| SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING
POLICIES Basis of Accounting The consolidated financial statements of the Group have been
prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The consolidated financial statements include the financial statements of the Company, its subsidiaries, the VIEs and VIEs’
subsidiaries for which the Company is the ultimate primary beneficiary. 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. A VIE is an entity in which the Company or its subsidiary, through
contractual arrangements, bears the risks of, and enjoys the rewards normally associated with, ownership of the entity, and therefore
the Company or its subsidiary is the primary beneficiary of the entity. All significant transactions and balances among the Company,
its subsidiaries, the VIEs and VIEs’ subsidiaries have been eliminated upon consolidation. COVID-19 Considerations In December 2019, a novel strain of coronavirus was reported
to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including
the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19)
a “Public Health Emergency of International Concern,” and on March 11, 2020, the World Health Organization characterized
the outbreak as a “pandemic.” Governments in affected countries are imposing travel bans, quarantines and other emergency
public health measures, which have caused material disruption to businesses globally resulting in an economic slowdown. These measures,
though temporary in nature, may continue and increase depending on developments in the COVID-19’s outbreak. We have experienced some disruption to our business during the
Chinese government mandated lockdown in February 2020. As a result of these unexpected disruptions, we have suspended our business
for two weeks according to the instruction of the local government, related to COVID-19, which may adversely affect our relationships
with our customers. In response to governmental directives and recommended safety
measures, we have implemented personal safety measures at all our facilities. However, these measures may not be sufficient to
mitigate the risk of infection by COVID-19. In the longer-term, the COVID-19 pandemic is likely to adversely
affect the economies and financial markets of many countries, and could result in a global economic downturn and a recession. This
would likely adversely affect our business in turn negatively impact our results of operations. While we continue to see an increasing demand for our services,
the environment remains uncertain and it may not be sustainable over the longer term. The degree to which the pandemic ultimately
impacts our business and results of operations will depend on future developments beyond our control, including the severity of
the pandemic, the extent of actions to contain or treat the virus, how quickly and to what extent normal economic and operating
conditions can resume, and the severity and duration of the global economic downturn that results from the pandemic. Use of Estimates In preparing the consolidated financial statements in conformity
with US GAAP, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses
during the reporting period. These estimates are based on information as of the date of the consolidated financial statements.
Significant estimates required to be made by management include, but are not limited to, the valuation of accounts receivable,
prepayments, and other receivables, useful lives of property and equipment and intangible assets, the recoverability of long-lived
assets and provision necessary for contingent liabilities. Actual results could differ from those estimates. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash accounts,
interest bearing savings accounts and time certificates of deposit with a maturity of three months or less when purchased. The
Group considers all highly liquid investment instruments with an original maturity of three months or less from the date of purchase
to be cash equivalents. The Group maintains most of the bank accounts in the PRC. Cash balances in bank accounts in PRC are not
insured by the Federal Deposit Insurance Corporation or other programs. Accounts Receivable Accounts receivable are recognized and carried at original invoiced
amount less an estimated allowance for uncollectible accounts. The Group usually determines the adequacy of reserves for doubtful
accounts based on individual account analysis and historical collection trends. The Group establishes a provision for doubtful
receivables when there is objective evidence that the Group may not be able to collect amounts due. The allowance is based on management’s
best estimates of specific losses on individual exposures, as well as a provision on historical trends of collections. Based on
management of customers’ credit and ongoing relationship, management makes conclusions whether any balances outstanding at
the end of the period will be deemed uncollectible on an individual basis and on aging analysis basis. The provision is recorded
against accounts receivables balances, with a corresponding charge recorded in the consolidated statements of income and comprehensive
income. Delinquent account balances are written-off against the allowance for doubtful accounts after management has determined
that the likelihood of collection is not probable. At June 30, 2020 and 2019, the Group determined that all accounts receivable
are collectible and thus the allowance for doubtful accounts is $0. Equipment and vehicles, net Equipment and vehicles are stated at cost less accumulated depreciation.
