The accompanying notes are an integral
part of the consolidated financial statements.
The accompanying notes are an integral part of the consolidated
financial statements.
The accompanying notes are an integral
part of the consolidated financial statements.
The accompanying notes are an integral
part of the consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(Amounts in RMB and US$, except for number of shares and per
share data)
|
1.
|
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
|
|
|
(a)
|
Description of Business
|
Oranco, Inc. (the “Company”) was
incorporated under the laws of the State of Nevada on June 16, 1977. The Company had been in the business of developing mineral
deposits. During the year 1983, all activities were abandoned, and the Company remained inactive until June 29, 2018 when it acquired
the business of Reliant Galaxy International Limited (“Reliant”). The Company and its subsidiaries (the “Group”)
are principally engaged in the marketing and wholesaling of self-branded spirits and imported wines in the People’s Republic
of China (the “PRC”).
As disclosed in the Form 8-K filed with
the Securities and Exchange Commission on October 19, 2018, the Company entered into a business agreement with Guangzhou Silicon
Technology Co., Ltd on August 20, 2018 to have Guangzhou Silicon Technology Co., Ltd develop an anti-counterfeiting laser recognition
proprietary system using blockchain technology.
Details of the subsidiaries are set out
in note 20 to the consolidated financial statements.
|
|
(b)
|
Basis of consolidation and presentation
|
The Consolidated Financial Statements include
the Financial Statements of Oranco, Inc. and its wholly-owned subsidiaries.
Subsidiaries are all entities over which
the Group has control. The Group controls an entity when the Group is exposed to or has rights to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The accompanying financial statements have
been prepared in accordance with the U.S. generally accepted accounting principles or GAAP. The Company operates in one reportable
segment and solely within the PRC. Accordingly, no segment or geographic information has been presented.
Non-controlling interests are shown as
a component of shareholders’ equity on the consolidated statement of balance sheet and the share of the net income attributable
to non-controlling interests is shown as a component of net income in the consolidated statements of operations.
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(UNAUDITED)
(Amounts in RMB and US$, except for number of shares and per
share data)
|
1.
|
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
|
|
|
(b)
|
Basis of consolidation and presentation – continued
|
Business Combinations
The acquisition of subsidiaries that meet
the criteria for business combinations is accounted for using the acquisition method of accounting. The consideration transferred
for the acquisition is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree
and the equity interests issued by the Group.
The consideration transferred includes
the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition
date. The Group recognizes any non-controlling interest in the acquiree at the non-controlling interest’s proportionate share
of the recognized amounts of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred.
Any contingent consideration to be transferred
by the Group are recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration
that is deemed to be an asset or liability is recognized, either in the Statement of Operations or as a change to other comprehensive
income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for
within equity. Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value
of the identifiable net assets acquired and liabilities assumed.
|
|
(c)
|
Financial instruments
|
Financial instruments of the Group primarily
consist of cash and cash equivalents, trade receivables, deposits, prepayments and other receivables, prepaid land lease, trade
payables, receipts in advance, accruals and other payables, and bank borrowings. The carrying values of the Group’s financial
instruments approximate their fair values, principally because of the short-term maturity of these instruments or their terms.
The Group has no derivative financial instruments.
|
|
(d)
|
Cash and cash equivalents
|
Cash and cash equivalents consist of cash
on hand and highly liquid investments which are unrestricted as to withdrawal or use, and which have maturities of three months
or less when purchased.
In May 2014, the FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers (Topic 606), to update the financial reporting requirements for revenue recognition. Topic
606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers.
It supersedes most current revenue recognition guidance, including industry-specific guidance. The guidance is based on the principle
that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also requires additional
disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including
significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. This guidance became
effective for the Group beginning on July 1, 2018, and the Group has the option of using either a full retrospective or a modified
retrospective approach for the adoption of the new standard. We adopted this standard using the modified retrospective approach
on July 1, 2018.
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED
(UNAUDITED)
(Amounts in RMB and US$, except for number of shares and per
share data)
|
1.
|
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
|
|
|
(e)
|
Revenue recognition – continued
|
In preparation for adoption of the standard,
we have completed our impact assessment of implementing this guidance. We have evaluated each of the five steps in Topic 606, which
are as follows: 1) identify the contract with the customer; 2) identify the performance obligations in the contract; 3) determine
the transaction price; 4) allocate the transaction price to the performance obligations; and 5) recognize revenue when (or as)
performance obligations are satisfied.
Revenue was not affected materially in
any period due to the adoption of ASC Topic 606 because: (1) we identified similar performance obligations under ASC Topic 606
as compared with deliverables and separate units of account previously identified; our performance obligation is to deliver the
spirits and wine; (2) we determined the transaction price to be consistent; and (3) we recorded revenue at the same point in time,
upon delivery under both ASC Topic 605 and ASC Topic 606, as applicable under the terms of the contract with the customer. Additionally,
the accounting for fulfillment costs or costs incurred to obtain a contract were not affected materially in any period due to the
adoption of Topic 606.
