| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES GOING
CONCERN The accompanying
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
three months ended December 31, 2024 and 2023, the Company had a net loss of approximately $1.14 million and $1.83 million, respectively.
For the six months ended December 31, 2024 and 2023, the Company had a net loss of approximately $3.10 million and $1.86 million, respectively.
The Company had an accumulated deficit of approximately $42.54 million as of December 31, 2024, and negative cash flow from operating
activities of approximately $1.59 million and $5.63 million for the six months ended December 31, 2024 and 2023, respectively.
The historical operating results including recurring losses from operations raise substantial doubt about the Company’s ability
to continue as a going concern. If
deemed necessary, management could seek to raise additional funds by way of admitting strategic investors, or 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 is no assurance
that the Company will be able to obtain funds on commercially acceptable terms, if at all. There is also no assurance that the amount
of funds the Company might raise will enable the Company to complete its initiatives or attain profitable operations. If the Company
is unable to raise additional funding to meet its working capital needs in the future, it may be forced to delay, reduce or cease its
operations. BASIS
OF PRESENTATION AND CONSOLIDATION The 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 Tianjin Information Sea
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 Shuhai Beijing’s 99% owned subsidiary Nanjing Shuhai Equity Investment
Fund Management Co. Ltd. (“Shuhai Nanjing”). During the year ended June 30, 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 December 31, 2024. VARIABLE
INTEREST ENTITY Pursuant
to the 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 of such entity, and therefore the Company is the primary beneficiary of such 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, Tianjin Information, an indirect subsidiary of Datasea 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 Under
the terms of the Operation and Intellectual Property Service Agreement, Shuhai Beijing entrusts Tianjin Information to manage its operations,
manage and control its assets and financial matters, and provide intellectual property services, purchasing management services, marketing
management services and inventory management services to Shuhai Beijing. Shuhai Beijing and its stockholders shall not make any decisions
nor direct the activities of Shuhai Beijing without Tianjin Information’s consent. Stockholders’
Voting Rights Entrustment Agreement Equity
Option Agreement Equity
Pledge Agreement As
of this report date, there were 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 December 31, 2024 and June
30, 2024, and for the three and six months ended December 31, 2024 and 2023, respectively.
December 31, June
30,
Cash $ 82,805 $ 93,154
Accounts receivable 210,980 718,546
Inventory 319,541 119,053
Other current assets 299,182 295,305
Total current assets 912,508 1,226,058
Property and equipment, net 32,363 30,934
Intangible asset, net 453,002 441,485
Right-of-use asset, net 172,158 11,045
Total non-current assets 657,523 483,464
Total assets $ 1,570,031 $ 1,709,522
Accounts payable $ 96,795 $ 765,998
Accrued liabilities and other payables 724,183 713,827
Lease liability 73,816 11,981
Loans payable 1,119,860 1,170,298
Other current liabilities 282,978 150,835
Total current liabilities 2,297,632 2,812,939
Lease liability - noncurrent 110,924 -
Total non-current liabilities 110,924 -
Total liabilities $ 2,408,556 $ 2,812,939
For
the For
the
Revenues $ 20,456,553 $ 11,279,181
Gross profit $ 467,329 $ 101,581
Net loss $ 10,091 $ (486,358 )
For
the For
the
Revenues $ 41,537,647 $ 18,159,924
Gross profit $ 705,463 $ 176,316
Net loss $ 442,099 $ 66,885 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 December 31, 2024, and June 30, 2024, the Company has no such contingencies. CASH Cash
includes cash on hand and demand deposits that are highly liquid in nature and have original maturities when purchased of three months
or less. ACCOUNTS
RECEIVABLE The
Company’s policy is to maintain an allowance for potential credit losses on accounts receivable. The Company adopted Accounting
Standards Update (“ASU”) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of
Credit losses on financial instruments later codified as Accounting Standard codification (“ASC”) 326 (“ASC 326”),
on July 1, 2023. The guidance introduces a revised approach to the recognition and measurement of credit losses, emphasizing an updated
model based on expected losses rather than incurred losses. There was no significant impact on the date of adoption of ASC 326. Under
ASC 326, accounts receivable are recorded at the invoiced amount, net of allowance for expected credit losses. The Company’s primary
allowance for credit losses is the allowance for doubtful accounts. The allowance for doubtful accounts reduces the accounts receivable
balance to the estimated net realizable value. The Company regularly reviews the adequacy of the allowance for credit losses based on
a combination of factors. In establishing any required allowance, management considers historical losses adjusted for current market
conditions, the Company’s customers’ financial condition, the amount of any receivables in dispute, the current receivables
aging, current payment terms and expectations of forward-looking loss estimates. All provisions
for the allowance for doubtful accounts are included as a component of general and administrative expenses on the accompanying consolidated
statements of operations and comprehensive loss. Accounts receivable deemed uncollectible are charged against the allowance for credit
