Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Mar. 31, 2022 | May 16, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | DATASEA INC. | |
Trading Symbol | DTSS | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --06-30 | |
Entity Common Stock, Shares Outstanding | 24,324,633 | |
Amendment Flag | false | |
Entity Central Index Key | 0001631282 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-38767 | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 45-2019013 | |
Entity Address, Address Line One | 20th Floor | |
Entity Address, Address Line Two | Tower B | |
Entity Address, Address Line Three | Guorui Plaza 1 Ronghua South Road | |
Entity Address, City or Town | Technological Development Zone Beijing | |
Entity Address, Country | CN | |
Entity Address, Postal Zip Code | 100176 | |
City Area Code | +86 | |
Local Phone Number | 10-56145240 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Security Exchange Name | NASDAQ | |
Entity Interactive Data Current | Yes |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2022 | Jun. 30, 2021 |
CURRENT ASSETS | ||
Cash | $ 1,628,750 | $ 49,676 |
Accounts receivable | 5,521,461 | 1,856 |
Inventory | 247,378 | 194,264 |
Value-added tax prepayment | 66,295 | 171,574 |
Prepaid expenses and other current assets | 381,658 | 468,615 |
Total current assets | 7,845,542 | 885,985 |
NONCURRENT ASSETS | ||
Security deposit for rents | 281,040 | 256,987 |
Long term investment | 63,010 | |
Property and equipment, net | 217,100 | 309,408 |
Intangible assets, net | 1,263,219 | 1,092,147 |
Right-of-use assets, net | 760,957 | 1,350,590 |
Total noncurrent assets | 2,585,326 | 3,009,132 |
TOTAL ASSETS | 10,430,868 | 3,895,117 |
CURRENT LIABILITIES | ||
Accounts payable | 4,874,633 | 174,718 |
Unearned revenue | 255,280 | 189,527 |
Deferred revenue | 72,682 | 46,439 |
Accrued expenses and other payables | 494,185 | 561,674 |
Due to related party | 29,063 | 69,305 |
Loans payable | 1,486,819 | |
Operating lease liabilities | 506,699 | 730,185 |
Total current liabilities | 6,232,542 | 3,258,667 |
NONCURRENT LIABILITIES | ||
Operating lease liabilities | 132,257 | 558,739 |
Total noncurrent liabilities | 132,257 | 558,739 |
TOTAL LIABILITIES | 6,364,799 | 3,817,406 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS’ EQUITY | ||
Common stock, $0.001 par value, 375,000,000 shares authorized, 24,244,130 and 21,474,138 shares issued and outstanding, respectively | 24,244 | 21,474 |
Additional paid-in capital | 20,602,889 | 12,086,788 |
Accumulated comprehensive income | 363,161 | 273,250 |
Accumulated deficit | (16,457,797) | (12,061,858) |
TOTAL COMPANY STOCKHOLDERS’ EQUITY | 4,532,497 | 319,654 |
Noncontrolling interest | (466,428) | (241,943) |
TOTAL EQUITY | 4,066,069 | 77,711 |
TOTAL LIABILITIES AND EQUITY | $ 10,430,868 | $ 3,895,117 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Mar. 31, 2022 | Jun. 30, 2021 |
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 | 24,244,130 | 21,474,138 |
Common stock, outstanding | 24,244,130 | 21,474,138 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Income Statement [Abstract] | ||||
Revenues | $ 6,643,538 | $ 17,686 | $ 16,294,147 | $ 152,925 |
Cost of goods sold | 6,055,134 | 9,912 | 15,395,849 | 66,925 |
Gross profit | 588,404 | 7,774 | 898,298 | 86,000 |
Operating expenses | ||||
Selling | 225,262 | 121,216 | 612,253 | 295,252 |
General and administrative | 1,372,509 | 945,285 | 3,990,789 | 2,377,257 |
Research and development | 248,832 | 207,774 | 968,403 | 537,009 |
Total operating expenses | 1,846,603 | 1,274,275 | 5,571,445 | 3,209,518 |
Loss from operations | (1,258,199) | (1,266,501) | (4,673,147) | (3,123,518) |
Non-operating income (expenses) | ||||
Other income (expenses) | 7,670 | (9,958) | 12,917 | (22,160) |
Interest income | 4,837 | 112 | 37,730 | 1,916 |
Total non-operating income (expenses), net | 12,507 | (9,846) | 50,647 | (20,244) |
Loss before income tax | (1,245,692) | (1,276,347) | (4,622,500) | (3,143,762) |
Income tax | ||||
Loss before noncontrolling interest | (1,245,692) | (1,276,347) | (4,622,500) | (3,143,762) |
Less: (loss) income attributable to noncontrolling interest | 31,720 | (57,347) | (226,561) | (93,902) |
Net loss to the Company | (1,277,412) | (1,219,000) | (4,395,939) | (3,049,860) |
Other comprehensive item | ||||
Foreign currency translation gain (loss) attributable to the Company | 19,919 | (7,072) | 89,911 | 105,471 |
Foreign currency translation gain (loss) attributable to noncontrolling interest | (218) | (192) | 2,076 | (1,582) |
Comprehensive loss attributable to the Company | (1,257,493) | (1,226,072) | (4,306,028) | (2,944,389) |
Comprehensive loss (income) attributable to noncontrolling interest | $ 31,502 | $ (57,539) | $ (224,485) | $ (95,484) |
Basic and diluted net loss per share (in Dollars per share) | $ (0.05) | $ (0.06) | $ (0.18) | $ (0.14) |
Weighted average shares used for computing basic and diluted loss per share (in Shares) | 24,244,130 | 21,470,487 | 23,837,047 | 21,214,197 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) | Common Stock | Additional paid-in capital | Statutory reserves | Accumulated deficit | Accumulated other comprehensive income | Noncontrolling interest | Total |
Balance at Jun. 30, 2020 | $ 20,944 | $ 11,104,666 | $ (7,413,381) | $ 170,207 | $ 3,882,436 | ||
Balance (in Shares) at Jun. 30, 2020 | 20,943,846 | ||||||
Net loss | (866,823) | (866,823) | |||||
Foreign currency translation gain (loss) | 58,479 | 58,479 | |||||
Balance at Sep. 30, 2020 | $ 20,944 | 11,104,666 | (8,280,204) | 228,686 | 3,074,092 | ||
Balance (in Shares) at Sep. 30, 2020 | 20,943,846 | ||||||
Net loss | (964,037) | (36,555) | (964,037) | ||||
Foreign currency translation gain (loss) | 54,064 | (1,390) | 54,064 | ||||
Issuance of common stock | $ 520 | 930,480 | 931,000 | ||||
Issuance of common stock (in Shares) | 520,000 | ||||||
Issuance of common stock for subscription agreement entered in prior period | $ 6 | (6) | |||||
Issuance of common stock for subscription agreement entered in prior period (in Shares) | 6,600 | ||||||
Balance at Dec. 31, 2020 | $ 21,470 | 12,035,140 | (9,244,241) | 282,750 | (37,945) | 3,095,119 | |
Balance (in Shares) at Dec. 31, 2020 | 21,470,446 | ||||||
Net loss | (1,219,000) | (57,347) | (1,219,000) | ||||
Foreign currency translation gain (loss) | (7,072) | (192) | (7,072) | ||||
Shares issued for stock compensation expense | $ 4 | 11,996 | 12,000 | ||||
Shares issued for stock compensation expense (in Shares) | 3,692 | ||||||
Increase of paid-in capital for subscription agreement entered in prior period | 30,652 | 30,652 | |||||
Balance at Mar. 31, 2021 | $ 21,474 | 12,077,788 | (10,463,241) | 275,678 | (95,484) | 1,911,699 | |
Balance (in Shares) at Mar. 31, 2021 | 21,474,138 | ||||||
Balance at Jun. 30, 2021 | $ 21,474 | 12,086,788 | (12,061,858) | 273,250 | (241,943) | 319,654 | |
Balance (in Shares) at Jun. 30, 2021 | 21,474,138 | ||||||
Net loss | (1,441,234) | (112,100) | (1,441,234) | ||||
Foreign currency translation gain (loss) | (4,697) | (254) | (4,697) | ||||
Issuance of common stock for equity financing | $ 2,437 | 7,679,359 | 7,681,796 | ||||
Issuance of common stock for equity financing (in Shares) | 2,436,904 | ||||||
Shares issued for stock compensation expense | $ 5 | 164,245 | 164,250 | ||||
Shares issued for stock compensation expense (in Shares) | 5,262 | ||||||
Balance at Sep. 30, 2021 | $ 23,916 | 19,930,392 | (13,503,092) | 268,553 | (354,297) | 6,719,769 | |
Balance (in Shares) at Sep. 30, 2021 | 23,916,304 | ||||||
Net loss | (1,677,293) | (146,181) | (1,677,293) | ||||
Foreign currency translation gain (loss) | 74,689 | 2,548 | 74,689 | ||||
Capital contribution to Shuhai Beijing from a major shareholder | 62,802 | 62,802 | |||||
Shares issued for paying officers’ accrued salary | $ 167 | 258,856 | 259,023 | ||||
Shares issued for paying officers’ accrued salary (in Shares) | 167,112 | ||||||
Shares issued for stock compensation expense | $ 161 | 130,339 | 130,500 | ||||
Shares issued for stock compensation expense (in Shares) | 160,714 | ||||||
Balance at Dec. 31, 2021 | $ 24,244 | 20,382,389 | (15,180,385) | 343,242 | (497,930) | 5,569,490 | |
Balance (in Shares) at Dec. 31, 2021 | 24,244,130 | ||||||
Net loss | (1,277,412) | 31,720 | (1,277,412) | ||||
Foreign currency translation gain (loss) | 19,919 | (218) | 19,919 | ||||
Shares issued for stock compensation expense | 220,500 | 220,500 | |||||
Balance at Mar. 31, 2022 | $ 24,244 | $ 20,602,889 | $ (16,457,797) | $ 363,161 | $ (466,428) | $ 4,532,497 | |
Balance (in Shares) at Mar. 31, 2022 | 24,244,130 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Loss including noncontrolling interest | $ (4,622,500) | $ (3,143,762) |
Adjustments to reconcile loss including noncontrolling interest to net cash used in operating activities: | ||
Loss on disposal on fixed assets | 679 | 9,619 |
Depreciation and amortization | 412,771 | 112,350 |
Bad debt expense | 287,214 | |
Operating lease expense | 654,029 | 588,924 |
Stock compensation expense | 515,250 | 12,000 |
Changes in assets and liabilities: | ||
Accounts receivable | (5,469,460) | (12,380) |
Inventory | (49,239) | (19,278) |
Value-added tax prepayment | 107,320 | (75,765) |
Prepaid expenses and other current assets | (262,428) | (130,638) |
Accounts payable | 4,655,575 | 81,903 |
Advance from customers | 87,041 | 41,823 |
Accrued expenses and other payables | 179,998 | 91,615 |
Payment on operating lease liabilities | (712,738) | (618,366) |
Net cash used in operating activities | (4,216,488) | (3,061,955) |
Cash flows from investing activities: | ||
Acquisition of property and equipment | (32,188) | (103,054) |
Acquisition of intangible assets | (402,118) | (25,934) |
Long-term investment | (62,438) | |
Net cash used in investing activities | (496,744) | (128,988) |
Cash flows from financing activities: | ||
Due to related parties | (40,760) | |
Payment of loan payable | (1,499,291) | 728,824 |
Proceeds from capital contribution from a major shareholder | 62,438 | |
Net proceeds from issuance of common stock | 7,681,796 | 931,000 |
Net cash provided by financing activities | 6,204,183 | 1,659,824 |
Effect of exchange rate changes on cash | 88,123 | 36,360 |
Net increase (decrease) in cash | 1,579,074 | (1,494,759) |
Cash, beginning of period | 49,676 | 1,665,936 |
Cash, end of period | 1,628,750 | 171,177 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | ||
Cash paid for income tax | ||
Supplemental disclosures of non-cash investing and financing activities: | ||
Transfer of prepaid software development expenditure to intangible assets | 50,000 | 1,000,000 |
Right-of-use assets obtained in exchange for new operating lease liabilities | 1,294,315 | |
Shares issued for accrued bonus to officers | $ 259,023 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Mar. 31, 2022 | |
Organization and Description of Business [Abstract] | |
ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS Datasea, Inc. (the “Company” or “Datasea”) is a publicly traded entity with the ticker symbol DTSS on the Nasdaq Capital Market and it was incorporated in Nevada on September 26, 2014. As a holding company with no material operations, the Company conducts a majority of its business activities through organizations established in the People’s Republic of China, or the PRC, primarily by variable interest entity (the “VIE”). The Company does not have any equity ownership of its VIE, instead it controls and receives economic benefits of the VIE’s business operations through certain contractual arrangements. For a description of the Company’s contractual arrangements, please refer to the Company’s annual report on Form 10-K for the year ended June 30, 2021, filed with the Securities and Exchange Commission (the “SEC”) on September 28, 2021. The vision of Datasea is dedicated in providing advanced technology to business and retail customers. Shuhai Information Technology Co., Ltd. (“Shuhai Beijing”), the VIE that through its various subsidiaries, has cutting-edge technology products and solutions in three industries: 5G messaging, acoustic intelligence and smart city are provided. As of the date of this report, Shuhai Beijing and its subsidiaries own 9 Patents and 53 Software Copyrights, with 12 patent applications pending in core technologies to empower and grow the business. Impact of Coronavirus Outbreak In December 2019, a novel strain of coronavirus (COVID-19) was reported, and the World Health Organization declared the outbreak to constitute a “Public Health Emergency of International Concern.” The COVID-19 pandemic has prompted the Company to focus on developing epidemic related products to pursue new business opportunities such as integrating the Company’s security platform and epidemic prevention system for schools and public communities for epidemic prevention. Starting April 2020, the Company resumed normal workflow. Since April 2020 to January 2022, there were some new COVID-19 cases discovered in a few provinces of China, but the number of new cases are not significant due to PRC government’s strict control. Since February 2022, COVID-19 variants cases increased in many cities of China; however, based on available information, management of the Company does not believe that COVID-19 new cases would have a significant impact on the Company’s operations for the rest of fiscal 2022; and does not anticipate any impairment of its assets. Management of the Company believes that its financial resources will be sufficient to handle the challenges associated with COVID-19. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GOING CONCERN The accompanying unaudited consolidated financial statements (“CFS”) 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, 2022 and 2021, the Company had a net loss of approximately $4.40 million and $3.05 million, respectively. For the three months ended March 31, 2022 and 2021, the Company had a net loss of approximately $1.28 million and $1.22 million, respectively. The Company had an accumulated deficit of approximately $16.46 million as of March 31, 2022, and negative cash flow from operating activities of approximately $4.22 million and $3.06 million for the nine months ended March 31, 2022 and 2021, respectively. The historical operating results indicate the Company has recurring losses from operations which raise the question related to the substantial doubt about the Company’s ability to continue as a going concern. There can be no assurance the Company will become profitable or obtain necessary financing for its business or that it will be able to continue in business. The unaudited consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. On July 20, 2021, the Company sold 2,436,904 shares of common stock at $3.48 per share. The net proceeds from the transactions were approximately $7,640,000, after deducting offering costs. If deemed necessary, management could seek to raise additional funds by way of private or public offerings, or by seeking to obtain loans from banks or others, to support the Company’s research and development (“R&D”), procurement, marketing and daily operation. While management of the Company believes in the viability of its strategy to generate sufficient revenues and 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 depends 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. There can be no assurance the Company will be successful in any future fund raising. Based on the Company’s most recent cash flows projection and working capital requirements, management of the Company believes that the Company will be able to continue to operate as a going concern in the foreseeable future and it will have sufficient working capital to meet its operating needs for at least the next 12 months. BASIS OF PRESENTATION AND CONSOLIDATION The accompanying unaudited consolidated financial statements (“CFS”) were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding CFS. The accompanying CFS include the financial statements of the Company and its 100% owned subsidiaries Shuhai Information Skill (HK) Limited (“Shuhai Skill (HK)”), and Shuhai Information Technology Co., Ltd. (“Tianjin Information”), and its VIE, Shuhai Beijing, and Shuhai Beijing’s 100% owned subsidiaries – Heilongjiang Xunrui Technology Co. Ltd. (“Xunrui”), Guozhong Times (Beijing) Technology Ltd. (“Guozhong Times”), Guohao Century (Beijing) Technology Ltd. (“Guohao Century”), Guozhong Haoze, and Shuhai Jingwei (Shenzhen) Information Technology Co., Ltd. (“Jingwei”), and Guohao Century’s 99% owned subsidiary – Hangzhou Zhangqi Business Management Partnership (“Zhangqi”, a limited partnership) and 69.81% owned subsidiary – Hangzhou Shuhai Zhangxun Information Technology Co., Ltd. (“Zhangxun”) which consisted of 51% ownership from Guohao Century and 19% ownership from Zhangqi, and Shuhai Beijing’s 99% owned subsidiary - Nanjing Shuhai Equity Investment Fund Management Co. Ltd. (“Shuhai Nanjing”). During the quarter ended March 31, 2022, the Company incorporated two new subsidiaries Shuhai (Shenzhen) Acoustic Effect Technology Co., Ltd (“Shuhai Acoustic”) and Shenzhen Acoustic Effect Management Partnership (“Shenzhen Acoustic MP”). All significant inter-company transactions and balances were eliminated in consolidation. The chart below depicts the corporate structure of the Company as of the date of this report. 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 CFS, 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 were included in the accompanying CFS. 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 Equity Pledge Agreement Risk Factors relating to VIE Structure Datasea Inc., the U.S. parent company, is a holding company with no material operations of its own. The Company conducts its operations in China through its VIE - Shuhai Beijing and its subsidiaries. Investors are not investing in the VIE. Neither the U.S. parent company nor its subsidiaries actually own any share in Shuhai Beijing. Instead, the U.S. parent company controls and receives the economic benefits of Shuhai Beijing business operation through a series of contractual agreements. The Company is subject to certain legal and operational risks associated with being based in China and having a majority of the operations through the contractual arrangements with the VIE. PRC laws and regulations governing the Company’s current business operations are sometimes vague and uncertain, and therefore, these risks may result in a material change in the Company’s operations. The VIE structure is used to replicate foreign investment in Chinese-based companies where Chinese law prohibits direct foreign investment in the operating companies, and that investors may never directly hold equity interests in the Chinese operating entities. In addition, due to the Company’s corporate structure, the Company is subject to risks due to uncertainty of the interpretation and the application of the PRC laws and regulations, including but not limited to limitation on foreign ownership of internet technology companies, and regulatory review of oversea listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the VIE Agreements. As of this report date, there was no dividends paid from the VIE to the U.S. parent company or the shareholders of the Company. There has been no change in facts and circumstances to consolidate the VIE. The following financial statement amounts and balances of the VIE were included in the accompanying CFS as of March 31, 2022 and June 30, 2021, and for the nine and three months ended March 31, 2022 and 2021, respectively. March 31, June 30, Cash $ 1,299,766 $ 26,916 Accounts receivable 5,521,461 1,856 Inventory 242,443 9,522 Other receivables 485,034 489,780 Other current assets 49,240 139,295 Total current assets 7,597,944 667,369 Property and equipment, net 113,058 167,194 Intangible asset, net 360,170 10,984 Right-of-use asset, net 213,791 442,441 Other non-current assets 63,010 16,816 Total non-current assets 750,029 637,435 Total assets $ 8,347,973 $ 1,304,804 Accounts payable $ 4,760,561 $ 12,887 Accrued liabilities and other payables 697,070 559,389 Lease liability 26,203 256,676 Loans payable - 1,455,860 Other current liabilities 341,700 268,527 Total current liabilities 5,825,534 2,553,339 Lease liability - noncurrent - 79,676 Total non-current liabilities - 79,676 Total liabilities $ 5,825,534 $ 2,633,015 For the For the Revenues $ 16,294,147 $ 152,924 Gross profit $ 3,490,824 $ 86,000 Net income (loss) $ 47,729 $ (1,881,939 ) For the For the Revenues $ 6,851,173 $ 17,685 Gross profit $ 2,028,339 $ 7,774 Net income (loss) $ 834,156 $ (785,680 ) USE OF ESTIMATES The preparation of CFS in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the 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 the CFS. CONTINGENCIES Certain conditions may exist as of the date the CFS 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 CFS. 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, 2022 and June 30, 2021, the Company has no such contingencies. CASH AND EQUIVALENTS Cash and equivalents include cash on hand, demand deposits and short-term cash investments that are highly liquid in nature and have original maturities when purchased of three months or less. INVENTORY Inventory is comprised principally of intelligent temperature measurement face recognition terminal and identity information recognition products, and 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 $60,230 and $59,187 allowances for slow-moving and obsolete inventory (mainly for Smart-Student Identification cards) as of March 31, 2022 and June 30, 2021, respectively. 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 3-5 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 three years. FAIR VALUE (“FV”) OF FINANCIAL INSTRUMENTS The carrying amounts of certain of the Company’s financial instruments, including cash and equivalents, accrued liabilities and accounts payable, 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 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 FV, and establishes a three-level valuation hierarchy for disclosures that enhances disclosure requirements for FV 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 FV measurement. The carrying value of the Company’s short-term financial instruments, such as cash, accounts receivable, prepaid expenses, accounts payable, advance from customers, accrued expenses and other payables approximates their FV due to their short maturities. As of March 31, 2022 and June 30, 2021, the Company did not identify any assets or liabilities required to be presented on the balance sheet at FV 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 expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its FV. FV generally is determined using the asset’s expected future undiscounted cash flows or market value, if readily determinable. Assets to be disposed of are reported at the lower of the carrying amount or FV less cost to sell. For the nine and three months ended March 31, 2022 and 2021, there was no impairment loss recognized on long-lived assets. UNEARNED REVENUE The Company records payments received in advance from its customers or sales agents for the Company’s products as unearned revenue, mainly consisting of deposits or prepayment for 5G products from the Company’s sales agencies. These orders normally are delivered based upon contract terms and customer demand, and will recognize as revenue when the products are delivered to the end customers. DEFERRED REVENUE Deferred revenue consists primarily of local government’s financial support under “2020 Harbin Eyas Plan” to Xunrui for technology innovation of developing the Intelligent Campus Security Management Platform. The Company will record the grant as income when it passes local government’s inspection of the project. LEASES The Company determines if an arrangement is a lease at inception under FASB ASC Topic 842. 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. ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets. ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company recognized no impairment of ROU assets as of March 31, 2022 and June 30, 2021. Operating leases are included in operating lease ROU and operating lease liabilities (current and non-current), on the consolidated balance sheets. As of March 31, 2022, the net ROU was $760,957 for the operating leases of the Company’s offices in various cities of China and senior officers’ dormitory in Beijing. As of March 31, 2022, total operating lease liabilities (includes current and noncurrent) were $638,956, which was for the operating leases of the Company’s offices in various cities of China and senior officers’ dormitory in Beijing. REVENUE RECOGNITION The Company follows Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606). The core principle underlying FASB 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 identified when possession of goods and services is transferred to a customer. FASB ASC Topic 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires 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 Company derives its revenues from product sales and 5G messaging service contracts with its customers, with revenues recognized upon delivery of services and products. Persuasive evidence of an arrangement is demonstrated via product sale contracts and professional service contracts, and invoices. The product selling price and the service price to the customer are fixed upon acceptance of the agreement. The Company recognizes revenue when the customer receives the products and passes the inspection and when professional service is rendered to the customer, collectability of payment is probable. These revenues are recognized at a point in time after all performance obligations are satisfied. Revenue is recognized net of returns and value-added tax charged to customers. During the nine and three months ended March 31, 2022, the Company’s revenue of $15.15 million and $5.54 million, respectively, was mainly from 5G messaging services including 5G Short Message Services (“SMS”), 5G integrated message marketing cloud platform (“5G MMCP”) and 5G multi-media video messaging (a value-added service). The related cost for such services provided of $14.38 million and $5.00 million for the nine and three months ended March 31, 2022, respectively, was mainly for the SMS service platform using fee that was provided from third-party mobile virtual network operators (MVNO) that obtains bulk access to network services at wholesale rates from its upstream suppliers or ultimate three major telecommunication and network operators in China, and sell it to downstream customers like Shuhai Beijing and its subsidiary, Hangzhou Zhangxun; and 5G MMCP project development cost. In addition, during the nine and three months ended March 31, 2022, the Company’s revenue of $36,537 and $2,437, respectively, was from Smart City projects which were mainly for the comprehensive security needs of residential communities, schools and commercial enterprises, the related cost for such services provided was $21,360 and $1,860; and $1.10 million was from advertising service with related cost of $1.0 million for the nine and three months ended March 31, 2022. SEGMENT INFORMATION FASB ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the method a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manners in which management disaggregates a company. Management determining the Company’s current operations constitutes a single reportable segment in accordance with ASC 