Accessibility StatementSkip Navigation Driving the Commercialization of Acoustic Technology in Smart Health Wearables through Solution-Based Service Delivery BEIJING, Sept. 11, 2025 /PRNewswire/ -- Datasea Inc. (NASDAQ: DTSS), a Nevada-based technology company specializing in acoustic high-tech products and AI multimodal digital solutions, today announced that its VIE entity in China, Shuhai Jingwei (Shenzhen) Information Technology Co., Ltd., has signed a service agreement with Hainan Zhixingjian Intellige ...

Core Insights - Datasea Inc. has achieved a significant breakthrough in acoustic technology, integrating sound wave coupling with AI for precision health management and clinical intervention [1][3] - The healthcare application market is projected to exceed $100 billion in China and approach $90 billion globally by 2030, driven by the demand for non-pharmaceutical precision health solutions [2][6] Company Developments - Datasea has activated its commercialization engine, utilizing proprietary sound wave coupling technologies to regulate the nervous system and create a closed-loop ecosystem for detection, analysis, diagnosis, and real-time intervention [3][4] - The company is focusing on ultrasound neuromodulation as its core product strategy, having developed innovative hardware with medical-grade precision and commenced initial commercialization efforts [4][5] Market Positioning - The company is well-positioned to address critical pain points in healthcare, with its acoustic technologies expected to drive disruptive transformation in precision health management [6][7] - Datasea aims to leverage this breakthrough to further advance technological iterations and enhance clinical applications, contributing to global wellness and delivering sustainable value to shareholders [7] Strategic Initiatives - The company is accelerating technology transfer, product deployment, and solution rollout through strategic collaborations to drive sustained growth momentum [5] - Datasea has established a wholly-owned subsidiary in Delaware to enter the U.S. markets as part of its global expansion plan [9]

BEIJING, May 19, 2025 /PRNewswire/ -- Datasea Inc. (NASDAQ: DTSS) ("Datasea" or the "Company"), a Nevada-based technology company specializing in acoustic high-tech products and 5G+AI multimodal digital solutions, today announced that its subsidiaries have signed two new service contracts totaling up to $100 million for the provision of 5G-AI multimodal digital services over a 12-month period. The customers include long-term partner Qingdao Ruizhi Yixing Information Technology Co., Ltd. ("Qingdao Ruizhi Yix ...

Core Insights - Datasea Inc. reported significant revenue growth in the third fiscal quarter of 2025, with revenue reaching $10.4 million, a 653.6% increase from $1.38 million in the same period of fiscal 2024 [1][5] - The company’s total revenue for the first nine months of 2025 was $51.9 million, up 164.8% compared to $19.6 million for the same period in fiscal 2024 [1][5] - The growth was primarily driven by the strong performance of the 5G+AI multimodal digital segment and the acoustic high-tech products [2][5] Financial Highlights - Gross profit for the third fiscal quarter of 2025 was $0.3 million, with a gross margin of 2.9%, an improvement from $0.01 million and 0.7% in the same period of the prior year [5] - The net loss for the third fiscal quarter of 2025 was $1.8 million, significantly improved from a net loss of $4.1 million in the same period of the prior year [5] - The company’s cash balance increased by 378.2% to $0.9 million, while accounts receivable dropped by 93.2% to $0.05 million, indicating improved capital turnover [5] Business Segment Highlights - The 5G+AI multimodal digital segment continues to lead in China, with notable market expansion and long-term customer contracts [4] - The acoustic high-tech segment saw the placement of products in 463 beauty and health stores in Northern China, reflecting growing market acceptance [4] Business Outlook - Datasea reaffirms its full fiscal year 2025 revenue guidance of approximately $90 million, representing a 275% increase over fiscal year 2024 [7] - The company plans to drive profitability by scaling high-margin acoustic high-tech products and expanding into international markets through strategic partnerships and mergers & acquisitions [8]

