Datasea Reports Third Quarter Fiscal Year 2022 Earnings and Provides Business Updates
May 16 2022 - 8:30AM
Datasea Inc. (NASDAQ: DTSS) (“Datasea” or the “Company”),
incorporated in Nevada in September 2014, and a digital technology
corporation engaged in three converging and innovative business
segments: 5G messaging, acoustic intelligence and smart city in
China, today announced financial results for the quarter ended
March 31, 2022 and provided an update on its key strategic and
operational initiatives.
“Datasea delivered record third quarter results with
year-over-year growth, mainly driven by accelerating demand for our
5G messaging solutions. This quarter marked a significant
inflection point to scale and transform Datasea, underscoring our
continued diversification and competitiveness building across 5G
messaging, acoustic intelligence, and smart city businesses,” said
Zhixin Liu, CEO of Datasea. “Moving forward, underpinned
by momentum from increased customer wins,
leadership expansion, great synergy effects among the business
lines, and strong business resilience, Datasea is well-positioned
for future growth.”
Third Quarter 2022 Financial Highlights
- Revenue was $6,643,538 for the three months ended March 31,
2022 compared to 17,686 for the quarter ended March 31, 2021
representing an increase of $6,625,852, or 37463%.
- Gross profit was $588,404 for the three months ended March 31,
2022 compared to $7,774 for the three months ended March 31, 2021,
representing an increase of $580,630 or 7469%. The increase in
gross profit was mainly due to the delivery of services related to
the 5G SMS service platform in 2022.
- R&D expenses were $248,832 for the three months ended March
31, 2022 compared to $207,774 for the three months ended March 31,
2021, representing an increase of $41,058, or 19.76%.
- More than $17.05 million worth of 5G messaging business
contracts have been signed.
Third Quarter 2022 Business Highlights
5G Messaging
- Client expansion. The number of enterprises
that engaged with Datasea’s 5G message authorization development
increased from about 100 to nearly 200 which directly resulted in
the Company becoming a leading service provider in China.
- Marketing and sales expansion. The Company
adopted an integrated sales strategy to boost sales to better
promote business development and meet with the demand of customers,
which includes 1) an expansion of the sales team for direct sales;
2) partner and broker mode; 3) joint marketing mode; 4) the
enterprise key customer project cooperation mode.
- Industry recognition. Shuhai Zhangxun, a
company indirectly contractually controlled by Datasea focusing on
the 5G messaging business, was named the "Top 10 Enterprises of 5G
Messaging in 2021" by New 5G Messaging (New Media) and 5G New
Business Center. In January 2022, Shuhai Zhangxun took the lead in
drafting the overall technical requirements for 5G messaging
applications in the express delivery industry.
Acoustic Intelligence
In this quarter, the Company demonstrated the commercial
potential of acoustic intelligence, through direct sales of
acoustic intelligence powered disinfection equipment and agreements
with different businesses to apply acoustic intelligence in the
areas such as automotive systems and smart home appliances.
- Client expansion. The Company entered into a
three-year collaboration agreement with Guangdong Canbo Electrical
Co., Ltd to apply Datasea’s innovative acoustic
intelligence-enabled sterilization technology to the disinfection
cabinets. The Company worked with Shanghai Zhuifeng Automotive
System Co., Ltd to promote the acoustic intelligent module products
in vehicle application scenarios. Datasea added Jiangsu Xinrong
Network Technology Research Institute Co., Ltd. as a new customer
of acoustic intelligence powered disinfection equipment and the
total value of the engagement would be RMB 20 million
(approximately USD 3.14 million) over the course of the two-year
agreement.
- Marketing and sales expansion. Datasea worked
with Unicorner LLC to expand acoustic intelligence products
distribution in the US market.
- Industry recognition. In January, Datasea
released China’s inaugural white paper with co-authors to uncover
detailed facts and compelling analyses of the acoustic-intelligence
technology, commercial applications, and the industry outlook.
Smart City
- Client expansion. The Company was engaged by
Jiangsu Xinrong Network Technology Research Institution Co., Ltd to
provide 5G messaging smart city solutions, and the value of this
engagement would be RMB 500,000 (approximately USD 78,800) per
residential community over the course of the two-year
agreement.
- Product update. The Company recently laid out
a series of upgrades, including IoT cloud platform 2.0 and Campus
Security Cloud System to meet with the client needs in different
scenarios and enhance the system’s analysis efficiency and
integration capability.
Webcast and Conference Call Information
The Company will host a conference call and webcast to discuss
its financial results at 9 a.m. ET (9 p.m. Beijing and Hong Kong
Time) on Monday, May 16, 2022.
Dial-in details for the earnings conference call are as
follows:Toll
Free: 1-877-451-6152Toll/International: 1-201-389-0879
Participants should dial-in at least 5 minutes before the
scheduled start time. Additionally, a live and archived webcast of
the conference call will be available at:
https://viavid.webcasts.com/starthere.jsp?ei=1550068&tp_key=f65ec48b63
A replay of the conference call will be accessible approximately
soon after the conclusion of the live webcast, by dialing the
following telephone numbers:
Toll
Free: 1-844-512-2921Toll/International: 1-412-317-6671Replay
Pin Number: 13730116Replay Start: Monday May 16, 2022,
12:00 PM ETReplay Expiry: Monday May 23, 2022, 11:59 PM
ET |
About Datasea Inc. Datasea Inc., through its
variable interest entity, Shuhai Information Technology Co., Ltd.,
a digital technology company in China, engages in three converging
and innovative industries: smart city, acoustic intelligence and 5G
messaging. Datasea leverages facial recognition technology and
other visual intelligence algorithms, combined with cutting-edge
acoustic and non-visual intelligence algorithms, to provide smart
city solutions that meet the security needs of residential
communities, schools and commercial enterprises. Most recently, in
response to the growing utilization of 5G technologies and the
overall initiative to utilize Datasea’s technology capabilities to
expand business coverage and revenue resources, Datasea has also
strategically expanded business coverage to 5G messaging and smart
payment solutions. Datasea has been certified as one of the
High-Tech Enterprises (jointly issued by the Beijing Science and
Technology Commission, Beijing Finance Bureau, Beijing State
Taxation Bureau and Beijing Local Taxation Bureau) and one of the
Zhongguancun High Tech Enterprises (issued by the Zhongguancun
Science Park Administrative Committee) in recognition of the
company’s achievement in high technology products. For additional
company information, please visit: www.dataseainc.com. Datasea
routinely posts important information on its website.
Cautionary Note Regarding Forward-Looking
Statements This press release contains forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934 and as defined in the U.S. Private Securities
Litigation Reform Act of 1995. These forward-looking statements can
be identified by terminology such as "will", "expects",
"anticipates", "future", "intends", "plans", "believes",
"estimates", "target", "going forward", "outlook," “objective” and
similar terms. Such statements are based upon management's current
expectations and current market and operating conditions, and
relate to events that involve known or unknown risks, uncertainties
and other factors, all of which are difficult to predict and which
are beyond Datasea's control, which may cause Datasea's actual
results, performance or achievements (including the RMB/USD value
of its anticipated benefit to Datasea as described herein) to
differ materially and in an adverse manner from anticipated results
contained or implied in the forward-looking statements. Further
information regarding these and other risks, uncertainties or
factors is included in Datasea's filings with the U.S. Securities
and Exchange Commission, which are available at www.sec.gov.
Datasea does not undertake any obligation to update any
forward-looking statement as a result of new information, future
events or otherwise, except as required under law.
Datasea investor and media
Contact:International Elite Capital Inc. Annabelle
ZhangTelephone: +1(646) 866-7989 Email:
datasea@iecapitalusa.com
DATASEA INC.CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS(UNAUDITED)
|
|
NINE MONTHSENDEDMARCH 31, |
|
|
THREE MONTHSENDEDMARCH 31, |
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
16,294,147 |
|
|
$ |
152,925 |
|
|
$ |
6,643,538 |
|
|
$ |
17,686 |
|
Cost of goods sold |
|
|
15,395,849 |
|
|
|
66,925 |
|
|
|
6,055,134 |
|
|
|
9,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
|
|
898,298 |
|
|
|
86,000 |
|
|
|
588,404 |
|
|
|
7,774 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling |
|
|
612,253 |
|
|
|
295,252 |
|
|
|
225,262 |
|
|
|
121,216 |
|
General and administrative |
|
|
3,990,789 |
|
|
|
2,377,257 |
|
|
|
1,372,509 |
|
|
|
945,285 |
|
Research and development |
