Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Mar. 31, 2020 | May 12, 2020 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | DATASEA INC. | |
Entity Central Index Key | 0001631282 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Current Reporting Status | Yes | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Common Stock, Shares Outstanding | 20,943,846 | |
Entity File Number | 333-202071 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | NV |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 |
CURRENT ASSETS | ||
Cash | $ 2,010,811 | $ 6,072,637 |
Restricted cash | 600,000 | 600,000 |
Inventory | 272,749 | 73,294 |
Value-added tax prepayment | 70,534 | |
Prepaid expenses and other current assets | 491,913 | 105,932 |
Total current assets | 3,446,007 | 6,851,863 |
NONCURRENT ASSETS | ||
Fixed assets, net | 252,315 | 41,116 |
Intangible assets, net | 1,948,882 | 555,811 |
Right-of-use assets, net | 758,162 | |
Total noncurrent assets | 2,959,359 | 596,927 |
TOTAL ASSETS | 6,405,366 | 7,448,790 |
CURRENT LIABILITIES | ||
Accounts payable | 46,768 | 13,088 |
Advances from customers | 1,361,134 | 1,318,897 |
Accrued expenses and other payables | 178,779 | 264,684 |
Loan payable to shareholder | 86,733 | |
Operating lease liabilities | 348,401 | |
Total current liabilities | 1,935,082 | 1,683,402 |
NONCURRENT LIABILITIES | ||
Operating lease liabilities | 421,558 | |
Total noncurrent assets | 421,558 | |
TOTAL LIABILITIES | 2,356,640 | 1,683,402 |
STOCKHOLDERS' EQUITY | ||
Common stock, $0.001 par value, 375,000,000 shares authorized, 20,943,846 shares issued and outstanding at March 31, 2020 and June 30, 2019 | 20,944 | 20,944 |
Additional paid-in capital | 11,104,666 | 11,104,666 |
Accumulated comprehensive income | 179,000 | 189,906 |
Accumulated deficit | (7,255,884) | (5,550,128) |
TOTAL STOCKHOLDERS' EQUITY | 4,048,726 | 5,765,388 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 6,405,366 | $ 7,448,790 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2020 | Jun. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 375,000,000 | 375,000,000 |
Common stock, issued | 20,943,846 | 20,943,846 |
Common stock, outstanding | 20,943,846 | 20,943,846 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||||
Revenues | ||||
Cost of goods sold | ||||
Gross profit | ||||
Operating expenses: | ||||
Selling | 33,284 | 34,388 | 142,605 | 183,240 |
General and administrative | 428,227 | 510,983 | 1,373,837 | 1,013,136 |
Research and development | 109,146 | 29,218 | 229,511 | 133,103 |
Total operating expenses | 570,657 | 574,589 | 1,745,953 | 1,329,479 |
Loss from operations | (570,657) | (574,589) | (1,745,953) | (1,329,479) |
Non-operating income | ||||
Other (expense) income, net | 2,784 | 894 | (3,632) | (2,571) |
Interest income | 10,134 | 32,696 | 43,828 | 47,114 |
Total non-operating income, net | 12,918 | 33,590 | 40,196 | 44,543 |
Loss before income tax | (557,739) | (540,999) | (1,705,757) | (1,284,936) |
Income tax | ||||
Net loss | (557,739) | (540,999) | (1,705,757) | (1,284,936) |
Other comprehensive item | ||||
Foreign currency translation gain (loss) | 719 | 198,209 | (10,906) | 222,332 |
Total comprehensive loss | $ (557,020) | $ (342,790) | $ (1,716,663) | $ (1,062,604) |
Net loss per share | ||||
Basic and diluted | $ (0.03) | $ (0.03) | $ (0.08) | $ (0.06) |
Weighted average shares outstanding | ||||
Basic and diluted | 20,943,846 | 20,943,846 | 20,943,846 | 19,845,627 |
Statements of Changes in Consol
Statements of Changes in Consolidated Stockholders' Equity (Unaudited) - USD ($) | Common Stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive income | Total |
Balance at Jun. 30, 2018 | $ 19,171 | $ 5,121,102 | $ (4,124,947) | $ 170,795 | $ 1,186,121 |
Balance, shares at Jun. 30, 2018 | 19,170,846 | ||||
Sale of common stock | $ 84 | 244,581 | 244,665 | ||
Sale of common stock, shares | 84,000 | ||||
Net loss | (371,659) | (371,659) | |||
Foreign currency translation gain | 31,573 | 31,573 | |||
Balance at Sep. 30, 2018 | $ 19,255 | 5,365,683 | (4,496,606) | 202,368 | 1,090,700 |
Balance, shares at Sep. 30, 2018 | 19,254,846 | ||||
Balance at Jun. 30, 2018 | $ 19,171 | 5,121,102 | (4,124,947) | 170,795 | 1,186,121 |
Balance, shares at Jun. 30, 2018 | 19,170,846 | ||||
Net loss | (1,284,936) | ||||
Balance at Mar. 31, 2019 | $ 20,945 | 11,104,666 | (5,409,883) | 393,127 | 6,108,855 |
Balance, shares at Mar. 31, 2019 | 20,943,846 | ||||
Balance at Sep. 30, 2018 | $ 19,255 | 5,365,683 | (4,496,606) | 202,368 | 1,090,700 |
Balance, shares at Sep. 30, 2018 | 19,254,846 | ||||
Sale of common stock | $ 22 | 62,759 | 62,781 | ||
Sale of common stock, shares | 21,500 | ||||
Sale of common stock-offering | $ 1,668 | 5,676,224 | 5,677,892 | ||
Sale of common stock-offering, shares | 1,667,500 | ||||
Net loss | (372,278) | (372,278) | |||
Foreign currency translation gain | (7,450) | (7,450) | |||
Balance at Dec. 31, 2018 | $ 20,945 | 11,104,666 | (4,868,884) | 194,918 | 6,451,645 |
Balance, shares at Dec. 31, 2018 | 20,943,846 | ||||
Net loss | (540,999) | (540,999) | |||
Foreign currency translation gain | 198,209 | 198,209 | |||
Balance at Mar. 31, 2019 | $ 20,945 | 11,104,666 | (5,409,883) | 393,127 | 6,108,855 |
Balance, shares at Mar. 31, 2019 | 20,943,846 | ||||
Balance at Jun. 30, 2019 | $ 20,944 | 11,104,666 | (5,550,128) | 189,906 | 5,765,388 |
Balance, shares at Jun. 30, 2019 | 20,943,846 | ||||
Net loss | (396,985) | (396,985) | |||
Foreign currency translation gain | 6,613 | 6,613 | |||
Balance at Sep. 30, 2019 | $ 20,944 | 11,104,666 | (5,947,113) | 196,519 | 5,375,016 |
Balance, shares at Sep. 30, 2019 | 20,943,846 | ||||
Balance at Jun. 30, 2019 | $ 20,944 | 11,104,666 | (5,550,128) | 189,906 | 5,765,388 |
Balance, shares at Jun. 30, 2019 | 20,943,846 | ||||
Net loss | (1,705,757) | ||||
Balance at Mar. 31, 2020 | $ 20,944 | 11,104,666 | (7,255,884) | 179,000 | 4,048,726 |
Balance, shares at Mar. 31, 2020 | 20,943,846 | ||||
Balance at Sep. 30, 2019 | $ 20,944 | 11,104,666 | (5,947,113) | 196,519 | 5,375,016 |
Balance, shares at Sep. 30, 2019 | 20,943,846 | ||||
Net loss | (751,032) | (751,032) | |||
Foreign currency translation gain | (18,238) | (18,238) | |||
Balance at Dec. 31, 2019 | $ 20,944 | 11,104,666 | (6,698,145) | 178,281 | 4,605,746 |
Balance, shares at Dec. 31, 2019 | 20,943,846 | ||||
Net loss | (557,739) | (557,739) | |||
Foreign currency translation gain | 719 | 719 | |||
Balance at Mar. 31, 2020 | $ 20,944 | $ 11,104,666 | $ (7,255,884) | $ 179,000 | $ 4,048,726 |
Balance, shares at Mar. 31, 2020 | 20,943,846 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows from operating activities: | ||
Net loss | $ (1,705,757) | $ (1,284,936) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 38,536 | 28,285 |
Operating lease expense | 113,211 | |
Changes in assets and liabilities: | ||
Inventory | (204,186) | 279 |
Prepaid expenses and other current assets | (394,017) | 12,099 |
Accounts payable | 34,499 | |
Advance from customers | 83,889 | |
Accrued expenses and other payables | (13,338) | (44,790) |
Taxes payable | (105,098) | |
Payment on operating lease liabilities | (132,953) | |
Net cash used in operating activities | (2,285,214) | (1,289,063) |
Cash flows from investing activities: | ||
Acquisition of fixed assets | (248,333) | (64,531) |
Acquisition of intangible assets | (1,400,000) | |
Net cash used in investing activities | (1,648,333) | (64,531) |
Cash flows from financing activities: | ||
Payment of loan payable - shareholder, net | (85,091) | (15,392) |
Net proceeds from sale of common stock - offering | 5,240,889 | |
Net proceeds from issuance of common stock | 308,858 | |
Net cash provided by (used in) financing activities | (85,091) | 5,534,355 |
Effect of exchange rate changes on cash | (43,188) | 129,722 |
Net (decrease) increase in cash and restricted cash | (4,061,826) | 4,310,483 |
Cash and restricted cash, beginning of period | 6,672,637 | 1,031,486 |
Cash and restricted cash, end of period | 2,610,811 | 5,341,969 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income tax | ||
Supplemental disclosures of non-cash investing and financing activities: | ||
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 875,366 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Mar. 31, 2020 | |
Organization and Description of Business [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Datasea Inc. (the “Company”, or “we”, “us”, “our” or similar terminology) was incorporated in the State of Nevada on September 26, 2014 under the name Rose Rock Inc. and changed its name to Datasea Inc. on May 27, 2015 by amending its articles of incorporation. On May 26, 2015, the Company’s founder, Xingzhong Sun, sold 6,666,667 shares of common stock, par value $0.001 per share, of the Company (the “Common Stock”) to Zhixin Liu, one of the owners of Shuhai Skill (HK) as defined below. On October 27, 2016, Mr. Sun sold his remaining 1,666,667 shares of Common Stock of the Company to Ms. Liu. On October 29, 2015, the Company entered into a share exchange agreement (the “Exchange Agreement”) with the shareholders (the “Shareholders”) of Shuhai Information Skill (HK) Limited (“Shuhai Skill (HK)”), a limited liability company incorporated on May 15, 2015 under the laws of the Hong Kong Special Administrative Region of the People’s Republic of China (the “PRC”). Pursuant to the terms of the Exchange Agreement, the Shareholders, who together own 100% of the ownership rights in Shuhai Skill (HK), transferred all of the issued and outstanding ordinary shares of Shuhai Skill (HK) to the Company in exchange for the issuance of an aggregate of 6,666,667 shares of Common Stock, thereby causing Shuhai Skill (HK) and its wholly owned subsidiaries, Tianjin Information Sea Information Technology Co., Ltd. (“Tianjin Information”), a limited liability company incorporated under the laws of the PRC, and Harbin Information Sea Information Technology Co., Ltd., a limited liability company incorporated under the laws of the PRC, to become wholly-owned subsidiaries of the Company; and Shuhai Information Technology Co., Ltd., also a limited liability company incorporated under the laws of the PRC (“Shuhai Beijing”), to become a variable interest entity (“VIE”) of the Company through a series of contractual agreements between Shuhai Beijing and Tianjin Information. The transaction was accounted for as a reverse merger, with Shuhai Skill (HK) and its subsidiaries being the accounting survivor. Accordingly, the historical financial statements presented are those of Shuhai Skill (HK) and its consolidated subsidiaries and VIE. Following the Share Exchange, the Shareholders, being Zhixin Liu and her father, Fu Liu, owned approximately 82% of the outstanding shares of Common Stock. As of October 29, 2015, there were 18,333,333 shares of Common Stock issued and outstanding, 15,000,000 of which were beneficially owned by Zhixin Liu and Fu Liu. On May 1, 2018, the Company implemented a 1 for 3 reverse stock split decreasing the shares outstanding from 57,511,711 to 19,170,846. The unaudited condensed consolidated financial statements have been retroactively adjusted to reflect the reverse split. After the Share Exchange, the Company, through its consolidated subsidiaries and VIE is engaged in providing smart security solutions primarily to schools, tourist or scenic attractions and public communities in China. On October 16, 2019, Shuhai Beijing incorporated a wholly owned subsidiary, Heilongjiang Xunrui Technology Co. Ltd. (“Xunrui”), which is engaged in developing and marketing the Company’s smart security system products. On December 3, 2019, Shuhai Beijing formed Nanjing Shuhai Equity Investment Fund Management Co. Ltd. (“Shuhai Nanjing”), a joint venture in PRC, in which Shuhai Beijing holds a 99% ownership interest with the remaining 1% ownership held by Nanjing Fanhan Zhineng Technology