Part I - Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Financial statements for March 31, 2025, show total assets at $6.15 million, a shift to $2.83 million in stockholders' equity, and revenues of $51.89 million [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2025, total assets increased to $6.15 million, driven by intangible assets, while liabilities decreased, improving stockholders' equity to $2.83 million Consolidated Balance Sheet Highlights (Unaudited) | | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$6,154,373** | **$3,291,704** | | Total Current Assets | $1,989,796 | $2,647,892 | | Intangible assets, net | $3,805,383 | $546,001 | | **Total Liabilities** | **$3,321,879** | **$3,599,982** | | Total Current Liabilities | $3,131,890 | $3,599,982 | | **Total Stockholders' Equity (Deficit)** | **$2,832,494** | **($308,278)** | [Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the nine months ended March 31, 2025, revenues surged to $51.89 million, gross profit increased significantly, and net loss narrowed to $4.88 million Statement of Operations Highlights (Unaudited) | Metric | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | **Revenues** | $51,891,475 | $19,612,213 | | **Gross Profit** | $912,223 | $186,841 | | **Loss from Operations** | ($5,038,381) | ($6,754,003) | | **Net Loss to the Company** | ($4,881,265) | ($5,996,815) | | **Basic and Diluted Net Loss per Share** | ($0.24) | ($1.55) | [Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased to $2.84 million for the nine months ended March 31, 2025, primarily due to $5.94 million in equity financing and $1.47 million in stock compensation - The company issued 692,308 shares for equity financing, raising **$1.96 million**, and an additional 1,932,224 shares to related parties for **$3.98 million**[13](index=13&type=chunk) - A total of 554,365 shares were issued for stock compensation expense, valued at approximately **$1.47 million** during the nine-month period[13](index=13&type=chunk) - Shareholders forgave debt totaling **$462,208**, which was recorded as an increase in additional paid-in capital[13](index=13&type=chunk)[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended March 31, 2025, operating cash outflow improved to $1.79 million, investing activities used $4.04 million, and financing provided $6.55 million Cash Flow Summary (Unaudited) | Cash Flow Activity | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | **Net Cash Used in Operating Activities** | ($1,785,456) | ($5,954,352) | | **Net Cash Used in Investing Activities** | ($4,043,776) | ($108,911) | | **Net Cash Provided by Financing Activities** | $6,553,450 | $6,209,131 | | **Net Increase in Cash** | $685,475 | $32,801 | | **Cash, End of Period** | $866,737 | $52,529 | - The company received net proceeds of **$5.94 million** from the issuance of common stock[16](index=16&type=chunk) - Cash used for the acquisition of intangible assets was **$4.04 million**[16](index=16&type=chunk) [Notes to Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the company's VIE structure, 'Going Concern' warning due to losses, revenue sources, and significant transactions including intangible asset purchases - The company operates in the PRC primarily through a Variable Interest Entity (VIE), Shuhai Beijing, controlled via contractual arrangements[19](index=19&type=chunk)[39](index=39&type=chunk) - Substantial doubt exists about the Company's ability to continue as a going concern due to recurring net losses (approx. **$4.88 million**) and negative operating cash flow (approx. **$1.79 million**)[35](index=35&type=chunk) Revenue by Source (Nine Months Ended March 31, 2025) | Revenue Source | Amount | | :--- | :--- | | 5G AI Multimodal communication | $51,503,911 | | Sell of Software | $326,936 | | Acoustic Intelligence Business | $56,908 | | Smart City business | $3,046 | | Other | $674 | | **Total Revenue** | **$51,891,475** | - On January 19, 2024, the company executed a **1-for-15 reverse stock split**, retroactively restating all share amounts[34](index=34&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes 164.6% revenue growth to 5G+AI business expansion, highlights strategic advancements, and addresses 'going concern' risk with recent financing and improved financial metrics [Overview and Business Summary](index=39&type=section&id=MD%26A_Overview) Datasea, a Nevada holding company operating via a VIE in China, focuses on acoustic high-tech and 5G+AI multimodal digital technologies, achieving $51.9 million revenue growth - Datasea is a Nevada holding company operating in China through a VIE structure, not a Chinese operating company[160](index=160&type=chunk) Financial Highlights (Nine Months Ended March 31, 2025) | Metric | Value | YoY Change | | :--- | :--- | :--- | | Revenue | $51,891,475 | +164.59% | | Gross Profit | $912,223 | +388.23% | | Net Loss | ($4,881,265) | -18.60% | | Cash Balance | $866,737 | +378.17% | | Accounts Receivable | $49,066 | -93.17% | | Net Intangible Assets | $3,805,383 | +596.96% | - The company reiterates confidence in achieving the full-year fiscal 2025 revenue target of **$90 million**[163](index=163&type=chunk) [Results of Operations](index=56&type=section&id=MD%26A_Results_of_Operations) For the three months ended March 31, 2025, revenue increased 648.7% to $10.4 million, and for nine months, revenue grew 164.6% to $51.9 million, with net loss narrowing Comparison of Operations (Three Months Ended March 31) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $10,353,977 | $1,383,001 | +648.7% | | Gross Profit | $297,790 | $9,871 | +2917.8% | | Net Loss to Company | ($1,782,998) | ($4,141,720) | -57.0% | Comparison of Operations (Nine Months Ended March 31) | Metric | 2025 | 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $51,891,475 | $19,612,213 | +164.6% | | Gross Profit | $912,223 | $186,841 | +388.2% | | Net Loss to Company | ($4,881,265) | ($5,996,815) | -18.6% | - The increase in revenue was mainly due to the rapid growth of the **5G AI multimodal digital business** in China, where the company is an industry leader[254](index=254&type=chunk)[291](index=291&type=chunk) - Selling expenses decreased by **80.9%** for the quarter and **27.9%** for the nine-month period, primarily due to reduced advertising and marketing expenses[278](index=278&type=chunk)[305](index=305&type=chunk) [Liquidity and Capital Resources](index=66&type=section&id=MD%26A_Liquidity_and_Capital_Resources) As of March 31, 2025, the company had a $1.14 million working capital deficit, with operations using $1.79 million cash, while financing provided $6.55 million Working Capital Summary | Metric | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash | $866,737 | $181,262 | | Working Capital Deficit | ($1,142,094) | ($952,090) | | Current Ratio | 0.64:1 | 0.74:1 | Cash Flow Summary (Nine Months Ended March 31, 2025) | Activity | Amount | | :--- | :--- | | Net Cash Used in Operating Activities | ($1,785,456) | | Net Cash Used in Investing Activities | ($4,043,776) | | Net Cash Provided by Financing Activities | $6,553,450 | - Net proceeds from the sale of common stock amounted to **$5.94 million** during the nine months ended March 31, 2025[324](index=324&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=72&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is not required to provide this information as it qualifies as a 'smaller reporting company' - As a "smaller reporting company", Datasea Inc. is not required to provide the information required by this Item[371](index=371&type=chunk) [Controls and Procedures](index=73&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were ineffective due to material weaknesses, including inadequate segregation of duties and lack of U.S. GAAP trained personnel - The principal executive and financial officers concluded that the Company's disclosure controls and procedures were **not effective** as of the end of the reporting period[372](index=372&type=chunk) - Material weaknesses identified include inadequate segregation of duties, lack of U.S. GAAP trained personnel, and insufficient written accounting policies[377](index=377&type=chunk) - Management is implementing remediation strategies, including refining internal control processes and enhancing personnel training[374](index=374&type=chunk)[375](index=375&type=chunk)[386](index=386&type=chunk) Part II - Other Information [Legal Proceedings](index=76&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not a party to any pending legal proceedings, and none are known to be contemplated - The company is not a party to any pending legal proceedings and no such proceedings are known to be contemplated[389](index=389&type=chunk) [Risk Factors](index=76&type=section&id=Item%201A.%20Risk%20Factors) As a 'smaller reporting company,' Datasea Inc. is not required to provide the information for this item - As a "smaller reporting company", the company is not required to provide the information for this item[390](index=390&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=76&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This item is not applicable to the company for this reporting period - Not applicable[391](index=391&type=chunk) [Defaults Upon Senior Securities](index=76&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports that there have been no defaults upon senior securities - None[392](index=392&type=chunk) [Mine Safety Disclosures](index=76&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[393](index=393&type=chunk) [Other Information](index=76&type=section&id=Item%205.