losses when identified. Subsequent recoveries of amounts previously written off are credited to earnings in the period recovered. As of
December 31, 2024 and June 30, 2024, the Company had a $0 bad debt allowance for credit losses. 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 $53,190 and $53,650 allowances for slow-moving and obsolete inventory (mainly for
Smart-Student Identification cards) as of December 31, 2024 and June 30, 2024, 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
Leasehold 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 value of the Company’s short-term financial instruments, such as cash, accounts receivable, prepaid expenses, accounts
payable, unearned revenue, accrued expenses and other payables approximates 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. As
of December 31, 2024 and June 30, 2024, 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 three and six
months ended December 31, 2024 and 2023, 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 the Company will recognize it as revenue when the products are delivered
to the end customers. 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 December 31, 2024 and June 30, 2024. 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 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, with performance obligations identified. The transaction price, such as product selling price, and the service price
to the customer with corresponding performance obligations are fixed upon acceptance of the agreement. The Company recognizes revenue
when it satisfies each performance obligation, 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 each performance
obligations is satisfied. Revenue is recognized net of returns and value-added tax charged to customers. The
following table shows the Company’s revenue by revenue sources:
For the For the
5G
AI Multimodal Digital Business $ 20,085,988 $ 11,276,319
5G
AI Multimodal top up 19,887,721 11,276,319
5G
AI digital technical service 198,267 -
Acoustic
Intelligence Business 43,304 2,862
Ultrasonic
Sound Air Disinfection Equipment 35,076 2,862
Upgraded
Sonic Sterilization and Purification Guardian 5,167 -
Sleep
Monitor 3,061 -
Software
licensing 326,936 -
Other 176 69,288
Total
revenue $ 20,456,404 $ 11,348,469
For
the Six For
the Six
5G
AI Multimodal communication $ 41,161,572 $ 18,156,782
5G
AI Multimodal communication 40,963,305 18,156,782
5G
AI digital technical service 198,267 -
Acoustic
Intelligence Business 45,768 3,142
Ultrasonic
Sound Air Disinfection Equipment 37,540 3,142
Upgraded
Sonic Sterilization and Purification Guardian 5,167 -
Sleep
Monitor 3,061 -
Software
licensing 326,936 -
Smart
City business 3,046 -
Smart
community 3,046 -
Other 176 69,288
Total
revenue $ 41,537,498 $ 18,229,212 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 manner in which management disaggregates a company. Management determined 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 includes 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 three and six months ended December 31, 2024 and 2023 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 December 31, 2024 and June 30, 2024,
the Company had no unrecognized tax positions and no charges during the three and six months ended December 31, 2024 and 2023, and accordingly,
the Company did not recognize any interest or penalties related to unrecognized tax benefits. 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, 2018 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,” governing the accounting for and reporting of noncontrolling
interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions
of this standard indicate, among other things, that NCI (previously referred to as minority interests) be treated as a separate component
of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated
as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially-owned consolidated
subsidiary be allocated to non-controlling interests even when such allocation might result in a deficit balance. 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. On December 20, 2022, Guohao Century acquired a 30% ownership noncontrolling
interests of Zhangxun from Zhengmao Zhang at the price of $0.15 (RMB 1.00). The Company recognized a paid in capital deficit
of $982,014 from this purchase due to continued loss of Zhangxun. Subsequent to this purchase, the Company ultimately holds a 99.9%
ownership of Zhangxun. On July 20, 2023, the Company sold Zhangxun to a third party for RMB 2 ($0.28). Zhangqi
was 1% owned by noncontrolling interest, in November 2023, the Company dissolved Zhangqi. As of December 31, 2023, Shuhai Nanjing
was 1% owned by noncontrolling interest, Shenzhen Acoustic MP was 1% owned by noncontrolling interest, Shuhai Shenzhen Acoustic
was 0.1% owned by noncontrolling interest, Guozhong Times was 0.091% owned by noncontrolling interest, and Guozhong Haoze was 0.091%
owned by noncontrolling interest. During the three months ended December 31, 2024 and 2023, the Company had net income of $8,562 and
net loss of $61 attributable to the noncontrolling interest from continuing operations, respectively. During the six
months ended December 31, 2024 and 2023, the Company had net loss of $118 and $9,993 attributable to the noncontrolling interest
from continuing operations, 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 $116,392 and $100,788 as of December 31, 2024 and June 30, 2024, 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 December 31, 2024 and June 30, 2024, cash of $150,094 and $79,225 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 December 31, 2024 and June 30, 2024, the cash balance of
$1,615 and $1,249 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 financial statements 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 stockhol |