There are also certain considerations related
to accounting policies, business processes and internal control over financial reporting that are associated with implementing
Topic 606. We have evaluated our policies, processes, and control framework for revenue recognition, and identified and implemented
the changes needed in response to the new guidance.
Lastly, disclosure requirements under the
new guidance in Topic 606 have been significantly expanded in comparison to the disclosure requirements under the current guidance,
including disclosures related to disaggregation of revenue into appropriate categories, performance obligations, the judgments
made in revenue recognition determinations, adjustments to revenue which relate to activities from previous quarters or years,
any significant reversals of revenue, and costs to obtain or fulfill contracts.
We conclude that the adoption of the standard
has no material impact on our revenue recognition policy.
|
|
(f)
|
Trade receivables and allowance for doubtful accounts
|
Trade receivables are stated at the amount
the Group expects to collect. The Group maintains allowances for doubtful accounts for estimated losses. Management considers the
following factors when determining the collectability of specific accounts: historical experience, creditworthiness of the clients,
aging of the receivables and other specific circumstances related to the accounts. Allowance for doubtful accounts is made and
recorded into general and administrative expenses based on the aging of trade receivables and on any specifically identified receivables
that may become uncollectible. Trade receivables which are deemed to be uncollectible are charged off against the allowance after
all means of collection have been exhausted and the potential for recovery is considered remote. The Company takes a write off
of the account balances when the Company can demonstrate all means of collection on the outstanding balances have been exhausted.
There is no allowance for doubtful accounts in these consolidated financial statements.
Inventories are stated at the lower of
cost or net realizable value. Cost is determined using the weighted average method. The components of inventories include raw materials,
processing cost of finished goods and purchase cost of products. The Group routinely evaluate the net realizable value of the inventories
in light of current market conditions and market trends and record a write-down against the cost of inventories should the net
realizable value falls below the cost.
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
1.
|
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
|
|
|
(h)
|
Property, plant and equipment and depreciation
|
Property, plant and equipment are carried
at cost less accumulated depreciation and any recorded impairment. Depreciation is calculated on a straight-line basis over the
following estimated useful lives:
|
Category
|
|
Estimated useful life
|
|
Estimated residual values
|
|
Building
|
|
20 years
|
|
0-10%
|
|
Computer and office equipment
|
|
3 years
|
|
0-10%
|
|
Leasehold improvement
|
|
Over the shorter of lease term or the estimated useful lives of the assets
|
Repairs and maintenance are expensed as
incurred and asset improvements are capitalized. Consideration is given at each balance sheet date to determine whether there is
any indication of impairment of the carrying amounts of the property, plant and equipment. The indication could be an unfavorable
development of a business or severe economic slowdown as well as reorganization of the operation. In assessing value in use, the
estimated future cash flows are discounted to their present value, based on the time value of money and the risks specific to the
country where the assets are located.
VAT on sales is charged at 13% on revenue
from product sales and is subsequently paid to the PRC tax authorities after netting input VAT on purchases. The excess of output
VAT over input VAT is recognized in other payables, and the excess of input VAT over output VAT is recognized in other receivables
in the Consolidated Balance Sheets.
Right-of-use (ROU) Assets represent the
Company’s right to control the use of an identified asset for a period of time, or term, in exchange for consideration, and
Lease Liabilities represent its obligation to make lease payments arising from the aforementioned right.
The Company determines if an arrangement
is, or contains, a lease at the inception date, and the Company measures and records a non-current ROU Asset and corresponding
Lease Liabilities, classified as current and non-current, on its consolidated balance sheet at the lease commencement date for
all leases except for short-term leases with a term of 12 months or less. ROU Assets and Lease Liabilities are initially recorded
based on the present value of lease payments over the lease term, which may include options to extend or terminate the lease when
it is reasonably certain at the commencement date that such options will be exercised. As the rate implicit for each of the Company’s
leases is not readily determinable, the Company uses its incremental borrowing rate, based on the information available at the
lease commencement date in determining the present value of its expected lease payments. The ROU Asset also includes any initial
direct costs and any lease payments made prior to the lease commencement date and is reduced by any lease incentives received.
The ROU Asset is amortized on a straight-line basis as the operating lease cost over the lease term on the consolidated statements
of income. ROU Asset amortization, referred to as noncash lease expense, along with the change in the operating lease liabilities
are separately presented within the cash flows from operating activities on the consolidated statements of cash flows.
ASC 842 provides various optional transition
practical expedients. Upon transition to ASC 842, the Company elected the use of the package of practical expedients to not reassess:
whether a contract is or contains a lease, lease classification and indirect costs. The Company did not elect the hindsight practical
expedient in transition. The Company has elected to not separate lease and non-lease components. See Note 17—Leases for additional
information.
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
1.
|
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
|
|
|
(k)
|
Foreign currency translation
|
Substantially all of the Group’s
operations are conducted in China and as a result, the functional and reporting currency of the Group is the Chinese Renminbi.