Maintenance and repairs are charged to expense as incurred. Depreciation is provided on the straight-line method based on the estimated
useful lives of the assets as follows:
Useful Lives
Office Equipment 5 Years
Electronic Equipment 5 Years
Motor Vehicles 10 Years Expenditures for maintenance and repairs, which do not materially
extend the useful lives of the assets, are charged to expense as incurred. Expenditures for major renewals and betterment which
substantially extend the useful life of assets are capitalized. The cost and related accumulated depreciation of assets retired
or sold are removed from the respective accounts, and any gain or loss is recognized in the consolidated statements of income and
other comprehensive income in other income or expenses. Intangible assets, net Intangible assets consist of only acquired software. The Group
has purchased software from third parties used for operation management. Software is initially recorded at cost and amortized on
a straight-line basis over the estimated economic useful lives of ten years. Leases Leases are classified at lease commencement date as either a
finance lease or an operating lease. A lease is a finance lease if it meets any of the following criteria: (a) the lease transfers
ownership of the underlying asset to the lessee by the end of the lease term. (b) the lease grants the lessee an option to purchase
the underlying asset that the lessee is reasonably certain to exercise, (c) the lease term is for the major part of the remaining
economic life of the underlying asset, (d) the present value of the sum of the lease payments and any residual value guaranteed
by the lessee that is not already reflected in the lease payments equals or exceeds substantially all of the fair value of the
underlying asset or (e) the underlying asset is of such a specialized nature that it is expected to have no alternative use to
the lessor at the end of the lease term. When none of the criteria meets, the lease shall be classified as an operating lease. For lessee, a lease is recognized as a right-of-use asset with
a corresponding liability at lease commencement date. The lease liability is calculated at the present value of the lease payments
not yet paid by using the lease term and discount rate determined at lease commencement. The right-of-use asset is calculated as
the lease liability, increased by any initial direct costs and prepaid lease payments, reduced by any lease incentives received
before lease commencement. The right-of-use asset itself is amortized on a straight-line basis unless another systematic method
better reflects how the underlying asset will be used by and benefits the lessee over the lease term. In February 2016, the Financial Accounting Standards Board (“FASB”)
issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). The amendments in this ASU require an entity
to recognize a right-of-use asset and lease liability for all leases with terms of more than 12 months. Recognition, measurement
and presentation of expenses will depend on classification as a finance or operating lease. The amendments also require certain
quantitative and qualitative disclosures about leasing arrangements. The Company adopted ASC 842 effective as of the beginning
of the first period presented by using a modified retrospective transition approach in the accompanying financial statements of
the Company. The adoption of this standard had a material impact on the Company’s financial position, with no material impact
on the results of operations and cash flows (see Notes 7 and 8). The Group’s accounting policy is to recognize lease payments
as rental expense for short-term leases less than 12 months. During the fiscal year ended June 30, 2020 and 2019, the Group recognized
$65,702 and $76,314 in rental expense pertaining to two short-term leases. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment when events or
changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Long-lived assets with carrying
values that are not expected to be recovered through future cash flows are written down to their estimated fair values. The carrying
value of a long-lived asset is deemed not recoverable if it exceeds the sum of undiscounted cash flows expected to result from
the use and eventual disposition of the asset. If the asset’s carrying value exceeds the sum of its undiscounted cash flows,
a non-cash asset impairment charge equal to the excess of the asset’s carrying value over its estimated fair value is recorded.
Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction
between market participants at a specified measurement date. We measure fair value using market price indicators or, in the absence
of such data, appropriate valuation technique. Fair Value of Financial Instruments The fair value of a financial instrument is defined as the exchange
price that would be received from an asset or paid to transfer a liability (as exit price) in the principal or most advantageous
market for the asset or liability in an orderly transaction between market participants at the measurement date. The carrying amounts
of financial assets and liabilities, such as cash and cash equivalents, time deposits, accounts receivable, prepaid expenses and
other current assets, accounts payable, and other current liabilities, approximate their fair values because of the short maturity
of these instruments and market rates of interest. ASC 820 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 – Quoted prices in active markets for
identical assets and liabilities. Level 2 – Quoted prices in active markets for
similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly,
for substantially the full term of the financial instrument. Level 3 – Unobservable inputs that are supported
by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain
pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The Group considers the carrying amount of its financial assets
and liabilities, which consist primarily of cash and cash equivalents, accounts receivable, and accounts payable to approximate
the fair value of the respective assets and liabilities as of June 30, 2020 and 2019 owing to their short-term or immediate nature. Revenue Recognition The Group adopted Accounting Standards Codification No. 606,
Revenue from Contracts with Customers The Group generates revenues primarily from installation &
maintenance, housekeeping services and senior care services. The Group sells its services through a third-party service provider
WeChat platform. The Group’s revenues are subject to value added tax (“VAT”). To record VAT payable, the Group
uses the gross presentation method, which presents the taxable services and the available input VAT amount (at the rate applicable