%20Other%20Information) No material changes occurred in procedures for security holder board nominations, and no Rule 10b5-1 trading arrangements were adopted or terminated - There have been no material changes to the procedures by which security holders may recommend nominees to the Board of Directors[394](index=394&type=chunk) - During the three months ended December 31, 2024, no director or officer adopted, modified or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement"[394](index=394&type=chunk) [Exhibits](index=77&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and Inline XBRL data files List of Exhibits | Exhibit | Description | | :--- | :--- | | 31.1 | Certification by CEO (Sarbanes Oxley Section 302) | | 31.2 | Certification by CFO (Sarbanes Oxley Section 302) | | 32.1 | Certification by CEO (18 U.S.C. Section 1350) | | 32.2 | Certification by CFO (18 U.S.C. Section 1350) | | 101.INS | Inline XBRL Instance Document | | 101.SCH | Inline XBRL Taxonomy Extension Schema Document | | 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | | 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | | 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | 104 | Cover Page Interactive Data File (Inline XBRL) |

Core Insights - Datasea Inc. expects to achieve projected annual revenue of $90 million, with third-quarter fiscal year 2025 revenue anticipated to be approximately $51.9 million, reflecting a year-over-year increase of about 164.6% compared to $19.6 million in the same period last year [1][2] Company Overview - Datasea Inc. is a digital technology company based in Nevada, specializing in acoustics high-tech and 5G+AI multimodal digital innovations [4] - The company provides products, services, and solutions for enterprise and retail customers, leveraging advanced R&D technology as the backbone for its offerings [4] - Datasea's 5G multimodal digital segment operates on a cloud platform based on AI, while its acoustics business utilizes cutting-edge technologies to combat viruses and develop applications in medical ultrasonic cosmetology [4] Strategic Focus - The company is strategically positioned to leverage opportunities in both the acoustics high-tech and 5G+AI multimodal digital sectors, aiming to drive long-term shareholder value [3] - Datasea's CEO emphasized the importance of technological innovation and market expansion in driving substantial growth, with a commitment to enhancing cost management and operational efficiencies [2]

Market Overview - US stock indices experienced a significant rise for the third consecutive trading day, with the Dow Jones up 486.83 points (1.23%), Nasdaq up 457.99 points (2.74%), and S&P 500 up 108.91 points (2.03%) on April 24 [1] Technology Sector Performance - Major tech stocks saw substantial gains, with Tesla, Amazon, and Microsoft rising over 3%, while Google and Meta increased by more than 2%, and Apple rose nearly 2% [2] - The semiconductor sector led the gains, with Micron Technology and Broadcom up over 6%, Intel and AMD rising over 4%, and Nvidia increasing by more than 3% [2] - Nvidia's market capitalization increased by $90.8 billion (approximately ¥661.8 billion) in one night [2] Company Earnings Reports - Alphabet (Google's parent company) reported Q1 revenue of $90.23 billion, a 12% year-over-year increase, exceeding the expected $89.1 billion. Earnings per share were $2.81, up from $1.89 a year ago, and also above the forecast of $2.01. The operating profit was $30.61 billion, a 20% increase year-over-year, surpassing the expected $28.86 billion. The board authorized a stock buyback of up to $70 billion [6] - Intel reported Q1 revenue of $12.67 billion, a slight decline of 0.4% year-over-year, but above the expected $12.31 billion. Adjusted earnings per share were $0.13, down from $0.18 a year ago, but above the forecast of $0.01. The data center and AI revenue was $4.13 billion, exceeding the analyst expectation of $2.96 billion. Intel projected Q2 revenue between $11.2 billion and $12.4 billion, below the market estimate of $12.88 billion. The company reduced its total capital expenditure target for 2025 from $20 billion to $18 billion, leading to a post-earnings drop of over 7% in its stock [7] Chinese Stocks Performance - The Nasdaq Golden Dragon China Index rose by 0.68%, with notable gains in popular Chinese stocks such as NIO and Futu Holdings, which increased by over 6%, and Pinduoduo, Baidu, NetEase, and Bilibili rising over 2%. Xpeng Motors surged by 39.41%, and ZYBT rose by 34.91% [7][8] Commodity Market - International precious metals futures saw a general increase, with COMEX gold futures rising by 2.04% to $3,361.30 per ounce, and WTI crude oil futures up by 0.84% to $62.79 per barrel [9]

