Datasea(US:DTSS)2022-09-27 16:00Financial Performance - Datasea reported a net loss of approximately $6.52 million for the year ended June 30, 2022, compared to a net loss of $4.65 million for the previous year, indicating a worsening financial performance [416]. - The company had an accumulated deficit of approximately $18.58 million as of June 30, 2022, and negative cash flow from operating activities of approximately $5.14 million for the year [416]. - Revenues for the year ended June 30, 2022, were $17,080,911, representing a $16,905,773 or 9,653% increase compared to $175,138 in 2021, primarily driven by the expansion into 5G messaging services [422]. - Cost of revenues increased to $16,125,238 for the year ended June 30, 2022, reflecting a $16,044,103 or 19,775% increase from $81,135 in 2021, mainly due to the costs associated with the 5G SMS service platform [426]. - Gross profit for the year ended June 30, 2022, was $955,673, a $861,670 or 917% increase from $94,003 in 2021, attributed to the delivery of services related to the 5G SMS service platform [427]. - Net loss for the year ended June 30, 2022, was $6,521,708, a $1,873,231 or 40% increase from $4,648,477 in 2021, mainly due to increased operating expenses [434]. - As of June 30, 2022, the company had a working capital deficit of $867,774, improving from a deficit of $2,372,682 in 2021, with a current ratio of 0.59:1 [436]. - Net cash used in operating activities was $5,139,712 for the year ended June 30, 2022, an increase of $1,191,363 compared to $3,948,349 in 2021, primarily due to increased net loss and accounts receivable [439]. - Total liabilities decreased by 43.52% to $2,156,045 as of June 30, 2022, attributed to the alignment of accounts payable with accounts receivable, indicating improved working capital management [442]. Business Development and Strategy - Datasea signed a $14.99 million procurement agreement to supply 5G messaging services with Zhangzhou Baina Intelligent Technology Co., demonstrating its capability to provide rich messaging experiences at scale [410]. - The company entered into a $22.3 million sales agreement to provide 5G messaging services with Hangzhou Runsheng Network Technology Ltd, reflecting an acceleration in demand for its services [411]. - Datasea aims to diversify its product portfolio and improve operating efficiency to maximize long-term sustainable growth of earnings and operating funds [402]. - Datasea's digital smart city platform integrates IoT, big data, and AI to enhance urban management and improve citizens' quality of life [406]. - The company plans to expand its addressable clients and market by offering a wider selection of acoustic intelligence products, including ultrasonic air sterilizers [443]. - Datasea intends to strengthen its acoustic intelligence business operations in the U.S. to enhance design, innovation, and sales capabilities [443]. - New products will be developed for a broader range of applications, with an emphasis on upgrading the 5G messaging business to capture market share [443]. - The company aims to improve margins through operational discipline and growth in higher-margin hardware, services, and solutions [443]. - Global sales will be expanded, and core products will be localized to better meet customer demands [445]. - The company plans to establish production lines for vertical integration to achieve cost advantages [445]. - Strategic alliances will be created through mergers and acquisitions or joint ventures to enhance synergy [445]. - Datasea will enhance brand awareness through marketing and obtain PCT international patents to increase the value of intangible assets [445]. Research and Development - The company holds 27 patents and 77 software copyrights, with 20 patent applications pending, indicating a strong focus on innovation and R&D [401]. - Research and development expenses rose to $1,259,739 for the year ended June 30, 2022, marking a $407,900 or 48% increase from $851,839 in 2021, with plans to invest approximately $10 million in technological product development over the next three years [429]. - Management believes the company will have sufficient working capital to meet its operating needs for at least the next 12 months [418].