ended June 30, 2022 due to issuances of common stock in private placements of approximately

$10.5 million and proceeds from convertible notes of $10 million, repayment of convertible notes of $5.0 million and warrant repurchase

of approximately $7.9 million.

We also had cash from warrants exercise of approximately $0.9 million and repayment of Economic Injury

Disaster Loan.

Net cash provided by financing

activities was approximately $54.2 million for the year ended June 30, 2021 due to cash proceeds received from issuances of common stock

to private investors of approximately $52.8 million and cash proceeds received from issuances of preferred stock to a private investor

of approximately $1.4 million.

Critical Accounting Estimates

preparation of financial statements and related disclosures in conformity with U.S.

generally accepted accounting principles and the Company’s

discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions

and estimates that affect the amounts reported.

Note 2, “Summary of Significant Accounting Policies” of the notes to the financial

statements included elsewhere in this Report describe the significant accounting policies and methods used in the preparation of the Company’s

consolidated financial statements.

There have been no material changes to the Company’s critical accounting estimates since the

date of this Report.

Off-Balance Sheet Arrangements

Quantitative and Qualitative

Disclosures about Market Risk.

Not applicable.

Financial Statements and Supplementary

The Company’s financial

statements and the related notes, together with the report of Audit Alliance LLP, are set forth following the signature pages of this

Changes in and Disagreements with Accountants

on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis