| 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 its VIE, 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, 2018. The results for the three months ended September 30, 2018 are not necessarily indicative of the results to be expected
for the full year ending June 30, 2019. VARIABLE
INTEREST ENTITY Pursuant
to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Section 810,
“Consolidation” (“ASC 810”), the Company is required to include in its consolidated financial statements,
the financial statements of Shuhai Beijing, its VIE. ASC 810 requires a VIE to be consolidated if the reporting entity 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. 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. VIE
Agreements Operation
and Intellectual Property Service Agreement Shareholders’
Voting Rights Entrustment Agreement Equity
Option Agreement Equity
Pledge Agreement 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 periods. Actual results could differ from those estimates. The significant areas
requiring the use of management estimates include, but are not limited to, the estimated useful life and residual value of property,
plant and equipment, provision for staff benefits, recognition and measurement of deferred income taxes and the valuation allowance
for deferred tax assets. Although these estimates are based on management’s knowledge of current events and actions management
may undertake in the future, actual results may ultimately differ from those estimates and such differences may be material to
our unaudited condensed consolidated financial statements. Contingencies Certain
conditions may exist as of the date the unaudited condensed consolidated financial statements are issued, which may result in
a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s
management and legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment.
In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may
result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted
claims as well as the perceived merits of the amount of relief sought or expected to be sought. If the assessment of a contingency
indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated
liability would be accrued in the Company’s unaudited condensed consolidated financial statements. If
the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable
but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable
and material, would be disclosed. As of September 30, 2018 and June 30, 2018, the Company has no contingencies. Cash
and Cash Equivalents Cash
and cash equivalents include cash on hand, demand deposits and short-term cash investments that are highly liquid in nature and
have original maturities of three months or less. The Company has no cash equivalents as of September 30, 2018 and June 30, 2018. Inventory Inventory,
comprised principally of products purchased that are 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, 2018 and June 30, 2018. Deferred
REGISTRATION Costs The
Company has capitalized certain legal, accounting and other third-party fees that are directly associated with its in-process
registered equity financing as deferred registration cost until such financing is consummated. After consummation of such equity
financing, these costs will be recorded in stockholders’ equity as a reduction of additional paid-in capital generated as
a result of the offering. Should the equity financing for which those costs relate no longer be considered probable of being consummated,
all deferred registration costs will be charged to operating expenses in the statement of operations at such time. The Company
incurred and deferred registration costs of $70,301 and $72,532 as of September 30, 2018 and June 30, 2018, 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 5-10 years
Office equipment 3-5
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 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 to ten 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 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, and loan payable-shareholder, approximate their fair values due to their short maturities. As
of September 30, 2018, 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. 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, 2018, the Company generated no revenue. 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. RESEARCH
AND DEVELOPMENT EXPENSES Research
and development expenses are expensed in the period when they are incurred. For the three months ended September 30, 2018 and
2017, the Company incurred research and development expenses of $62,771 and $94,560, respectively. 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 United States dollars (“USD”) The accounts of the Chinese entities were translated into USD in accordance with
ASC Topic 830 “Foreign Currency Matters.” All assets and liabilities were translated at the exchange rate on the balance
sheet date; stockholders’ equity is translated at historical rates and the statements of operations and cash flows are translated
at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive
income 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 financial statements unless it enters into a new long-term lease. In
September 2017, the FASB issued ASU 2017-13, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842). The main
objective of this pronouncement is to clarify the effective date of the adoption of ASC Topic 606 and ASC Topic 842 and the definition
of public business entity as stipulated in ASU 2014-09 and ASU 2016-02. ASU 2014-09 provides that a public business entity and
certain other specified entities adopt ASC Topic 606 for annual reporting periods beginning after December 15, 2017, including
interim reporting periods within that reporting period. All other entities are required to adopt ASC Topic 606 for annual reporting
periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December
15, 2019. ASU 2016-12 requires that “a public business entity and certain other specified entities adopt ASC Topic 842 for
fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. All other entities are required
to adopt ASC Topic 842 for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after
December 15, 2020”. ASU 2017-13 clarifies that the SEC would not object to certain public business entities electing to
use the non-public business entities effective dates for applying ASC 606 and ASC 842. ASU 2017-13, however, limits such election
to certain public business entities that “otherwise would not meet the definition of a public business entity except for
a requirement to include or inclusion of its financial statements or financial information in another entity’s filings with
the SEC”. 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. | NOTE
3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Deferred
REGISTRATION Costs The
Company defers certain legal, accounting and other third-party fees that are directly associated with in-process equity financings
as deferred registration costs until such financings are consummated. After consummation of the equity financing, these costs
are recorded in stockholders’ equity as a reduction of additional paid-in capital generated as a result of the offering.
Should the equity financing for which those costs relate no longer be considered probable of being consummated, all deferred registration
costs will be charged to operating expenses in the statement of operations at such time. The Company had deferred registration
costs of $72,532 as of June 30, 2018. 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 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 ten 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 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 issuance of common stock and loan payable-shareholder, approximate their fair values due to their
short maturities. As
of June 30, 2018, 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, 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 years ended June 30, 2018 and 2017, one customer accounted for 85.1% and 100% of the Company’s total sales, respectively. 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 years. RESEARCH
AND DEVELOPMENT EXPENSES Research
and development expenses are expensed in the period when they are incurred. For the years ended June 30, 2018 and 2017, the
Company incurred research and development expenses of $361,616 and $203,600, respectively. 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 United States dollars (“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
in other comprehensive income in accordance with FASB ASC Topic 220, “Comprehensive Income.” Gains and losses resulting
from the foreign currency transactions are reflected in the statements of operations. RECENT
ACCOUNTING PRONOUNCEMENTS In
February 2016, the FASB issued ASU 2016-02 Amendments to 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 financial statements unless it enters into a new long-term lease. In
September 2017, the FASB issued ASU 2017-13, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842). The main
objective of this pronouncement is to clarify the effective date of the adoption of ASC Topic 606 and ASC Topic 842 and the definition
of public business entity as stipulated in ASU 2014-09 and ASU 2016-02. ASU 2014-09 provides that a public business entity and
certain other specified entities adopt ASC Topic 606 for annual reporting periods beginning after December 15, 2017, including
interim reporting periods within that reporting period. All other entities are required to adopt ASC Topic 606 for annual reporting
periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December
15, 2019. ASU 2016-12 requires that “a public business entity and certain other specified entities adopt ASC Topic 842 for
fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. All other entities are required
to adopt ASC Topic 842 for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after
December 15, 2020”. ASU 2017-13 clarifies that the SEC would not object to certain public business entities electing to
use the non-public business entities effective dates for applying ASC 606 and ASC 842. ASU 2017-13, however, limits such election
to certain public business entities that “otherwise would not meet the definition of a public business entity except for
a requirement to include or inclusion of its financial statements or financial information in another entity’s filings with
the SEC”. In
January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments
in this ASU clarify 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. Basically, these amendments
provide a screen to determine when a set is not a business. If the screen is not met, the amendments in this ASU first, require
that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly
contribute to the ability to create output and second, remove the evaluation of whether a market participant could replace missing
elements. These amendments take effect for public businesses for fiscal years beginning after December 15, 2017 and interim periods
within those periods, and all other entities should apply these amendments for fiscal years beginning after December 15, 2018,
and interim periods within annual periods beginning after December 15, 2019. 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 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 consolidated financial statements. Management
does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have
a material effect on the accompanying consolidated financial statements. |
