| 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 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 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 consolidated financial statements and notes for the year ended June 30, 2017. The
results of the three month periods ended September 30, 2017 are not necessarily indicative of the results to be expected for the
full year ending June 30, 2018. VARIABLE INTEREST ENTITY Pursuant
to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
Section 810, “Consolidation” (“ASC 810”), the Company is required to include in its consolidated
financial statements, the financial statements of its variable interest entity (“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 is 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. Accordingly, the results of Shuhai Beijing have
been included in the accompanying unaudited condensed consolidated financial statements. Shuhai Beijing has no assets that are
collateral for or restricted solely to settle their obligations. The creditors of Shuhai Beijing do not have recourse to the Company’s
general credit. 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, the estimated useful life and residual value of property, plant and
equipment, provision for staff benefits, recognition and measurement of deferred income taxes and the valuation allowance for
deferred tax assets. Although these estimates are based on management’s knowledge of current events and actions management
may undertake in the future, actual results may ultimately differ from those estimates and such differences may be material to
our unaudited condensed consolidated financial statements. Contingencies Certain conditions
may exist as of the date the unaudited condensed consolidated financial statements are issued, which may result in a loss to the
Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and
legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing
loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such
proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as
well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency indicates
that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability
would be accrued in the Company’s unaudited condensed consolidated financial statements. If the assessment indicates that a potential
material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the
contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed. 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, 2017 and June 30, 2017. Inventory Inventory,
comprised principally of products purchased comprised of routers used in installations, is valued at the lower of cost or net realizable
value. The value of inventory is determined using the first-in, first-out method. The Company periodically estimates an inventory
allowance for estimated unmarketable inventories when necessary. Inventory amounts are reported net of such allowances. There were
no allowances for inventory as of September 30, 2017 and June 30, 2017 . 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 their estimated useful lives or remaining 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. 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. The carrying value of cash, accounts
receivable, inventory, prepaid expenses and other current assets, accounts payable, accrued expenses and other payables, advances
for sale of common stock and loan payable-shareholder, are carried at costs, which approximate their fair values due to their short
maturities. As of September 30, 2017, the Company
did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value on a recurring
basis. IMPAIRMENT OF LONG-LIVED ASSETS In accordance with FASB ASC
360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets such as property, 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 asset exceeds its fair
value. 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 retentions are included in accounts receivable. During the three months ended September
30, 2017, one customer accounted for 100% of the Company’s total sales. INCOME TAXES The Company uses the asset and liability
method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax
expense is recognized for the amount of: (i) taxes payable or refundable for the current period and (ii) deferred tax consequences
of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns.
Deferred tax assets 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 entities are maintained in RMB and the accounts of the U.S. parent company are maintained in USD. The
accounts of the Chinese entities were translated into USD in accordance with ASC Topic 830 “Foreign Currency
Matters.” All assets and liabilities were translated at the exchange rate on the balance sheet date;
stockholders’ equity is translated at historical rates and the statements of operations and cash flows are translated
at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other
comprehensive income in accordance with ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from
the 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 paid-in capital and distributions
to stockholders. RECENT ACCOUNTING PRONOUNCEMENTS In February 2016, the FASB issued ASU
2016-02 Amendments to the ASC 842 Leases. This update requires a lessee to recognize the assets and liability (the lease liability)
arising from operating leases on the balance sheet for the lease term. When measuring assets and liabilities arising from a lease,
a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise
an option to extend the lease or not to exercise an option to terminate the lease. Within a twelve months or less lease term, a
lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. If a lessee makes this
election, it should recognize lease expense on a straight-line basis over the lease term. In transition, this update will be effective
for public entities for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The
Company does not currently expect the adoption of ASU 2016-02 to have a material impact on the Company’s condensed consolidated
financial statements unless it enters into a new long-term lease. In April 2016, the FASB issued ASU
2016-10, Revenue from Contracts with Customers (ASC 606): Identifying Performance Obligations and Licensing. The objective is
to clarify the two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while
retaining the related principles for these areas. The ASU affects the guidance in ASU 2014-09, Revenue from Contracts with Customers
(ASC 606), which is not yet effective. The effective date and transition requirements for this ASU are the same as the effective
date and transition requirements in ASC 606 (and any other Topic amended by ASU 2014-09). ASU 2015-14, Revenue from Contracts
with Customers (ASC 606): Deferral of the Effective Date, defers the effective date of ASU 2014-09 by one year. The Company does
not expect the adoption of ASU 2016-10 to have a material impact on the Company’s condensed consolidated financial statements. In May 2016, the FASB issued ASU 2016-12,
Revenue from Contracts with Customers (ASC 606): Narrow-Scope Improvements and Practical Expedients. The objective is to address
certain issues identified by the FASB-IASB Joint Transition Resource Group for Revenue Recognition. The amendments in this Update
affect the guidance in Accounting Standards Update 2014-09, Revenue from Contracts with Customers (ASC 606), which is not yet effective.
The effective date and transition requirements for the amendments in this Update are the same as the effective date and transition
requirements for ASC 606 (and any other Topic amended by Update 2014-09). Accounting Standards Update 2015-14, Revenue from Contracts
with Customers (ASC 606): Deferral of the Effective Date, defers the effective date of Update 2014-09 by one year. The Company
does not expect the adoption of ASU 2016-12 to have a material impact on the Company’s condensed consolidated financial statements In November 2016, the FASB issued ASU
2016-18, Restricted Cash. The amendments in this update address diversity in practice that exists in the classification and
presentation of changes in restricted cash and require that a statement of cash flows explain the change during the period in the
total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. ASU 2016-18
is effective for the Company beginning January 1, 2018 and is required to be applied using a retrospective transition method to
each period presented. The Company does not expect the adoption of the amendment in this ASU to have a significant impact on the
Company's condensed consolidated financial statements. In January 2017, the FASB issued ASU
2017-01, Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding
guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets
or businesses. The Company does not expect the adoption of the amendment in this ASU to have a significant impact on the Company's
condensed consolidated financial statements. In February 2017, the FASB issued ASU
2017-05, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which
defines the term "in-substance nonfinancial asset" and clarifies the scope and accounting of a financial asset that meets the definition.
ASU 2017-05 also provides guidance for partial sales of nonfinancial assets. The Company does not expect the adoption of the amendment
in this ASU to have a significant impact on the Company's condensed consolidated financial statements. Management does not believe that any
recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying
unaudited condensed consolidated financial statements. |