|
|
968,403 |
|
|
|
537,009 |
|
|
|
248,832 |
|
|
|
207,774 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses |
|
|
5,571,445 |
|
|
|
3,209,518 |
|
|
|
1,846,603 |
|
|
|
1,274,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(4,673,147 |
) |
|
|
(3,123,518 |
) |
|
|
(1,258,199 |
) |
|
|
(1,266,501 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating income (expenses) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses) |
|
|
12,917 |
|
|
|
(22,160 |
) |
|
|
7,670 |
|
|
|
(9,958 |
) |
Interest income |
|
|
37,730 |
|
|
|
1,916 |
|
|
|
4,837 |
|
|
|
112 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total non-operating income (expenses), net |
|
|
50,647 |
|
|
|
(20,244 |
) |
|
|
12,507 |
|
|
|
(9,846 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax |
|
|
(4,622,500 |
) |
|
|
(3,143,762 |
) |
|
|
(1,245,692 |
) |
|
|
(1,276,347 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before noncontrolling interest |
|
|
(4,622,500 |
) |
|
|
(3,143,762 |
) |
|
|
(1,245,692 |
) |
|
|
(1,276,347 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: (loss) income attributable to noncontrolling interest |
|
|
(226,561 |
) |
|
|
(93,902 |
) |
|
|
31,720 |
|
|
|
(57,347 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss to the Company |
|
|
(4,395,939 |
) |
|
|
(3,049,860 |
) |
|
|
(1,277,412 |
) |
|
|
(1,219,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive item |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation gain (loss) attributable to the
Company |
|
|
89,911 |
|
|
|
105,471 |
|
|
|
19,919 |
|
|
|
(7,072 |
) |
Foreign currency translation gain (loss) attributable to
noncontrolling interest |
|
|
2,076 |
|
|
|
(1,582 |
) |
|
|
(218 |
) |
|
|
(192 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss attributable to the Company |
|
$ |
(4,306,028 |
) |
|
$ |
(2,944,389 |
) |
|
$ |
(1,257,493 |
) |
|
$ |
(1,226,072 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss (income) attributable to noncontrolling
interest |
|
$ |
(224,485 |
) |
|
$ |
(95,484 |
) |
|
$ |
31,502 |
|
|
$ |
(57,539 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share |
|
$ |
(0.18 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares used for computing basic and diluted loss
per share |
|
$ |
23,837,047 |
|
|
$ |
21,214,197 |
|
|
|
24,244,130 |
|
|
|
21,470,487 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DATASEA INC.CONSOLIDATED
BALANCE SHEETS
|
|
MARCH 31,2022 |
|
|
JUNE 30,2021 |
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash |
|
$ |
1,628,750 |
|
|
$ |
49,676 |
|
Accounts receivable |
|
|
5,521,461 |
|
|
|
1,856 |
|
Inventory |
|
|
247,378 |
|
|
|
194,264 |
|
Value-added tax prepayment |
|
|
66,295 |
|
|
|
171,574 |
|
Prepaid expenses and other current assets |
|
|
381,658 |
|
|
|
468,615 |
|
Total current assets |
|
|
7,845,542 |
|
|
|
885,985 |
|
|
|
|
|
|
|
|
|
|
NONCURRENT ASSETS |
|
|
|
|
|
|
|
|
Security deposit for rents |
|
|
281,040 |
|
|
|
256,987 |
|
Long term investment |
|
|
63,010 |
|
|
|
- |
|
Property and equipment, net |
|
|
217,100 |
|
|
|
309,408 |
|
Intangible assets, net |
|
|
1,263,219 |
|
|
|
1,092,147 |
|
Right-of-use assets, net |
|
|
760,957 |
|
|
|
1,350,590 |
|
Total noncurrent assets |
|
|
2,585,326 |
|
|
|
3,009,132 |
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS |
|
$ |
10,430,868 |
|
|
$ |
3,895,117 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
4,874,633 |
|
|
$ |
174,718 |
|
Unearned revenue |
|
|
255,280 |
|
|
|
189,527 |
|
Deferred revenue |
|
|
72,682 |
|
|
|
46,439 |
|
Accrued expenses and other payables |
|
|
494,185 |
|
|
|
561,674 |
|
Due to related party |
|
|
29,063 |
|
|
|
69,305 |
|
Loans payable |
|
|
- |
|
|
|
1,486,819 |
|
Operating lease liabilities |
|
|
506,699 |
|
|
|
730,185 |
|
Total current liabilities |
|
|
6,232,542 |
|
|
|
3,258,667 |
|
|
|
|
|
|
|
|
|
|
NONCURRENT LIABILITIES |
|
|
|
|
|
|
|
|
Operating lease liabilities |
|
|
132,257 |
|
|
|
558,739 |
|
Total noncurrent liabilities |
|
|
132,257 |
|
|
|
558,739 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES |
|
|
6,364,799 |
|
|
|
3,817,406 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Common stock, $0.001 par value, 375,000,000 shares authorized,
24,244,130 and 21,474,138 shares issued and outstanding,
respectively |
|
|
24,244 |