Institute Co. Ltd, an unrelated party that was supported by both Nanjing Municipal Government and Beijing University of Posts and Telecommunications. Shuhai Nanjing was formed for purposes of easy access of government funding and private financing in new technology development and project incubation. As of this report date, Shuhai Nanjing has no operations yet. In January 2020, as described below, to expeditiously establish new subsidiaries to further expand the business and operation, the Company acquired ownerships in three entities for no consideration from the Company’s management who set up such entities on the Company’s behalf. On January 3, 2020, Shuhai Beijing entered into two equity transfer agreements (the “Transfer Agreements”) with President of the Company, and a Director of the Company. Pursuant to the Transfer Agreements, the Director and the President, each agreed, for no consideration, to (i) transfer their 51% and 49% ownership interest, respectively, in Guozhong Times (Beijing) Technology Ltd. (“Guozhong Times”) to Shuhai Beijing; and (ii) transfer their 51% and 49% ownership interest, respectively, in Guohao Century (Beijing) Technology Ltd. (“Guohao Century”) to Shuhai Beijing. Guozhong Times and Guohao Century were established for developing technology for electronic products, intelligence equipment and accessories, and providing software and information system consulting, installation and maintenance services. Guozhong Times started operation since January 2020, Guohao Century has not yet commenced operation as of this report date. On January 7, 2020, Shuhai Beijing entered into another equity transfer agreement with the President, the same Director described above and an unrelated individual. Pursuant to this equity transfer agreement, the Director, the President and the unrelated each agreed to transfer their 51%, 16%, 33% ownership interests, respectively, in Guozhong Haoze (Beijing) Technology Ltd. (“Guozhong Haoze”) to Shuhai Beijing for no consideration. Guozhong Haoze was formed to further develop and market the smart security system products. Guozhong Haoze has not yet commenced operation as of this report date In December 2019, a novel strain of coronavirus (COVID-19) was reported in China, upon which the World Health Organization has declared the outbreak to constitute a “Public Health Emergency of International Concern.”Based on the epidemic prevention and control system embedded in our intelligent security platform, the company was able to promptly organize our employees at home to develope and upgrade the body temperature measurement and administration backend of the epidemic prevention and control system, which could meet the needs of schools and public communities for epidemic prevention, and well adressed the problem of how to integrate our security platform and epidemic prevention system. Ever since April, the company has resumed normal work, and the impact of COVID-19 outbreak on our marketing efforts from January to March of 2020 has been minimized. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GOING CONCERN The accompanying unaudited condensed consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. For the nine months ended March 31, 2020 and 2019, the Company had a net loss of $1.71 million and $1.28 million, respectively. The Company has an accumulated deficit of $7.26 million as of March 31, 2020. This raise substantial doubt about the Company’s ability to continue as a going concern. There can be no assurance that the Company will become profitable or obtain necessary financing for its business or that it will be able to continue in business. The Company is currently seeking to modify its products and software to assist schools and communities in addressing the coronavirus outbreak, providing possible remedy and prevention for the future outbreak after school resumes and public community reverts to social activities by promoting Epidemic Prevention and Control Systems. Management also intends to raise additional funds by way of a private or public offering, or by obtaining loans from banks or others which are planned to be used altogether with operating turnover to support Company’s R&D, procurement, marketing and daily operation , while the Company believes in the viability of its strategy to generate sufficient revenue and in its ability to raise additional funds on reasonable terms and conditions, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering. The unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern. BASIS OF PRESENTATION AND CONSOLIDATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company and its 100% owned subsidiaries of Shuhai Skill (HK), Tianjin Information and its VIE, Shuhai Beijing, and its subsidiaries – Xunrui and Guozhong Times. All significant inter-company transactions and balances have been eliminated in consolidation. The accompanying unaudited interim condensed consolidated financial statements (“CFS”) have been prepared pursuant to the rules and regulations of the SEC. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments and elimination of intercompany transactions upon consolidation) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in the annual consolidated financial statements prepared in accordance with US GAAP have been omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended June 30, 2019. The results for the three and nine months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year ending June 30, 2020. VARIABLE INTEREST ENTITY Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Section 810, “Consolidation” (“ASC 810”), the Company is required to include in its consolidated financial statements, the financial statements of Shuhai Beijing, its VIE. ASC 810 requires a VIE to be consolidated if the company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns. A VIE is an entity in which a company, through contractual arrangements, bears the risk of, and enjoys the rewards normally associated with ownership of the entity, and therefore the company is the primary beneficiary of the entity. Under ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the reporting entity has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The reporting entity’s determination of whether it has this power is not affected by the existence of kick-out rights or participating rights, unless a single enterprise, including its related parties and de - facto agents, have the unilateral ability to exercise those rights. Shuhai Beijing’s actual stockholders do not hold any kick-out rights that affect the consolidation determination. Through the VIE agreements, the Company is deemed the primary beneficiary of Shuhai Beijing and its subsidiaries. Accordingly, the results of Shuhai Beijing and its subsidiaries have been included in the accompanying unaudited condensed consolidated financial statements. Shuhai Beijing has no assets that are collateral for or restricted solely to settle their obligations. The creditors of Shuhai Beijing do not have recourse to the Company’s general credit. VIE Agreements Operation and Intellectual Property Service Agreement Shareholders’ Voting Rights Entrustment Agreement Equity Option Agreement Information or its designee(s) the irrevocable right and option to acquire all or a portion of Shuhai Beijing Shareholders’ equity interests in Shuhai Beijing for an option price of RMB 0.001 for each capital contribution of RMB1.00. Pursuant to the terms of the Option Agreement, Tianjin Information and the Shuhai Beijing shareholders have agreed to certain restrictive covenants to safeguard the rights of Tianjin Information under the option Agreement. Tianjin Information agreed to pay RMB1.00 annually to Shuhai Beijing Shareholders to maintain the option rights. Tianjin Information may terminate the Option Agreement upon prior written notice. The Option Agreement is valid for a period of 10 years from the effective date and renewable at Tianjin Information’s option. Equity Pledge Agreement The following financial statement amounts and balances of the VIE were included in the accompanying condensed consolidated financial statements as of March 31, 2020 and June 30, 2019 and for the nine and three months ended March 31, 2020 and 2019, respectively: March 31, June 30, Current assets $ 546,373 $ 1,573,413 Non-current assets 990,548 96,927 Total assets $ 1,536,921 $ 1,670,340 Current liabilities $ 1,863,810 $ 6,232,836 Non-current liabilities 421,558 - Total liabilities $ 2,285,368 $ 6,232,836 For the For the Revenues $ - $ - Gross profit $ - $ - Net loss $ 235,541 $ 944,617 For the For the Revenues $ - $ - Gross profit $ - $ - Net loss $ 291,011 $ 1,107,119 USE OF ESTIMATES The preparation of unaudited condensed consolidated financial statements in conformity with US GAPP 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 financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The significant areas requiring the use of management estimates include, but are not limited to, the estimated useful life and residual value of property, plant and equipment, provision for staff benefits, recognition and measurement of deferred income taxes and the 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 unaudited condensed consolidated financial statements. CONTINGENCIES Certain conditions may exist as of the date the unaudited condensed consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company’s unaudited condensed consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. As of March 31, 2020 and June 30, 2019, the Company has no such contingencies. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand, demand deposits and short-term cash investments that are highly liquid in nature and have original maturities of three months or less. RESTRICTED CASH Restricted cash represents cash held in an indemnification escrow account related to requirements of the financing agreement signed with the underwriter of the Company’s initial public offering for a period of 18 months or longer subsequent to the closing of the initial public offering on December 21, 2018. INVENTORY Inventory comprised principally of smart student identification cards related to the Company’s “Safe Campus” security products, as well as products associated therewith comprised of routers to be used in installations, is valued at the lower of cost or net realizable value. The value of inventory is determined using the first-in, first-out method. The Company periodically estimates an inventory allowance for estimated unmarketable inventories when necessary. Inventory amounts are reported net of such allowances. There were no allowances for inventory as of March 31, 2020 and June 30, 2019 . PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation. Major repairs and improvements that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs are expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method over estimated useful lives as follows: Furniture and fixtures 5-10 years Office equipment 3-5 years Vehicles 5 years Lease improvement 3 years Leasehold improvements are depreciated utilizing the straight-line method over the shorter of their estimated useful lives or remaining lease term. INTANGIBLE ASSETS Intangible assets with finite lives are amortized using the straight-line method over their estimated period of benefit. Evaluation of the recoverability of intangible assets is made to take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of the Company’s intangible assets are subject to amortization. No impairment of intangible assets has been identified as of the balance sheet date. Intangible assets include licenses, certificates, patents and other technology and are amortized over their useful life of five to ten years. FAIR VALUE (“FV”) OF FINANCIAL INSTRUMENTS Certain of the Company’s financial instruments, including cash and equivalents, accrued liabilities and accounts payable, carrying amounts approximate their FV due to their short maturities. FASB ASC Topic 825, “Financial Instruments,” requires disclosure of the FV of financial instruments held by the Company. The carrying amounts reported in the balance sheets for current liabilities each qualify as financial instruments and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and the current market rate of interest. FAIR VALUE MEASUREMENTS AND DISCLOSURES FASB ASC Topic 820, “Fair Value Measurements,” defines fair value, and establishes a three-level valuation hierarchy for disclosures that enhances disclosure requirements for fair value measures. The three levels are defined as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include other than those in level 1 quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. The carrying value of the Company’s short-term financial instruments, such as accounts payable, approximate their fair values due to their short maturities. As of March 31, 2020 and June 30, 2019, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value on a recurring basis. IMPAIRMENT OF LONG-LIVED ASSETS In accordance with FASB ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets such as property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, or it is reasonably possible that these assets could become impaired as a result of technological or other changes. The determination of recoverability of assets to be held and used is made by comparing the carrying amount of an asset to future undiscounted cash flows to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value. Fair value generally is determined using the asset’s expected future discounted cash flows or market value, if readily determinable. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. During the reporting periods there was no impairment loss recognized on long-lived assets. LEASES On July 1, 2019, the Company adopted Topic 842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after July 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with its historical accounting under Topic 840. The Company elected the package of practical expedients permitted under the transition guidance, which allowed it to carry forward its historical lease classification, its assessment on whether a contract was or contains a lease, and its initial direct costs for any leases that existed prior to July 1, 2019. The Company also elected to combine its lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the condensed consolidated statements of income on a straight-line basis over the lease term. The adoption did not impact its beginning retained earnings, or its prior year consolidated statements of income and statements of cash flows. Under Topic 842, the Company determines if an arrangement is a lease at inception. Right of Use Assets (“ROU”) and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of its leases do not provide an implicit rate, it uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The ROU assets include adjustments for prepayments and accrued lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise such options. Operating leases are included in operating lease right-of-use assets and operating lease liabilities (current and non-current), on the condensed consolidated balance sheets. At March 31, 2020, the net ROU was $758,162, and total operating lease liabilities (includes current and noncurrent) was $769,956. REVENUE RECOGNITION On July 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2014-09 (and related amendments subsequently issued in 2016), Revenue from Contracts with Customers (ASC 606), by using the modified retrospective method for contracts that were not completed as of July 1, 2018. This did not result in an adjustment to retained earnings upon adoption of this new guidance, as the Company’s revenue was recognized based on the amount of consideration, we expect to receive in exchange for satisfying the performance obligations. The core principle underlying the ASC 606 is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify 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. The Company’s revenue streams are recognized at a point in time, based on when control of goods and services transfers to a customer. ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (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) the Company satisfies each performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. Upon adoption, the Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASC 606 under previous standards and using the five-step model under the new guidance and confirmed that there were no differences in the pattern of revenue recognition. The Company is seeking to derive its revenues from professional service contracts with its customers, with revenues being recognized upon delivery of services and products. Persuasive evidence of an arrangement is demonstrated via professional service contracts and invoices; and the service price to the customer is fixed upon acceptance of the professional services contract. The Company will recognize revenue when professional service is rendered to the customer by the Company and collectability of payment is reasonably assured. These revenues will be recognized at a point in time after all performance obligations are satisfied. INCOME TAXES The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current period and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets also include the prior years’ net operating losses carried forward. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. The Company follows ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Under the provisions of ASC Topic 740, when tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statement of income. At March 31, 2020 and June 30, 2019, the Company did not take any uncertain positions that would necessitate recording a tax related liability. RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses are expensed in the period when they are incurred. For the three and nine months ended March 31, 2020, the Company incurred research and development expenses of $109,146 and $229,511, respectively. For the three and nine months ended March 31, 2019, the Company incurred research and development expenses of $29,218 and $133,103, respectively. CONCENTRATION OF CREDIT RISK The Company maintains cash in accounts with state-owned banks within the PRC. Cash in state-owned banks less than RMB500,000 ($71,806) is covered by insurance. Should any of these institutions holding the Company’s cash become insolvent, or if the Company is unable to withdraw funds for any reason, the Company could lose the cash on deposit with that institution. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in these bank accounts. Cash denominated in RMB with a U.S. dollar equivalent of $1,584,380 and $1,395,104 at March 31, 2020 and June 30, 2019, respectively, were held in accounts at financial institutions located in the PRC‚ which is not freely convertible into foreign currencies. The Company, its subsidiaries and VIE have not experienced any losses in such accounts and do not believe the cash is exposed to any significant risk. Cash held in accounts at U.S. financial institutions are insured by the Federal Deposit Insurance Corporation or other programs subject to certain limitations up to $250,000 per depositor. As of March 31, 2020, the cash balance of approximately $410,138 was maintained at U.S. financial institutions, of which approximately $160,000 was not insured. Cash was maintained at financial institutions in Hong Kong, and were insured by the Hong Kong Deposit Protection Board up to a limit of HK $500,000 (approximately $64,000). As of March 31, 2020, the cash balance of approximately $16,293 was maintained at financial institutions in Hong Kong. FOREIGN CURRENCY TRANSLATION AND COMPREHENSIVE INCOME (LOSS) The accounts of the Company’s Chinese entities are maintained in RMB and the accounts of the U.S. parent company are maintained in United States dollars(“USD”) The accounts of the Chinese entities were translated into USD in accordance with ASC Topic 830 “Foreign Currency Matters.” All assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders’ equity is translated at historical rates and the statements of operations and cash flows are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income (loss) in accordance with ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from foreign currency transactions are reflected in the statements of operations. The Company follows FASB ASC Topic 220-10, “Comprehensive Income (loss).” Comprehensive income(loss) comprises net income(loss) and all changes to the statements of changes in stockholders’ equity, except those due to investments by stockholders, changes in additional paid-in capital and distributions to stockholders. The exchange rates used to translate amounts in RMB to USD for the purposes of preparing the consolidated financial statements were as follows March 31, March 31, June 30, 2020 2019 2019 Period end USD: RMB exchange rate 7.0851 6.7121 6.8668 Average USD: RMB exchange rate 6.9993 6.8271 6.8263 BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (EPS) Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similarly, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted EPS are based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to have been exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. STATEMENT OF CASH FLOWS In accordance with FASB ASC Topic 230, “Statement of Cash Flows,” cash flows from the Company’s operations are calculated based upon the local currencies. As a result, amounts shown on the statement of cash flows may not necessarily agree with changes in the corresponding asset and liability on the balance sheet. RECENT ACCOUNTING PRONOUNCEMENTS In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the fair value hierarchy. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements or disclosures. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application among reporting entities. The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. Upon adoption, the Company must apply certain aspects of this standard retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company is evaluating the impact this update will have on its Consolidated Financial Statements. |
Fixed Assets
Fixed Assets | 9 Months Ended |
Mar. 31, 2020 | |
Fixed Assets [Abstract] | |