Monetary assets and liabilities denominated
in currencies other than the applicable functional currencies are translated into the functional currencies at the prevailing rates
of exchange at the balance sheet date. Transactions in currencies other than the functional currency are converted into the functional
currency at the applicable rates of exchange prevailing at the transaction dates. Transaction gains and losses are recognized in
the consolidated statements of operations.
In translating the financial statements
of the Company’s subsidiaries outside the PRC into the reporting currency, assets and liabilities are translated from the
subsidiaries’ functional currencies to the reporting currency at the exchange rate at the balance sheet date. Equity amounts
are translated at historical exchange rates; revenues, expenses, and other gains and losses are translated using the average rate
for the period. Translation adjustments are reported as cumulative translation adjustments and are shown as a separate component
of other comprehensive income/(loss) in the consolidated statements of operations. During 2019 and 2018, such translation adjustments
were not material.
The Group uses the average exchange rate
for the year and the exchange rate at the balance sheet date to translate the operating results and financial position, respectively.
Translation differences are recorded in accumulated other comprehensive loss, a component of shareholders’ deficits.
Convenience translation
Amounts in US$ are presented for the convenience
of the reader and are translated at the noon buying rate of US$1.00 to RMB 6.8680 on September 28, 2018 and RMB 7.1477 on September
30, 2019, representing the noon buying rate set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation
is made that the RMB amounts could have been, or could be converted, realized or settled into US$ at such rate or at any other
rate.
Income taxes are provided for in accordance
with the laws and regulations applicable to the Group as enacted by the relevant tax authorities. The impact of an uncertain income
tax position on the income tax return is recognized at the largest amount that is more-likely-than-not to be sustained upon audit
of the related tax authority. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being
sustained. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Group
records interest and penalties related to unrecognized tax benefits (if any) in interest expenses and general and administrative
expenses, respectively.
|
|
(m)
|
Fair value measurement
|
The Group defines fair value as the price
that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date.
When determining the fair value measurements
for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most advantageous
market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability.
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
1.
|
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
|
|
|
(m)
|
Fair value
measurement – continued
|
The Group’s financial instruments
include cash and cash equivalents, term deposits, trade and other receivables, trade and other payables and bank borrowings. The
Group considers the carrying amounts approximate fair value because of the short maturity of these financial instruments.
|
|
(n)
|
Transactions between entities under common control
|
When accounting for a transfer of assets
or exchange of shares between entities under common control of the Group, the carrying amounts of the assets and liabilities transferred
shall remain unchanged subsequent to the transaction, and no gain or loss shall be recorded in the Group’s consolidated statements
of operations.
|
|
(o)
|
Commitments and contingencies
|
In the normal course of business, the Group
is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of
matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters. An accrual for a
loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably
estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material,
is disclosed.
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
1.
|
SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES – CONTINUED
|
|
|
(q)
|
Adoption of new accounting standards
|
In February 2016, the FASB issued ASU 2016-02, “Leases
(Topic 842),” which requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations
created by all leases with a term of more than one year. Accounting by lessors remains similar to pre-existing U.S. GAAP.
Subsequent accounting standards updates have been issued, which amend and/or clarify the application of ASU 2016-02. The
Company adopted Topic 842 effective January 1, 2019. See Note 17, operating leases arrangement for further details.
The adoption of the standard in the consolidated
financial statements for the financial period ended September 30, 2019 will have no significant impact to the provision for income
taxes and will have no impact to the net cash used in, or generated by, operating, investing, or financing activities in the Group’s
consolidated statements of cash flows.
|
|
(r)
|
Recently issued accounting pronouncements not yet adopted
|
In June 2016, the FASB issued ASU 2016-13,
Financial Instruments – Credit Losses (Topic 326), amending existing guidance on the accounting for credit losses on financial
instruments within its scope. The guidance introduces an expected loss model for estimating credit losses, replacing the incurred
loss model. The new guidance also changes the impairment model for available-for-sale debt securities, requiring the use of an
allowance to record estimated credit losses (and subsequent recoveries). The new guidance is effective for the Company beginning
after December 15, 2020. The Company is currently evaluating the impact of the adoption of this guidance on its condensed consolidated
financial statements.
In August 2018, the FASB issued ASU 2018-13,
Fair Value Measurement (Topic 820): Disclosure Framework. The purpose of the update is to improve the effectiveness of the fair
value measurement disclosures that allow for clear communication of information that is most important to the users of financial
statements. There were certain required disclosures that have been removed or modified. In addition, the update added the following
disclosures: (i) changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring
Level 3 fair value measurements held at the end of the reporting period and (ii) the range and weighted average of significant
unobservable inputs used to develop Level 3 fair value measurements. The standard will become effective for the Company for its
periods beginning after December 15, 2019; early adoption is permitted. The Company is currently evaluating the impact of ASU 2018-13
on its condensed consolidated financial statements.