280. The Company’s only business and industry segment is high technology and advanced information systems (“TAIS”). TAIS include smart city solutions that meet the security needs of residential communities, schools and commercial enterprises, and 5G messaging services including 5G SMS, 5G MMCP and 5G multi-media video messaging. All of the Company’s customers are in the PRC and all revenues for the nine and three months ended March 31, 2022 and 2021 were generated from the PRC. All identifiable assets of the Company are located in the PRC. Accordingly, no geographical segments are presented. INCOME TAXES The Company uses the asset and liability method of accounting for income taxes in accordance with FASB 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 FASB 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. FASB 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 FASB ASC Topic 740, when tax returns are filed, it is likely 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. As of March 31, 2022, the Company had no unrecognized tax benefits and no charges during the nine and three months ended March 31, 2022, and accordingly, the Company did not recognize any interest or penalties related to unrecognized tax benefits. There was no accrual for uncertain tax positions as of March 31, 2022. The Company files a U.S. and PRC income tax return. With few exceptions, the Company’s U.S. income tax returns filed for the years ending on June 30, 2018 and thereafter are subject to examination by the relevant taxing authorities; the Company uses calendar year-end for its PRC income tax return filing, PRC income tax returns filed for the years ending on December 31, 2017 and thereafter are subject to examination by the relevant taxing authorities. RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses are expensed in the period when incurred. These costs primarily consist of cost of materials used, salaries paid for the Company’s development department, and fees paid to third parties. NONCONTROLLING INTERESTS The Company follows FASB ASC Topic 810, “Consolidation,” The net income (loss) attributed to NCI was separately designated in the accompanying statements of operations and comprehensive income (loss). Losses attributable to NCI in a subsidiary may exceed a non-controlling interest’s interests in the subsidiary’s equity. The excess attributable to NCIs is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCI balance. As of March 31, 2022, Zhangxun was 30.19% owned by noncontrolling interest, Zhangqi was 1% owned by noncontrolling interest, and Shuhai Nanjing was 1% owned by noncontrolling interest, Shenzhen Acoustic MP was 1% owned by noncontrolling interest, Shenzhen Acoustic was 30.1% owned by noncontrolling interest. During the nine months ended March 31, 2022 and 2021, the Company had loss of $226,561 and $93,902 attributable to the noncontrolling interest, respectively. During the three months ended March 31, 2022 and 2021, the Company had income of $31,720 and net loss of $57,347 attributable to the noncontrolling interest, 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 ($76,000) is covered by insurance. Should any institution 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 $1,549,718 and $32,687 as of March 31, 2022 and June 30, 2021, respectively, was held in accounts at financial institutions located in the PRC‚ which is not freely convertible into foreign currencies. Cash held in accounts at U.S. financial institutions is insured by the Federal Deposit Insurance Corporation or other programs subject to certain limitations up to $250,000 per depositor. As of March 31, 2022, cash of $72,651 was maintained at U.S. financial institutions. Cash was maintained at financial institutions in Hong Kong, and was insured by the Hong Kong Deposit Protection Board up to a limit of HK $500,000 ($64,000). As of March 31, 2022, the cash balance of $6,381 was maintained at financial institutions in Hong Kong. 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. 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 dollar (“USD”). The accounts of the Chinese entities were translated into USD in accordance with FASB 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 FASB 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 inco |
Property and Equipment
Property and Equipment | 9 Months Ended |
Mar. 31, 2022 | |
Property and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 3 – PROPERTY AND EQUIPMENT Property and equipment are summarized as follows: March 31, June 30, Furniture and fixtures $ 118,863 $ 115,507 Vehicle 551 3,096 Leasehold improvement 246,921 242,643 Office equipment 276,866 246,910 Subtotal 643,201 608,156 Less: accumulated depreciation 426,101 298,748 Total $ 217,100 $ 309,408 Depreciation for the nine months ended March 31, 2022 and 2021 was $127,847 and $104,841, respectively. Depreciation for the three months ended March 31, 2022 and 2021 was $41,506 and $38,819, respectively. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS | NOTE 4 – INTANGIBLE ASSETS Intangible assets are summarized as follows: March 31, June 30, Software registration right $ 81,057 $ 58,157 Patent 418,155 33,634 Software development costs 1,150,000 1,100,000 Value-added telecommunications business license 16,535 16,249 Subtotal 1,665,747 1,208,040 Less: Accumulated amortization 402,528 115,893 Total $ 1,263,219 $ 1,092,147 Software registration right represented the purchase cost of customized software with its source code from third party software developer. Software development cost represented R&D costs incurred internally after the technological feasibility was established and a working model was produced and was recorded as intangible asset. Amortization for the nine months ended March 31, 2022 and 2021 was $284,924 and $7,509, respectively. Amortization for the three months ended March 31, 2022 and 2021 was $137,720 and $5,292, respectively. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Mar. 31, 2022 | |
Prepaid Expenses and Other Current Assets [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, June 30, Security deposit $ - $ 6,956 Prepaid expenses 177,325 53,944 Prepaid software development - 50,000 Prepaid insurance - 39,868 Other receivables - Heqin 579,692 569,651 Advance from third party individual 169,005 - Others 35,328 33,021 Total 961,350 753,440 Less: allowance for other receivables - Heqin 579,692 284,825 Total $ 381,658 $ 468,615 Other receivables - Heqin 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 sales team which used to work with Fortune 500 companies and specializes in business marketing and sales channel establishment and expansion, especially in education industry and public area. It has successful experience of organizing multiple business matchmaking meetings with customers, distributors and retailers. The cooperation term is from February 20, 2020 through March 1, 2023; however, Heqin is the exclusive distributor of the Company’s face Recognition Payment Processing products for the period to July 30, 2020. During March and April 2020, Guozhong Times provided operating funds to Heqin, together with a credit line provided by Guozhong Times to Heqin from May 2020 through August 2020, for a total borrowing of RMB 10 million ($1.41 million) for Heqin’s operating needs. As of December 31, 2021, Guozhong Times had an outstanding receivable of RMB 3.68 million ($577,191) from Heqin and was recorded as other receivables. As of June 30, 2021, Guozhong Times had an outstanding receivable of RMB 3.68 million ($577,191) from Heqin and was recorded as other receivable. The Company would not charge Heqin any interest, except for two loans with RMB 200,000 ($28,250) each, due on June 30, 2020 and August 15, 2020, respectively, for which the Company charges 15% interest if Heqin did not repay by the due date. No profits will be allocated and distributed before full repayment of the borrowing. After Heqin pays in full the borrowing, Guozhong Times and Heqin will distribute 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. As of March 31, 2022 and June 30, 2021, Heqin did not make any repayment to the Company, and the Company made a bad debt allowance of $579,692 and $284,825 as of March 31, 2022 and June 30, 2021, respectively. |
Long Term Investment
Long Term Investment | 9 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
LONG TERM INVESTMENT | NOTE 6 – LONG TERM INVESTMENT In November, 2021, Shuhai Nanjing invested RMB 200,000 ($31,500) for 6.21% stock ownership of a high-tech company in Nanjing City specializing on internet security equipment; Shuhai Nanjing also agreed to invest RMB 300,000 ($47,300) for 3% stock ownership of another high-tech company in Nanjing City specializing on digital market monitoring solutions, and Shuhai Nanjing paid RMB 200,000 ($31,500) as of March 31, 2022. These investments are recorded at cost. As of March 31, 2022, there is no impairment on these investments. |
Accrued Expenses and Other Paya
Accrued Expenses and Other Payables | 9 Months Ended |
Mar. 31, 2022 | |
Accrued Expenses and Other Payables [Abstract] | |
ACCRUED EXPENSES AND OTHER PAYABLES | NOTE 7 – ACCRUED EXPENSES AND OTHER PAYABLES Accrued expenses and other payables consisted of the following: March 31, June 30, Other payables $ 202,404 $ 186,954 Senior officer’s salary payable 26,885 204,332 Salary payable - employees 264,896 170,388 Total $ 494,185 $ 561,674 Other payables mainly consisted of social security and insurance payable. |
Loans Payable
Loans Payable | 9 Months Ended |
Mar. 31, 2022 | |
Loans Payable Disclosure [Abstract] | |
LOANS PAYABLE | NOTE 8 – LOANS PAYABLE As of June 30, 2021, the Company had several loan agreements with an unrelated party for $1,486,819, these loans bear no interest, and are required to be repaid any time before December 31, 2021. The Company repaid the loan in full to the unrelated party by December 31, 2021. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9 – RELATED PARTY TRANSACTIONS In April 2020, the Company’s CEO entered into a one-year apartment rental agreement with the Company for an apartment located in Harbin city as the Company’s branch office with an annual rent of RMB 75,000 ($11,000). The term was from May 1, 2020 through April 30, 2021. On April 30, 2021, Xunrui entered a new one-year lease for this location with the Company’s President for an annual rent of RMB 75,000 ($11,000), The rental expense for this agreement was $8,780 and $8,418 for the nine months ended March 31, 2022 and 2021, respectively. The rental expense for this agreement was $2,950 and $2,881 for the three months ended March 31, 2022 and 2021, respectively. On October 1, 2020, the Company’s CEO entered into an office rental agreement with Xunrui. Pursuant to the agreement, the Company rents an office in Harbin city with a total payment of RMB 163,800 ($24,050) from October 1, 2020 through September 30, 2021. On October 1, 2021, Xunrui entered a new seven-month lease for this location with the Company’s President for total rent of RMB 94,500 ($14,690). The rental expense for this agreement was $19,036 and $6,373, respectively, for the nine and three months ended March 31, 2022. On July 1, 2021, the Company’s CEO entered into a car rental agreement with the Company for one year. Pursuant to the agreement, the Company rents a car from the Company’s CEO for a monthly rent of RMB 18,000 ($2,800), or total payment of $33,400, to be paid in full at once. On September 1, 2021, the Company renewed a one-year lease for senior officers’ dormitory in Beijing, the monthly rent is RMB 15,200 ($2,439), payable every six months in advance. The rental expense for this lease was $16,608 and $7,117 for the nine and three months ended March 31, 2022. On December 24, 2021, the Company’s CEO (also the major shareholder of the Company) contributed RMB 400,000 ($62,802) as capital contribution to Shuhai Beijing. Due to related parties As of March 31, 2022 and June 30, 2021, the Company had due to related parties of $29,063 and $69,305, mainly was for the payable of an office leasing from the Company’s CEO, and certain expenses of the Company that were paid by the CEO and her father (one of the Company’s directors), due to related parties bore no interest and payable upon demand. |
Common Stock and Warrants
Common Stock and Warrants | 9 Months Ended |
Mar. 31, 2022 | |
Common Stock and Warrants [Abstract] | |