FIXED ASSETS | NOTE 3 – FIXED ASSETS Fixed assets are summarized as follows: March 31, June 30, 2019 Furniture and fixtures $ 89,439 $ 83,437 Vehicle 2,823 2,913 Leasehold improvement 137,826 - Office equipment 151,885 54,641 Subtotal 381,973 140,991 Less: accumulated depreciation 129,658 99,875 Total $ 252,315 $ 41,116 Depreciation expense for the three months ended March 31, 2020 and 2019 was $23,556 and $7,156 respectively. Depreciation expense for the nine months ended March 31, 2020 and 2019 was $33,263 and $24,787 respectively. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 4 – INTANGIBLE ASSETS Intangible assets are summarized as follows: March 31, June 30, 2019 Software registration right $ 36,677 $ 37,843 Patent 11,318 15,286 Technology development 1,900,000 500,000 Value-added telecommunications business license 14,815 11,678 Subtotal 1,962,810 564,807 Less: Accumulated amortization 13,928 8,996 Total $ 1,948,882 $ 555,811 On May 28, 2019, the Company entered into an agreement with SDT Trade Co., Ltd., an unaffiliated party ("SDT"). SDT will assist the Company with technical development work related to the Company's security-related software and systems. Pursuant to the agreement, SDT will complete certain development work within twelve months and thereafter maintain the system for thirty-six months. The total amount to be paid under the agreement is $1,200,000. As of March 31, 2020, the Company paid SDT $1,000,000. However, the development has not commenced yet since the Company has not finalized the technology specifications. On July 2, 2019, the Company entered into a technology development service agreement with HW (HK) Limited, an unaffiliated party. Pursuant to the agreement, the Company appointed HW (HK) Limited to develop an eye protection technical system for a two period ending July 1, 2021. The total payments to made under the agreement is $1,200,000. As of March 31, 2020, the Company paid HW (HK) Limited $900,000 and the technology development is in process. Amortization expense for the three months ended March 31, 2020 and 2019 were $3,546 and $1,880, respectively. Amortization expense for the nine months ended March 31, 2020 and 2019 were $5,273 and $3,498, respectively. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Mar. 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID EXPENSES AND OTHER CURRENT ASSETS | NOTE 5 – PREPAID EXPENSES AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following: March 31, 2020 June 30, 2019 Security deposit $ 155,900 $ 46,933 Prepaid expenses and advances 80,910 34,181 Other receivables 197,598 - Others 57,505 24,818 Total $ 491,913 $ 105,932 On February 20, 2020, Guozhong Times entered an Operation Cooperation Agreement with an unrelated company, Heqin (Beijing) Technology Co, Ltd. (“Heqin”) for marketing and promoting the sale of Face Recognition Payment Processing equipment and related technical support, and other products of the Company including Epidemic Prevention and Control Systems. Heqin has a strong sales team who used to work shoulder by shoulder with fortune 500 companies and specializes in business marketing and sales channel establishment and expansion, especially in education industry and public area.They have had Successful experience of organizing multiple business matchmaking meetings with customers, distributors and retailers. The cooperation term is from February 2, 2020 through March 1, 2023; however, Heqin is the exclusive distributor of the Company’s face Recognition Payment Processing products for the period up to July 30, 2020. During the period of March and April 2020, Guozhong Times will provide the operating fund to Heqin, together with a credit line provided by Guozhong Times to Heqin for the period from May 2020 through August 2020, for total borrowing amount of RMB 10 million ($1.41 million) for Heqin’s operating needs. As of March 31, 2020, Guozhong Times had an outstanding receivable of RMB 1.4 million ($197,598) from Heqin and was recorded as other receivable, with no interest and repayment date no later than the end of current fiscal year. The loan to Heqin is secured against the assets of Heqin, and Heqin’s shareholders are jointly responsible for the timely repayment of the loan. No profits will be allocated and distributed before the full repayment of the borrowing. After Heqin pays in full the borrowing amount, Guozhong Times and Heqin will start to distribute from the profits of sale of Face Recognition Payment Processing equipment and related technical support at 30% and 70% of the net income, respectively. The profit allocation for the sale of other products of the Company are to be negotiated. Heqin will receive certain stock reward when it reaches the preset sales target under the performance compensation mechanism. |
Accrued Expenses and Other Paya
Accrued Expenses and Other Payables | 9 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES AND OTHER PAYABLES | NOTE 6 – ACCRUED EXPENSES AND OTHER PAYABLES Accrued expenses and other payable consisted of the following: March 31, 2020 June 30, 2019 Deposit $ - $ 30,525 Salary and other payables 178,779 234,159 Total $ 178,779 $ 264,684 As of March 31, 2020, accrued expenses and other payables mainly consisted of salary payable of $111,808, and accrued labilities and other payables of $66,971. As of June 30, 2019, salary and other payables mainly consist of salary payable of $52,551 and other payable of $180,858. |
Advances from Customers
Advances from Customers | 9 Months Ended |
Mar. 31, 2020 | |
Advances from Customers [Abstract] | |
ADVANCES FROM CUSTOMERS | NOTE 7 – ADVANCES FROM CUSTOMERS On March 5, 2018, the Company entered into separate agreements with two sales agents. Pursuant to the agreements, the Company authorized the agents to market the Company’s Safe Campus Management System. The term of the agreements is for five years and will expire on March 6, 2023 and July 1, 2023, respectively. In accordance with ASU 2016-08, Principal versus Agent Considerations (ASC 606), the Company determined that it was the principal in these two contracts and as such, the Company recorded the payments received from the two sales agents as advances. The Company will recognize revenue from these contracts as the sales agents sell the products and services to third parties. As of March 31, 2020, the Company had advances from customers of $1,361,134, of which, $1.28 million was advances from the sales agents. As of June 30, 2019, the Company had advances from customers of $1,318,897, all was the advances from the sales agents. As of March 31, 2020, Guozhong Times has received 3 purchase orders from development and construction companies , China for customized hardware and software solutions to detect and control the novel coronavirus outbreak in areas. Datasea’s systems sold in these orders utilized in public places, including campuses, shopping malls, scenic areas, residential areas and factory areas. The value of a single purchase order ranges from $1,620 to $2,620 (RMB 11,500 to RMB 18,600). The total value of the 33 agreements is $84,000 (RMB 596,520). Pursuant to the purchase orders, customers shall pay the full amount within 15 days after the purchase order is signed. As of March 31, 2020, Guozhong Times has received $69,500 (RMB493,500). |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 8 – RELATED PARTY TRANSACTIONS The Company’s President, Zhixin Liu, paid certain operating expenses on behalf of the Company. As of March 31, 2020 and June 30, 2019, the amounts due to the President were $nil and $86,733 respectively. These amounts were interest-free, unsecured and due on demand. On January 1, 2019, the Company’s President entered into a car rental agreement with the Company for a term of two years. Pursuant to the agreement, the Company rents a car from the Company’s President for a monthly rent of approximately $700. The agreement was replaced by a new agreement entered on November 30, 2019 for the leasing period from December 1, 2019 through December 31, 2020, with monthly rent of approximately $1,700, or total payment of $22,288, which was paid in full in advance as required by the agreement, and was recorded as prepaid expenses at March 31, 2020. The Company recorded car rental expense of $1,429 and $2,197 for the three months ended March 31, 2020 and 2019. The Company recorded car rental expense of $3,572 and $6,591 for the nine months ended March 31, 2020 and 2019. In April 2019, the Company’s President entered into an apartment rental agreement with the Company. Pursuant to the agreement, the Company rents an apartment located in Harbin city as the Company’s branch office from the Company’s President with an annual rent of approximately $2,828. The term was from May 1, 2019 through April 30, 2020. The rent paid under this agreement was $729 and $733 for the three months ended March 31, 2020 and 2019, respectively. The rent paid under this agreement was $2,186 and $2,197 for the nine months ended March 31, 2020 and 2019, respectively. On April 22, 2019, the Company borrowed RMB400,000 (or approximately $57,000) with no interest from the Company’s President to pay operating expenses. The loan was repaid on July 8, 2019. |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 9 – INCOME TAXES The Company is subject to income taxes by entity on income arising in or derived from the tax jurisdiction in which each entity is domiciled. The Company's PRC subsidiaries file their income tax returns online with PRC tax authorities. The Company conducts all of its businesses through its subsidiaries and affiliated entities, principally in the PRC. The Company's US parent company, was incorporated in the US and is subject to U.S. income tax rate of 21% and files U.S. federal income tax return. As of March 31, 2020, the US entity had net operating loss ("NOL") carry forwards for income tax purpose of $261,419. The NOL arising in tax years beginning after 2017 may reduce 80% of a taxpayer's taxable income, and be carried forward indefinitely. Management believes the realization of benefits from these losses remains uncertain due to the parent Company's limited operating history and continuing losses. Accordingly, a 100% deferred tax asset valuation allowance was provided. The Company's offshore subsidiary, Shuhai Skill (HK), a HK holding company is subject to 16.5% corporate income tax in HK. Shuhai Beijing received a tax holiday with a 15% corporate income tax rate since it qualified as a high-tech company. Tianjin Information, Xunrui, and Guozhong Times are subject to the regular 25% PRC income tax rate. As of March 31, 2020, the Company has approximately $5.17 million of NOL related to its HK holding company, PRC subsidiaries and VIEs that expire in years 2019 through 2023. The Company estimated the NOL based on the unaudited financial statements of each entity per PRC GAAP, which the management believes it approximates the financial statements per PRC tax law. In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the Company's future generation of taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance as of March 31, 2020 and June 30, 2019. The following table reconciles the U.S. statutory rates to the Company's effective tax rate for the three and nine months ended March 31, 2020 and 2019: Three Months Nine Months 2020 2019 2020 2019 US federal statutory rates (21.0 )% (21.0 )% (21.0 )% (21.0 )% Tax rate difference – current provision (3.1 ) 6.0 % (3.6 ) 6.0 % Effect of PRC tax holiday 0.8 % - % 5.2 % - % Valuation allowance 23.3 % 15.0 % 19.4 % 15.0 % Effective tax rate - - - - The Company's net deferred tax asset as of March 31, 2020 and June 30, 2019 is as follows: March 31, June 30, Deferred tax asset – net operating loss $ 901,777 $ 1,199,872 Valuation allowance (901,777 ) (1,199,872 ) Net deferred tax asset $ - $ - |
Commiments
