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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

  

Form 10-K

Amendment No.__

  

☒   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the fiscal year ended June 30, 2017

 

or

 

☐   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from                to               .

 

Commission File Number 000-54485

 

IONIX TECHNOLOGY, INC.

(Exact name of registrant as specified in its charter)

 

 

(Address of principal executive offices) (Zip Code)

(Former Address)

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 None

 

Securities registered pursuant to Section 12(g) of the Act:

 

 

Indicate by check mark if the Registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

 

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

 

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐No ☒ 

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

 

Large accelerated filer ☐		Accelerated filer ☐
Non-accelerated filer ☐		Smaller reporting company ☒
(Do not check if smaller reporting company)		Emerging growth company ☐

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $273,270,800 based upon the price ($4.40) at which the common stock was last sold as of December 31, 2016, the last business day of the registrant’s most recently completed second fiscal quarter, multiplied by the approximate number of shares of common stock held by persons other than executive officers, directors and five percent stockholders of the registrant without conceding that any such person is an “affiliate” of the registrant for purposes of the federal securities laws.

 

 

Documents Incorporated By Reference:  None 

   

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 TABLE OF CONTENTS

 

 

 

PART I

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are not historical facts but rather are based on current expectations, estimates and projections. We may use words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “foresee,” “estimate” and variations of these words and similar expressions to identify forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted. These risks and uncertainties include the following:
    

 

Use of Term

 

Except as otherwise indicated by the context, references in this Annual Report to the words "we," "our," "us," the "Company," "IINX," or “Ionix” refers to Ionix Technology, Inc. All references to “USD” or United States Dollars refer to the legal currency of the United States of America.

 

 

Item 1.

Business

 

Corporate Background

 

On April 30, 2017, Well Best International Investment Limited (“Well Best”), a wholly-owned subsidiary of the Company, transferred all of its rights, title and interest to all 100% of the issued and outstanding common stock of XinyuIonix Technology Company Limited (“XinyuIonix”) to Zhengfu Nan for  RMB 100($14.49 USD) pursuant to a Share Transfer Agreement dated April 30, 2017 (the “Agreement”). Pursuant to the Agreement the consideration shall be paid to Well Best within 15 working days after execution of the Agreement. Following the execution of the Agreement, Mr. Nan owns 100% of XinyuIonix and assumes all liabilities of XinyuIonix. As a result XinyuIonix is no longer a wholly-owned subsidiary of Well Best or an indirect wholly-owned subsidiary of the Company.

 

Business Summary

Since January 2016, the Company has shifted its focus to becoming an aggregator of energy cooperatives to achieve optimum price and efficiency in creating and producing technology and products that emphasize long life, high output, high energy density, and high reliability. By and through its wholly owned subsidiary, Well Best and the indirect subsidiaries, Baileqi Electronics, Lisite Science, and Welly Surplus, the Company has commenced its operation of high-end intelligent electronic equipment, such as portable power banks and LCD monitors in China.

The Company, Well Best, Welly Surplus, Baileqi Electronics, and Lisite Science are actively seeking additional new prospects for technology enhancements, design, manufacturing and production of the Company’s operation of high-end intelligent electronic equipment, such as portable power banks and LCD products and future product development.

Products

 

 

 

 

 

 

 

 

The Company’s products include 18650-2000mAh lithium ion batteries for use in lithium cell electronic bicycles, balance cars, scooters, electric vehicles, special vehicles at low speed, energy storage, and other products. The 18650 -200mAh battery cell is a commodity format cell based on standardized specifications for product dimensions, however, the Company is able to and provides custom solutions based on the needs of customers regarding capacity and performance. During the year ended June 30, 2017, the Company decided to focus its energies on the civil electronics portion of its business.

The product specifications for our 18650-2000mAH battery, pictured to the right, are set forth in the table below:

 

 

What is a Lithium-Ion Battery?

A lithium-ion battery (“LIB”) is a rechargeable electric device within which lithium moves from a negative electrode to a positive electrode during the discharge and back charging.  The four main materials typically used in LIB’s are cathode materials, anode materials, operators, and electrolytic solution.  The performance and safety of an LIB depends heavily on the materials from which they are made as their operation is based on chemical reactions which can be directly affected by the materials used in production.