to the supplier). Revenues are recorded net of VAT in accordance with the ASC 606. The recognition of revenues involves certain
management judgments. The amount and timing of our revenues could be materially different for any period if management made different
judgments or utilized different estimates. Installation & maintenance Installation and maintenance services mainly consisting of the
following services: technical home installation and repair, maintenance and other after sale services. Revenues from installation
and maintenance services are recognized at a point in time once the service is transferred to the customer. For service arrangements
that include multiple performance obligations, revenues are allocated to each performance obligation based on its standalone selling
price. The Group allocates arrangement consideration in multiple-deliverable revenue arrangements at the inception of an arrangement
to all deliverables based on the relative selling price method, generally based on the best estimate of selling price. The Group,
acting as principal, contracts with third-party service providers (i.e., service outlets), acting as agents. The Group is responsible
for market development and providing the customer information to the service provider, directing the outlet to provide services
and coordination with the customer, while the service provider provides the door-to-door service. The price of services is set
by the Group and the service provider is only responsible for collection of payments. When the Group’s end customers place
orders online for services, they pay either a required visit fee or the estimated full amount of service fee through third-party
payment platforms, such as WeChat Pay and Alipay. The Group chooses the service provider by the proximity principle. If the customer
is not satisfied with the chosen provider, the service provider can be re-selected. Regardless of the service provider’s
performance, the Group is still liable to complete the orders. If the end customer fails to pay after satisfactory service is provided
and the service provider is unable to collect payment from the end customer, the Group will communicate directly with the end customer.
The service provider is not obligated to pay the Group. To minimize our risk, the service provider will remit payment of any outstanding
receivables each month. Housekeeping services Housekeeping services refer to services including housecleaning,
nanny service, maternity matron and personnel staffing. Revenues from housekeeping are recognized at a point in time upon completion
of services to the customer based on the relative selling price method. Senior care services Senior care services refers to services provided through the
company’s E-watch, which include blood pressure monitoring, heart rate analytics, daily steps count, location and track record,
call for help through WeChat or phone, and other care services rendered to senior customers through an E-watch, which is provided
to customers when they pay the annual fees. The customers sign a contract for the services with the Company. The contract term
is normally one year. The revenues from senior care services are generated from E-watch sales and related E-watch monitoring services
provided. Revenues from E-watch sales are recognized at a point in time once customers receive the E-watch and the revenues of
the services provided are recognized over the contractual service period. Senior care services consist of the sale of E-watches and related
care services. The E-watch is not sold to customers separately; the E-watch is sold only in conjunction with a contract to provide
senior care services, which are facilitated through the E-watch. The service can be renewed as long as the customers continue to
pay annual fees. Normally the service period is one year and the renewal annual fee is RMB 699. Consequently, the Company regards
these operating activities as operating in one material segment, being the revenue of senior care services. Cost of revenue Cost of revenue consists of service fees paid to staff, outlets,
suppliers and the cost of accessories sold. Income Taxes Income taxes are provided on an asset and liability approach
for financial accounting and reporting of income taxes. Any PRC tax paid by subsidiaries during the year is recorded. Deferred
income taxes are recognized for all significant temporary differences at enacted rates and classified as current or non-current
based upon the classification of the related asset or liability in the financial statements. A valuation allowance is provided
to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all, the deferred
tax asset will not be realized. Ordinary Shares The Company accounts for repurchased ordinary shares under the
cost method and includes such treasury stock as a component of the common shareholders’ equity. Cancellation of treasury
stock is recorded as a reduction of ordinary shares, additional paid-in capital and retained earnings, as applicable. An excess
of purchase price over par value is allocated to additional paid-in capital first with any remaining excess charged entirely to
retained earnings. Related Parties Parties are considered to be related if one party has the ability,
directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and
operating decisions. Parties are also considered to be related if they are subject to common control or significant influence,
such as a family member or relative, shareholder, or a related corporation. Earnings Per Share The Company computes earnings per share (“EPS”)
in accordance with ASC 260, “Earnings per Share”. ASC 260 requires companies with complex capital structures to present
basic and diluted EPS. Basic EPS is measured as net income divided by the weighted average ordinary shares outstanding for the
period. Diluted EPS is similar to basic EPS but presents the dilutive effect on a per share basis of 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. There were no potentially dilutive ordinary shares
during the fiscal years ended June 30, 2020, 2019 and 2018. Comprehensive Income/ (Loss) ASC Topic 220 establishes standards for reporting comprehensive
income and its components. Comprehensive income or loss is defined as the change in equity during a period from transactions and
other events from non-owner sources. During the fiscal years ended June 30, 2020, 2019 and 2018, a foreign currency translation
gain (loss) adjustment of ($837,040), ($729,348) and $58,355, respectively, was recognized as a component of accumulated other
comprehensive income (loss), respectively. Foreign Currency Translation The Group’s principal country of operations is the PRC.