Other pronouncements issued by the FASB
or other authoritative accounting standards groups with future effective dates are either not applicable or not significant to
the condensed consolidated financial statements of the Company.
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
2.
|
REVENUE AND OTHER INCOME
|
Revenue represents the invoiced spirits
and wine products sold to customers less discounts, returns, and surcharges.
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
25,667,997
|
|
|
|
3,591,085
|
|
|
|
23,962,454
|
|
|
Other income
|
|
|
45,852
|
|
|
|
6,415
|
|
|
|
19,037
|
|
|
|
|
|
25,713,849
|
|
|
|
3,597,500
|
|
|
|
23,981,491
|
|
All revenue is derived in China.
A concentration analysis of the revenue
is as follows:
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
|
|
|
|
|
|
|
|
Customer A
|
|
|
16
|
%
|
|
|
12
|
%
|
|
Customer B
|
|
|
16
|
%
|
|
|
11
|
%
|
|
Customer C
|
|
|
42
|
%
|
|
|
11
|
%
|
|
Customer D
|
|
|
12
|
%
|
|
|
10
|
%
|
|
Customer E
|
|
|
12
|
%
|
|
|
10
|
%
|
|
Customer F
|
|
|
10
|
%
|
|
|
9
|
%
|
|
Others
|
|
|
21
|
%
|
|
|
37
|
%
|
|
|
|
|
100
|
%
|
|
|
100
|
%
|
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
3.
|
SELLING AND DISTRIBUTION EXPENSES
|
The following expenses are included in
the selling and distribution expenses:
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Freight
|
|
|
9,700
|
|
|
|
1,357
|
|
|
|
280
|
|
|
Packaging cost
|
|
|
-
|
|
|
|
-
|
|
|
|
143,216
|
|
|
|
|
|
9,700
|
|
|
|
1,357
|
|
|
|
143,496
|
|
|
4.
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
Property, plant and equipment, net, consist
of the following:
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computer and office equipment
|
|
|
334,631
|
|
|
|
46,817
|
|
|
|
268,550
|
|
|
|
39,119
|
|
|
Building
|
|
|
3,754,625
|
|
|
|
525,291
|
|
|
|
3,754,625
|
|
|
|
546,923
|
|
|
Add: Computer and leasehold improvement
|
|
|
-
|
|
|
|
-
|
|
|
|
66,081
|
|
|
|
9,626
|
|
|
|
|
|
4,089,256
|
|
|
|
572,108
|
|
|
|
4,089,256
|
|
|
|
595,668
|
|
|
Less: accumulated depreciation
|
|
|
(1,027,666
|
)
|
|
|
(143,776
|
)
|
|
|
(965,032
|
)
|
|
|
(140,573
|
)
|
|
Property, plant and equipment, net,
|
|
|
3,061,590
|
|
|
|
428,332
|
|
|
|
3,124,224
|
|
|
|
455,095
|
|
|
5.
|
PREPAID LAND LEASE AND OTHER LEASE, NET
|
Prepaid land lease and other lease, net,
consists of the following:
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid land lease
|
|
|
10,412,120
|
|
|
|
1,456,709
|
|
|
|
5,412,120
|
|
|
|
788,364
|
|
|
Less: accumulated amortization
|
|
|
(613,453
|
)
|
|
|
(85,825
|
)
|
|
|
(502,700
|
)
|
|
|
(73,227
|
)
|
|
Add: other lease asset-ROU – note 17
|
|
|
776,317
|
|
|
|
108,611
|
|
|
|
5,000,000
|
|
|
|
728,333
|
|
|
Prepaid land lease and other lease, net
|
|
|
10,574,984
|
|
|
|
1,479,495
|
|
|
|
9,909,420
|
|
|
|
1,443,470
|
|
The carrying amounts of the prepaid land
lease and other lease are analyzed as:
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
1,381,624
|
|
|
|
193,296
|
|
|
|
547,180
|
|
|
|
79,706
|
|
|
Non-current assets
|
|
|
9,193,360
|
|
|
|
1,286,199
|
|
|
|
9,362,240
|
|
|
|
1,363,764
|
|
|
|
|
|
10,574,984
|
|
|
|
1,479,495
|
|
|
|
9,909,420
|
|
|
|
1,443,470
|
|
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
5.
|
PREPAID LAND LEASE AND OTHER LEASE, NET – CONTINUED
|
Prepaid land lease represents the costs
of the land use rights in respect of leasehold land in the People’s Republic of China, on which the Group’s buildings
are situated. Prepaid other lease represents the lease of a warehouse in the PRC.
The prepaid land lease’ terms are
70 years, ending in 2082 and other leases terms are 10 years, ending in 2029.