Industry Overview

 

 

_________________________________

 

·

customer service,

·

product pricing, and

·

product performance, reliability and safety.

 

Distribution Methods of Products

The Company’s products are currently directly shipped from the manufacturers to the distributors and retailers. Marketing and sales departments were established in through the Company’s indirect subsidiaries during the year ended June 30, 2017 to cope with the growth of the Company. We explore potential customer bases using internal resources. Currently, we do not have any long term contracts with our customers and will manufacture according to the purchase orders received. In the future, we will continue to seek additional channels of distribution for our products to include wholesale stores and mass retailers. The Company plans to focus primarily on distributing its products regionally, starting in Greater China, and will then seek to expand its distribution channels across the U.S. and internationally.

Manufacturing

 

Suppliers of Materials

The elements necessary for our products are and will be sourced from several different suppliers located primarily in China on an order-by-order basis. These materials include lithium manganite (Li-Mn) and lithium nickel manganese cobalt (Li-NiCoMn). Some of the materials in our products are not readily available in large quantities or are available on a limited basis only. Further, the limited availability of some of these materials could cause significant fluctuations in their costs.

The Company, Baileqi Electronics, and Lisite Science acquire materials from the following list of principal suppliers, dependent on availability and price points:

 

*This list of suppliers is subject to change at any time.

Our management researches and develops our sources of materials used in the manufacturing of our products. The materials that we source are and will be sent to our manufacturer in China to create our products. The Company does not have any long-term contracts with our suppliers and we cannot be assured that they will be able to meet our demands.

 

Intellectual Property

Government Regulations Affecting Our Business

At this stage in our business, we are unaware of any government regulations that are directly affecting our business, however, as we grow our business activities may become subject to various governmental regulations in different countries in which we operates, including regulations relating to: various business/investment approvals; trade affairs, including customs, import and export control; competition and antitrust; anti-bribery; advertising and promotion; intellectual property; broadcasting, consumer and business taxation; foreign exchange controls; personal information protection; product safety; labor; human rights; conflict; occupational health and safety; environmental; and recycling requirements.

Employees of the Company

The Company has no significant employees other than our officers and directors. As of June 30, 2017, the Company has no employees, however, our indirect subsidiary Baileqi has fifteen employees and Lisite Science has three employees. We intend to increase the size of our management team and hire additional employees in the future to manage the continued growth of our company and to increase our sales force and marketing efforts.

WHERE YOU CAN GET ADDITIONAL INFORMATION

 

We file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy our reports or other filings made with the SEC at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, DC 20549. You can obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also access these reports and other filings electronically on the SEC’s web site, www.sec.gov.

 

Item 1A.

Risk Factors

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 1B.

Unresolved Staff Comments

 

None.

 

Item 2.

Properties

 

Our mailing address in the US is that of our registered agent, at 3773 Howard Hughes Pkwy, Suite 500S, Las Vegas, NV 89169. Our principal office in China consists of 2,298 square feet (701 square meters) of office and warehouse space located at 4F, Tea Tree B Building, Guwu Sanwei Industrial Park, Xixiang Street, Baoan District, Shenzhen, Guangdong Province, China 518000.  This office is leased by Baileqi, our indirect subsidiary, for $2,510 (16,824RMB) per month. This lease expires on September 30, 2018. We believe that this space is adequate for our current and immediately foreseeable operating needs.

 

 

We previously maintained an office at Chengdong Industrial Park in Fenyi County, Jiangxi Province,China, however, on April 30, 2017, Well Best our wholly-owned subsidiary transferred all of its rights, title and interest to XinyuIonix. As such the Company no longer responsible for the lease at Chengdong Industrial Park

Item 3.

Legal Proceedings

  

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder, is an adverse party or has a material interest adverse to our interest. 

Item 4.

Mine Safety Disclosure

 

Not applicable.