COMMON STOCK AND WARRANTS | NOTE 10 – COMMON STOCK AND WARRANTS Private Placement in October 2020 On October 22, 2020, the Company entered into a common stock purchase agreement with Triton Funds LP (“Triton”). Pursuant to the Purchase Agreement, subject to certain conditions set forth in the Purchase Agreement, Triton was obligated, pursuant to a purchase notice by the Company, to purchase up to $2 million of the Company’s common stock from time to time through December 31, 2020. The Company is precluded from submitting a purchase notice to Triton if the closing price is less than $1.65 per share as reported on the Nasdaq Stock Market. The total number of the shares to be purchased under the Agreement shall not exceed 523,596, or 2.5% of the Company’s outstanding shares of common stock on the Agreement’s execution date, subject to the 9.9% beneficial ownership limitation of the Company’s shares of common stock outstanding by Triton. Closing for sales of common stock will occur no later than three business days following the date on which the Purchased Shares are received by Triton’s custodian. In addition, the Company agreed to (i) at the time of the purchase agreement execution remit $10,000 to Triton, and (ii) at the initial closing pay $5,000 to Triton, to reimburse Triton’s expenses related to the transaction. On October 29, 2020, the Company issued a notice to sell 520,000 shares to Triton. On November 11, 2020, the Company and Triton closed the equity financing for the issuance of 520,000 shares of the Company’s common stock at $1.80 per share, the market price on November 11, 2020 was $1.81 per share, the Company received $931,000 proceeds from the financing after deducting $5,000 expenses. Registered Direct Offering and Concurrent Private Placement in July 2021 On July 20, 2021, the Company entered into a securities purchase agreement with certain institutional investors, pursuant to which the Company agreed to sell to such investors an aggregate of 2,436,904 shares of the common stock of the Company at a purchase price of $3.48 per share. The offering of the common stock is pursuant to a shelf registration statement on Form S-3 (File No. 333-239183), which was declared effective by the SEC on June 25, 2020. Concurrently with the sale of the shares of the common stock, the Company also sold warrants to purchase 1,096,608 shares of common stock to such investors. The Company sold the shares of the common stock and the warrants for aggregate gross proceeds of approximately $8,480,426, before commissions and expenses. Subject to certain beneficial ownership limitations, the warrants were immediately exercisable at an exercise price equal to $4.48 per share, and will terminate on the two- and one-half-year anniversary following the initial exercise date of the warrants. The warrants issued in this financing was classified as equity instruments. The Company accounted for the warrants issued in this financing based on the FV method under FASB ASC Topic 505, and the FV of the warrants was calculated using the Black-Scholes model under the following assumptions: life of 2.5 years, volatility of 150%, risk-free interest rate of 0.37% and dividend yield of 0%. The FV of the warrants issued at grant date was $1,986,880. In addition, the Company has also agreed to issue to its placement agent for offering above warrants to purchase a number of shares of the common stock equal to 5.0% of the aggregate number of shares of the common stock sold in this offering (121,845 shares of warrants), the warrants have an exercise price of $3.96 per share and will terminate on the two and one-half-year anniversary of the closing of the offering. The Company accounted for the warrants issued based on the FV method under FASB ASC Topic 505, and the FV of the warrants was calculated using the Black-Scholes model under the following assumptions: life of 2.5 years, volatility of 150%, risk-free interest rate of 0.37% and dividend yield of 0%. The FV of the warrants issued at grant date was $225,964. The warrants issued in this financing was classified as equity instruments. The closing of the sales of these securities under the securities purchase agreement took place on July 22, 2021. The net proceeds from the transactions were approximately $7,640,000, after deducting certain fees due to the placement agent and the Company’s estimated transaction expenses, and has been used for working capital and general corporate purposes, and for the repayment of debt. Following is a summary of the activities of warrants for the period ended March 31, 2022: Number Average Weighted Outstanding as of June 30, 2021 101,500 6.00 3.47 Exercisable as of June 30, 2021 101,500 6.00 3.47 Granted 1,218,453 4.43 2.50 Exercised - - - Forfeited - - - Expired - - - Outstanding as of March 31, 2022 1,319,953 $ 4.55 1.88 Exercisable as of March 31, 2022 1,319,953 $ 4.55 1.88 Shares to Independent Directors as Compensation During the nine months ended March 31, 2022 and 2021, the Company recorded $15,000 and $12,000 stock compensation expense to two independent directors through the issuance of 10,132 and 3,692 shares of the Company’s common stock at market price of the stock issuance date, respectively. During the three months ended March 31, 2022 and 2021, the Company recorded $4,500 and $12,000 stock compensation expense to two independent directors through the issuance of 0 and 3,692 shares of the Company’s common stock at market price of the stock issuance date. Shares to Officers as Compensation On September 24, 2021, under the 2018 Equity Inventive plan, the Company’s Board of Directors granted 15,000 shares of the Company’s common stock to its CEO each month and 10,000 shares to one of the board members each month staring from July 1, 2021, payable quarterly with the aggregate number of shares for each quarter being issued on the first day of the next quarter at a per share price of the closing price of the day prior to the issuance. During the nine and three months ended March 31, 2022, the Company recorded the fair value of $485,250 and $210,000 stock compensation expense for the shares that are issued to the Company’s CEO and one of the board members for the quarter. Shares to a Consultant as Compensation On October 1, 2021, the Company entered into a one-year advisory agreement with a consultant for a monthly compensation of $3,000, payable on a quarterly basis by the issuance of the Company’s shares. The Company issued the consultant 5,844 shares of the Company’s common stock during the nine months ended March 31, 2022. This agreement was terminated on Feb 28 2022. Shares to Officers in Lieu of Salary Payable On December 30, 2021, the Board of Directors approved to issue 167,112 shares to the Company’s CEO and one of the board members in lieu of payment for salary payable of $259,023, the market price of the Company’s shares at December 30, 2021 was $1.55 per share. Amendment for Shares Reserved Under 2018 Equity Incentive Plan On March 17, 2022, the Board of Directors approved the amendment to the Company’s 2018 Equity Incentive Plan to increase the number of the Company’s Common Stock to be reserved from 4,000,000 shares to 14,000,000 shares, such amendment has been approved by the stockholders at the Company’s annual meeting held on April 28, 2022. |
Income Taxes
Income Taxes | 9 Months Ended |
Mar. 31, 2022 | |
Income Tax [Abstract] | |
INCOME TAXES | NOTE 11 – 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 U.S. parent company is subject to U.S. income tax rate of 21% and files U.S. federal income tax return. As of March 31, 2022 and June 30, 2021, the U.S. entity had net operating loss (“NOL”) carry forwards for income tax purposes of $1.98 million and $0.94 million. The NOL arising in tax years beginning after 2017 may reduce 80% of a taxpayer’s taxable income, and be carried forward indefinitely. However, the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”) passed in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. 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, Guozhong Times, Guozhong Haoze, Guohao Century, Jingwei, Shuhai Nanjing, Zhangxun are subject to the regular 25% PRC income tax rate. As of March 31, 2022 and June 30, 2021, the Company has approximately $13.16 million and $9.04 million of NOL from its HK holding company, PRC subsidiaries and VIEs that expire in calendar years 2021 through 2025. 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 depends 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, 2022 and June 30, 2021. The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the nine months ended March 31, 2022 and 2021: 2022 2021 US federal statutory rates (21.0 )% (21.0 )% Tax rate difference – current provision (2.7 )% (3.3 )% Effect of PRC tax holiday (0.7 )% 3.4 % Valuation allowance 24.4 % 20.9 % Effective tax rate - % - % The following table reconciles the U.S. statutory rates to the Company’s effective tax rate for the three months ended March 31, 2022 and 2021: 2022 2021 US federal statutory rates (21.0 )% (21.0 )% Tax rate difference – current provision (2.1 )% (3.4 )% Effect of PRC tax holiday 2.2 % 3.5 % Valuation allowance 20.9 % 20.9 % Effective tax rate - % - % The Company’s net deferred tax assets as of March 31, 2022 and June 30, 2021 is as follows: March 31, June 30, Deferred tax asset Net operating loss $ 2,191,451 $ 1,841,786 R&D expense 123,750 123,750 Accrued expense of officers’ salary - 29,876 Depreciation and amortization 31,907 3,502 Bad debt expense 143,607 69,410 Social security and insurance accrual 30,982 29,949 Inventory impairment 14,921 14,423 ROU, net of lease liabilities 21,596 4,686 Total 2,558,214 2,117,382 Less: valuation allowance (2,558,214 ) (2,117,382 ) Net deferred tax asset $ - $ - |
Commitments
Commitments | 9 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS | NOTE 12 – COMMITMENTS Leases On July 30, 2019, the Company entered into an operating lease for its office in Beijing. Pursuant to the lease, the delivery date of the property was August 8, 2019 but the lease term started on October 8, 2019 and expires on October 7, 2022, and has a monthly rent of RMB 207,269 without value added tax (“VAT”) (or $29,250). The lease required a security deposit of three months’ rent of RMB 677,769 (or $96,000). The Company received a six-month rent abatement, which was considered in calculating the present value of the lease payments to determine the ROU which is being amortized over the term of the lease. 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 $29,000). The deposit was RMB 202,352 (or $29,000). On August 28, 2019, the Company entered an operating lease for senior officers’ dormitory in Beijing. The lease has a term of two years with expiration on August 31, 2021, the monthly rent was RMB 14,500 ($2,045), payable every six months in advance. The lease was renewed for another year from September 1, 2021 to August 31, 2022 at a monthly rent of RMB 15,200 ($2,350), payable every six months in advance. In August 2020, the Company entered into a lease for an office in Shenzhen City, China for three years from August 8, 2020 through August 7, 2023, with a monthly rent of RMB 209,911 ($29,651) for the first year. The rent will increase by 3% each year starting from the second year. On August 26, 2020, Tianjin Information entered into a lease for the office in Hangzhou City, China from September 11, 2020 to October 5, 2022. The first year-rent is RMB 1,383,970 ($207,000). The second-year rent is RMB 1,425,909 ($202,800). The security deposit is RMB 115,311 ($16,400). The total rent for the lease period is to be paid in four installments. The Company adopted FASB ASC Topic 842 on July 1, 2019. The components of lease costs, lease term and discount rate with respect of the Company’s office lease and the senior officers’ dormitory lease with an initial term of more than 12 months are as follows: Nine Months Nine Months Operating lease expense $ 654,029 $ 588,924 Three Months Three Months Operating lease expense $ 218,267 $ 229,856 March 31, Right-of-use assets $ 760,957 Lease liabilities - current 506,699 Lease liabilities - noncurrent 132,257 Weighted average remaining lease term 0.98 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, 2022: 12 Months Ending March 31, Minimum 2023 $ 506,699 2024 133,638 Total undiscounted cash flows 640,337 Less: imputed interest (1,381 ) Present value of lease liabilities $ 638,956 |
Subsequent Events
Subsequent Events | 9 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 13 – 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 unaudited financial statements were issued and determined the Company had no major subsequent event need to be disclosed. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 9 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
GOING CONCERN | GOING CONCERN The accompanying unaudited consolidated financial statements (“CFS”) 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, 2022 and 2021, the Company had a net loss of approximately $4.40 million and $3.05 million, respectively. For the three months ended March 31, 2022 and 2021, the Company had a net loss of approximately $1.28 million and $1.22 million, respectively. The Company had an accumulated deficit of approximately $16.46 million as of March 31, 2022, and negative cash flow from operating activities of approximately $4.22 million and $3.06 million for the nine months ended March 31, 2022 and 2021, respectively. The historical operating results indicate the Company has recurring losses from operations which raise the question related to the substantial doubt about the Company’s ability to continue as a going concern. There can be no assurance the Company will become profitable or obtain necessary financing for its business or that it will be able to continue in business. The unaudited consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties. On July 20, 2021, the Company sold 2,436,904 shares of common stock at $3.48 per share. The net proceeds from the transactions were approximately $7,640,000, after deducting offering costs. If deemed necessary, management could seek to raise additional funds by way of private or public offerings, or by seeking to obtain loans from banks or others, to support the Company’s research and development (“R&D”), procurement, marketing and daily operation. While management of the Company believes in the viability of its strategy to generate sufficient revenues and 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 depends 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. There can be no assurance the Company will be successful in any future fund raising. Based on the Company’s most recent cash flows projection and working capital requirements, management of the Company believes that the Company will be able to continue to operate as a going concern in the foreseeable future and it will have sufficient working capital to meet its operating needs for at least the next 12 months. |
