Datasea Reports Second Quarter Fiscal Year 2022 Earnings and Provides Business Updates


BEIJING, Feb. 11, 2022 (GLOBE NEWSWIRE) -- Datasea Inc. (NASDAQ: DTSS) (“Datasea” or the “Company”), incorporated in Nevada in September 2014, is 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 December 31, 2021 and provided an update on its key strategic and operational initiatives.

“Datasea had a solid quarter as our 5G messaging business started to demonstrate its great value and capability to improve the Company’s competitiveness and create new sources of revenue and profits. As one of the first movers in this industry, Datasea has been a leading 5G messaging service provider in China. We will continue to leverage our advantages of entering the market early to build brand recognition and customer loyalty,” said Zhixin Liu, CEO of Datasea. “Benefiting from our proprietary technologies and great synergy effects among the business lines, such as acoustic intelligence and smart city, we believe that our business development is on track and is supported by a strong product portfolio. Datasea’s business goals are to focus on the sustainable development, and we are integrating it into every business decision.”

Second Quarter 2022 Financial Highlights

  • Revenue was $8,979,479 and $126,184 for the three months ended December 31, 2021 and 2020, respectively, representing an increase of $8,853,295, or 7016%.
  • Gross profit was $246,299 and $86,070 for the three months ended December 31, 2021 and 2020, respectively, representing an increase of $160,229, or 186%. The increase in gross profit was mainly due to the delivery of services related to the 5G SMS service platform in 2021.
  • R&D expenses were $432,355 and $134,509 for the three months ended December 31, 2021 and 2020, respectively, representing an increase of $297,846, or 221%.
  • 5G messaging sales revenue increased more than 900% this quarter, compared with the immediate prior quarter ended September 30, 2021, representing nine-month consecutive growth.

Second Quarter 2022 Business Highlights

5G Messaging

  • Client expansion. Since 2021, as a leading service provider in the field of 5G messaging in China, the Company has been engaged for services by 100+ institutional clients from express delivery, catering, tourism, e-commerce, financing, and technology industry to establish message marketing cloud platform (“5G MMCP”).
  • Marketing and sales expansion. From October 2021 to the end of December 2021, the Company was engaged in various contracts that were related to SMS, integrated 5G message marketing cloud platform (“5G IMMCP”) and value-added services, with a total contract value of approximately $14.73 million, among which $9.6 million worth of services have been delivered.
  • Industry recognition. In December 2021, the Company assisted ZTO Express to complete the first placement order through 5G messaging services in express delivery industry. The Company cooperated with the National Engineering Laboratory for Logistics Information Technology (“National Engineering Laboratory”), and continually worked to promote the formulation of 5G Messaging standards in the express industry.

Acoustic Intelligence

The Company commits to tap acoustic intelligence’s full business potential and wield acoustic intelligence across industries in meaningful ways.

  • Research Partnerships. The Company has entered into partnerships with top-notch institutions in this area, equipped itself with solid R&D capability, and released China’s inaugural white paper “Industry Development and Technology Application of Acoustic Intelligence in China” with co-authors, Institute of Cloud Computing and Big Data, China Academy of Information and Communications Technology.
  • Product lineup. Currently, the Company has four flagship products to unfold the commercial possibilities of acoustic intelligence in the most wanted areas such as health, security, and environment protection. These products are 1) ultrasonic sound sterilization and antivirus equipment (the first-ever sterilization and antivirus equipment that combines ultrasonic sound effects with optics to address the Covid-19 disinfecting needs); 2) Tianer voice recognition alarm; 3) directional sound recognizer (a solution for noise pollution); 4) sound effect refreshing directional sound device. Datasea has prepared samples, completed laboratory tests and user pilot tests, entered mass production to varying degrees for these products, and they are expected to be introduced to the market in the fiscal year of 2022.

Smart City

  • Client expansion. From October 2021 to the end of December 2021, the Company was engaged in various contracts that were related to smart community solutions and food safety supervision system of the Smart Canteen.
  • Product update. The Company recently laid out a series of upgrades 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 8 a.m. ET (9 p.m. Beijing and Hong Kong Time) on Monday, February 14, 2022.

Dial-in details for the earnings conference call are as follows:

Toll Free: 1-877-451-6152
Toll/International: 1-201-389-0879
 

Participants should dial-in at least 5 minutes before the scheduled start time. Additionally, a live webcast of the conference call will be available at: https://viavid.webcasts.com/starthere.jsp?ei=1530184&tp_key=e52c484915

A replay of the conference call will be accessible approximately soon after the conclusion of the live, by dialing the following telephone numbers:

Toll Free: 1-844-512-2921
Toll/International: 1-412-317-6671
Replay Pin Number: 13727206
Replay Start: Monday February 14, 2022, 11:00 AM ET
Replay Expiry: Monday February 21, 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 Zhang
Telephone: +1(646) 866-7989
Email: datasea@iecapitalusa.com


DATASEA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(UNAUDITED)

  SIX MONTHS ENDED
DECEMBER 31,
  THREE MONTHS ENDED
DECEMBER 31,
 
  2021  2020  2021  2020 
             
Revenues $9,650,609  $135,239  $8,979,479  $126,184 
Cost of goods sold  9,340,715   57,013   8,733,180   40,114 
                 
Gross profit  309,894   78,226   246,299   86,070 
                 
Operating expenses                
Selling  386,991   174,036   156,192   119,971 
General and administrative  2,618,280   1,431,972   1,498,809   812,536 
Research and development  719,571   329,235   432,355   134,509 
                 