Commiments | 9 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS | NOTE 10 – COMMIMENTS Lease Agreement On March 20, 2019, the Company entered into the one-year operating lease agreement for a senior management's dormitory. Pursuant to the lease agreement, the lease expires on March 22, 2020 and has a monthly rent of RMB 5,200 (or approximately $735). The Company did not renew the lease upon lease expiration. On July 30, 2019, the Company entered into an operating lease agreement for its office in Beijing. Pursuant to the lease agreement, the delivery date of the property was August 8, 2019 but the lease term started on October 8, 2019 and expire on October 7, 2022, and has a monthly rent of RMB 207,269 without value added tax ("VAT") (or approximately $29,250). The lease required a security deposit of three months' rent of RMB 677,769 (or approximately $96,000). The Company will receive a six-month rent abatement. On July 30, 2019, the Company entered into a property service agreement for its office in Beijing (described above). Pursuant to the property service agreement, the agreement commenced on August 9, 2019 and will expire on October 8, 2022, and has a quarterly fee of RMB 202,352 (or approximately $29,000). The deposit was RMB202,352 (or approximately $29,000). On August 28, 2019, the Company entered an operating lease agreement for senior officers' dormitory in Beijing. The lease has a term of two-years with expiration date on August 31, 2021, the monthly rent is RMB 14,500 ($2,045), payable every six months in advance. The Company adopted ASC 842 on July 1, 2019. The components of lease costs, lease term and discount rate with respect of the office and dormitory leases with an initial term of more than 12 months are as follows: Three Months Nine Months (Unaudited) (Unaudited) Operating lease expense $ 31,727 $ 113,211 March 31, (Unaudited) Right-of-use assets $ 758,162 Lease liabilities $ 348,401 Lease liabilities - noncurrent $ 421,558 Weighted average remaining lease term 2.47 years Weighted average discount rate 5.00 % The following is a schedule, by years, of maturities of the operating lease liabilities as of March 31, 2020: Twelve months ending March 31, Minimum 2021 $ 348,401 2022 302,774 2023 175,525 Total undiscounted cash flows 826,700 Less: imputed interest (56,741 ) Present value of lease liabilities 769,959 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS The Company follows the guidance in FASB ASC 855-10 for the disclosure of subsequent events. The Company evaluated subsequent events through the date the financial statements were issued and determined the Company has the following material subsequent event: In 2018, the Company's Board of Directors and majority stockholders approved the 2018 Equity Incentive Plan (the "2018 Plan"), the 2018 Plan authorized the reserve of 4,000,000 shares of the Company's common stock as stock reward to attract and retain personnel, provide additional incentives to employees, directors and consultants and promote the success of the Company's business. No awards have been granted under the 2018 Plan as of the date of this Report. In April 2020, the Board approved and authorized the preparation of Form S-8 to register the 4,000,000 shares of the Company's common stock subject to the 2018 Plan. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
GOING CONCERN | GOING CONCERN The accompanying unaudited condensed consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. For the nine months ended March 31, 2020 and 2019, the Company had a net loss of $1.71 million and $1.28 million, respectively. The Company has an accumulated deficit of $7.26 million as of March 31, 2020. This raise substantial doubt about the Company’s ability to continue as a going concern. There can be no assurance that the Company will become profitable or obtain necessary financing for its business or that it will be able to continue in business. The Company is currently seeking to modify its products and software to assist schools and communities in addressing the coronavirus outbreak, providing possible remedy and prevention for the future outbreak after school resumes and public community reverts to social activities by promoting Epidemic Prevention and Control Systems. Management also intends to raise additional funds by way of a private or public offering, or by obtaining loans from banks or others which are planned to be used altogether with operating turnover to support Company’s R&D, procurement, marketing and daily operation , while the Company believes in the viability of its strategy to generate sufficient revenue and in its ability to raise additional funds on reasonable terms and conditions, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenue and its ability to raise additional funds by way of a public or private offering. The unaudited condensed consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern. |
BASIS OF PRESENTATION AND CONSOLIDATION | BASIS OF PRESENTATION AND CONSOLIDATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. The accompanying unaudited condensed consolidated financial statements include the financial statements of the Company and its 100% owned subsidiaries of Shuhai Skill (HK), Tianjin Information and its VIE, Shuhai Beijing, and its subsidiaries – Xunrui and Guozhong Times. All significant inter-company transactions and balances have been eliminated in consolidation. The accompanying unaudited interim condensed consolidated financial statements ("CFS") have been prepared pursuant to the rules and regulations of the SEC. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments and elimination of intercompany transactions upon consolidation) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in the annual consolidated financial statements prepared in accordance with US GAAP have been omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended June 30, 2019. The results for the three and nine months ended March 31, 2020 are not necessarily indicative of the results to be expected for the full year ending June 30, 2020. |
VARIABLE INTEREST ENTITY | VARIABLE INTEREST ENTITY Pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Section 810, “Consolidation” (“ASC 810”), the Company is required to include in its consolidated financial statements, the financial statements of Shuhai Beijing, its VIE. ASC 810 requires a VIE to be consolidated if the company is subject to a majority of the risk of loss for the VIE or is entitled to receive a majority of the VIE’s residual returns. A VIE is an entity in which a company, through contractual arrangements, bears the risk of, and enjoys the rewards normally associated with ownership of the entity, and therefore the company is the primary beneficiary of the entity. Under ASC 810, a reporting entity has a controlling financial interest in a VIE, and must consolidate that VIE, if the reporting entity has both of the following characteristics: (a) the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance; and (b) the obligation to absorb losses, or the right to receive benefits, that could potentially be significant to the VIE. The reporting entity’s determination of whether it has this power is not affected by the existence of kick-out rights or participating rights, unless a single enterprise, including its related parties and de - facto agents, have the unilateral ability to exercise those rights. Shuhai Beijing’s actual stockholders do not hold any kick-out rights that affect the consolidation determination. Through the VIE agreements, the Company is deemed the primary beneficiary of Shuhai Beijing and its subsidiaries. Accordingly, the results of Shuhai Beijing and its subsidiaries have been included in the accompanying unaudited condensed consolidated financial statements. Shuhai Beijing has no assets that are collateral for or restricted solely to settle their obligations. The creditors of Shuhai Beijing do not have recourse to the Company’s general credit. VIE Agreements Operation and Intellectual Property Service Agreement Shareholders’ Voting Rights Entrustment Agreement Equity Option Agreement Information or its designee(s) the irrevocable right and option to acquire all or a portion of Shuhai Beijing Shareholders’ equity interests in Shuhai Beijing for an option price of RMB 0.001 for each capital contribution of RMB1.00. Pursuant to the terms of the Option Agreement, Tianjin Information and the Shuhai Beijing shareholders have agreed to certain restrictive covenants to safeguard the rights of Tianjin Information under the option Agreement. Tianjin Information agreed to pay RMB1.00 annually to Shuhai Beijing Shareholders to maintain the option rights. Tianjin Information may terminate the Option Agreement upon prior written notice. The Option Agreement is valid for a period of 10 years from the effective date and renewable at Tianjin Information’s option. Equity Pledge Agreement The following financial statement amounts and balances of the VIE were included in the accompanying condensed consolidated financial statements as of March 31, 2020 and June 30, 2019 and for the nine and three months ended March 31, 2020 and 2019, respectively: March 31, June 30, Current assets $ 546,373 $ 1,573,413 Non-current assets 990,548 96,927 Total assets $ 1,536,921 $ 1,670,340 Current liabilities $ 1,863,810 $ 6,232,836 Non-current liabilities 421,558 - Total liabilities $ 2,285,368 $ 6,232,836 For the For the Revenues $ - $ - Gross profit $ - $ - Net loss $ 235,541 $ 944,617 For the For the Revenues $ - $ - Gross profit $ - $ - Net loss $ 291,011 $ 1,107,119 |
USE OF ESTIMATES | USE OF ESTIMATES The preparation of unaudited condensed consolidated financial statements in conformity with US GAPP 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 financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The significant areas requiring the use of management estimates include, but are not limited to, the estimated useful life and residual value of property, plant and equipment, provision for staff benefits, recognition and measurement of deferred income taxes and the 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 unaudited condensed consolidated financial statements. |
CONTINGENCIES | CONTINGENCIES Certain conditions may exist as of the date the unaudited condensed consolidated financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company's management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company's legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability would be accrued in the Company's unaudited condensed consolidated financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. As of March 31, 2020 and June 30, 2019, the Company has no such contingencies. |
CASH AND CASH EQUIVALENTS | CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash on hand, demand deposits and short-term cash investments that are highly liquid in nature and have original maturities of three months or less. |
RESTRICTED CASH | RESTRICTED CASH Restricted cash represents cash held in an indemnification escrow account related to requirements of the financing agreement signed with the underwriter of the Company's initial public offering for a period of 18 months or longer subsequent to the closing of the initial public offering on December 21, 2018. |
INVENTORY | INVENTORY Inventory comprised principally of smart student identification cards related to the Company's "Safe Campus" security products, as well as products associated therewith comprised of routers to be used in installations, is valued at the lower of cost or net realizable value. The value of inventory is determined using the first-in, first-out method. The Company periodically estimates an inventory allowance for estimated unmarketable inventories when necessary. Inventory amounts are reported net of such allowances. There were no allowances for inventory as of March 31, 2020 and June 30, 2019 . |
PROPERTY AND EQUIPMENT | PROPERTY AND EQUIPMENT Property and equipment are stated at cost, less accumulated depreciation. Major repairs and improvements that significantly extend original useful lives or improve productivity are capitalized and depreciated over the period benefited. Maintenance and repairs are expensed as incurred. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method over estimated useful lives as follows: Furniture and fixtures 5-10 years Office equipment 3-5 years Vehicles 5 years Lease improvement 3 years Leasehold improvements are depreciated utilizing the straight-line method over the shorter of their estimated useful lives or remaining lease term. |
INTANGIBLE ASSETS | INTANGIBLE ASSETS Intangible assets with finite lives are amortized using the straight-line method over their estimated period of benefit. Evaluation of the recoverability of intangible assets is made to take into account events or circumstances that warrant revised estimates of useful lives or that indicate that impairment exists. All of the Company's intangible assets are subject to amortization. No impairment of intangible assets has been identified as of the balance sheet date. Intangible assets include licenses, certificates, patents and other technology and are amortized over their useful life of five to ten years. |