Core Insights - Datasea Inc. reported a significant revenue increase of approximately 81.4%, reaching about $20.5 million for the second fiscal quarter ended December 31, 2024, compared to $11.3 million in the same period the previous year, driven by the growth of its 5G+AI multimodal digital business in China [1][6] - The company is focused on expanding its customer base in the 5G+AI sector and enhancing its high-margin acoustic products, indicating a commitment to technological innovation and sustainable growth [2][12] Financial Highlights - Revenue for the second fiscal quarter of 2025 was approximately $20.5 million, marking an increase of 81.4% from $11.3 million in the same quarter of 2024 [6] - Gross profit for the quarter was approximately $0.4 million, with a gross margin of about 2.0%, an improvement from $0.1 million and 0.9% in the same period last year [6] - The net value of intangible assets increased by 647% to $4,081,544 as of December 31, 2024, compared to $546,001 on June 30, 2024, reflecting the company's growth and innovation [6] - Inventory rose to $319,932, a 108.31% increase from $153,583 on June 30, 2024, indicating a rise in customer orders within the acoustic high-tech business [6] Business Highlights – 5G+AI Multimodal Digital Business - The company has signed new contracts worth approximately $30 million with various clients, reinforcing its market penetration [5] - Datasea's AI multimodal models have achieved breakthroughs in sentiment analysis, machine translation, and natural language processing, enhancing data understanding and decision-making reliability [6] - The company has developed a self-designed Transformer model architecture capable of processing multiple modalities in parallel, improving applications such as image-text correlation analysis and audio-video synchronization [6] Business Highlights – Acoustic High-Tech Business - Datasea is advancing its acoustic high-tech products, including ultrasonic disinfection machines and sleep aid devices, targeting growing consumer markets [12] - The company plans to release new acoustic products in 2025, including a pet deodorizing purifier and a mechanical wave-based brain cortisol regulation device [12] - Strategic partnerships have been established with beauty and health management companies, aiming to introduce acoustic high-tech products to numerous retail locations [12] Operational and Strategic Outlook - The company aims to drive profitability by scaling high-margin acoustic products and reducing customer acquisition costs through its 5G+AI platform [12] - Datasea plans to accelerate its global expansion into the U.S. and Europe through strategic partnerships and mergers and acquisitions [12] - The company is focused on enhancing its intellectual property portfolio, particularly in ultrasound medical imaging and acoustic IoT technologies [12]

[Part I - Financial Information](index=3&type=section&id=Part%20I%20-%20Financial%20Information) [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's financial statements show significant revenue growth and improved equity, but also a continued net loss and a going concern risk [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Total assets grew to $5.90 million and stockholders' equity turned positive, driven by increased intangible assets and reduced liabilities Consolidated Balance Sheet Highlights (Unaudited) | Account | Dec 31, 2024 ($) | June 30, 2024 ($) | | :--- | :--- | :--- | | **Total Current Assets** | 1,595,096 | 2,647,892 | | **Total Noncurrent Assets** | 4,308,437 | 643,812 | | **Total Assets** | **5,903,533** | **3,291,704** | | **Total Current Liabilities** | 2,560,305 | 3,599,982 | | **Total Liabilities** | **2,677,125** | **3,599,982** | | **Total Stockholders' Equity (Deficit)** | **3,226,408** | **(308,278)** | - The significant increase in noncurrent assets is mainly due to the growth of **intangible assets**, which rose from **$546,001 to $4,081,544**[10](index=10&type=chunk) - The company shifted from a **stockholders' deficit of $308,278 to a positive equity of $3,226,408**, largely due to an increase in additional paid-in capital[10](index=10&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Substantial revenue growth for the three and six-month periods led to higher gross profit, though the company remains in a net loss position Three Months Ended December 31, (Unaudited) | Metric | 2024 ($) | 2023 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | 20,456,404 | 11,348,469 | +80.3% | | Gross Profit | 417,452 | 102,235 | +308.3% | | Loss from Operations | (1,238,352) | (1,788,536) | -30.8% | | Net Loss to the Company | (1,136,278) | (1,833,039) | -38.0% | | Basic and Diluted Net Loss per Share | (0.16) | (0.72) | -77.8% | Six Months Ended December 