| Summary of significant accounting policies | Note 3
– Summary of significant accounting policies Basis
of presentation The
accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”) pursuant to the rules and regulations of the U.S. Securities and Exchange Commission
(“SEC”). Principles
of consolidation The
consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions
and balances among the Company and its subsidiaries have been eliminated upon consolidation. Subsidiaries
are those entities in which the Company, directly or indirectly, controls more than one half of the voting power; or has the power to
govern the financial and operating policies, to appoint or remove the majority of the members of the board of directors, or to cast a
majority of votes at the meeting of directors. Use
of estimates and assumptions The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated
financial statements and the reported amounts of revenues and expenses during the periods presented. Significant accounting estimates
reflected in the Company’s consolidated financial statements required to be made by management include, but not limited to, the
useful lives of property and equipment, impairment of long-lived assets, valuation of share options, share-based compensation, allowance
for deferred tax assets and uncertain tax position. Actual results could differ from these estimates. Risks
and Uncertainties The
Company operates in an industry that is subject to intense competition, government regulations and rapid technological changes. Operations
are subject to significant risk and uncertainties including financial, operational, technological, regulatory, and other risks, including
the potential risk of business failure. Segment Operating
segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly
by the chief operating decision maker (“CODM”), or decision making group, in deciding how to allocate resources and in assessing
performance. The CODM is comprised of certain members of the Company’s management team. The Company has one operating segment.
The Company’s CODM manages the Company’s operations on a consolidated basis for the purpose of allocating resources. All
of the Company’s long-lived assets are held in Hong Kong. Foreign
currency translation and transaction The
reporting currency of the Company is the United States dollar (“$”). The Company conducts its businesses in Hong Kong in
the local currency, Hong Kong Dollar (“HK$”), as its functional currency. The consolidated balance sheet accounts, statement
of operations accounts and equity accounts are all translated at the exchange rate as quoted by the Hong Kong Monetary Authority (“HKMA”).
The Company considers the foreign exchange risk in relation to transactions denominated in HK$ with respect to $ is not significant as
HK$ is pegged to $. The HKMA guarantees to exchange US dollars into Hong Kong dollars, or vice versa, at the rate of HK$7.80 to $1.00. Monetary
assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the
rates of exchange existing at the balance sheet date. Transactions in currencies other than the functional currency during the year are
converted into the functional currency at the applicable rates of exchange prevailing at the transaction date. Transaction gains and
losses are recognized in “other income, net”. Assets and liabilities denominated in foreign currencies are translated at
the exchange rates at the balance sheet date. Equity accounts are translated at historical exchange rates and revenues, expenses, gains
and losses are translated using the average rate for the year. Translation adjustments are reported as cumulative translation adjustments
and are shown as a separate component of other comprehensive loss in the consolidated statements of changes in shareholders’ deficit
and comprehensive loss. Cash
Cash
represents demand deposits placed with banks or other financial institutions, which are unrestricted as to withdrawal or use, and which
have original maturities of three months or less and are readily convertible to known amounts of cash. All of the cash balances as at
June 30, 2021 and 2020, were maintained at financial institutions in Hong Kong, and were insured by the Hong Kong Deposit Protection
Board up to a limit of HK $500,000 (approximately $64,000). Property
and equipment, net Property
and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated
useful lives of the assets. The estimated useful lives are as follows:
Useful Life
Leasehold improvement Shorter of the remaining
lease terms or estimated useful lives The
cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is
included in the consolidated statements of operations and comprehensive loss. Expenditures for maintenance and repairs are charged to
earnings as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized.
The Company also re-evaluates the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates
of useful lives. Prepayment Prepayment
primarily consists of prepayment of a corporate apartment’s rental. Prepayment is classified as current based on the terms of the
respective agreement. This prepayment is unsecured and is reviewed periodically to determine whether their carrying value has become
impaired. Long-term
deposits Long-term
deposits present the deposits paid to the landlords as required on the signing of the lease agreements and thereafter, to be held by
the landlords as security for the performance of the Company’s obligations under the lease agreements. The deposits are classified
as either current or non-current based on the terms of the respective agreement. The deposit is unsecured and is reviewed periodically
to determine whether its carrying value has become impaired. Impairment
for long-lived assets Long-lived
assets, including property and equipment with finite lives are reviewed for impairment whenever events or changes in circumstances (such
as a significant adverse change to market conditions that will impact the future use of the assets) indicate that the carrying value
of an asset may not be recoverable. The Company assesses the recoverability of the assets based on the undiscounted future cash flows
the assets are expected to generate and recognize an impairment loss when estimated undiscounted future cash flows expected to result
from the use of the asset plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset.