Inventories consist of the following:
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Raw materials
|
|
|
2,913,726
|
|
|
|
407,645
|
|
|
|
4,500,125
|
|
|
|
655,517
|
|
|
Finished goods
|
|
|
3,729,827
|
|
|
|
521,822
|
|
|
|
2,216,931
|
|
|
|
322,932
|
|
|
Packaging material
|
|
|
183,932
|
|
|
|
25,733
|
|
|
|
183,932
|
|
|
|
26,793
|
|
|
|
|
|
6,827,485
|
|
|
|
955,200
|
|
|
|
6,900,988
|
|
|
|
1,005,242
|
|
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
33,391,117
|
|
|
|
4,671,589
|
|
|
|
32,053,899
|
|
|
|
4,669,177
|
|
The Group normally allows credit terms
to well-established customers ranging from 30 to 150 days. The Group seeks to maintain strict control over its trade receivables.
Overdue trade receivables are reviewed regularly by the Board of Directors.
|
8.
|
DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES
|
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
36,923,164
|
|
|
|
5,165,741
|
|
|
|
45,054,919
|
|
|
|
6,562,989
|
|
|
Other receivables
|
|
|
638,350
|
|
|
|
89,308
|
|
|
|
555,604
|
|
|
|
80,933
|
|
|
|
|
|
37,561,514
|
|
|
|
5,255,049
|
|
|
|
45,610,523
|
|
|
|
6,643,922
|
|
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
9.
|
CASH AND CASH EQUIVALENTS
|
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash on hand
|
|
|
391,582
|
|
|
|
54,784
|
|
|
|
419,446
|
|
|
|
61,099
|
|
|
Cash held in banks
|
|
|
73,204,070
|
|
|
|
10,241,626
|
|
|
|
52,744,520
|
|
|
|
7,683,106
|
|
|
|
|
|
73,595,652
|
|
|
|
10,296,410
|
|
|
|
53,163,966
|
|
|
|
7,744,205
|
|
Cash held in banks earns interest at floating
rates based on daily bank deposit rates.
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
339,120
|
|
|
|
47,445
|
|
|
|
247,685
|
|
|
|
36,079
|
|
For the larger suppliers, the Group makes
payment in advance for the inventories. For the smaller suppliers, the Group obtains credit terms ranging from 30 to 90 days.
A concentration analysis of the suppliers
based on the purchases made during the year is as follows:
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
|
|
|
|
|
|
|
|
Supplier A
|
|
|
52
|
%
|
|
|
59
|
%
|
|
Supplier B
|
|
|
37
|
%
|
|
|
17
|
%
|
|
Supplier C
|
|
|
8
|
%
|
|
|
11
|
%
|
|
Supplier D
|
|
|
2
|
%
|
|
|
4
|
%
|
|
Supplier E
|
|
|
-
|
%
|
|
|
4
|
%
|
|
Supplier F
|
|
|
-
|
%
|
|
|
3
|
%
|
|
Others
|
|
|
-
|
%
|
|
|
2
|
%
|
|
|
|
|
100
|
%
|
|
|
100
|
%
|
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
11.
|
RECEIPTS IN ADVANCE, ACCRUALS AND OTHER PAYABLES
|
Receipts in advance, accruals and other
payables consist of the following:
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued payroll and bonus
|
|
|
312,801
|
|
|
|
43,762
|
|
|
|
301,894
|
|
|
|
43,976
|
|
|
Accrued and other payables
|
|
|
5,493,320
|
|
|
|
768,544
|
|
|
|
3,430,703
|
|
|
|
499,738
|
|
|
Other tax payables
|
|
|
1,079,712
|
|
|
|
151,057
|
|
|
|
466,538
|
|
|
|
67,959
|
|
|
Receipts in advance
|
|
|
960,276
|
|
|
|
134,348
|
|
|
|
1,499,033
|
|
|
|
218,359
|
|
|
|
|
|
7,846,109
|
|
|
|
1,097,711
|
|
|
|
5,698,168
|
|
|
|
830,032
|
|
|
12.
|
AMOUNT DUE TO DIRECTOR
|
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current-liabilities
|
|
|
16,218,437
|
|
|
|
2,269,043
|
|
|
|
13,392,777
|
|
|
|
1,950,878
|
|
|
Non-Current-liabilities
|
|
|
81,781,805
|
|
|
|
11,441,695
|
|
|
|
81,781,805
|
|
|
|
11,912,863
|
|
|
|
|
|
98,000,242
|
|
|
|
13,710,738
|
|
|
|
95,174,582
|
|
|
|
13,863,741
|
|
The amount due to director is interest-free,
unsecured and repayable on demand.