 

 

PART II

 

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities

 

Market Information

 

Our common stock is currently quoted on OTCQB. Our common stock commenced quotation on the OTCQB under the trading symbol “CPJT”. On February 4, 2016, our symbol was changed to “IINX” to reflect the Company’s name change to Ionix Technology, Inc. Our common stock began trading in April 2015. Because we are quoted on the OTCQB, our common stock may be less liquid, receive less coverage by security analysts and news media, and generate lower prices than might otherwise be obtained if it were listed on a national securities exchange.

 

The following table sets forth the high and low bid prices for our Common Stock per quarter as reported by the OTCQB for the quarterly periods indicated below based on our fiscal year end June 30. These prices represent quotations between dealers without adjustment for retail mark-up, markdown or commission and may not represent actual transactions.

 

Fiscal Quarter		High				Low
First Quarter (Jul. 1, 2015 – Sept. 30, 2015)		$	0.55			$	0.25
Second Quarter (Oct. 1, 2015 – Dec. 31, 2015)		$	0.55			$	0.55
Third Quarter (Jan. 1, 2016 – Mar. 31, 2016)		$	6.00			$	0.10
Fourth Quarter (Apr. 1, 2016 – Jun. 30, 2016)		$	5.00			$	5.00
First Quarter (Jul. 1, 2016 – Sept. 30, 2016)		$	5.00			$	3.60
Second Quarter (Oct. 1, 2016 – Dec. 31, 2016)		$	4.40			$	3.60
Third Quarter (Jan. 1, 2017 – Mar. 31, 2017)		$	4.40			$	4.00
Fourth Quarter (Apr. 1, 2017– Jun. 30, 2017)		$	4.40			$	2.00

  

Record Holders

 

As of June 30, 2017, the approximate number of registered holders of our common stock was 94. As of June 30, 2017, there were 99,003,000 shares of common stock issued and outstanding and there were 5,000,000 shares of preferred stock issued and outstanding. There were no shares of common stock subject to outstanding warrants, and there were no shares of common stock subject to outstanding stock options.

 

Dividends

 

We have not declared or paid any cash dividends on our common stock nor do we anticipate paying any in the foreseeable future. Furthermore, we expect to retain any future earnings to finance our operations and expansion. The payment of cash dividends in the future will be at the discretion of our Board of Directors and will depend upon our earnings levels, capital requirements, any restrictive loan covenants and other factors the Board considers relevant.

Securities Authorized for Issuance under Equity Compensation Plans

None.

 

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

Exemption From Registration. The shares of Common Stock and Preferred Stock referenced herein were issued in reliance upon one of the following exemptions:

(a)The shares of Common Stock referenced herein were issued in reliance upon the exemption from securities registration afforded by the provisions of Section 4(2) of the Securities Act of 1933, as amended, ("Securities Act"), based upon the following: (a) each of the persons to whom the shares of Common Stock were issued (each such person, an "Investor") confirmed to the Company that it or he is an "accredited investor," as defined in Rule 501 of Regulation D promulgated under the Securities Act and has such background, education and experience in financial and business matters as to be able to evaluate the merits and risks of an investment in the securities, (b) there was no public offering or general solicitation with respect to the offering of such shares, (c) each Investor was provided with certain disclosure materials and all other information requested with respect to the Company, (d) each Investor acknowledged that all securities being purchased were being purchased for investment intent and were "restricted securities" for purposes of the Securities Act, and agreed to transfer such securities only in a transaction registered under the Securities Act or exempt from registration under the Securities Act and (e) a legend has been, or will be, placed on the certificates representing each such security stating that it was restricted and could only be transferred if subsequently registered under the Securities Act or transferred in a transaction exempt from registration under the Securities Act.