FAIR VALUE ("FV") OF FINANCIAL INSTRUMENTS | FAIR VALUE ("FV") OF FINANCIAL INSTRUMENTS Certain of the Company's financial instruments, including cash and equivalents, accrued liabilities and accounts payable, carrying amounts approximate their FV due to their short maturities. FASB ASC Topic 825, "Financial Instruments," requires disclosure of the FV of financial instruments held by the Company. The carrying amounts reported in the balance sheets for current liabilities each qualify as financial instruments and are a reasonable estimate of their FV because of the short period of time between the origination of such instruments and their expected realization and the current market rate of interest. |
FAIR VALUE MEASUREMENTS AND DISCLOSURES | FAIR VALUE MEASUREMENTS AND DISCLOSURES FASB ASC Topic 820, "Fair Value Measurements," defines fair value, and establishes a three-level valuation hierarchy for disclosures that enhances disclosure requirements for fair value measures. The three levels are defined as follows: ● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. ● Level 2 inputs to the valuation methodology include other than those in level 1 quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. ● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. The carrying value of the Company's short-term financial instruments, such as accounts payable, approximate their fair values due to their short maturities. As of March 31, 2020 and June 30, 2019, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value on a recurring basis. |
IMPAIRMENT OF LONG-LIVED ASSETS | IMPAIRMENT OF LONG-LIVED ASSETS In accordance with FASB ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets such as property and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, or it is reasonably possible that these assets could become impaired as a result of technological or other changes. The determination of recoverability of assets to be held and used is made by comparing the carrying amount of an asset to future undiscounted cash flows to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its fair value. Fair value generally is determined using the asset's expected future discounted cash flows or market value, if readily determinable. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. During the reporting periods there was no impairment loss recognized on long-lived assets. |
LEASES | LEASES On July 1, 2019, the Company adopted Topic 842 using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application. Results and disclosure requirements for reporting periods beginning after July 1, 2019 are presented under Topic 842, while prior period amounts have not been adjusted and continue to be reported in accordance with its historical accounting under Topic 840. The Company elected the package of practical expedients permitted under the transition guidance, which allowed it to carry forward its historical lease classification, its assessment on whether a contract was or contains a lease, and its initial direct costs for any leases that existed prior to July 1, 2019. The Company also elected to combine its lease and non-lease components and to keep leases with an initial term of 12 months or less off the balance sheet and recognize the associated lease payments in the condensed consolidated statements of income on a straight-line basis over the lease term. The adoption did not impact its beginning retained earnings, or its prior year consolidated statements of income and statements of cash flows. Under Topic 842, the Company determines if an arrangement is a lease at inception. Right of Use Assets ("ROU") and lease liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of its leases do not provide an implicit rate, it uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company's incremental borrowing rate is a hypothetical rate based on its understanding of what its credit rating would be. The ROU assets include adjustments for prepayments and accrued lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. The Company's lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise such options. Operating leases are included in operating lease right-of-use assets and operating lease liabilities (current and non-current), on the condensed consolidated balance sheets. At March 31, 2020, the net ROU was $758,162, and total operating lease liabilities (includes current and noncurrent) was $769,956. |
REVENUE RECOGNITION | REVENUE RECOGNITION On July 1, 2018, the Company adopted Accounting Standards Update ("ASU") 2014-09 (and related amendments subsequently issued in 2016), Revenue from Contracts with Customers (ASC 606), by using the modified retrospective method for contracts that were not completed as of July 1, 2018. This did not result in an adjustment to retained earnings upon adoption of this new guidance, as the Company's revenue was recognized based on the amount of consideration, we expect to receive in exchange for satisfying the performance obligations. The core principle underlying the ASC 606 is that the Company will recognize revenue to represent the transfer of goods and services to customers in an amount that reflects the consideration to which the Company expects to be entitled in such exchange. This will require the Company to identify 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. The Company's revenue streams are recognized at a point in time, based on when control of goods and services transfers to a customer. ASC 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires that the Company (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) the Company satisfies each performance obligation. The application of the five-step model to the revenue streams compared to the prior guidance did not result in significant changes in the way the Company records its revenue. Upon adoption, the Company evaluated its revenue recognition policy for all revenue streams within the scope of the ASC 606 under previous standards and using the five-step model under the new guidance and confirmed that there were no differences in the pattern of revenue recognition. The Company is seeking to derive its revenues from professional service contracts with its customers, with revenues being recognized upon delivery of services and products. Persuasive evidence of an arrangement is demonstrated via professional service contracts and invoices; and the service price to the customer is fixed upon acceptance of the professional services contract. The Company will recognize revenue when professional service is rendered to the customer by the Company and collectability of payment is reasonably assured. These revenues will be recognized at a point in time after all performance obligations are satisfied. |
INCOME TAXES | INCOME TAXES The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, "Income Taxes." Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current period and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity's financial statements or tax returns. Deferred tax assets also include the prior years' net operating losses carried forward. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized. The Company follows ASC Topic 740, which prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740 also provides guidance on recognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Under the provisions of ASC Topic 740, when tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statement of income. At March 31, 2020 and June 30, 2019, the Company did not take any uncertain positions that would necessitate recording a tax related liability. |
RESEARCH AND DEVELOPMENT EXPENSES | RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses are expensed in the period when they are incurred. For the three and nine months ended March 31, 2020, the Company incurred research and development expenses of $109,146 and $229,511, respectively. For the three and nine months ended March 31, 2019, the Company incurred research and development expenses of $29,218 and $133,103, respectively. |
CONCENTRATION OF CREDIT RISK | CONCENTRATION OF CREDIT RISK The Company maintains cash in accounts with state-owned banks within the PRC. Cash in state-owned banks less than RMB500,000 ($71,806) is covered by insurance. Should any of these institutions holding the Company's cash become insolvent, or if the Company is unable to withdraw funds for any reason, the Company could lose the cash on deposit with that institution. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in these bank accounts. Cash denominated in RMB with a U.S. dollar equivalent of $1,584,380 and $1,395,104 at March 31, 2020 and June 30, 2019, respectively, were held in accounts at financial institutions located in the PRC‚ which is not freely convertible into foreign currencies. The Company, its subsidiaries and VIE have not experienced any losses in such accounts and do not believe the cash is exposed to any significant risk. Cash held in accounts at U.S. financial institutions are insured by the Federal Deposit Insurance Corporation or other programs subject to certain limitations up to $250,000 per depositor. As of March 31, 2020, the cash balance of approximately $410,138 was maintained at U.S. financial institutions, of which approximately $160,000 was not insured. Cash was maintained at financial institutions in Hong Kong, and were insured by the Hong Kong Deposit Protection Board up to a limit of HK $500,000 (approximately $64,000). As of March 31, 2020, the cash balance of approximately $16,293 was maintained at financial institutions in Hong Kong. |
FOREIGN CURRENCY TRANSLATION AND COMPREHENSIVE INCOME (LOSS) | FOREIGN CURRENCY TRANSLATION AND COMPREHENSIVE INCOME (LOSS) The accounts of the Company's Chinese entities are maintained in RMB and the accounts of the U.S. parent company are maintained in United States dollars("USD") The accounts of the Chinese entities were translated into USD in accordance with ASC Topic 830 "Foreign Currency Matters." All assets and liabilities were translated at the exchange rate on the balance sheet date; stockholders' equity is translated at historical rates and the statements of operations and cash flows are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income (loss) in accordance with ASC Topic 220, "Comprehensive Income." Gains and losses resulting from foreign currency transactions are reflected in the statements of operations. The Company follows FASB ASC Topic 220-10, "Comprehensive Income (loss)." Comprehensive income(loss) comprises net income(loss) and all changes to the statements of changes in stockholders' equity, except those due to investments by stockholders, changes in additional paid-in capital and distributions to stockholders. The exchange rates used to translate amounts in RMB to USD for the purposes of preparing the consolidated financial statements were as follows March 31, March 31, June 30, 2020 2019 2019 Period end USD: RMB exchange rate 7.0851 6.7121 6.8668 Average USD: RMB exchange rate 6.9993 6.8271 6.8263 |
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (EPS) | BASIC AND DILUTED EARNINGS (LOSS) PER SHARE (EPS) Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similarly, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Diluted EPS are based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to have been exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. |
STATEMENT OF CASH FLOWS | STATEMENT OF CASH FLOWS In accordance with FASB ASC Topic 230, "Statement of Cash Flows," cash flows from the Company's operations are calculated based upon the local currencies. As a result, amounts shown on the statement of cash flows may not necessarily agree with changes in the corresponding asset and liability on the balance sheet. |