Total operating expenses  3,724,842   1,935,243   2,087,356   1,067,016 
                 
Loss from operations  (3,414,948)  (1,857,017)  (1,841,057)  (980,946)
                 
Non-operating income (expenses)                
Other income (expenses)  5,247   (12,202)  5,224   (19,854)
Interest income  32,893   1,804   12,359   208 
                 
Total non-operating income (expenses), net  38,140   (10,398)  17,583   (19,646)
                 
Loss before income tax  (3,376,808)  (1,867,415)  (1,823,474)  (1,000,592)
                 
Income tax  -   -   -   - 
                 
Loss before noncontrolling interest  (3,376,808)  (1,867,415)  (1,823,474)  (1,000,592)
                 
Less: loss attributable to noncontrolling interest  (258,281)  (36,555)  (146,181)  (36,555)
                 
Net loss to the Company  (3,118,527)  (1,830,860)  (1,677,293)  (964,037)
                 
Other comprehensive item                
Foreign currency translation gain attributable to the Company  69,992   112,543   74,689   54,064 
Foreign currency translation gain (loss) attributable to noncontrolling interest  2,294   (1,390)  2,548   (1,390)
                 
Comprehensive loss attributable to the Company $(3,048,535) $(1,718,317) $(1,602,604) $(909,973)
                 
Comprehensive loss attributable to noncontrolling interest $(255,987) $(37,945) $(143,633) $(37,945)
                 
Basic and diluted net loss per share $(0.13) $(0.09) $(0.07) $(0.05)
                 
Weighted average shares used for computing basic and diluted loss per share $23,637,930  $21,088,837   23,919,867   21,233,829 
                 


DATASEA INC.
CONSOLIDATED BALANCE SHEETS

  DECEMBER 31,
2021
  JUNE 30,
2021
 
  (Unaudited)    
       
ASSETS      
CURRENT ASSETS      
Cash $2,240,708  $49,676 
Accounts receivable  5,223,231   1,856 
Inventory  210,808   194,264 
Value-added tax prepayment  156,995   171,574 
Prepaid expenses and other current assets  1,297,321   468,615 
Total current assets  9,129,063   885,985 
         
NONCURRENT ASSETS        
Security deposit for rents  275,170   256,987 
Long term investment  62,738   - 
Property and equipment, net  249,393   309,408 
Intangible assets, net  1,195,303   1,092,147 
Right-of-use assets, net  962,056   1,350,590 
Total noncurrent assets  2,744,660   3,009,132 
         
TOTAL ASSETS $11,873,723  $3,895,117 
         
LIABILITIES AND STOCKHOLDERS’ EQUITY        
CURRENT LIABILITIES        
Accounts payable $5,022,008  $174,718 
Unearned revenue  256,108   189,527 
Deferred revenue  47,053   46,439 
Accrued expenses and other payables  502,909   561,674 
Due to related party  56,541   69,305 
Loans payable  -   1,486,819 
Operating lease liabilities  688,520   730,185 
Total current liabilities  6,573,139   3,258,667 
         
NONCURRENT LIABILITIES        
Operating lease liabilities  229,024   558,739 
Total noncurrent liabilities  229,024   558,739 
         
TOTAL LIABILITIES  6,802,163   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  20,382,389   12,086,788 
Accumulated comprehensive income  343,242   273,250 
Accumulated deficit  (15,180,385)  (12,061,858)
TOTAL COMPANY STOCKHOLDERS’ EQUITY  5,569,490   319,654 
         
Noncontrolling interest  (497,930)  (241,943)
         
TOTAL EQUITY  5,071,560   77,711 
         
TOTAL LIABILITIES AND EQUITY $11,873,723  $3,895,117 
         


DATASEA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

  SIX MONTHS ENDED
DECEMBER 31
 
  2021  2020 
       
Cash flows from operating activities:      
Loss including noncontrolling interest $(3,376,808) $(1,867,415)
Adjustments to reconcile loss including noncontrolling interest to net cash used in operating activities:        
Loss on disposal on fixed assets  460   - 
Depreciation and amortization  233,544   68,239 
Bad debt expense  286,055   - 
Operating lease expense  435,762   369,810 
Stock compensation expense  294,750   - 
Changes in assets and liabilities:        
Accounts receivable  (5,175,377)  - 
Inventory  (13,850)  (27,296)
Value-added tax prepayment  16,702   (49,206)
Prepaid expenses and other current assets  (1,165,822)  (123,475)
Accounts payable  4,803,114   22,838 
Advance from customers  63,507   - 
Accrued expenses and other payables  191,289   89,762 
Payment on operating lease liabilities  (417,948)  (329,549)
         
Net cash used in operating activities  (3,824,622)  (1,846,292)
         
Cash flows from investing activities:        
Acquisition of property and equipment  (23,787)  (91,214)
Acquisition of intangible assets  (198,151)  (8,482)
Long-term investment  (62,186)  - 
         
Net cash used in investing activities  (284,124)  (99,696)
         
Cash flows from financing activities:        
Due to related parties  (13,391)  - 
Payment of loan payable  (1,493,237)  - 
Proceeds from capital contribution from a major shareholder  62,186   - 
Net proceeds from issuance of common stock  7,681,796   931,000 
         
Net cash provided by financing activities  6,237,354   931,000 
         
Effect of exchange rate changes on cash  62,424   23,449 
         
Net increase (decrease) in cash  2,191,032   (991,539)
         
Cash, beginning of period  49,676   1,665,936 
         
Cash, end of period $2,240,708  $674,397 
         
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  $850,000 
Right-of-use assets obtained in exchange for new operating lease liabilities $-  $1,276,944 
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.