BASIS OF PRESENTATION AND CONSOLIDATION | BASIS OF PRESENTATION AND CONSOLIDATION The accompanying unaudited consolidated financial statements (“CFS”) were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding CFS. The accompanying CFS include the financial statements of the Company and its 100% owned subsidiaries Shuhai Information Skill (HK) Limited (“Shuhai Skill (HK)”), and Shuhai Information Technology Co., Ltd. (“Tianjin Information”), and its VIE, Shuhai Beijing, and Shuhai Beijing’s 100% owned subsidiaries – Heilongjiang Xunrui Technology Co. Ltd. (“Xunrui”), Guozhong Times (Beijing) Technology Ltd. (“Guozhong Times”), Guohao Century (Beijing) Technology Ltd. (“Guohao Century”), Guozhong Haoze, and Shuhai Jingwei (Shenzhen) Information Technology Co., Ltd. (“Jingwei”), and Guohao Century’s 99% owned subsidiary – Hangzhou Zhangqi Business Management Partnership (“Zhangqi”, a limited partnership) and 69.81% owned subsidiary – Hangzhou Shuhai Zhangxun Information Technology Co., Ltd. (“Zhangxun”) which consisted of 51% ownership from Guohao Century and 19% ownership from Zhangqi, and Shuhai Beijing’s 99% owned subsidiary - Nanjing Shuhai Equity Investment Fund Management Co. Ltd. (“Shuhai Nanjing”). During the quarter ended March 31, 2022, the Company incorporated two new subsidiaries Shuhai (Shenzhen) Acoustic Effect Technology Co., Ltd (“Shuhai Acoustic”) and Shenzhen Acoustic Effect Management Partnership (“Shenzhen Acoustic MP”). All significant inter-company transactions and balances were eliminated in consolidation. The chart below depicts the corporate structure of the Company as of the date of this report. |
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 CFS, 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 were included in the accompanying CFS. 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 Equity Pledge Agreement Risk Factors relating to VIE Structure Datasea Inc., the U.S. parent company, is a holding company with no material operations of its own. The Company conducts its operations in China through its VIE - Shuhai Beijing and its subsidiaries. Investors are not investing in the VIE. Neither the U.S. parent company nor its subsidiaries actually own any share in Shuhai Beijing. Instead, the U.S. parent company controls and receives the economic benefits of Shuhai Beijing business operation through a series of contractual agreements. The Company is subject to certain legal and operational risks associated with being based in China and having a majority of the operations through the contractual arrangements with the VIE. PRC laws and regulations governing the Company’s current business operations are sometimes vague and uncertain, and therefore, these risks may result in a material change in the Company’s operations. The VIE structure is used to replicate foreign investment in Chinese-based companies where Chinese law prohibits direct foreign investment in the operating companies, and that investors may never directly hold equity interests in the Chinese operating entities. In addition, due to the Company’s corporate structure, the Company is subject to risks due to uncertainty of the interpretation and the application of the PRC laws and regulations, including but not limited to limitation on foreign ownership of internet technology companies, and regulatory review of oversea listing of PRC companies through a special purpose vehicle, and the validity and enforcement of the VIE Agreements. As of this report date, there was no dividends paid from the VIE to the U.S. parent company or the shareholders of the Company. There has been no change in facts and circumstances to consolidate the VIE. The following financial statement amounts and balances of the VIE were included in the accompanying CFS as of March 31, 2022 and June 30, 2021, and for the nine and three months ended March 31, 2022 and 2021, respectively. March 31, June 30, Cash $ 1,299,766 $ 26,916 Accounts receivable 5,521,461 1,856 Inventory 242,443 9,522 Other receivables 485,034 489,780 Other current assets 49,240 139,295 Total current assets 7,597,944 667,369 Property and equipment, net 113,058 167,194 Intangible asset, net 360,170 10,984 Right-of-use asset, net 213,791 442,441 Other non-current assets 63,010 16,816 Total non-current assets 750,029 637,435 Total assets $ 8,347,973 $ 1,304,804 Accounts payable $ 4,760,561 $ 12,887 Accrued liabilities and other payables 697,070 559,389 Lease liability 26,203 256,676 Loans payable - 1,455,860 Other current liabilities 341,700 268,527 Total current liabilities 5,825,534 2,553,339 Lease liability - noncurrent - 79,676 Total non-current liabilities - 79,676 Total liabilities $ 5,825,534 $ 2,633,015 For the For the Revenues $ 16,294,147 $ 152,924 Gross profit $ 3,490,824 $ 86,000 Net income (loss) $ 47,729 $ (1,881,939 ) For the For the Revenues $ 6,851,173 $ 17,685 Gross profit $ 2,028,339 $ 7,774 Net income (loss) $ 834,156 $ (785,680 ) |
USE OF ESTIMATES | USE OF ESTIMATES The preparation of CFS in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the 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 the CFS. |
CONTINGENCIES | CONTINGENCIES Certain conditions may exist as of the date the CFS 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 CFS. 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, 2022 and June 30, 2021, the Company has no such contingencies. |
CASH AND EQUIVALENTS | CASH AND EQUIVALENTS Cash and equivalents include cash on hand, demand deposits and short-term cash investments that are highly liquid in nature and have original maturities when purchased of three months or less. |
INVENTORY | INVENTORY Inventory is comprised principally of intelligent temperature measurement face recognition terminal and identity information recognition products, and 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 $60,230 and $59,187 allowances for slow-moving and obsolete inventory (mainly for Smart-Student Identification cards) as of March 31, 2022 and June 30, 2021, respectively. |
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 3-5 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 three years. |
FAIR VALUE (“FV”) OF FINANCIAL INSTRUMENTS | FAIR VALUE (“FV”) OF FINANCIAL INSTRUMENTS The carrying amounts of certain of the Company’s financial instruments, including cash and equivalents, accrued liabilities and accounts payable, 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 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 FV, and establishes a three-level valuation hierarchy for disclosures that enhances disclosure requirements for FV 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 FV measurement. The carrying value of the Company’s short-term financial instruments, such as cash, accounts receivable, prepaid expenses, accounts payable, advance from customers, accrued expenses and other payables approximates their FV due to their short maturities. As of March 31, 2022 and June 30, 2021, the Company did not identify any assets or liabilities required to be presented on the balance sheet at FV 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 expected to be generated by the asset. If such assets are considered impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the asset exceeds its FV. FV generally is determined using the asset’s expected future undiscounted cash flows or market value, if readily determinable. Assets to be disposed of are reported at the lower of the carrying amount or FV less cost to sell. For the nine and three months ended March 31, 2022 and 2021, there was no impairment loss recognized on long-lived assets. |
UNEARNED REVENUE | UNEARNED REVENUE The Company records payments received in advance from its customers or sales agents for the Company’s products as unearned revenue, mainly consisting of deposits or prepayment for 5G products from the Company’s sales agencies. These orders normally are delivered based upon contract terms and customer demand, and will recognize as revenue when the products are delivered to the end customers. |
DEFERRED REVENUE | DEFERRED REVENUE Deferred revenue consists primarily of local government’s financial support under “2020 Harbin Eyas Plan” to Xunrui for technology innovation of developing the Intelligent Campus Security Management Platform. The Company will record the grant as income when it passes local government’s inspection of the project. |
LEASES | LEASES The Company determines if an arrangement is a lease at inception under FASB ASC Topic 842. 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. ROU assets are reviewed for impairment when indicators of impairment are present. ROU assets from operating and finance leases are subject to the impairment guidance in ASC 360, Property, Plant, and Equipment, as ROU assets are long-lived nonfinancial assets. ROU assets are tested for impairment individually or as part of an asset group if the cash flows related to the ROU asset are not independent from the cash flows of other assets and liabilities. An asset group is the unit of accounting for long-lived assets to be held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The Company recognized no impairment of ROU assets as of March 31, 2022 and June 30, 2021. Operating leases are included in operating lease ROU and operating lease liabilities (current and non-current), on the consolidated balance sheets. As of March 31, 2022, the net ROU was $760,957 for the operating leases of the Company’s offices in various cities of China and senior officers’ dormitory in Beijing. As of March 31, 2022, total operating lease liabilities (includes current and noncurrent) were $638,956, which was for the operating leases of the Company’s offices in various cities of China and senior officers’ dormitory in Beijing. |
REVENUE RECOGNITION | REVENUE RECOGNITION The Company follows Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (ASC 606). The core principle underlying FASB 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 identified when possession of goods and services is transferred to a customer. FASB ASC Topic 606 requires the use of a new five-step model to recognize revenue from customer contracts. The five-step model requires 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 Company derives its revenues from product sales and 5G messaging service contracts with its customers, with revenues recognized upon delivery of services and products. Persuasive evidence of an arrangement is demonstrated via product sale contracts and professional service contracts, and invoices. The product selling price and the service price to the customer are fixed upon acceptance of the agreement. The Company recognizes revenue when the customer receives the products and passes the inspection and when professional service is rendered to the customer, collectability of payment is probable. These revenues are recognized at a point in time after all performance obligations are satisfied. Revenue is recognized net of returns and value-added tax charged to customers. During the nine and three months ended March 31, 2022, the Company’s revenue of $15.15 million and $5.54 million, respectively, was mainly from 5G messaging services including 5G Short Message Services (“SMS”), 5G integrated message marketing cloud platform (“5G MMCP”) and 5G multi-media video messaging (a value-added service). The related cost for such services provided of $14.38 million and $5.00 million for the nine and three months ended March 31, 2022, respectively, was mainly for the SMS service platform using fee that was provided from third-party mobile virtual network operators (MVNO) that obtains bulk access to network services at wholesale rates from its upstream suppliers or ultimate three major telecommunication and network operators in China, and sell it to downstream customers like Shuhai Beijing and its subsidiary, Hangzhou Zhangxun; and 5G MMCP project development cost. In addition, during the nine and three months ended March 31, 2022, the Company’s revenue of $36,537 and $2,437, respectively, was from Smart City projects which were mainly for the comprehensive security needs of residential communities, schools and commercial enterprises, the related cost for such services provided was $21,360 and $1,860; and $1.10 million was from advertising service with related cost of $1.0 million for the nine and three months ended March 31, 2022. |
SEGMENT INFORMATION | SEGMENT INFORMATION FASB ASC Topic 280, “Segment Reporting,” requires use of the “management approach” model for segment reporting. The management approach model is based on the method a company’s management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manners in which management disaggregates a company. Management determining the Company’s current operations constitutes a single reportable segment in accordance with ASC 280. The Company’s only business and industry segment is high technology and advanced information systems (“TAIS”). TAIS include smart city solutions that meet the security needs of residential communities, schools and commercial enterprises, and 5G messaging services including 5G SMS, 5G MMCP and 5G multi-media video messaging. All of the Company’s customers are in the PRC and all revenues for the nine and three months ended March 31, 2022 and 2021 were generated from the PRC. All identifiable assets of the Company are located in the PRC. Accordingly, no geographical segments are presented. |