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans from financial institutions – Note (i)
|
|
|
850,000
|
|
|
|
118,919
|
|
|
|
2,250,000
|
|
|
|
327,749
|
|
|
Classified as:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
850,000
|
|
|
|
118,919
|
|
|
|
2,250,000
|
|
|
|
327,749
|
|
Note:
|
|
(i)
|
Three loans from financial institutions bear fixed interest rates ranging from 5% to 5.59% per annum and mature on October 29, 2019, December 18, 2019, and March 14, 2020, respectively.
|
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
14.
|
SHARE CAPITAL AND CAPITAL MANAGEMENT
|
|
|
|
Issued and fully paid
|
|
|
Shares to be issued
|
|
|
Additional paid
in capital
|
|
|
Total share capital
|
|
|
Company
|
|
Number of
shares
|
|
|
value
US$
|
|
|
value
RMB
|
|
|
Number of
shares
|
|
|
value
US$
|
|
|
value
RMB
|
|
|
value
US$
|
|
|
value
RMB
|
|
|
value
RMB
|
|
|
At June 30, 2017 and June 30, 2016
|
|
|
4,269,950
|
|
|
|
4,270
|
|
|
|
27,775
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(4,269
|
)
|
|
|
(27,774
|
)
|
|
|
1
|
|
|
Common stock conversion
|
|
|
37,921,530
|
|
|
|
37,922
|
|
|
|
246,671
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
246,671
|
|
|
Conversion of amount due to a director
|
|
|
15,000,000
|
|
|
|
15,000
|
|
|
|
97,570
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
27,209
|
|
|
|
176,986
|
|
|
|
274,556
|
|
|
Shares issued for cash
|
|
|
13,000,000
|
|
|
|
13,000
|
|
|
|
84,561
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
91,000
|
|
|
|
591,925
|
|
|
|
676,486
|
|
|
Shares issued as consideration for business acquisition
|
|
|
28,000,000
|
|
|
|
28,000
|
|
|
|
182,131
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
182,131
|
|
|
Shares to be issued as consideration for business acquisition note 1
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
321,296,000
|
|
|
|
321,296
|
|
|
|
2,126,520
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,126,520
|
|
|
Reverse merger
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(113,940
|
)
|
|
|
(741,137
|
)
|
|
|
(741,137
|
)
|
|
At June 30, 2018
|
|
|
98,191,40
|
|
|
|
98,191
|
|
|
|
638,708
|
|
|
|
321,296,000
|
|
|
|
321,296
|
|
|
|
2,126,520
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,765,228
|
|
|
Shares reverse split on August 7, 2019
|
|
|
(88,372,332
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(289,166,400
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Restated at June 30, 2018 and September 30, 2018
|
|
|
9,819,148
|
|
|
|
98,191
|
|
|
|
638,708
|
|
|
|
32,129,600
|
|
|
|
321,296
|
|
|
|
2,126,520
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,765,228
|
|
|
Shares were issued as consideration for business acquisition note 1
|
|
|
32,129,600
|
|
|
|
321,296
|
|
|
|
2,126,520
|
|
|
|
(32,129,600
|
)
|
|
|
(321,296
|
)
|
|
|
(2,126,520
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total at June 30, 2019 and September 30, 2019
|
|
|
41,948,748
|
|
|
|
419,487
|
|
|
|
2,765,228
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
2,765,228
|
|
Each share has a nominal value of US$0.001 per share.
Note:
|
|
1.
|
The 321,296,000 new shares, at $0.001 per share, are part of the consideration of the acquisition of Reliant Galaxy International Limited by the Company. The aggregated nominal value of the shares is US$321,296.
|
|
|
2.
|
On July 22, 2019, the Company filed a Certificate of Amendment with the Secretary of State of Nevada to effect a reverse stock split of the issued and outstanding shares of its common stock at a ratio of one share for every 10 shares outstanding prior to the effective date of the reverse stock split. All current and historical information contained herein related to the share and per share information for the Company’s common stock or stock equivalents reflects the 1-for-10 reverse stock split of the Company’s outstanding shares of common stock that became market effective on August 7, 2019. There was no change in the number of the Company’s authorized shares of common stock.
|
|
|
3.
|
On August 7, 2019, the Company effected a decrease in the number of its authorized Common Stock from 500,000,000 to 50,000,000, with its Common Stock’s par value unchanged at $0.001 per share.
|
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
The Company is subject to taxes in the USA.
The Company has had no taxable income under Federal or State tax laws. The Company has loss carry forwards totaling $24,581 that
may be offset against future federal income taxes. If not used, the carry forwards will expire 20 years after they are incurred.
The Company’s BVI subsidiary is not
subject to taxation.
The Company’s Hong Kong subsidiary
is subject to taxes in Hong Kong. The Hong Kong subsidiary has had no taxable income.
The Company’s PRC subsidiaries are
subject to taxes in China. The applicable PRC statutory income tax rate is 25% according to the Enterprise Income Tax Law.