31, (Unaudited) | Metric | 2024 ($) | 2023 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | 41,537,498 | 18,229,212 | +127.9% | | Gross Profit | 614,433 | 176,970 | +247.2% | | Loss from Operations | (3,268,902) | (2,646,312) | +23.5% | | Net Loss to the Company | (3,098,267) | (1,855,095) | +67.0% | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Cash from financing activities funded investments in intangible assets and covered operating cash use, resulting in a slight net cash increase Cash Flow Summary for Six Months Ended December 31, (Unaudited) | Cash Flow Activity | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (1,587,572) | (5,633,283) | | Net cash used in investing activities | (3,957,527) | (71,816) | | Net cash provided by financing activities | 5,659,128 | 6,241,781 | | **Net increase in cash** | **86,839** | **417,988** | - The primary use of cash in investing activities was the **acquisition of intangible assets, totaling $3.95 million**[17](index=17&type=chunk) - Financing activities were a key source of cash, with **$5.94 million in net proceeds from the issuance of common stock**[17](index=17&type=chunk) [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the company's VIE structure, going concern uncertainty, revenue sources, and significant financing and acquisition transactions - The company operates primarily through a **Variable Interest Entity (VIE) structure** in the People's Republic of China (PRC)[20](index=20&type=chunk) - A **1-for-15 reverse stock split** was effective on January 19, 2024, with all share amounts retroactively restated[35](index=35&type=chunk) - There is **substantial doubt about the Company's ability to continue as a going concern** due to recurring losses and an accumulated deficit of approximately **$42.54 million**[36](index=36&type=chunk) Revenue Breakdown for Six Months Ended Dec 31, 2024 | Revenue Source | Amount ($) | | :--- | :--- | | 5G AI Multimodal communication | 41,161,572 | | Acoustic Intelligence Business | 45,768 | | Software licensing | 326,936 | | Smart City business | 3,046 | | Other | 176 | | **Total revenue** | **41,537,498** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses strong revenue growth from its 5G+AI business, ongoing net losses, going concern risks, and material weaknesses in internal controls [Overview](index=28&type=section&id=Overview) The company operates via a VIE structure in China, focusing on acoustic tech and a rapidly growing 5G+AI digital business - Datasea is a Nevada-based holding company with business activities in China conducted through a **VIE structure**[158](index=158&type=chunk) - For the six-month period ending Dec 31, 2024, **revenue grew 127.86% to $41.54 million**, driven by the 5G+AI multimodal digital business[160](index=160&type=chunk) - The company is focusing on five key application areas for its acoustic technology: **acoustic industry, agriculture, healthcare, health, and IoT**[165](index=165&type=chunk) - The **5G+AI multimodal digital platform is the main revenue source**, serving sectors like banking, insurance, and gaming[184](index=184&type=chunk)[201](index=201&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Revenue grew significantly for both three and six-month periods, but widening net loss for the six-month period reflects rising operating expenses Three-Month Operational Comparison (Ended Dec 31) | Metric | 2024 ($) | 2023 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | 20,456,404 | 11,348,469 | +80.3% | | Gross Profit | 417,452 | 102,235 | +308.3% | | Gross Margin | 2.0% | 0.9% | +1.1 p.p. | | Net Loss to Company | (1,136,278) | (1,833,039) | -38.0% | Six-Month Operational Comparison (Ended Dec 31) | Metric | 2024 ($) | 2023 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | 41,537,498 | 18,229,212 | +127.9% | | Gross Profit | 614,433 | 176,970 | +247.2% | | Gross Margin | 1.5% | 1.0% | +0.5 p.p. | | Net Loss from Cont. Ops | (3,098,267) | (2,688,641) | +15.2% | - The increase in G&A expenses for the six-month period was primarily due to a **$514,297 increase in stock compensation expense** and a **$369,845 increase in professional service fees**[317](index=317&type=chunk) [Liquidity and Capital Resources](index=53&type=section&id=Liquidity%20and%20Capital%20Resources) The company faces a working capital deficit and relies on equity financing to fund operations and investments, highlighting going concern risks - As of December 31, 2024, the company had a **working capital deficit of $965,209** and a current ratio of 0.62:1[325](index=325&type=chunk) Six-Month Cash Flow Summary (Ended Dec 31) | Activity | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | (1,587,572) | (5,633,283) | | Net