INCOME TAXES | INCOME TAXES The Company uses the asset and liability method of accounting for income taxes in accordance with FASB 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 FASB 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. FASB 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 FASB ASC Topic 740, when tax returns are filed, it is likely 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. As of March 31, 2022, the Company had no unrecognized tax benefits and no charges during the nine and three months ended March 31, 2022, and accordingly, the Company did not recognize any interest or penalties related to unrecognized tax benefits. There was no accrual for uncertain tax positions as of March 31, 2022. The Company files a U.S. and PRC income tax return. With few exceptions, the Company’s U.S. income tax returns filed for the years ending on June 30, 2018 and thereafter are subject to examination by the relevant taxing authorities; the Company uses calendar year-end for its PRC income tax return filing, PRC income tax returns filed for the years ending on December 31, 2017 and thereafter are subject to examination by the relevant taxing authorities. |
RESEARCH AND DEVELOPMENT EXPENSES | RESEARCH AND DEVELOPMENT EXPENSES Research and development expenses are expensed in the period when incurred. These costs primarily consist of cost of materials used, salaries paid for the Company’s development department, and fees paid to third parties. |
NONCONTROLLING INTERESTS | NONCONTROLLING INTERESTS The Company follows FASB ASC Topic 810, “Consolidation,” The net income (loss) attributed to NCI was separately designated in the accompanying statements of operations and comprehensive income (loss). Losses attributable to NCI in a subsidiary may exceed a non-controlling interest’s interests in the subsidiary’s equity. The excess attributable to NCIs is attributed to those interests. NCIs shall continue to be attributed their share of losses even if that attribution results in a deficit NCI balance. As of March 31, 2022, Zhangxun was 30.19% owned by noncontrolling interest, Zhangqi was 1% owned by noncontrolling interest, and Shuhai Nanjing was 1% owned by noncontrolling interest, Shenzhen Acoustic MP was 1% owned by noncontrolling interest, Shenzhen Acoustic was 30.1% owned by noncontrolling interest. During the nine months ended March 31, 2022 and 2021, the Company had loss of $226,561 and $93,902 attributable to the noncontrolling interest, respectively. During the three months ended March 31, 2022 and 2021, the Company had income of $31,720 and net loss of $57,347 attributable to the noncontrolling interest, 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 ($76,000) is covered by insurance. Should any institution 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 $1,549,718 and $32,687 as of March 31, 2022 and June 30, 2021, respectively, was held in accounts at financial institutions located in the PRC‚ which is not freely convertible into foreign currencies. Cash held in accounts at U.S. financial institutions is insured by the Federal Deposit Insurance Corporation or other programs subject to certain limitations up to $250,000 per depositor. As of March 31, 2022, cash of $72,651 was maintained at U.S. financial institutions. Cash was maintained at financial institutions in Hong Kong, and was insured by the Hong Kong Deposit Protection Board up to a limit of HK $500,000 ($64,000). As of March 31, 2022, the cash balance of $6,381 was maintained at financial institutions in Hong Kong. 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. |
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 dollar (“USD”). The accounts of the Chinese entities were translated into USD in accordance with FASB 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 FASB 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 CFS were as follows: March 31, March 31, June 30, 2022 2021 2021 Period-end date USD: RMB exchange rate 6.3482 6.5713 6.4601 Average USD for the reporting period: RMB exchange rate 6.4064 6.6820 6.6273 |
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 is 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. For the nine and three months ended March 31, 2021 and 2020, the Company’s basic and diluted loss per share are the same as a result of the Company’s net loss. 1,319,953 and 101,500 warrants were anti-dilutive for the nine months ended March 31, 2022 and 2021, respectively. 1,319,953 and 101,500 warrants were anti-dilutive for the three months ended March 31, 2022 and 2021, respectively. |
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 June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its CFS. In August 2020, the FASB issued ASU 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for convertible debt by eliminating the beneficial conversion and cash conversion accounting models. Upon adoption of ASU 2020-06, convertible debt, unless issued with a substantial premium or an embedded conversion feature that is not clearly and closely related to the host contract, will no longer be allocated between debt and equity components. This modification will reduce the issue discount and result in less non-cash interest expense in financial statements. ASU 2020-06 also updates the earnings per share calculation and requires entities to assume share settlement when the convertible debt can be settled in cash or shares. For contracts in an entity’s own equity, the type of contracts primarily affected by ASU 2020-06 are freestanding and embedded features that are accounted for as derivatives under the current guidance due to a failure to meet the settlement assessment by removing the requirements to (i) consider whether the contract will be settled in registered shares, (ii) consider whether collateral is required to be posted, and (iii) assess shareholder rights. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and only if adopted as of the beginning of such fiscal year. The Company adopted ASU 2020-06 effective July 1, 2021. The adoption of ASU 2020-06 did not have any impact on the Company’s CFS presentation or disclosures. In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt — Modifications and Extinguishments (Subtopic 470-50), Compensation — Stock Compensation (Topic 718), and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40): Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (“ASU 2021-04”). ASU 2021-04 provides guidance as to how an issuer should account for a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option (i.e., a warrant) that remains classified after modification or exchange as an exchange of the original instrument for a new instrument. An issuer should measure the effect of a modification or exchange as the difference between the fair value of the modified or exchanged warrant and the fair value of that warrant immediately before modification or exchange and then apply a recognition model that comprises four categories of transactions and the corresponding accounting treatment for each category (equity issuance, debt origination, debt modification, and modifications unrelated to equity issuance and debt origination or modification). ASU 2021-04 is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the guidance provided in ASU 2021-04 prospectively to modifications or exchanges occurring on or after the effective date. Early adoption is permitted for all entities, including adoption in an interim period. If an entity elects to early adopt ASU 2021-04 in an interim period, the guidance should be applied as of the beginning of the fiscal year that includes that interim period. The adoption of ASU 2021-04 is not expected to have any impact on the Company’s CFS presentation or disclosures. The Company’s management does not believe that any other recently issued, but not yet effective, authoritative guidance, if currently adopted, would have a material impact on the Company’s financial statement presentation or disclosures. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Summary of Significant Accounting Policies (Tables) [Line Items] | |
Schedule of balances of the VIE | March 31, June 30, Cash $ 1,299,766 $ 26,916 Accounts receivable 5,521,461 1,856 Inventory 242,443 9,522 Other receivables 485,034 489,780 Other current assets 49,240 139,295 Total current assets 7,597,944 667,369 Property and equipment, net 113,058 167,194 Intangible asset, net 360,170 10,984 Right-of-use asset, net 213,791 442,441 Other non-current assets 63,010 16,816 Total non-current assets 750,029 637,435 Total assets $ 8,347,973 $ 1,304,804 Accounts payable $ 4,760,561 $ 12,887 Accrued liabilities and other payables 697,070 559,389 Lease liability 26,203 256,676 Loans payable - 1,455,860 Other current liabilities 341,700 268,527 Total current liabilities 5,825,534 2,553,339 Lease liability - noncurrent - 79,676 Total non-current liabilities - 79,676 Total liabilities $ 5,825,534 $ 2,633,015 |
Schedule of depreciation of property and equipment | Furniture and fixtures 3-5 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, 2022 2021 2021 Period-end date USD: RMB exchange rate 6.3482 6.5713 6.4601 Average USD for the reporting period: RMB exchange rate 6.4064 6.6820 6.6273 |
Consolidated Entity, Excluding Consolidated VIE [Member] | |
Summary of Significant Accounting Policies (Tables) [Line Items] | |
Schedule of balances of the VIE | For the For the Revenues $ 16,294,147 $ 152,924 Gross profit $ 3,490,824 $ 86,000 Net income (loss) $ 47,729 $ (1,881,939 ) For the For the Revenues $ 6,851,173 $ 17,685 Gross profit $ 2,028,339 $ 7,774 Net income (loss) $ 834,156 $ (785,680 ) |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Property and Equipment [Abstract] | |
Schedule of property and equipment | March 31, June 30, Furniture and fixtures $ 118,863 $ 115,507 Vehicle 551 3,096 Leasehold improvement 246,921 242,643 Office equipment 276,866 246,910 Subtotal 643,201 608,156 Less: accumulated depreciation 426,101 298,748 Total $ 217,100 $ 309,408 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | March 31, June 30, Software registration right $ 81,057 $ 58,157 Patent 418,155 33,634 Software development costs 1,150,000 1,100,000 Value-added telecommunications business license 16,535 16,249 Subtotal 1,665,747 1,208,040 Less: Accumulated amortization 402,528 115,893 Total $ 1,263,219 $ 1,092,147 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Schedule of prepaid expenses and other current assets | March 31, June 30, Security deposit $ - $ 6,956 Prepaid expenses 177,325 53,944 Prepaid software development - 50,000 Prepaid insurance - 39,868 Other receivables - Heqin 579,692 569,651 Advance from third party individual 169,005 - Others 35,328 33,021 Total 961,350 753,440 Less: allowance for other receivables - Heqin 579,692 284,825 Total $ 381,658 $ 468,615 |
Accrued Expenses and Other Pa_2
Accrued Expenses and Other Payables (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Accrued Expenses and Other Payables [Abstract] | |
Schedule of accrued expenses and other payables | March 31, June 30, Other payables $ 202,404 $ 186,954 Senior officer’s salary payable 26,885 204,332 Salary payable - employees 264,896 170,388 Total $ 494,185 $ 561,674 |
Common Stock and Warrants (Tabl
Common Stock and Warrants (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Common Stock and Warrants [Abstract] | |
Schedule of activities of warrants | Number Average Weighted Outstanding as of June 30, 2021 101,500 6.00 3.47 Exercisable as of June 30, 2021 101,500 6.00 3.47 Granted 1,218,453 4.43 2.50 Exercised - - - Forfeited - - - Expired - - - Outstanding as of March 31, 2022 1,319,953 $ 4.55 1.88 Exercisable as of March 31, 2022 1,319,953 $ 4.55 1.88 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Income Tax [Abstract] | |
Schedule of reconciles the U.S. statutory rates to the company’s effective tax rate | 2022 2021 US federal statutory rates (21.0 )% (21.0 )% Tax rate difference – current provision (2.7 )% (3.3 )% Effect of PRC tax holiday (0.7 )% 3.4 % Valuation allowance 24.4 % 20.9 % Effective tax rate - % - % 2022 2021 US federal statutory rates (21.0 )% (21.0 )% Tax rate difference – current provision (2.1 )% (3.4 )% Effect of PRC tax holiday 2.2 % 3.5 % Valuation allowance 20.9 % 20.9 % Effective tax rate - % - % |
Schedule of net deferred tax assets | March 31, June 30, Deferred tax asset Net operating loss $ 2,191,451 $ 1,841,786 R&D expense 123,750 123,750 Accrued expense of officers’ salary - 29,876 Depreciation and amortization 31,907 3,502 Bad debt expense 143,607 69,410 Social security and insurance accrual 30,982 29,949 Inventory impairment 14,921 14,423 ROU, net of lease liabilities 21,596 4,686 Total 2,558,214 2,117,382 Less: valuation allowance (2,558,214 ) (2,117,382 ) Net deferred tax asset $ - $ - |
Commitments (Tables)
Commitments (Tables) | 9 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of lease costs, lease term and discount rate of office lease | Nine Months Nine Months Operating lease expense $ 654,029 $ 588,924 Three Months Three Months Operating lease expense $ 218,267 $ 229,856 March 31, Right-of-use assets $ 760,957 Lease liabilities - current 506,699 Lease liabilities - noncurrent 132,257 Weighted average remaining lease term 0.98 years Weighted average discount rate 5.00 % |
Schedule of maturities of the operating lease liabilities | 12 Months Ending March 31, Minimum 2023 $ 506,699 2024 133,638 Total undiscounted cash flows 640,337 Less: imputed interest (1,381 ) Present value of lease liabilities $ 638,956 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||||
Oct. 20, 2015 | Mar. 31, 2022USD ($)shares | Mar. 31, 2021USD ($)shares | Mar. 31, 2022USD ($)shares | Mar. 31, 2021USD ($)shares | Mar. 31, 2022CNY (¥) | Mar. 31, 2022HKD ($) | Jul. 20, 2021$ / sharesshares | Jun. 30, 2021USD ($) | |
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Net loss | $ (1,280,000) | $ 1,220,000 | $ 4,400,000 | $ 3,050,000 | |||||
Accumulated deficit | (16,457,797) | (16,457,797) | $ (12,061,858) | ||||||
Negative cash flow from operating activities | $ (4,216,488) | (3,061,955) | |||||||
Shares of common stock (in Shares) | shares | 2,436,904 | ||||||||