A reconciliation of the income tax expenses
in China is set out below:
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income tax
|
|
|
13,990,473
|
|
|
|
1,957,339
|
|
|
|
14,053,154
|
|
|
Taxation at the applicable tax rate of 25%
|
|
|
3,497,619
|
|
|
|
489,335
|
|
|
|
3,513,289
|
|
|
Tax effect on non-taxable income
|
|
|
(11,464
|
)
|
|
|
(1,604
|
)
|
|
|
(4,759
|
)
|
|
Tax effects of expense that are not deductible
|
|
|
452,118
|
|
|
|
63,254
|
|
|
|
658,953
|
|
|
(Over)/under-provision in respect of previous year
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Income taxes
|
|
|
3,938,273
|
|
|
|
550,985
|
|
|
|
4,167,483
|
|
|
16.
|
CONTRIBUTION PLAN IN THE PRC
|
As stipulated by the PRC state regulations,
the subsidiaries in the PRC participate in the state-run defined contribution retirement scheme. All employees are entitled to
an annual pension payment equal to a fixed proportion of the average basic salary of the geographical area of their last employment
at their retirement date. The PRC subsidiaries are required to make contributions to the local social security bureau at 29.4%
to 37.4% of the previous year’s average basic salary amount of the geographical area where the employees are under employment
with the PRC subsidiaries. The Group has no obligation for the payment of pension benefits beyond the annual contributions as set
out above.
According to the relevant rules and regulations
of the PRC, the PRC subsidiaries and their employees are each required to make contributions to an accommodation fund at 9% of
the salaries and wages of the employees which are administered by the Public Accumulation Funds Administration Centre. There is
no further obligation for the Group except for such contributions to the accommodation fund. The Group had no significant obligation
apart from the contributions as stated above.
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
17.
|
OPERATING LEASE ARRANGEMENT
|
On September 30, 2019, the Company
adopted ASU 2016-02 using the modified retrospective method as of the effective date of September 30, 2019 (the
“effective date method”). Under the effective date method, financial results reported in periods prior to 2019 are
unchanged. In transition to the new lease guidance, the Company elected the package of practical expedients permitted under the
transition guidance within the new standard that allowed the Company to not reassess whether a contract is or contains a lease,
lease classification and initial direct costs; however, the Company did not elect the hindsight transitional practical expedient.
The Company has also elected the practical expedient to not account for lease components (e.g., fixed payments including rent,
real estate taxes and insurance costs) separately from the nonlease components. After assessment of the cumulative impact of adopting
ASU 2016-02, it was determined that the cumulative effect adjustment required under the new guidance was immaterial and
therefore the Company did not record a retrospective adjustment to the opening balance of retained earnings at September 30,
2019. The Company recognized additional operating lease right-of-use assets and lease liabilities of $0.7 million
as of September 30, 2019.
The Company is currently a lessee under
a number of operating leases for offices and a warehouse. The Company’s leases generally have remaining lease terms of 1
year to 5 years and some of which include options to terminate the leases within 1 year. These leases do not have significant rent
escalation holidays, concessions, leasehold improvement incentives, or other build-out clauses. Further, the leases do
not contain contingent rent provisions.
Supplemental information related to leases
and the Company’s Consolidated Financial Statements is as follows:
|
|
|
September 30,
2019
|
|
|
Components of lease costs:
|
|
|
|
|
|
|
|
|
|
|
|
Total operating lease costs
|
|
|
246,203
|
|
|
|
|
September 30,
2019
|
|
|
|
|
|
|
|
Weighted average remaining lease term (years) of operating leases:
|
|
|
1.25
|
|
|
|
|
|
|
|
|
Weighted average discount rate of operating leases:
|
|
|
2.9
|
%
|
|
|
|
September 30,
2019
|
|
|
|
|
|
|
|
Other - right-of-use assets
|
|
|
774,727
|
|
|
|
|
|
|
|
|
Lease liabilities included in:
|
|
|
|
|
|
Accrued expenses - current portion of lease liabilities
|
|
|
(774,727
|
)
|
|
Total lease liabilities
|
|
|
(774,727
|
)
|
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
17.
|
OPERATING LEASE
ARRANGEMENT – CONTINUED
|
The Group has total future minimum lease
payments under non-cancellable operating lease payable as follows:
|
|
|
September 30,
2019
|
|
|
September 30,
2018
|
|
|
|
|
RMB
|
|
|
RMB
|
|
|
|
|
|
|
|
|
|
|
Within 1 year
|
|
|
792,694
|
|
|
|
216,000
|
|
|
After 1 year but within 2 years
|
|
|
4,500
|
|
|
|
54,000
|
|
|
After 2 years but within 3 years
|
|
|
-
|
|
|
|
-
|
|
|
After 3 years
|
|
|
-
|
|
|
|
-
|
|
|
Total lease payments
|
|
|
797,194
|
|
|
|
270,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Interest
|
|
|
(22,467
|
)
|
|
|
-
|
|
|
Present value of lease liabilities
|
|
|
774,727
|
|
|
|
-
|
|
The Group is the lessee under a number
of operating leases for offices and a warehouse. The Company’s leases generally have remaining lease terms of 1 year to 5
years and some of which include options to terminate the leases within 1 year.
|
18.
|
RELATED PARTY BALANCES AND TRANSACTIONS
|
The Group had the following transactions
with related party balance during the financial periods:
|
|
|
September 30,
2019
|
|
|
June 30,
2019
|
|
|
|
|
RMB
|
|
|
US$
|
|
|
RMB
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current-liabilities
|
|
|
16,218,437
|
|
|
|
2,269,043
|
|
|
|
13,392,777
|
|
|
|
1,950,878
|
|
|
Non-Current-liabilities
|
|
|
81,781,805
|
|
|
|
11,441,695
|
|
|
|
81,781,805
|
|
|
|
11,912,863
|
|
|
|
|
|
98,000,242
|
|
|
|
13,710,738
|
|
|
|
95,174,582
|
|
|
|
13,863,741
|
|
The balance represented the amount due
to directors, Mr. Peng Yang for the three months period ended as at September 30, 2019.
