| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES Basis
of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements
include the financial statements of the Company and its 100% owned subsidiaries of Shuhai Skill (HK)”), Tianjin Information,
Harbin Information and Shuhai Beijing. The accompanying unaudited
condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments
and elimination of intercompany transactions upon consolidation) which are, in the opinion of management, necessary to fairly present
the operating results for the respective periods. Certain information and footnote disclosures normally present in the annual condensed
consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of
America have been omitted pursuant to such rules and regulations. These unaudited condensed consolidated financial statements should
be read in conjunction with the audited condensed consolidated financial statements and notes for the year ended June 30, 2016.
The results of the three month periods ended September 30, 2016 are not necessarily indicative of the results to be expected for
the full year ending June 30, 2017. USE OF ESTIMATES The preparation of
unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United
States of America 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 period. Actual results could differ from those estimates. The significant areas requiring the
use of management estimates include, but are not limited to, estimated useful life and residual value of property, plant and equipment,
provision for staff benefit, recognition and measurement of deferred income taxes and valuation allowance for deferred tax assets.
Although these estimates are based on management’s knowledge of current events and actions management may undertake in the
future, actual results may ultimately differ from those estimates and such differences may be material to our consolidated financial
statements. Contingencies Certain conditions
may exist as of the date the unaudited condensed consolidated financial statements are issued, which may result in a loss to the
Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and
legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing
loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such
proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as
well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency indicates
that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability
would be accrued in the Company’s financial statements. If the assessment
indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated,
the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would
be disclosed. START-UP
COSTS In accordance with
ASC 720, “Start-up Costs,” the Company expenses all costs incurred in connection with the start-up and organization
of the Company. Cash
and Cash Equivalents Cash and cash equivalents include cash
on hand, demand deposits and short-term cash investments that are highly liquid in nature and have original maturities of three
months or less. The Company has no cash equivalents as of September 30, 2016 and June 30, 2016. PROPERTY AND EQUIPMENT Property and equipment are stated at cost,
less accumulated depreciation. Major repairs and improvements that significantly extend original useful lives or improve productivity
are capitalized and depreciated over the period benefited. Maintenance and repairs are expensed as incurred. When property and
equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts,and
any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method
over estimated useful lives as follows:
Furniture and fixtures 5-10 years
Office equipment 3-5 years Leasehold improvements are depreciated
on a straight-line method over the shorter of estimated useful lives or lease terms. 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 our intangible assets are subject to amortization. The Company acquired Value added telecommunications
business license on September 28, 2015. No impairment of intangible assets has been identified as of the balance sheet dates. Intangible assets include licenses and
certificates and are amortized over their useful life of five years. FAIR VALUE MEASUREMENTS AND DISCLOSURES FASB ASC Topic 820, “Fair Value Measurements,”
defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure
requirements for fair value measures. The three levels are defined as follows:
● Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
● Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
● Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement. Certain of the Company’s financial instruments,
including cash, accrued expenses and other payables, are carried at costs, which approximate their fair values due to their short
maturities. As of September 30, 2016, the Company did not
identify any assets and liabilities that are required to be presented on the balance sheet at fair value on a recurring basis. IMPAIRMENT OF LONG-LIVED ASSETS In accordance with the Financial
Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360-10, Accounting
for the Impairment or Disposal of Long-Lived Assets, long-lived assets such as property, plant 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 industrial
changes. The determination of recoverability of assets to be held and used is made by comparing the carrying amount of an
asset to future undiscounted cash flows to be generated by the assets. If such assets are considered to be impaired,
the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less cost to sell. During the
reporting periods there was no impairment loss recognized on long-lived assets. Revenue Recognition The Company recognizes revenues from
professional services contracts. Customers are billed, according to individual agreements. Revenues from professional
services are recognized on a completed-contract basis, in accordance with ASC Topic 605-35, “Construction-Type and
Production-Type Contracts.” Under the completed-contract basis, contract costs are recorded to projects in process and
billings and/or cash received are recorded to a deferred revenue liability account during the periods of construction. Costs
include direct material, direct labor and subcontract labor. All revenues, costs, and profits are recognized in operations
upon completion of the contract. A contract is considered completed when all costs except insignificant items have been
incurred and final acceptance has been received from the customer. Corporate general and administrative expenses are charged
to the periods as incurred. However, in the event a loss on a contract is foreseen, the Company will recognize the loss as
incurred. For uncompleted contracts, the deferred asset (accumulated contract costs) in excess of the deferred liability
(billings and/or cash received) is classified under current assets as costs in excess of billings on uncompleted contracts.