Owned subsidiaries, description | The accompanying unaudited consolidated financial statements (“CFS”) were prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding CFS. The accompanying CFS include the financial statements of the Company and its 100% owned subsidiaries Shuhai Information Skill (HK) Limited (“Shuhai Skill (HK)”), and Shuhai Information Technology Co., Ltd. (“Tianjin Information”), and its VIE, Shuhai Beijing, and Shuhai Beijing’s 100% owned subsidiaries – Heilongjiang Xunrui Technology Co. Ltd. (“Xunrui”), Guozhong Times (Beijing) Technology Ltd. (“Guozhong Times”), Guohao Century (Beijing) Technology Ltd. (“Guohao Century”), Guozhong Haoze, and Shuhai Jingwei (Shenzhen) Information Technology Co., Ltd. (“Jingwei”), and Guohao Century’s 99% owned subsidiary – Hangzhou Zhangqi Business Management Partnership (“Zhangqi”, a limited partnership) and 69.81% owned subsidiary – Hangzhou Shuhai Zhangxun Information Technology Co., Ltd. (“Zhangxun”) which consisted of 51% ownership from Guohao Century and 19% ownership from Zhangqi, and Shuhai Beijing’s 99% owned subsidiary - Nanjing Shuhai Equity Investment Fund Management Co. Ltd. (“Shuhai Nanjing”). During the quarter ended March 31, 2022, the Company incorporated two new subsidiaries Shuhai (Shenzhen) Acoustic Effect Technology Co., Ltd (“Shuhai Acoustic”) and Shenzhen Acoustic Effect Management Partnership (“Shenzhen Acoustic MP”). All significant inter-company transactions and balances were eliminated in consolidation. | ||||||||
Net profit, percentage | 100.00% | ||||||||
Equity option agreement description | Pursuant to the terms of the Option Agreement, Tianjin Information and the Shuhai Beijing shareholders agreed to certain restrictive covenants to safeguard the rights of Tianjin Information under the option Agreement. Tianjin Information agreed to pay RMB 1.00 annually to Shuhai Beijing Shareholders to maintain the option rights. Tianjin Information may terminate the Option Agreement upon written notice. The Option Agreement is valid for 10 years from the effective date and renewable at Tianjin Information’s option. | ||||||||
Allowances for slow-moving and obsolete inventory | 60,230 | $ 60,230 | 59,187 | ||||||
Useful life of intangible assets | 3 years | ||||||||
Operating lease right-of-use assets | 760,957 | $ 760,957 | 1,350,590 | ||||||
Operating lease liabilities | 506,699 | 506,699 | 730,185 | ||||||
Revenue | 5,540,000 | 15,150,000 | |||||||
Related cost of services provided | 5,000,000 | 14,380,000 | |||||||
Cost of revenue | 6,055,134 | $ 9,912 | 15,395,849 | 66,925 | |||||
Related cost | 1,860 | 21,360 | |||||||
Advertising service of related cost | $ 1,000,000 | $ 1,100,000 | |||||||
Tax benefit percentage | 50.00% | 50.00% | 50.00% | 50.00% | |||||
Loss of noncontrolling interest, | $ 226,561 | $ 93,902 | |||||||
Cash in state-owned banks | $ 1,628,750 | 1,628,750 | 49,676 | ||||||
Federal Deposit Insurance Corporation | 250,000 | ||||||||
Deposit protection | $ 64,000 | $ 64,000 | $ 500,000 | ||||||
Number of warrants anti dilutive (in Shares) | shares | 1,319,953 | 101,500 | 1,319,953 | 101,500 | |||||
Concentration of Credit Risk [Member] | |||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Cash in state-owned banks | $ 76,000 | $ 76,000 | ¥ 500,000 | ||||||
U.S. financial institutions [Member] | |||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Cash in state-owned banks | 1,549,718 | 1,549,718 | $ 32,687 | ||||||
Cash balance not insured | 72,651 | 72,651 | |||||||
Cash balance | 6,381 | 6,381 | |||||||
Smart City projects [Member] | |||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Cost of revenue | 2,437 | 36,537 | |||||||
Lease Agreements [Member] | |||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Operating lease right-of-use assets | 760,957 | 760,957 | |||||||
Operating lease liabilities | $ 638,956 | 638,956 | |||||||
Consolidated Financial Statement [Member] | |||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Negative cash flow from operating activities | (4,220,000) | $ (3,060,000) | |||||||
Sale of common stock per share (in Dollars per share) | $ / shares | $ 3.48 | ||||||||
Net proceeds | $ 7,640,000 | ||||||||
Zhangxun [Member] | |||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Ownership interest | 30.19% | 30.19% | 30.19% | 30.19% | |||||
Zhangqi [Member] | |||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Ownership interest | 1.00% | 1.00% | 1.00% | 1.00% | |||||
Shuhai Nanjing [Member] | |||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Ownership interest | 1.00% | 1.00% | 1.00% | 1.00% | |||||
Shenzhen Acoustic MP [Member] | |||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Ownership interest | 1.00% | 1.00% | 1.00% | 1.00% | |||||
Shenzhen Acoustic [Member] | |||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Ownership interest | 30.10% | 30.10% | 30.10% | 30.10% | |||||
Shuhai Beijing [Member] | |||||||||
Summary of Significant Accounting Policies (Details) [Line Items] | |||||||||
Net income (loss) of noncontrolling interest, | $ 31,720 | $ 57,347 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of balances of the VIE - USD ($) | 9 Months Ended | 12 Months Ended |
Mar. 31, 2022 | Jun. 30, 2021 | |
Schedule of balances of the VIE [Abstract] | ||
Cash | $ 1,299,766 | $ 26,916 |
Accounts receivable | 5,521,461 | 1,856 |
Inventory | 242,443 | 9,522 |
Other receivables | 485,034 | 489,780 |
Other current assets | 49,240 | 139,295 |
Total current assets | 7,597,944 | 667,369 |
Property and equipment, net | 113,058 | 167,194 |
Intangible asset, net | 360,170 | 10,984 |
Right-of-use asset, net | 213,791 | 442,441 |
Other non-current assets | 63,010 | 16,816 |
Total non-current assets | 750,029 | 637,435 |
Total assets | 8,347,973 | 1,304,804 |
Accounts payable | 4,760,561 | 12,887 |
Accrued liabilities and other payables | 697,070 | 559,389 |
Lease liability | 26,203 | 256,676 |
Loans payable | 1,455,860 | |
Other current liabilities | 341,700 | 268,527 |
Total current liabilities | 5,825,534 | 2,553,339 |
Lease liability - noncurrent | 79,676 | |
Total non-current liabilities | 79,676 | |
Total liabilities | $ 5,825,534 | $ 2,633,015 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of balances of the VIE - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of balances of the VIE [Abstract] | ||||
Revenues | $ 6,851,173 | $ 17,685 | $ 16,294,147 | $ 152,924 |
Gross profit | 2,028,339 | 7,774 | 3,490,824 | 86,000 |
Net income (loss) | $ 834,156 | $ (785,680) | $ 47,729 | $ (1,881,939) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details) - Schedule of depreciation of property and equipment | 9 Months Ended |
Mar. 31, 2022 | |
Furniture and fixtures [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 3 years |
Furniture and fixtures [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 5 years |
Office equipment [Member] | Minimum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 3 years |
Office equipment [Member] | Maximum [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 5 years |
Vehicles [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 5 years |
Lease improvement [Member] | |
Public Utility, Property, Plant and Equipment [Line Items] | |
Estimated useful life (in years) | 3 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details) - Schedule of exchange rates used to translate amounts - RMB [Member] | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 |
Summary of Significant Accounting Policies (Details) - Schedule of exchange rates used to translate amounts [Line Items] | |||
Period-end date USD: RMB exchange rate | 6.3482 | 6.4601 | 6.5713 |
Average USD for the reporting period: RMB exchange rate | 6.4064 | 6.6273 | 6.682 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Property and Equipment [Abstract] | ||||
Depreciation expense | $ 41,506 | $ 38,819 | $ 127,847 | $ 104,841 |
Property and Equipment (Detai_2
Property and Equipment (Details) - Schedule of property and equipment - USD ($) | Mar. 31, 2022 | Jun. 30, 2021 |
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 643,201 | $ 608,156 |
Less: accumulated depreciation | 426,101 | 298,748 |
Total | 217,100 | 309,408 |
Furniture and fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 118,863 | 115,507 |
Vehicle [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 551 | 3,096 |
Leasehold improvement [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | 246,921 | 242,643 |
Office equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 276,866 | $ 246,910 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization expense | $ 137,720 | $ 5,292 | $ 284,924 | $ 7,509 |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of intangible assets - USD ($) | Mar. 31, 2022 | Jun. 30, 2021 |
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Subtotal | $ 1,665,747 | $ 1,208,040 |
Less: Accumulated amortization | 402,528 | 115,893 |
Total | 1,263,219 | 1,092,147 |
Software registration right [Member] | ||
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Subtotal | 81,057 | 58,157 |
Patent [Member] | ||
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Subtotal | 418,155 | 33,634 |
Software development costs [Member] | ||
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Subtotal | 1,150,000 | 1,100,000 |
Value-added telecommunications business license [Member] | ||
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Subtotal | $ 16,535 | $ 16,249 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) | Aug. 15, 2020USD ($) | Aug. 15, 2020CNY (¥) | Feb. 20, 2020 | Jun. 30, 2020USD ($) | Jun. 30, 2020CNY (¥) | Mar. 31, 2022USD ($) | Dec. 31, 2021USD ($) | Dec. 31, 2021CNY (¥) | Jun. 30, 2021USD ($) | Jun. 30, 2021CNY (¥) | Aug. 31, 2020USD ($) | Aug. 31, 2020CNY (¥) |
Prepaid Expenses and Other Current Assets (Details) [Line Items] | ||||||||||||
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 including Epidemic Prevention and Control Systems. Heqin has a sales team which used to work with Fortune 500 companies and specializes in business marketing and sales channel establishment and expansion, especially in education industry and public area. It has successful experience of organizing multiple business matchmaking meetings with customers, distributors and retailers. | |||||||||||
Total borrowing amount | $ 1,410,000 | ¥ 10,000,000 | ||||||||||
Outstanding receivable | $ 577,191 | ¥ 3,680,000 | $ 577,191 | ¥ 3,680,000 | ||||||||
Interest expenses | $ 28,250 | ¥ 200,000 | $ 28,250 | ¥ 200,000 | ||||||||
Interest rate | 15.00% | 15.00% | 15.00% | 15.00% | ||||||||
Bad debt allowance | $ 579,692 | $ 284,825 | ||||||||||
Minimum [Member] | ||||||||||||
Prepaid Expenses and Other Current Assets (Details) [Line Items] | ||||||||||||
Profits of sale of face recognition payment, percent | 30.00% | |||||||||||
Maximum [Member] | ||||||||||||
Prepaid Expenses and Other Current Assets (Details) [Line Items] | ||||||||||||
Profits of sale of face recognition payment, percent | 70.00% |
Prepaid Expenses and Other Cu_4
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other current assets - USD ($) | Mar. 31, 2022 | Mar. 31, 2021 |
Prepaid Expense and Other Assets [Abstract] | ||
Security deposit | $ 6,956 | |
Prepaid expenses | 177,325 | 53,944 |
Prepaid software development | 50,000 | |
Prepaid insurance | 39,868 | |
Other receivables - Heqin | 579,692 | 569,651 |
Advance from third party individual | 169,005 | |
Others | 35,328 | 33,021 |
Total | 961,350 | 753,440 |
Less: allowance for other receivables - Heqin | 579,692 | 284,825 |
Total | $ 381,658 | $ 468,615 |
Long Term Investment (Details)
Long Term Investment (Details) | 1 Months Ended | 9 Months Ended | ||
Nov. 30, 2021USD ($) | Nov. 30, 2021CNY (¥) | Mar. 31, 2022USD ($) | Mar. 31, 2022CNY (¥) | |
Long Term Investment (Details) [Line Items] | ||||
Stock ownership invested | $ (31,500) | ¥ 200,000 | ||
Internet Security Equipment [Member] | ||||
Long Term Investment (Details) [Line Items] | ||||
Stock ownership invested | $ (31,500) | ¥ 200,000 | ||
Stock ownership percentage | 6.21% | 6.21% | ||
Digital Market Monitoring Solutions [Member] | ||||
Long Term Investment (Details) [Line Items] | ||||
Stock ownership invested | $ (47,300) | ¥ 300,000 | ||
Stock ownership percentage | 3.00% | 3.00% |
Accrued Expenses and Other Pa_3
Accrued Expenses and Other Payables (Details) - Schedule of accrued expenses and other payables - USD ($) | Mar. 31, 2022 | Jun. 30, 2021 |
Accrued Expenses and Other Payables [Abstract] | ||
Other payables | $ 202,404 | $ 186,954 |
Senior officer’s salary payable | 26,885 | 204,332 |
Salary payable - employees | 264,896 | 170,388 |
Total | $ 494,185 | $ 561,674 |
Loans Payable (Details)
Loans Payable (Details) | Jun. 30, 2021USD ($) |
Loans Payable Disclosure [Abstract] | |
Loans from unrelated party | $ 1,486,819 |
Related Party Transactions (Det
Related Party Transactions (Details) | Oct. 02, 2021USD ($) | Oct. 02, 2021CNY (¥) | Sep. 02, 2021USD ($) | Sep. 02, 2021CNY (¥) | Jul. 02, 2021USD ($) | Jul. 02, 2021CNY (¥) | Apr. 30, 2021USD ($) | Apr. 30, 2021CNY (¥) | Apr. 20, 2020USD ($) | Apr. 20, 2020CNY (¥) | Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2021CNY (¥) | Dec. 24, 2021USD ($) | Dec. 24, 2021CNY (¥) | Jun. 30, 2021USD ($) |
Related Party Transactions (Details) [Line Items] | |||||||||||||||||||
Rental expense | $ 2,950 | $ 2,881 | |||||||||||||||||
Total rent payment | $ 14,690 | ||||||||||||||||||
Due to related parties | 29,063 | $ 29,063 | $ 69,305 | ||||||||||||||||
Chief Executive Officer [Member] | |||||||||||||||||||
Related Party Transactions (Details) [Line Items] | |||||||||||||||||||
Monthly rent expense | $ (2,800) | ¥ 18,000 | |||||||||||||||||
Monthly rent payment, total | $ 33,400 | ||||||||||||||||||
Chief Executive Officer [Member] | |||||||||||||||||||
Related Party Transactions (Details) [Line Items] | |||||||||||||||||||