(b)The shares of common stock referenced herein were issued pursuant to and in accordance with Rule 506 of Regulation D and Section 4(2) of the Securities Act. We made this determination in part based on the representations of the Investor(s), which included, in pertinent part, that such Investor(s) was an “accredited investor” as defined in Rule 501(a) under the Securities Act, and upon such further representations from the Investor(s) that (a) the Investor is acquiring the securities for his, her or its own account for investment and not for the account of any other person and not with a view to or for distribution, assignment or resale in connection with any distribution within the meaning of the Securities Act, (b) the Investor agrees not to sell or otherwise transfer the purchased securities unless they are registered under the Securities Act and any applicable state securities laws, or an exemption or exemptions from such registration are available, (c) the Investor either alone or together with its representatives has knowledge and experience in financial and business matters such that he, she or it is capable of evaluating the merits and risks of an investment in us, and (d) the Investor has no need for the liquidity in its investment in us and could afford the complete loss of such investment.  Our determination is made based further upon our action of (a) making written disclosure to each Investor prior to the closing of sale that the securities have not been registered under the Securities Act and therefore cannot be resold unless they are registered or unless an exemption from registration is available, (b) making written descriptions of the securities being offered, the use of the proceeds from the offering and any material changes in the Company’s affairs that are not disclosed in the documents furnished, and (c) placement of a legend on the certificate that evidences the securities stating that the securities have not been registered under the Securities Act and setting forth the restrictions on transferability and sale of the securities, and upon such inaction of  the Company of any general solicitation or advertising for securities herein issued in reliance upon Rule 506 of Regulation D and Section 4(2) of the Securities Act.

 

(c) The shares of Common Stock referenced herein were issued pursuant to and in accordance with Rule 903 of Regulation S of the Act. We completed the offering of the shares pursuant to Rule 903 of Regulation S of the Act on the basis that the sale of the shares was completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the shares. Each investor represented to us that the investor was not a "U.S. person", as defined in Regulation S, and was not acquiring the shares for the account or benefit of a U.S. person. The agreement executed between us and each investor included statements that the securities had not been registered pursuant to the Act and that the securities may not be offered or sold in the United States unless the securities are registered under the Act or pursuant to an exemption from the Act. Each investor agreed by execution of the agreement for the shares: (i) to resell the securities purchased only in accordance with the provisions of Regulation S, pursuant to registration under the Act or pursuant to an exemption from registration under the Act; (ii) that we are required to refuse to register any sale of the securities purchased unless the transfer is in accordance with the provisions of Regulation S, pursuant to registration under the Act or pursuant to an exemption from registration under the Act; and (iii) not to engage in hedging transactions with regards to the securities purchased unless in compliance with the Act. All certificates representing the shares were or upon issuance will be endorsed with a restrictive legend confirming that the securities had been issued pursuant to Regulation S of the Act and could not be resold without registration under the Act or an applicable exemption from the registration requirements of the Act.

Purchases of Equity Securities by the Small Business Issuer and Affiliated Purchasers

 

None.

  

Item 6

Selected Financial Data

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 7.      Management’s Discussion and Analysis of Financial Condition and Results of Operation

 

The following discussion should be read in conjunction with our audited financial statements and notes thereto included herein. We caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or our behalf. We disclaim any obligation to update forward-looking statements.

 

During the year ended June 30, 2017, the Company received $271,936 in cash from financing activities, which was all due to proceeds received from related party loans. In comparison, during the year ended June 30, 2016, the Company received $1,044,949 in cash from financing activities, including proceeds from related party loans of $53,510 and cash collected from issuance of preferred shares of $50,000.

 

 Critical Accounting Policies

While our significant accounting policies are more fully described in Note 3 to our financial statements, we believe the following accounting policies are the most critical to aid you in fully understanding and evaluating this management discussion and analysis

 

In accordance with the ASC Topic 605, “Revenue Recognition”, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectability is reasonably assured.

The Company recognizes revenue from the sale of finished products upon delivery to the customer, whereas the title and risk of loss are fully transferred to the customers. The Company records its revenues, net of value added taxes (“VAT”). The Company is subject to VAT which is levied on the majority of the products at the rate of 17% on the invoiced value of sales.