If an impairment is identified, the Company would reduce the carrying amount of the asset to its estimated fair value based on a discounted
cash flows approach or, when available and appropriate, to comparable market values. As of June 30, 2021, and 2020, no impairment of
long-lived assets was recognized. Fair
value measurement ASC
825-10 requires certain disclosures regarding the fair value of financial instruments. Fair value is defined as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize
the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are 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, quoted market prices for
identical or similar assets in markets that are not active, inputs other than quoted prices that are observable and inputs derived
from or corroborated by observable market data.
● Level 3 — inputs
to the valuation methodology are unobservable. Unless
otherwise disclosed, the fair value of the Company’s financial instruments including cash, prepayment, accrued expenses, other
payables-related parties and shareholder’s loans approximates their recorded values due to their short-term maturities. The fair
value of the long-term deposit approximates their carrying amounts because the deposit was paid in cash. Research
and development Research
and development costs are charged to operations as incurred. The Company accounts for nonrefundable advance payments for goods and services
that will be used in future research and development activities as expenses when the goods have been received or when the service has
been performed rather than when the payment is made. Research and development expenses consist of costs incurred by the Company for the
discovery and development of the Company’s product candidates. Research and development costs include, but not limited to, payroll
and personnel expenses including stock-based compensation, research studies supplies, fees for research studies services, consulting
costs, and allocated overhead, including rent, equipment, and utilities. Employee
benefit plan Employees
of the Company located in Hong Kong participate in a compulsory saving scheme (pension fund) for the retirement of residents in Hong
Kong. Employees are required to contribute monthly to mandatory provident fund schemes provided by approved private organizations, according
to their salaries and the period of employment. The Company is required to contribute to the plan based on certain percentages of the
employees’ salaries, up to a maximum amount specified by the local government. For the years ended June 30, 2021, 2020 and
2019, the contribution made was approximately $14,512, $9,943 and $9,057, respectively. Operating
leases A
lease for which substantially all the benefits and risks incidental to ownership remain with the lessor is classified by the lessee as
an operating lease. All leases of the Company are currently classified as operating leases. The Company records the total expenses on
a straight-line basis over the lease term. Related
Parties Parties,
which can be a corporation or individual, are considered to be related if the Company has the ability, directly or indirectly, to control
the other party or exercise significant influence over the other party in making financial and operational decisions. Companies are also
considered to be related if they are subject to common control or common significant influence, such as a family member or relative,
shareholder, or a related corporation. Government
grants Government
grants include financial incentives in the form of cash subsidies that involve no conditions or continuing performance obligations of
the Company. Government grants are recognized as other non-operating income upon receipt. Share-based
compensation The
Company accounts for share-based compensation in accordance with ASC 718, Compensation — Stock Compensation (“ASC 718”).
In accordance with ASC 718, the Company determines whether an award should be classified and accounted for as a liability award or an
equity award. All the Company’s share-based awards were classified as equity awards and are recognized in the consolidated financial
statements based on their grant date fair values. The
Company has elected to recognize share-based compensation using the straight-line method for all share-based awards granted with graded
over the requisite service period, which is the vesting period. The Group accounts for forfeitures as they occur in accordance with ASU
No. 2016-09, Compensation — Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting. The Group,
with the assistance of an independent third-party valuation firm, determined the fair value of the stock options granted to employees.
The BlackScholes Model was applied in determining the estimated fair value of the options granted to employees and non-employees. Income
taxes The
Company accounts for current income taxes in accordance with the laws of the relevant tax authorities. Deferred income taxes are recognized
when temporary differences exist between the tax bases of assets and liabilities and their reported amounts in the consolidated financial
statements. 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 income in the period including the enactment date. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized. An
uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained
in a tax examination. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on
examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded. Penalties and interest
incurred related to underpayment of income tax are classified as income tax expense in the period incurred. No significant penalties
or interest relating to income taxes have been incurred during the years ended June 30, 2021, 2020 and 2019. (Loss)
earnings per share The
Company computes (loss) earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share”. ASC 260
requires companies to present basic and diluted EPS. Basic EPS is measured as net income (loss) divided by the weighted average ordinary
share outstanding for the period. Diluted EPS presents the dilutive effect on a per share basis of the potential Ordinary Shares (e.g.,
convertible securities, options and warrants) as if they had been converted at the beginning of the periods presented, or issuance date,
if later. Potential Ordinary Shares that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per
share) are excluded from the calculation of diluted EPS. For the years ended June 30, 2021, 2020 and 2019, there were no dilutive shares. Commitments
and Contingencies In
the normal course of business, the Company is subject to contingencies, including legal proceedings and claims arising out of the business
that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such
contingency if it determines it is probable that a loss has occurred and a reasonable estimate of the loss can be made. The Company may
consider many factors in making these assessments including historical and the specific facts and circumstances of each matter. Concentration
of credit risk Financial
instruments that potentially subject the Company to concentration of credit risks consist primarily of cash, the balances of which are
stated on the consolidated balance sheets which represent the Company’s maximum exposure. The
Company places its cash in good credit quality financial institutions in Hong Kong. The Company deposits its cash in financial institutions
that it believes have high credit quality and have not experienced any losses on such accounts and does not believe it is exposed to
any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Recently
issued accounting pronouncements In
February 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02). ASU 2016-02 requires an entity
to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about the entity’s leasing
arrangements. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.