Rental expense | 6,373 | 19,036 | |||||||||||||||||
Total rent payment | $ 24,050 | ¥ 163,800 | |||||||||||||||||
Capital contribution | $ 62,802 | ¥ 400,000 | |||||||||||||||||
Beijing [Member] | |||||||||||||||||||
Related Party Transactions (Details) [Line Items] | |||||||||||||||||||
Rental expense | $ 7,117 | 16,608 | |||||||||||||||||
Monthly rent expense | $ (2,439) | ¥ 15,200 | |||||||||||||||||
Apartment Rental Agreement [Member] | |||||||||||||||||||
Related Party Transactions (Details) [Line Items] | |||||||||||||||||||
Annual rent expense | $ (11,000) | ¥ 75,000 | $ (11,000) | ¥ 75,000 | |||||||||||||||
Rental expense | $ 8,780 | $ 8,418 | |||||||||||||||||
Total rent payment | ¥ | ¥ 94,500 |
Common Stock and Warrants (Deta
Common Stock and Warrants (Details) | Dec. 30, 2021USD ($)$ / sharesshares | Jul. 20, 2021$ / sharesshares | Nov. 11, 2020USD ($)$ / sharesshares | Oct. 29, 2020shares | Oct. 22, 2020USD ($)$ / shares | Mar. 31, 2022USD ($)shares | Mar. 31, 2021USD ($)shares | Mar. 31, 2022USD ($)$ / sharesshares | Mar. 31, 2021USD ($)shares | Mar. 17, 2022shares | Oct. 01, 2021USD ($) |
Common Stock and Warrants (Details) [Line Items] | |||||||||||
Number of common stock sold | shares | 520,000 | ||||||||||
Market price per share (in Dollars per share) | $ / shares | $ 1.81 | ||||||||||
Net proceeds from common stock (in Dollars) | $ 7,681,796 | $ 931,000 | |||||||||
Aggregate shares | shares | 2,436,904 | ||||||||||
Purchase shares | shares | 1,096,608 | ||||||||||
Aggregate gross proceeds (in Dollars) | $ 8,480,426 | ||||||||||
Exercise price per share (in Dollars per share) | $ / shares | $ 4.48 | ||||||||||
Assumptions life | 2 years 6 months | ||||||||||
Volatility percentage | 150.00% | ||||||||||
Risk free interest rate percentage | 0.37% | ||||||||||
Dividend yield percentage | 0.00% | ||||||||||
Warrants issued (in Dollars) | $ 1,986,880 | ||||||||||
Description of warrants issued | In addition, the Company has also agreed to issue to its placement agent for offering above warrants to purchase a number of shares of the common stock equal to 5.0% of the aggregate number of shares of the common stock sold in this offering (121,845 shares of warrants), the warrants have an exercise price of $3.96 per share and will terminate on the two and one-half-year anniversary of the closing of the offering. The Company accounted for the warrants issued based on the FV method under FASB ASC Topic 505, and the FV of the warrants was calculated using the Black-Scholes model under the following assumptions: life of 2.5 years, volatility of 150%, risk-free interest rate of 0.37% and dividend yield of 0%. The FV of the warrants issued at grant date was $225,964. | ||||||||||
Stock compensation expenses (in Dollars) | $ 4,500 | $ 12,000 | $ 15,000 | $ 12,000 | |||||||
Common stock shares at market price | shares | 0 | 3,692 | 10,132 | 3,692 | |||||||
Shares to officers description | On September 24, 2021, under the 2018 Equity Inventive plan, the Company’s Board of Directors granted 15,000 shares of the Company’s common stock to its CEO each month and 10,000 shares to one of the board members each month staring from July 1, 2021, payable quarterly with the aggregate number of shares for each quarter being issued on the first day of the next quarter at a per share price of the closing price of the day prior to the issuance. During the nine and three months ended March 31, 2022, the Company recorded the fair value of $485,250 and $210,000 stock compensation expense for the shares that are issued to the Company’s CEO and one of the board members for the quarter. | ||||||||||
Monthly compensation amount (in Dollars) | $ 3,000 | ||||||||||
Common stock shares | shares | 5,844 | 5,844 | |||||||||
Company shares issued | shares | 167,112 | ||||||||||
Board members | 1 | ||||||||||
Payment for salary payable (in Dollars) | $ 259,023 | ||||||||||
Market price per share (in Dollars per share) | $ / shares | $ 1.55 | ||||||||||
Minimum [Member] | |||||||||||
Common Stock and Warrants (Details) [Line Items] | |||||||||||
Common stock | shares | 4,000,000 | ||||||||||
Maximum [Member] | |||||||||||
Common Stock and Warrants (Details) [Line Items] | |||||||||||
Common stock | shares | 14,000,000 | ||||||||||
Securities Purchase Agreement [Member] | |||||||||||
Common Stock and Warrants (Details) [Line Items] | |||||||||||
Purchase price per share (in Dollars per share) | $ / shares | $ 3.48 | ||||||||||
Net proceeds (in Dollars) | $ 7,640,000 | ||||||||||
Triton Funds LP [Member] | |||||||||||
Common Stock and Warrants (Details) [Line Items] | |||||||||||
Purchase of common stock (in Dollars) | $ 2,000,000 | ||||||||||
Closing price per share (in Dollars per share) | $ / shares | $ 1.65 | ||||||||||
Description of common stock agreement | The total number of the shares to be purchased under the Agreement shall not exceed 523,596, or 2.5% of the Company’s outstanding shares of common stock on the Agreement’s execution date, subject to the 9.9% beneficial ownership limitation of the Company’s shares of common stock outstanding by Triton. Closing for sales of common stock will occur no later than three business days following the date on which the Purchased Shares are received by Triton’s custodian. In addition, the Company agreed to (i) at the time of the purchase agreement execution remit $10,000 to Triton, and (ii) at the initial closing pay $5,000 to Triton, to reimburse Triton’s expenses related to the transaction. | ||||||||||
Number of common stock sold | shares | 520,000 | ||||||||||
Common stock, per share (in Dollars per share) | $ / shares | $ 1.8 | ||||||||||
Net proceeds from common stock (in Dollars) | $ 931,000 | ||||||||||
Other expense (in Dollars) | $ 5,000 |
Common Stock and Warrants (De_2
Common Stock and Warrants (Details) - Schedule of activities of warrants - Warrants [Member] | 9 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Common Stock and Warrants (Details) - Schedule of activities of warrants [Line Items] | |
Number of Warrants Outstanding, Beginning balance | shares | 101,500 |
Average Exercise Price Outstanding, Beginning balance | $ / shares | $ 6 |
Weighted Average Remaining Contractual Term in Years Outstanding, Beginning balance | 3 years 5 months 19 days |
Number of Warrants Exercisable, Beginning balance | shares | 101,500 |
Average Exercise Price Exercisable, Beginning balance | $ / shares | $ 6 |
Weighted Average Remaining Contractual Term in Years Exercisable, Beginning balance | 3 years 5 months 19 days |
Number of Warrants, Granted | shares | 1,218,453 |
Average Exercise Price, Granted | $ / shares | $ 4.43 |
Weighted Average Remaining Contractual Term in Years, Granted | 2 years 6 months |
Number of Warrants, Exercised | shares | |
Average Exercise Price, Exercised | $ / shares | |
Number of Warrants, Forfeited | shares | |
Average Exercise Price, Forfeited | $ / shares | |
Number of Warrants, Expired | shares | |
Average Exercise Price, Expired | $ / shares | |
Number of Warrants Outstanding, Ending balance | shares | 1,319,953 |
Average Exercise Price, Outstanding, Ending balance | $ / shares | $ 4.55 |
Weighted Average Remaining Contractual Term in Years Outstanding, Ending balance | 1 year 10 months 17 days |
Number of Warrants Exercisable, Ending balance | shares | 1,319,953 |
Average Exercise Price Exercisable, Ending balance | $ / shares | $ 4.55 |
Weighted Average Remaining Contractual Term in Years Exercisable, Ending balance | 1 year 10 months 17 days |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Mar. 31, 2022 | Jun. 30, 2021 | |
Income Taxes (Details) [Line Items] | ||
U.S. income tax rate | 21.00% | |
Net operating loss | $ 1,980 | $ 940 |
Reduce of taxpayer’s taxable income | 80.00% | |
Description of income tax limitations | However, the Coronavirus Aid, Relief and Economic Security Act (“the CARES Act”) passed in March 2020, provides tax relief to both corporate and noncorporate taxpayers by adding a five-year carryback period and temporarily repealing the 80% limitation for NOLs arising in 2018, 2019 and 2020. | |
Percentage of differed tax asset | 100.00% | |
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, Guozhong Times, Guozhong Haoze, Guohao Century, Jingwei, Shuhai Nanjing, Zhangxun are subject to the regular 25% PRC income tax rate. | |
Expire years, description | PRC subsidiaries and VIEs that expire in calendar years 2021 through 2025. | |
Operating Income (Loss) [Member] | ||
Income Taxes (Details) [Line Items] | ||
Net operating loss | $ 13,160 | $ 9,040 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of reconciles the U.S. statutory rates to the company’s effective tax rate | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of reconciles the U.S. statutory rates to the company’s effective tax rate [Abstract] | ||||
US federal statutory rates | (21.00%) | (21.00%) | (21.00%) | (21.00%) |
Tax rate difference – current provision | (2.10%) | (3.40%) | (2.70%) | (3.30%) |
Effect of PRC tax holiday | 2.20% | 3.50% | (0.70%) | 3.40% |
Valuation allowance | 20.90% | 20.90% | 24.40% | 20.90% |
Effective tax rate |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of net deferred tax assets - USD ($) | Mar. 31, 2022 | Jun. 30, 2021 |
Deferred tax asset | ||
Net operating loss | $ 2,191,451 | $ 1,841,786 |
R&D expense | 123,750 | 123,750 |
Accrued expense of officers’ salary | 29,876 | |
Depreciation and amortization | 31,907 | 3,502 |
Bad debt expense | 143,607 | 69,410 |
Social security and insurance accrual | 30,982 | 29,949 |
Inventory impairment | 14,921 | 14,423 |
ROU, net of lease liabilities | 21,596 | 4,686 |
Total | 2,558,214 | 2,117,382 |
Less: valuation allowance | (2,558,214) | (2,117,382) |
Net deferred tax asset |
Commitments (Details)
Commitments (Details) | 1 Months Ended | |||||||||
Aug. 31, 2020 | Aug. 26, 2020USD ($) | Aug. 28, 2019USD ($) | Aug. 28, 2019CNY (¥) | Jul. 30, 2019USD ($) | Jul. 30, 2019CNY (¥) | Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($) | Aug. 26, 2020CNY (¥) | Jul. 30, 2019CNY (¥) | |
Commitments (Details) [Line Items] | ||||||||||
Lease maturity , description | In August 2020, the Company entered into a lease for an office in Shenzhen City, China for three years from August 8, 2020 through August 7, 2023, with a monthly rent of RMB 209,911 ($29,651) for the first year. | On August 26, 2020, Tianjin Information entered into a lease for the office in Hangzhou City, China from September 11, 2020 to October 5, 2022. | The lease has a term of two years with expiration on August 31, 2021, the monthly rent was RMB 14,500 ($2,045), payable every six months in advance. | The lease has a term of two years with expiration on August 31, 2021, the monthly rent was RMB 14,500 ($2,045), payable every six months in advance. | Pursuant to the lease, the delivery date of the property was August 8, 2019 but the lease term started on October 8, 2019 and expires on October 7, 2022, and has a monthly rent of RMB 207,269 without value added tax (“VAT”) (or $29,250). | Pursuant to the lease, the delivery date of the property was August 8, 2019 but the lease term started on October 8, 2019 and expires on October 7, 2022, and has a monthly rent of RMB 207,269 without value added tax (“VAT”) (or $29,250). | ||||
Security deposit | $ 6,956 | |||||||||
Rent | $ 2,350 | ¥ 15,200 | ||||||||
Increase in rent percentage | 3.00% | |||||||||
Annual rent first year | $ 207,000 | ¥ 1,383,970 | ||||||||
Annual rent second year | 202,800 | 1,425,909 | ||||||||
Security Deposit | $ 16,400 | ¥ 115,311 | ||||||||
Operating Lease Agreement [Member] | ||||||||||
Commitments (Details) [Line Items] | ||||||||||
Monthly rent | $ 29,250 | ¥ 207,269 | ||||||||
Security deposit | ¥ | ¥ 677,769 | |||||||||
Security deposit | $ 96,000 | |||||||||
Description of renewed term | On August 28, 2019, the Company entered an operating lease for senior officers’ dormitory in Beijing. | On August 28, 2019, the Company entered an operating lease for senior officers’ dormitory in Beijing. | ||||||||
Property Service Agreement [Member] | ||||||||||
Commitments (Details) [Line Items] | ||||||||||
Lease maturity , description | 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 $29,000). | 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 $29,000). | ||||||||
Quarterly fee | $ 29,000 | ¥ 202,352 | ||||||||
Rent deposit | $ 29,000 | ¥ 202,352 |
Commitments (Details) - Schedul
Commitments (Details) - Schedule of lease costs, lease term and discount rate of office lease - Commitments [Member] - USD ($) | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | |
Commitments (Details) - Schedule of lease costs, lease term and discount rate of office lease [Line Items] | ||||
Operating lease expense | $ 218,267 | $ 229,856 | $ 654,029 | $ 588,924 |
Right-of-use assets | 760,957 | 760,957 | ||
Lease liabilities - current | 506,699 | 506,699 | ||
Lease liabilities - noncurrent | $ 132,257 | $ 132,257 | ||
Weighted average remaining lease term | 11 months 23 days | 11 months 23 days | ||
Weighted average discount rate | 5.00% | 5.00% |
Commitments (Details) - Sched_2
Commitments (Details) - Schedule of maturities of the operating lease liabilities | Mar. 31, 2022USD ($) |
Schedule of maturities of the operating lease liabilities [Abstract] | |
2023 | $ 506,699 |
2024 | 133,638 |
Total undiscounted cash flows | 640,337 |
Less: imputed interest | (1,381) |
Present value of lease liabilities | $ 638,956 |
Subsequent Events (Details)
Subsequent Events (Details) | 9 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent event, description | The Company evaluated subsequent events through the date the unaudited financial statements were issued and determined the Company had no major subsequent event need to be disclosed. |