RECENT ACCOUNTING PRONOUNCEMENTS | RECENT ACCOUNTING PRONOUNCEMENTS In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, which modifies the disclosure requirements for Level 1, Level 2 and Level 3 instruments in the fair value hierarchy. The guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial statements or disclosures. In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistent application among reporting entities. The guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, with early adoption permitted. Upon adoption, the Company must apply certain aspects of this standard retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company is evaluating the impact this update will have on its Consolidated Financial Statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of balances of the VIE | March 31, June 30, Current assets $ 546,373 $ 1,573,413 Non-current assets 990,548 96,927 Total assets $ 1,536,921 $ 1,670,340 Current liabilities $ 1,863,810 $ 6,232,836 Non-current liabilities 421,558 - Total liabilities $ 2,285,368 $ 6,232,836 For the For the Revenues $ - $ - Gross profit $ - $ - Net loss $ 235,541 $ 944,617 For the For the Revenues $ - $ - Gross profit $ - $ - Net loss $ 291,011 $ 1,107,119 |
Schedule of depreciation of property and equipment | Furniture and fixtures 5-10 years Office equipment 3-5 years Vehicles 5 years Lease improvement 3 years |
Schedule of exchange rates used to translate amounts | March 31, March 31, June 30, 2020 2019 2019 Period end USD: RMB exchange rate 7.0851 6.7121 6.8668 Average USD: RMB exchange rate 6.9993 6.8271 6.8263 |
Fixed Assets (Tables)
Fixed Assets (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Fixed Assets [Abstract] | |
Schedule of fixed assets | March 31, June 30, 2019 Furniture and fixtures $ 89,439 $ 83,437 Vehicle 2,823 2,913 Leasehold improvement 137,826 - Office equipment 151,885 54,641 Subtotal 381,973 140,991 Less: accumulated depreciation 129,658 99,875 Total $ 252,315 $ 41,116 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | March 31, June 30, 2019 Software registration right $ 36,677 $ 37,843 Patent 11,318 15,286 Technology development 1,900,000 500,000 Value-added telecommunications business license 14,815 11,678 Subtotal 1,962,810 564,807 Less: Accumulated amortization 13,928 8,996 Total $ 1,948,882 $ 555,811 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of prepaid expenses and other current assets | March 31, 2020 June 30, 2019 Security deposit $ 155,900 $ 46,933 Prepaid expenses and advances 80,910 34,181 Other receivables 197,598 - Others 57,505 24,818 Total $ 491,913 $ 105,932 |
Accrued Expenses and Other Pa_2
Accrued Expenses and Other Payables (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other payable | March 31, 2020 June 30, 2019 Deposit $ - $ 30,525 Salary and other payables 178,779 234,159 Total $ 178,779 $ 264,684 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of effective tax rate | Three Months Nine Months 2020 2019 2020 2019 US federal statutory rates (21.0 )% (21.0 )% (21.0 )% (21.0 )% Tax rate difference – current provision (3.1 ) 6.0 % (3.6 ) 6.0 % Effect of PRC tax holiday 0.8 % - % 5.2 % - % Valuation allowance 23.3 % 15.0 % 19.4 % 15.0 % Effective tax rate - - - - |
Schedule of net deferred tax asset | March 31, June 30, Deferred tax asset – net operating loss $ 901,777 $ 1,199,872 Valuation allowance (901,777 ) (1,199,872 ) Net deferred tax asset $ - $ - |
Commiments (Tables)
Commiments (Tables) | 9 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of lease costs, lease term and discount rate with respect of the office and dormitory leases | Three Months Nine Months (Unaudited) (Unaudited) Operating lease expense $ 31,727 $ 113,211 March 31, (Unaudited) Right-of-use assets $ 758,162 Lease liabilities $ 348,401 Lease liabilities - noncurrent $ 421,558 Weighted average remaining lease term 2.47 years Weighted average discount rate 5.00 % |
Schedule of maturities of the operating lease liabilities | Twelve months ending March 31, Minimum 2021 $ 348,401 2022 302,774 2023 175,525 Total undiscounted cash flows 826,700 Less: imputed interest (56,741 ) Present value of lease liabilities 769,959 |
Organization and Description _2
Organization and Description of Business (Details) - $ / shares | May 01, 2018 | Oct. 27, 2016 | Oct. 29, 2015 | May 26, 2015 | Jan. 07, 2020 | Jan. 03, 2020 | Mar. 31, 2020 | Dec. 03, 2019 | Jun. 30, 2019 |
Organization and Description of Business (Textual) | |||||||||
Date of incorporation | Sep. 26, 2014 | ||||||||
Common stock, issued | 20,943,846 | 20,943,846 | |||||||
Common stock, outstanding | 20,943,846 | 20,943,846 | |||||||
Reverse stock split, description | The Company implemented a 1 for 3 reverse stock split decreasing the shares outstanding from 57,511,711 to 19,170,846. | ||||||||
Common stock, par value | $ 0.001 | $ 0.001 | |||||||
Zhixin Liu [Member] | |||||||||
Organization and Description of Business (Textual) | |||||||||
Number of new share issued | 6,666,667 | ||||||||
Ownership rights acquired | 82.00% | ||||||||
Common stock, par value | $ 0.001 | ||||||||
Shuhai Beijing [Member] | |||||||||
Organization and Description of Business (Textual) | |||||||||
Ownership rights acquired | 99.00% | ||||||||
Equity transfer agreements, description | Pursuant to this equity transfer agreement, the Director, the President and the unrelated each agreed to transfer their 51%, 16%, 33% ownership interests, respectively, in Guozhong Haoze (Beijing) Technology Ltd. (“Guozhong Haoze”) to Shuhai Beijing for no consideration. Guozhong Haoze was formed to further develop and market the smart security system products. Guozhong Haoze has not yet commenced operation as of this report date | Pursuant to the Transfer Agreements, the Director and the President, each agreed, for no consideration, to (i) transfer their 51% and 49% ownership interest, respectively, in Guozhong Times (Beijing) Technology Ltd. (“Guozhong Times”) to Shuhai Beijing; and (ii) transfer their 51% and 49% ownership interest, respectively, in Guohao Century (Beijing) Technology Ltd. (“Guohao Century”) to Shuhai Beijing. Guozhong Times and Guohao Century were established for developing technology for electronic products, intelligence equipment and accessories, and providing software and information system consulting, installation and maintenance services. Guozhong Times started operation since January 2020, Guohao Century has not yet commenced operation as of this report date. | |||||||
Nanjing Fanhan Zhineng Technology Institute [Member] | |||||||||
Organization and Description of Business (Textual) | |||||||||
Remaining ownership interest | 1.00% | ||||||||
Shuhai Skill (HK) [Member] | |||||||||
Organization and Description of Business (Textual) | |||||||||
Ownership rights acquired | 100.00% | ||||||||
Business combination, consideration transferred | The Company entered into a share exchange agreement (the "Exchange Agreement") with the shareholders (the "Shareholders") of Shuhai Information Skill (HK) Limited ("Shuhai Skill (HK)"), a limited liability company incorporated on May 15, 2015 under the laws of the Hong Kong Special Administrative Region of the People's Republic of China (the "PRC"). Pursuant to the terms of the Exchange Agreement, the Shareholders, who together own 100% of the ownership rights in Shuhai Skill (HK), transferred all of the issued and outstanding ordinary shares of Shuhai Skill (HK) to the Company in exchange for the issuance of an aggregate of 6,666,667 shares of Common Stock, thereby causing Shuhai Skill (HK) and its wholly owned subsidiaries, Tianjin Information Sea Information Technology Co., Ltd. ("Tianjin Information"), a limited liability company incorporated under the laws of the PRC, and Harbin Information Sea Information Technology Co., Ltd., a limited liability company incorporated under the laws of the PRC, to become wholly-owned subsidiaries of the Company, and Shuhai Information Technology Co., Ltd., also a limited liability company incorporated under the laws of the PRC ("Shuhai Beijing"), to become a variable interest entity ("VIE") of the Company through a series of contractual agreements between Shuhai Beijing and Tianjin Information. The transaction was accounted for as a reverse merger, with Shuhai Skill (HK) and its subsidiaries being the accounting survivor. Accordingly, the historical financial statements presented are those of Shuhai Skill (HK) and its consolidated subsidiaries and VIE. | ||||||||
Common stock, issued | 18,333,333 | ||||||||
Common stock, outstanding | 15,000,000 | ||||||||
Ms. Liu [Member] | |||||||||
Organization and Description of Business (Textual) | |||||||||
Number of new share issued | 1,666,667 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2019 | |
Accounting Policies [Abstract] | |||||
Current assets | $ 546,373 | $ 546,373 | $ 1,573,413 | ||
Non-current assets | 990,548 | 990,548 | 96,927 | ||
Total assets | 1,536,921 | 1,536,921 | 1,670,340 | ||
Current liabilities | 1,863,810 | 1,863,810 | 6,232,836 | ||
Non-current liabilities | 421,558 | 421,558 | |||
Total liabilities | 2,285,368 | 2,285,368 | $ 6,232,836 | ||
Revenues | |||||
Gross profit (loss) | |||||
Net loss | $ 235,541 | $ 291,011 | $ 944,617 | $ 1,107,119 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) | 9 Months Ended |
Mar. 31, 2020 | |
Vehicles [Member] | |
Estimated useful life (in years) | 5 years |
Lease improvement [Member] | |
Estimated useful life (in years) | 3 years |
Minimum [Member] | Furniture and fixtures [Member] | |
Estimated useful life (in years) | 5 years |
Minimum [Member] | Office equipment [Member] | |
Estimated useful life (in years) | 3 years |
Maximum [Member] | Furniture and fixtures [Member] | |
Estimated useful life (in years) | 10 years |
Maximum [Member] | Office equipment [Member] | |
Estimated useful life (in years) | 5 years |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - CNY | Mar. 31, 2020 | Jun. 30, 2019 | Mar. 31, 2019 |
Period end USD: RMB exchange rate | 7.0851 | 6.8668 | 6.7121 |
Average USD: RMB exchange rate | 6.9993 | 6.8263 | 6.8271 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details Textual) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||
Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2020CNY (¥) | Dec. 03, 2019 | |
Summary of Significant Accounting Policies (Textual) | |||||||||||
Research and development expenses | $ 109,146 | $ 29,218 | $ 229,511 | $ 133,103 | |||||||
Cash in state-owned banks | $ 2,010,811 | 2,010,811 | $ 6,072,637 | ||||||||
Cash denominated in RMB with a U.S. dollar equivalent | 1,584,380 | 1,395,104 | |||||||||
Federal Deposit Insurance Corporation | $ 250,000 | ||||||||||
Owned subsidiaries percentage | 100.00% | 100.00% | 100.00% | ||||||||
Net loss | $ (557,739) | $ (751,032) | $ (396,985) | $ (540,999) | $ (372,278) | $ (371,659) | $ (1,705,757) | $ (1,284,936) | |||
Accumulated deficit | (7,255,884) | (7,255,884) | (5,550,128) | ||||||||
Right-of-use assets | 758,162 | 758,162 | |||||||||
Operating lease liabilities | 769,956 | 769,956 | |||||||||
U.S. financial institutions [Member] | |||||||||||
Summary of Significant Accounting Policies (Textual) | |||||||||||
Cash balance | 410,138 | 410,138 | |||||||||
Cash balance not insured | 160,000 | 160,000 | |||||||||
Financial Institutions in Hong Kong [Member] | |||||||||||
Summary of Significant Accounting Policies (Textual) | |||||||||||
Cash balance | $ 16,293 | $ 16,293 | |||||||||
Nanjing Fanhan Zhineng Technology Institute [Member] | |||||||||||
Summary of Significant Accounting Policies (Textual) | |||||||||||
Remaining ownership interest | 1.00% | ||||||||||
Shuhai Beijing [Member] | |||||||||||
Summary of Significant Accounting Policies (Textual) | |||||||||||
Ownership interest | 99.00% | ||||||||||
Net profits | 100.00% | ||||||||||