 

ASC Topic 220, “Comprehensive Income”, establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during a period from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying consolidated statement of stockholders’ equity, consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

 

Accounts receivable are recorded at the invoiced amount and do not bear interest, which are due within contractual payment terms, generally 30 to 90 days from shipment. Credit is extended based on evaluation of a customer's financial condition, the customer’s credit-worthiness and their payment history. Accounts receivable outstanding longer than the contractual payment terms are considered past due. Past due balances over 90 days and over a specified amount are reviewed individually for collectability. At the end of each period, the Company specifically evaluates individual customer’s financial condition, credit history, and the current economic conditions to monitor the progress of the collection of accounts receivables. The Company will consider the allowance for doubtful accounts for any estimated losses resulting from the inability of its customers to make required payments. For the receivables that are past due or not being paid according to payment terms, the appropriate actions are taken to exhaust all means of collection, including seeking legal resolution in a court of law. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance-sheet credit exposure related to its customers. Based on the evaluation, the Company has determined that $NIL and $71,318 allowance for doubtful accounts is required as of June 30, 2017 and 2016 respectively. The $71,318 allowance for doubtful accounts was included in the current assets from discontinued operations.

The Company’s consolidated financial statements have been prepared in accordance with US GAAP. This 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 date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. The significant areas requiring the use of management estimates include, but are not limited to, the allowance for doubtful accounts receivable, estimated useful life of intangible assets, provision for staff benefits, recognition and measurement of deferred income taxes and valuation allowance for deferred tax assets. Although these estimates are based on management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately differ from those estimates and such differences may be material to our consolidated financial statements.

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company is the United States Dollar ("US$"). The Company's subsidiaries in the People’s Republic of China (“PRC”) maintain their books and records in their local currency, the Renminbi Yuan ("RMB"), which is the functional currency as being the primary currency of the economic environment in which these entities operate.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, “ Translation of Financial Statement ”, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. Stockholders’ equity is translated at historical rates. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

The exchange rates used to translate amounts in RMB into U.S. Dollars for the purposes of preparing the consolidated financial statements are as follows:

 

 

Recently Issued Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued, ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The guidance substantially converges final standards on revenue recognition between the FASB and the International Accounting Standards Board providing a framework on addressing revenue recognition issues and, upon its effective date, replaces almost all exiting revenue recognition guidance, including industry-specific guidance, in current U.S. generally accepted accounting principles. In April 2015, the FASB proposed a one-year delay in the effective date and companies will be allowed to early adopt as of the original effective date.  Accordingly, this guidance will be effective for the Company beginning the first quarter of fiscal year 2018.  The Company plans to adopt the new revenue guidance in the fiscal year of 2018 and is currently in the process of evaluating the impact on the Company’s consolidated financial statements.

  

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The amendments in this ASU clarify and include specific guidance to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments will be effective beginning the first quarter of fiscal year 2018. Early adoption of the amendments is permitted. The amendments in this ASU should be applied using a retrospective transition method to each period presented.  The Company will adopt the amendments in the fiscal year of 2018.  No significant impacts on the consolidated financial statements from the amendments were expected.

 

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this ASU require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash. Therefore, amounts generally described as restricted cash should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments will be effective beginning the first quarter of fiscal year 2018. Early adoption of the amendments is permitted. The amendments should be applied using a retrospective transition method to each period presented. The Company plans to adopt the amendments in the first quarter of fiscal year 2018. Since then, the changes in restricted cash in the consolidated cash flow are no longer presented within investing activities and will be retrospectively included in the changes of cash, cash equivalents and restricted cash as required.

 

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments in this ASU clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The amendments will be effective beginning the first quarter of fiscal year 2018.  Early application is permitted. The amendments should be applied prospectively on or after the effective date. No disclosures are required at transition. The Company is currently evaluating the impact the amendments will have on the consolidated financial statements.

 

In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in this ASU simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. Under the amendments, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying value, which eliminates the current requirement to calculate a goodwill impairment charge by comparing the implied fair value of goodwill with its carrying amount. The amendments will be effective beginning the first quarter of fiscal year 2020. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The amendments should be applied on a prospective basis. The Company is currently evaluating the impact the amendments will have on the consolidated financial statements.

 

In February 2017, the FASB issued ASU No. 2017-05, Derecognition and Partial Sales of Nonfinancial Assets. The amendments in this ASU clarify the scope of guidance on nonfinancial asset derecognition (ASC 610-20) as well as the accounting for partial sales of nonfinancial assets. The amendments will be effective beginning the first quarter of fiscal year 2018. Early adoption is permitted but is conditioned upon the early adoption of the new revenue standard (ASC 606). The amendments should be applied on a full or modified retrospective basis. The Company is currently evaluating the impact the amendments will have on the consolidated financial statements.