The deferred liability (billings and/or cash received) in excess of the deferred asset (accumulated contract costs) is
classified under current liabilities as billings in excess of costs on uncompleted contracts. Contract retention are included
in accounts receivable. In January 2016, the Company secured a government
procurement contract with the Bureau of Public Security of Daqing City in Heilongjiang Province. As of September 30, 2016, the
project has not been completed. INCOME TAXES The Company uses the asset and liability
method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income
tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year 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 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. ASC Topic 740.10.30 clarifies the accounting
for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold
and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken
in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in
interim periods, disclosure, and transition. The Company has no material uncertain tax positions for any of the reporting periods
presented. CONCENTRATION OF CREDIT RISK The Company maintains cash in accounts
with state-owned banks within the PRC. Cash in state-owned banks is not covered by insurance. Should any of these institutions
holding the Company’s cash become insolvent, or if the Company is unable to withdraw funds for any reason, the Company could
lose the cash on deposit with that institution. The Company has not experienced any losses in such accounts and believes it is
not exposed to any risks on its cash in these bank accounts. FOREIGN CURRENCY TRANSLATION AND COMPREHENSIVE INCOME
(LOSS) The accounts of the Company’s Chinese subsidiary
are maintained in RMB and the accounts of the U.S. parent company are maintained in USD. The accounts of the Chinese
subsidiary were translated into USD in accordance with Accounting Standards Codification (“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 statement of income items are translated at the
weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive
income in accordance with ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from the foreign
currency transactions are reflected in the statements of income. The Company follows FASB ASC Topic
220-10, “Comprehensive Income.” Comprehensive income comprises net income and all changes to the statements of
stockholders’ equity, except those due to investments by stockholders, changes in paid-in capital and distributions to
stockholders. RECENT ACCOUNTING PRONOUNCEMENTS In November 2015, the FASB issued ASU 2015-17,
"Balance Sheet Classification of Deferred Taxes," which simplifies the presentation of deferred taxes by requiring
that deferred tax assets and liabilities be presented as noncurrent on the balance sheet. ASU 2015-17 is effective for annual reporting
periods, and interim periods therein, beginning after December 15, 2015 (fiscal year 2017 for the Company). The Company adopted
this guidance, prospectively, as of November 30, 2015. In February 2016, the FASB issued ASU 2016-02,
"Leases (Topic 842)" to increase the transparency and comparability about leases among entities. The new guidance requires
lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional
disclosures about leasing arrangements. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018,
and requires a modified retrospective approach to adoption. Early adoption is permitted. The Company is currently evaluating the
impact of this new standard on its consolidated financial statements and related disclosures. In April 2016, FASB issued Accounting Standards
Update No. 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing. The amendments
clarity the following two aspects of Topic 606: (a) identifying performance obligations; and (b) the licensing implementation guidance.
The amendments do not change the core principle of the guidance in Topic 606. The effective date and transition requirements for
the amendments are the same as the effective date and transition requirements in Topic 606. Public entities should apply the amendments
for annual reporting periods beginning after December 15, 2017, including interim reporting periods therein (i.e., January 1, 2018,
for a calendar year entity). Early application for public entities is permitted only as of annual reporting periods beginning after
December 15, 2016, including interim reporting periods within that reporting period. The Company is currently evaluating the impact
of this new standard on its unaudited condensed consolidated financial statements. In May 2016, FASB issued ASU No. 2016-12—Revenue
from Contracts with Customers (Topic 606); Narrow-Scope Improvements and Practical Expedients, which is intended to not change
the core principle of the guidance in Topic 606, but rather affect only the narrow aspects of Topic 606 by reducing the potential
for diversity in practice at initial application and by reducing the cost and complexity of applying Topic 606 both at transition
and on an ongoing basis. The Company is assessing the impact of the adoption of the ASU on its unaudited condensed consolidated
financial statements, disclosure requirements and methods of adoption. |