Equity option agreement, description | The irrevocable right and option to acquire all or a portion of Shuhai Beijing Shareholders' equity interests in Shuhai Beijing for an option price of RMB 0.001 for each capital contribution of RMB1.00. Pursuant to the terms of the Option Agreement, Tianjin Information and the Shuhai Beijing shareholders have agreed to certain restrictive covenants to safeguard the rights of Tianjin Information under the option Agreement. Tianjin Information agreed to pay RMB1.00 annually to Shuhai Beijing Shareholders to maintain the option rights. Tianjin Information may terminate the Option Agreement upon prior written notice. The Option Agreement is valid for a period of 10 years from the effective date and renewable at Tianjin Information's option. | ||||||||||
Concentration of credit risk, description | Cash was maintained at financial institutions in Hong Kong, and were insured by the Hong Kong Deposit Protection Board up to a limit of HK $500,000 (approximately $64,000). | ||||||||||
RMB [Member] | |||||||||||
Summary of Significant Accounting Policies (Textual) | |||||||||||
Cash in state-owned banks | ¥ | ¥ 500,000 | ||||||||||
Minimum [Member] | |||||||||||
Summary of Significant Accounting Policies (Textual) | |||||||||||
Intangible assets useful life | 5 years | ||||||||||
Maximum [Member] | |||||||||||
Summary of Significant Accounting Policies (Textual) | |||||||||||
Intangible assets useful life | 10 years |
Fixed Assets (Details)
Fixed Assets (Details) - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 |
Subtotal | $ 381,973 | $ 140,991 |
Less: accumulated depreciation | 129,658 | 99,875 |
Total | 252,315 | 41,116 |
Furniture and fixtures [Member] | ||
Subtotal | 89,439 | 83,437 |
Vehicle [Member] | ||
Subtotal | 2,823 | 2,913 |
Leasehold improvement [Member] | ||
Subtotal | 137,826 | |
Office equipment [Member] | ||
Subtotal | $ 151,885 | $ 54,641 |
Fixed Assets (Details Textual)
Fixed Assets (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Fixed Assets (Textual) | ||||
Depreciation expense | $ 23,556 | $ 7,156 | $ 33,263 | $ 24,787 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 |
Subtotal | $ 1,962,810 | $ 564,807 |
Less: Accumulated amortization | 13,928 | 8,996 |
Total | 1,948,882 | 555,811 |
Software registration right [Member] | ||
Subtotal | 36,677 | 37,843 |
Patent [Member] | ||
Subtotal | 11,318 | 15,286 |
Technology development [Member] | ||
Subtotal | 1,900,000 | 500,000 |
Value-added telecommunications business license [Member] | ||
Subtotal | $ 14,815 | $ 11,678 |
Intangible Assets (Details Text
Intangible Assets (Details Textual) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
May 28, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Intangible Assets (Textual) | |||||
Amortization expense | $ 3,546 | $ 1,880 | $ 5,273 | $ 3,498 | |
Technology development service agreement, description | The Company appointed HW (HK) Limited to develop an eye protection technical system for a two period ending July 1, 2021. | ||||
Total payments to service agreements | $ 1,200,000 | ||||
SDT Trade Co., Ltd. [Member] | |||||
Intangible Assets (Textual) | |||||
Amount Payable | 1,000,000 | 1,000,000 | |||
SDT Trade Co., Ltd. [Member] | Agreement [Member] | |||||
Intangible Assets (Textual) | |||||
Payment to Agreement | $ 1,200,000 | ||||
HW (HK) Limited [Member] | Service agreement [Member] | |||||
Intangible Assets (Textual) | |||||
Payments to service agreements | $ 900,000 | $ 900,000 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Security deposit | $ 155,900 | $ 46,933 |
Prepaid expenses and advances | 80,910 | 34,181 |
Other receivables | 197,598 | |
Others | 57,505 | 24,818 |
Total | $ 491,913 | $ 105,932 |
Prepaid Expenses and Other Cu_4
Prepaid Expenses and Other Current Assets (Details Textual) | 1 Months Ended | 9 Months Ended | ||
Feb. 20, 2020 | Mar. 31, 2020USD ($) | Mar. 31, 2020CNY (¥) | Jun. 30, 2019USD ($) | |
Prepaid Expenses and Other Current Assets (Textual) | ||||
Cooperation agreement, description | Guozhong Times entered an Operation Cooperation Agreement with an unrelated company, Heqin (Beijing) Technology Co, Ltd. (“Heqin”) for marketing and promoting the sale of Face Recognition Payment Processing equipment and related technical support, and other products of the Company. Heqin has a strong sales team and specializes in business marketing and sales channel establishment and expansion. The cooperation term is from February 2, 2020 through March 1, 2023; however, Heqin is the exclusive distributor of the Company’s face Recognition Payment Processing products for the period up to July 30, 2020. During the period of March and April 2020, Guozhong Times will provide the operating fund to Heqin, together with a credit line provided by Guozhong Times to Heqin for the period from May 2020 through August 2020, for total borrowing amount of RMB 10 million ($1.41 million) for Heqin’s operating needs. | |||
Other receivables | $ | $ 197,598 | |||
Minimum [Member] | ||||
Prepaid Expenses and Other Current Assets (Textual) | ||||
Profits of sale of face recognition payment, percent | 30.00% | |||
Maximum [Member] | ||||
Prepaid Expenses and Other Current Assets (Textual) | ||||
Profits of sale of face recognition payment, percent | 70.00% | |||
RMB [Member] | ||||
Prepaid Expenses and Other Current Assets (Textual) | ||||
Other receivables | ¥ | ¥ 1,400,000 |
Accrued Expenses and Other Pa_3
Accrued Expenses and Other Payables (Details) - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 |
Payables and Accruals [Abstract] | ||
Deposit | $ 30,525 | |
Salary and other payables | 178,779 | 234,159 |
Total | $ 178,779 | $ 264,684 |
Accrued Expenses and Other Pa_4
Accrued Expenses and Other Payables (Details Textual) - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 |
Accrued Expenses and Other Payables (Textual) | ||
Salary payable | $ 111,808 | $ 52,551 |
Accrued labilities and other payables | $ 66,971 | $ 52,551 |
Advances from Customers (Detail
Advances from Customers (Details) - USD ($) | Mar. 05, 2018 | Mar. 31, 2020 | Jun. 30, 2019 |
Advances from Customers (Textual) | |||
Agreement expired, description | The term of the agreements is for five years and will expire on March 6, 2023 and July 1, 2023, respectively. | ||
Advances from the sales agents | $ 1,280,000 | ||
Advances from customer | $ 1,361,134 | $ 1,318,897 | |
Description of purchase order ranges | The value of a single purchase order ranges from $1,620 to $2,620 (RMB 11,500 to RMB 18,600). The total value of the 33 agreements is $84,000 (RMB 596,520). Pursuant to the purchase orders, customers shall pay the full amount within 15 days after the purchase order is signed. As of March 31, 2020, Guozhong Times has received $69,500 (RMB493,500). |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jan. 02, 2019 | Apr. 30, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Jun. 30, 2019 | Apr. 22, 2019 |
Related Party Transactions (Textual) | ||||||||
Rent expenses | $ 1,429 | $ 2,197 | $ 3,572 | $ 6,591 | ||||
Car Rental Agreement [Member] | ||||||||
Related Party Transactions (Textual) | ||||||||
Rent expenses | 1,700 | |||||||
Pay operating expenses | 22,288 | |||||||
Zhixin Liu [Member] | ||||||||
Related Party Transactions (Textual) | ||||||||
Amount due to president | $ 86,733 | |||||||
Company borrowed loan | $ 57,000 | |||||||
Zhixin Liu [Member] | RMB [Member] | ||||||||
Related Party Transactions (Textual) | ||||||||
Company borrowed loan | $ 400,000 | |||||||
Zhixin Liu [Member] | Car Rental Agreement [Member] | ||||||||
Related Party Transactions (Textual) | ||||||||
Lease expiration period | December 1, 2019 through December 31, 2020 | |||||||
Rent expenses | $ 700 | |||||||
Agreement term | 2 years | |||||||
Zhixin Liu [Member] | Apartment Rental Agreement [Member] | ||||||||
Related Party Transactions (Textual) | ||||||||
Lease expiration period | May 1, 2019 through April 30, 2020 | |||||||
Rent expenses | $ 2,828 | $ 729 | $ 733 | $ 2,186 | $ 2,197 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | ||||
US federal statutory rates | (21.00%) | (21.00%) | (21.00%) | (21.00%) |
Tax rate difference - current provision | (3.10%) | 6.00% | (3.60%) | 6.00% |
Effect of PRC statutory tax rate | 0.80% | 5.20% | ||
Valuation allowance | 23.30% | 15.00% | 19.40% | 15.00% |
Effective tax rate |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 |
Net deferred tax asset | ||
Deferred tax asset – net operating loss | $ 901,777 | $ 1,199,872 |
Valuation allowance | (901,777) | (1,199,872) |
Net deferred tax asset |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||
Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Mar. 31, 2020 | Mar. 31, 2019 | |
Income Taxes (Textual) | ||||||||
Net operating losses | $ (557,739) | $ (751,032) | $ (396,985) | $ (540,999) | $ (372,278) | $ (371,659) | $ (1,705,757) | $ (1,284,936) |
Corporate tax rate, description | The Company's offshore subsidiary, Shuhai Skill (HK), a HK holding company is subject to 16.5% corporate income tax in HK. Shuhai Beijing received a tax holiday with a 15% corporate income tax rate since it qualified as a high-tech company. Tianjin Information, Xunrui, and Guozhong Times are subject to the regular 25% PRC income tax rate. | |||||||
Net operating loss, description | the Company has approximately $5.17 million of NOL related to its HK holding company, PRC subsidiaries and VIEs that expire in years 2019 through 2023. | |||||||
U.S. federal income tax rate | 21.00% | 21.00% | 21.00% | 21.00% |
Commiments (Details)
Commiments (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |||
Operating lease expense | $ 31,727 | $ 113,211 |
Commiments (Details 1)
Commiments (Details 1) - USD ($) | Mar. 31, 2020 | Jun. 30, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
Right-of-use assets | $ 758,162 | |
Lease liabilities | 348,401 | |
Lease liabilities - noncurrent | $ 421,558 | |
Weighted average remaining lease term | 2 years 5 months 20 days | |
Weighted average discount rate | 5.00% |
Commiments (Details 2)
Commiments (Details 2) | Mar. 31, 2020USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2021 | $ 348,401 |
2022 | 302,774 |
2023 | 175,525 |
Total undiscounted cash flows | 826,700 |
Less: imputed interest | (56,741) |
Present value of lease liabilities | $ 769,959 |
Commiments (Details Textual)
Commiments (Details Textual) | Mar. 20, 2019USD ($) | Mar. 20, 2019CNY (¥) | Aug. 28, 2019 | Jul. 30, 2019USD ($) | Jul. 30, 2019CNY (¥) | Jul. 30, 2019USD ($) | Jul. 30, 2019CNY (¥) |
Operating lease agreement, description | The lease has a term of two-years with expiration date on August 31, 2021, the monthly rent is RMB 14,500 ($2,045), payable every six months in advance. | ||||||
Property Service Agreement [Member] | |||||||
Rent deposit | $ | $ 29,000 | ||||||
Quarterly fee | $ | $ 29,000 | ||||||
Description of lease term | The agreement commenced on August 9, 2019 and will expire on October 8, 2022. | The agreement commenced on August 9, 2019 and will expire on October 8, 2022. | |||||
Property Service Agreement [Member] | RMB [Member] | |||||||
Rent deposit | ¥ | ¥ 202,352 | ||||||
Quarterly fee | ¥ | ¥ 202,352 | ||||||
Operating lease agreement [Member] | |||||||
Monthly rent | $ | $ 735 | $ 29,250 | $ 96,000 | ||||
Lease expired | Mar. 22, 2020 | Mar. 22, 2020 | Oct. 7, 2022 | Oct. 7, 2022 | |||
Renewed term | 1 year | 1 year | |||||
Description of lease term | The lease term started on October 8, 2019 and expire on October 7, 2022. | The lease term started on October 8, 2019 and expire on October 7, 2022. | |||||
Operating lease agreement [Member] | RMB [Member] | |||||||
Monthly rent | ¥ | ¥ 5,200 | ¥ 207,269 | ¥ 677,769 |
Subsequent Events (Details)
Subsequent Events (Details) - Equity Incentive Plan 2018 [Member] - shares | Apr. 30, 2020 | Jun. 30, 2018 |
Subsequent Events (Textual) | ||
Shares authorized for reserve | 4,000,000 | |
Subsequent Event [Member] | ||
Subsequent Events (Textual) | ||
Registration of shares | 4,000,000 |