|
|
|
21,474 |
|
Additional paid-in capital |
|
|
20,602,889 |
|
|
|
12,086,788 |
|
Accumulated comprehensive income |
|
|
363,161 |
|
|
|
273,250 |
|
Accumulated deficit |
|
|
(16,457,797 |
) |
|
|
(12,061,858 |
) |
TOTAL COMPANY STOCKHOLDERS’ EQUITY |
|
|
4,532,497 |
|
|
|
319,654 |
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest |
|
|
(466,428 |
) |
|
|
(241,943 |
) |
|
|
|
|
|
|
|
|
|
TOTAL EQUITY |
|
|
4,066,069 |
|
|
|
77,711 |
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND
EQUITY |
|
$ |
10,430,868 |
|
|
$ |
3,895,117 |
|
|
|
|
|
|
|
|
|
|
DATASEA INC.CONSOLIDATED
STATEMENTS OF CASH FLOWS(UNAUDITED)
|
|
NINE MONTHSENDEDMARCH 31 |
|
|
|
2022 |
|
|
2021 |
|
|
|
|
|
|
|
|
Cash flows from operating activities: |
|
|
|
|
|
|
Loss including noncontrolling interest |
|
$ |
(4,622,500 |
) |
|
$ |
(3,143,762 |
) |
Adjustments to reconcile loss including noncontrolling interest to
net cash used in operating activities: |
|
|
|
|
|
|
|
|
Loss on disposal on fixed assets |
|
|
679 |
|
|
|
9,619 |
|
Depreciation and amortization |
|
|
412,771 |
|
|
|
112,350 |
|
Bad debt expense |
|
|
287,214 |
|
|
|
- |
|
Operating lease expense |
|
|
654,029 |
|
|
|
588,924 |
|
Stock compensation expense |
|
|
515,250 |
|
|
|
12,000 |
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
(5,469,460 |
) |
|
|
(12,380 |
) |
Inventory |
|
|
(49,239 |
) |
|
|
(19,278 |
) |
Value-added tax prepayment |
|
|
107,320 |
|
|
|
(75,765 |
) |
Prepaid expenses and other current assets |
|
|
(262,428 |
) |
|
|
(130,638 |
) |
Accounts payable |
|
|
4,655,575 |
|
|
|
81,903 |
|
Advance from customers |
|
|
87,041 |
|
|
|
41,823 |
|
Accrued expenses and other payables |
|
|
179,998 |
|
|
|
91,615 |
|
Payment on operating lease liabilities |
|
|
(712,738 |
) |
|
|
(618,366 |
) |
|
|
|
|
|
|
|
|
|
Net cash used in operating activities |
|
|
(4,216,488 |
) |
|
|
(3,061,955 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Acquisition of property and equipment |
|
|
(32,188 |
) |
|
|
(103,054 |
) |
Acquisition of intangible assets |
|
|
(402,118 |
) |
|
|
(25,934 |
) |
Long-term investment |
|
|
(62,438 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(496,744 |
) |
|
|
(128,988 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Due to related parties |
|
|
(40,760 |
) |
|
|
- |
|
Payment of loan payable |
|
|
(1,499,291 |
) |
|
|
728,824 |
|
Proceeds from capital contribution from a major shareholder |
|
|
62,438 |
|
|
|
- |
|
Net proceeds from issuance of common stock |
|
|
7,681,796 |
|
|
|
931,000 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
6,204,183 |
|
|
|
1,659,824 |
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
88,123 |
|
|
|
36,360 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash |
|
|
1,579,074 |
|
|
|
(1,494,759 |
) |
|
|
|
|
|
|
|
|
|
Cash, beginning of period |
|
|
49,676 |
|
|
|
1,665,936 |
|
|
|
|
|
|
|
|
|
|
Cash, end of period |
|
$ |
1,628,750 |
|
|
$ |
171,177 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of cash flow
information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
- |
|
|
$ |
- |
|
Cash paid for income tax |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosures of non-cash investing and
financing activities: |
|
|
|
|
|
|
|
|
Transfer of prepaid software development expenditure to intangible
assets |
|
$ |
50,000 |
|
|
$ |
1,000,000 |
|
Right-of-use assets obtained in exchange for new operating lease
liabilities |
|
$ |
- |
|
|
$ |
1,294,315 |
|
Shares issued for accrued bonus to officers |
|
$ |
259,023 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
IMPORTANT NOTICE TO USERS (summary only, please refer to
the Form 10-Q for full text of notice); All information is
unaudited unless otherwise noted or accompanied by an audit opinion
and is subject to the more comprehensive information contained in
our SEC reports and filings. We do not endorse third-party
information. All information speaks as of the last fiscal quarter
or year for which we have filed a Form 10-K or 10-Q, or for
historical information the date or period expressly indicated in or
with such information. We undertake no duty to update the
information. Forward-looking statements are subject to risks and
uncertainties described in our Forms 10-Q and 10-K.
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