 

 

Contractual Obligations

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

Item 7A.

Quantitative and Qualitative Disclosure About Market Risk

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 8.

Financial Statements and Supplementary Data

 

IONIX TECHNOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

  

 

 

To Board of Directors and the Stockholders of

Ionix Technology, Inc.

 

We have audited the accompanying consolidated balance sheets of Ionix Technology, Inc. (“the Company”) as of June 30, 2017 and 2016 and the related consolidated statements of comprehensive income (loss), stockholders’ equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audit in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Ionix Technology, Inc. as of June 30, 2017 and 2016, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company had an accumulated deficit of $183,441 at June 30, 2017 and has not generated sufficient cash flow from its operations for the past two years. These circumstances, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are described in note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ Paritz & Company, P.A.

 

Hackensack, New Jersey

October 13, 2017

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 IONIX TECHNOLOGY, INC.

CONSOLIDATED BALANCE SHEETS

  

The accompanying notes are an integral part of these consolidated financial statements.

 

 

IONIX TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

IONIX TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

 IONIX TECHNOLOGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

		June 30, 2017				June 30, 2016
Balance sheet items, except for equity accounts			6.7744				6.6312
Items in statements of comprehensive income (loss) and cash flows			6.7028				6.3120

		For the years ended June 30,
		2017				2016
Revenue		$	-			$	-
Cost of revenue			-				-
Gross profit			-				-
Selling, general and administrative expenses			-				6,539
Loss before income taxes			-				(6,539	)
Provision for income taxes			-				-
Net loss		$	-			$	(6,539	)

		For the period from July 1 to August 19, 2016				For the year ended June 30,2016
Revenue		$	173,005			$	1,972,473
Cost of revenue			(152,465	)			(1,846,598	)
Gross profit			20,540				125,875
Selling, general and administrative expenses			8,917				105,245
Income  before income taxes			11,623				20,630
Provision for income taxes			(2,906	)			(5,158	)
Net income			8,717				15,472

		For the period from July 1,2016 to April 30, 2017				For the year ended June 30,2016
Revenue		$	858,357			$	-
Cost of revenue			(769,418	)			-
Gross profit			88,939				-
Selling, general and administrative expenses			34,427				-
Income  before income taxes			54,512				-
Provision for income taxes			(23,382	)			-
Net income		$	31,130			$	-

		June 30, 2017				June 30, 2016
Ben Wong		$	143,792			$	53,510
Changyong Yang			122,820				-
Xin Sui			6,992				-
Shenzhen Baileqi S&T			41,405				-
Baozhen Deng			8,590				-
		$	323,599			$	53,510

		For the year ended June 30, 2017								As of June 30, 2017
		Revenue				Percentage of revenue				Accounts receivable				Percentage of accounts receivable
Customer A		$	3,084,370				45	%		$	-				-	%
Customer B- related party			1,493,090				22	%			-				-	%
Total		$	4,577,460				67	%		$	-				-	%

		For the year ended June 30, 2017								As of June 30, 2017
		Total Purchase				Percentage of total purchase				Accounts payable				Percentage of accounts payable
Supplier A- related party		$	3,303,081				51	%		$	-				-	%
Total		$	3,303,081				51	%		$	-				-	%

		For the years ended June 30
		2017				2016
U.S. Statutory rate		$	31,933			$	(18,677	)
Tax rate difference between foreign operation and U.S.			(18,474	)			6,108
Change in valuation allowance			34,977				12,569
Permanent difference			(18,818	)			-
Effective tax rate		$	29,618			$	-

The provisions for income taxes are summarized as follows:		For the years ended June 30,
		2017				2016
Current		$	29,618			$	-
Deferred			-				-
Total		$	29,618			$	-

		As of June 30,
		2017				2016
Net operating loss carryforward		$	42,830			$	12,569
Others			4,716				-
			47,546				12,569
Less valuation allowance			(47,546	)			(12,569	)
Deferred tax assets		$	-			$	-