cash used in investing activities | (3,957,527) | (71,816) | | Net cash provided by financing activities | 5,659,128 | 6,241,781 | - The company's **accounts receivable balance decreased by 70.64%** to $210,980, indicating improved cash collection[343](index=343&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company is exempt from this disclosure requirement as a "smaller reporting company" - The company is exempt from this disclosure requirement due to its status as a **"smaller reporting company"**[376](index=376&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls were ineffective due to material weaknesses in internal controls over financial reporting - The CEO and CFO concluded that the company's **disclosure controls and procedures were not effective** as of the end of the reporting period[377](index=377&type=chunk) - Identified material weaknesses include **inadequate segregation of duties**, a **lack of personnel with U.S. GAAP expertise**, and **insufficient written accounting policies**[378](index=378&type=chunk) - Management is taking steps to **enhance internal controls**, including improving cost control and project management[385](index=385&type=chunk)[386](index=386&type=chunk)[387](index=387&type=chunk)[388](index=388&type=chunk)[389](index=389&type=chunk) [Part II - Other Information](index=62&type=section&id=Part%20II%20-%20Other%20Information) [Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any pending legal proceedings - The company is **not currently involved in any legal proceedings**[393](index=393&type=chunk) [Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) The company is exempt from this disclosure requirement as a "smaller reporting company" - The company is exempt from this disclosure requirement due to its status as a **"smaller reporting company"**[394](index=394&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company details two significant equity financing events in July and September 2024 to fund R&D and corporate purposes - On July 2, 2024, a registered direct offering raised gross proceeds of approximately **$2.25 million**[396](index=396&type=chunk) - In September 2024, the company issued **1,932,224 shares to three non-U.S. investors at $2.06 per share**, including to the CEO and a director[395](index=395&type=chunk) [Defaults Upon Senior Securities](index=63&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - **None**[401](index=401&type=chunk) [Mine Safety Disclosures](index=63&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - **Not applicable**[402](index=402&type=chunk) [Other Information](index=63&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter - No director or officer adopted, modified, or terminated a **Rule 10b5-1 or non-Rule 10b5-1 trading arrangement** during the quarter[404](index=404&type=chunk) [Exhibits](index=64&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications and XBRL data files - Key exhibits include **CEO and CFO certifications** (Exhibits 31.1, 31.2, 32.1, 32.2) and **Inline XBRL documents** (Exhibit 101 series)[405](index=405&type=chunk)

Core Insights - Datasea Inc. reported an expected revenue of approximately $20.5 million for Q2 FY2025, marking an 81% increase from $11.3 million in the same period last year [1] - The gross profit for the same quarter is projected to be $0.41 million, reflecting a significant 310% increase from $0.1 million year-over-year [1] - The growth in revenue and gross profit is attributed to the expansion of the company's 5G AI multimodal digital business and increased market penetration in China [1][2] Company Overview - Datasea Inc. specializes in acoustic high-tech and 5G-AI multimodal digitalization, providing products, services, and solutions for enterprise and retail customers [3] - The company utilizes advanced R&D technology as the backbone for its products, operating its 5G multimodal digital segment on a cloud platform based on AI [3] - Datasea employs cutting-edge technologies in its acoustics business to combat viruses and is also developing applications in medical ultrasonic cosmetology [3] Strategic Initiatives - The company has established a wholly-owned subsidiary, Datasea Acoustics LLC, in Delaware to facilitate its entry into the U.S. market as part of its global expansion strategy [3] - Datasea's CEO emphasized the importance of their focus on 5G + AI multimodal solutions, which has led to increased adoption of their high-margin technical products and services [2] - The strategic placement of acoustic high-tech products in over 400 high-quality physical retail stores across China is expected to enhance financial results in the upcoming quarters [2]