A modified retrospective approach is required. In January 2018, the FASB issued ASU 2018-01, Leases: Land Easement Practical Expedient
for Transition. This ASU clarifies the accounting and reporting of land easements. In July 2018, the FASB issued ASU No. 2018-10, “Codification
Improvements to Topic 842, Leases,” (“ASU 2018-10”), to clarify how to apply certain aspects of the new lease accounting
standard. The amendments in this update, among other things, better articulates the requirement for a lessee’s reassessment of
lease classification as of the effective date of a modification, clarifies that a change to an index or rate for variable lease payments
does not constitute a resolution of a contingency that would result in the remeasurement of lease payments, and requires entities that
apply Topic 842 retrospectively to each reporting period and do not adopt the practical expedients to write off any prior unamortized
initial direct costs that do not meet the definition under Topic 842 to equity. The amendments in this update have the same effective
date and transition requirements as the new lease standard summarized above. Also, in July 2018, the FASB issued ASU No. 2018-11, “Leases
(Topic 842): Targeted Improvements,” (“ASU 2018-11”), to provide an additional transition method. An entity can now
elect not to present comparative financial information under Topic 842 if it recognizes a cumulative-effect adjustment to retained earnings
upon adoption. On November 15, 2019, the FASB issued ASU 2019-10, which amends the effective dates for certain major new accounting standards,
including Topic 842, to give implementation relief to certain types of entities. In June 2020, ASU 2020-05 defer the effective date for
one year for entities in the “all other” category. For all other entities, the amendments in ASU 2020-05 are effective for
fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. Early application
of the guidance continues to be permitted. As an emerging growth company, the Company can adopt Topic 842 on July 1, 2022. The Company
is evaluating the impact this ASU will have on its consolidated financial statements. In
June 2016, the FASB amended guidance related to the impairment of financial instruments as part of ASU2016-13 Financial Instruments –
Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which was effective from January 1, 2020. The guidance
replaces the incurred loss impairment methodology with an expected credit loss model for which a company recognizes an allowance based
on the estimate of expected credit loss. In November 2018, the FASB issued ASU No. 2018-19, Codification Improvements to Topic 326, Finance–l
Instruments - Credit Losses, which clarified that receivables from operating leases are not within the scope of Topic 326 and instead,
impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842. On May 15, 2019, the FASB
issued ASU 2019-05, 9 which provides transition relief for entities adopting the Board’s credit losses standard, ASU 2016-13. Specifically,
ASU 2019-05 amends ASU 2016-13 to allow companies to irrevocably elect, upon adoption of ASU 2016-13, the fair value option for financial
instruments that (1) were previously recorded at amortized cost and (2) are within the scope of the credit losses guidance in ASC 326-20,
(3) are eligible for the fair value option under ASC 825-10, and (4) are not held-to-maturity debt securities. For entities that have
adopted ASU 2016-13, the amendments in ASU 2019-05 are effective for fiscal years beginning after December 15, 2019, including interim
periods therein. An entity may early adopt the ASU in any interim period after its issuance if the entity has adopted ASU 2016-13. For
all other entities, the effective date will be the same as the effective date of ASU 2016-13. The Company has not yet adopted this pronouncement
and is currently assessing the impact of adopting this standard on its consolidated financial statements. In
August 2018, the FASB Accounting Standards Board issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure
Framework Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”). ASU 2018-13 modifies
the disclosure requirements on fair value measurements. ASU 2018-13 is effective for public entities for fiscal years beginning
after December 15, 2019, with early adoption permitted for any removed or modified disclosures. The removed and modified disclosures
were adopted on a retrospective basis and the new disclosures were adopted on a prospective basis. The Company adopted this
pronouncement on July 1, 2020 and there was no material impact noted on the consolidated financial statements. In
August 2020, the FASB issued ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Except
for the above-mentioned pronouncements, there are no new recent issued accounting standards that will have a material impact on the consolidated
financial position, statements of operations and cash flows. |