At the end of each reporting period, neither
the Group nor the Company had any other related party transaction.
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
19.
|
CONTINGENT LIABILITIES
|
At the end of each reporting period, neither
the Group nor the Company had any significant contingent liabilities.
|
20.
|
DETAILS OF SUBSIDIARIES
|
|
Company
name
|
|
Place
and date of incorporation
|
|
Capital
|
|
Attributable
Equity
interest
|
|
|
Principal
activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Reliant
Galaxy International Limited
|
|
Established
in British Virgin Islands on January 3, 2017
|
|
Registered
and paid-in capital of RMB 69,100
|
|
|
100
|
%
|
|
Investment
holding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sure
Rich Investment
|
|
Established
in
|
|
Share
capital
|
|
|
100
|
%
|
|
Investment
holding
|
|
(Group)
Limited
|
|
Hong
Kong
On February 1, 2007
|
|
RMB
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fujian
Jinou Trading Co., Ltd.
|
|
Established
in the PRC on July 5, 2004
|
|
Registered
and paid-in capital of US$ 1,650,000
|
|
|
100
|
%
|
|
Investment
holding and marketing self-owned brand and wholesaling of spirits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fenyang
Huaxin Spirit Development Co., Ltd.
|
|
Established
in the PRC on November 7, 2013
|
|
Registered
and Paid-in capital of RMB 1,000,000
|
|
|
100
|
%
|
|
Marketing
self-owned brand and wholesaling of spirits and wines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fenyang
Jinqiang Spirit Co., Ltd.
|
|
Established
in the PRC on November 7, 2013
|
|
Registered
capital 10,000,000 and Paid-in capital of RMB 5,000,000
|
|
|
100
|
%
|
|
Marketing
self-owned brand and wholesaling of spirits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beijing Huaxin
Tianchuang Enterprise Management Consulting Co., Ltd.
|
|
Established
in the PRC on April 14, 2018
|
|
Registered
and issued capital of RMB1,000,000
|
|
|
51
|
%(i)
|
|
Dormant
|
Notes:
|
|
(i)
|
The subsidiary was registered with payable share capital and the Company committed to pay up its share of the issued capital in the amount of RMB 510,000 on March 31, 2037, which is 20 years from the date of incorporation permitted by the Regulation of the People’s Republic of China on Company Registration. The amount due to the subsidiary is interest-free and unsecured.
|
ORANCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
– CONTINUED (UNAUDITED)
(Amounts in RMB and US$, except for number
of shares and per share data)
|
Company name
|
|
Place and date of incorporation
|
|
Capital
|
|
Attributable Equity
interest
|
|
|
Principal activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Guangzhou Silicon Technology Co., Ltd
|
|
Established in the PRC on September 8, 2015
|
|
Registered and issued capital of RMB5,000,000
|
|
|
20
|
%
|
|
Development, sale and provision of software solutions
|
Notes:
|
|
(i)
|
On September 1, 2018, Fenyang Huaxin Spirit Development Co., Ltd acquired 20% of Guangzhou Silicon Technology Co., Ltd..
|
On June 29, 2018, Oranco, Inc. acquired
100% of the issued capital of Reliant in a share for share exchange with the then shareholders of Reliant. Due to the relative
size of the companies, the shareholders of Reliant became the majority shareholders in the consolidated group.
Pursuant to the share for share exchange,
Oranco issued an aggregated 349,296,000 new shares of common stock, with par value of $0.001 per share, of which 28,000,000 were
issued on June 29, 2018, the closing date of the share exchange transaction. The remaining 321,296,000 shares were issued on May
29, 2019 following the completion of the increase of the Company’s authorized shares on February 15, 2019.
At the date of acquisition, Oranco, Inc.
was a shell company with minimal assets and operations. The transaction has been treated as a group reconstruction and has been
accounted for using the reverse merger accounting method. Accordingly, the consolidated financial statements have been treated
as being a continuation of the consolidated financial statements of Reliant, with Oranco, Inc. being treated as the acquired entity
for accounting purposed. Accordingly, the financial information for the previous period and comparatives reflects the consolidated
operations of Reliant.
|
23.
|
NOTE TO THE CONSOLIDATED STAETMENT OF CASH FLOWS
|
Disclosure of non-cash item:
|
|
(i)
|
Mr. Yang Peng, the director of the Company settled a bank loan in the amount of RMB1,900,000 on behalf of Company for the period ended September 30, 2019.
|