The financial position and results of its operations are determined using RMB, the local currency, as the functional currency.
The consolidated financial statements are reported using U.S. Dollars. The results of operations and the statement of cash flows
denominated in foreign currency are translated at the average rate of exchange during the reporting period. Assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that
date. The equity denominated in the functional currency is translated at the historical rate of exchange at the time of capital
contribution. Because cash flows are translated based on the average translation rate, amounts related to assets and liabilities
reported on the consolidated statements of cash flows will not necessarily agree with changes in the corresponding balances on
the consolidated balance sheets. Translation adjustments are included as a separate component of accumulated other comprehensive
income (loss). The value of RMB against U.S. Dollar may fluctuate and is affected
by, among other things, changes in the PRC’s political and economic conditions. Any significant revaluation of RMB may materially
affect the Company’s consolidated financial condition in terms of U.S. Dollar reporting. The following table outlines the
currency exchange rates that were used in the consolidated financial statements:
June 30, 2020 June 30, 2019 June 30, 2018
Year-end spot rate US$1= 7.0795 RMB US$1= 6.8747 RMB US$1= 6.6166 RMB
Average rate US$1= 7.0293 RMB US$1= 6.8260 RMB US$1= 6.5054 RMB Segment Reporting Operating segments, and the amounts of each segment item reported
in the consolidated financial statements, are identified from the financial information provided regularly to the Group’s
most senior executive management for the purposes of allocating resources to, and assessing the performance of, the Group’s
various lines of business and geographical locations. Individually material operating segments are not aggregated
for financial reporting purposes unless the segments have similar economic characteristics and are similar in respect of the nature
of products and services, the nature of production processes, the type or class of customers, the methods used to distribute the
products or provide the services, and the nature of the regulatory environment. Operating segments which are not individually material
may be aggregated if they share a majority of these criteria. The Group’s three segments are installation & maintenance,
housekeeping and senior care services. Operation of senior care services began in August, 2019. The Group started generating revenue
from this new segment in August 2019. Commitments and Contingencies The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Certain conditions may exist as of the date the consolidated financial statements
are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or
fail to occur. The Company assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.
There are no known commitments or contingencies as of June 30, 2020 or 2019. Concentration of Risks Exchange Rate Risks The Company’s Chinese subsidiaries may be exposed
to significant foreign currency risks from exchange rate fluctuations and the degree of volatility of foreign exchange rates between
the U.S. Dollar and the RMB. As of June 30, 2020 and 2019, the RMB denominated cash and cash equivalents amounted to $25,022,199
and $23,229,372, respectively. Currency Convertibility Risks Substantially all of the Group’s operating activities
are transacted in RMB, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either
through the People’s Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rates quoted
by the People’s Bank of China. Approval of foreign currency payments by the People’s Bank of China or other regulatory
institutions requires submitting a payment application form together with other information such as suppliers’ invoices,
shipping documents and signed contracts. Concentration of Credit Risks Financial instruments that potentially subject the Group to
concentration of credit risks consist primarily of cash and cash equivalents and accounts receivable, the balances of which stated
on the consolidated balance sheets represented the Group’s maximum exposure. The Group places its cash and cash equivalents
in good credit quality financial institutions in China. Interest Rate Risks The Company is subject to interest rate
risk. Although the Company’s interest-bearing loans carry fixed interest rates within the reporting period, the Company is
still subject to the risk of adverse changes in the interest rates charged by the banks if and when these loans are refinanced. Liquidity Risks The Company’s primary sources of
liquidity consist of existing cash balances and cash flows from the Company’s operating activities. The Company’s ability
to generate sufficient cash flows from its operating activities is primarily dependent on its sales of products to the Company’s
customers at margins sufficient to cover fixed and variable expenses. As of June 30, 2020 and 2019, the Company had cash and cash
equivalents of $25,022,199 and $23,229,372, respectively. Management believes that the current cash, cash to be generated from
operations and access to loans from banks and related parties will be sufficient to meet the Company’s working capital needs
for at least the next twelve months. However, the Company does not have any amounts committed to be provided by its related parties.
The Company is also not dependent upon this offering to meet liquidity needs for the next twelve months. However, the Company plans
to expand its business by investing in lease assets and APP software either through acquisition or research and development and
construction of facilities. The Company will need to raise additional capital through financing, including its initial public offering,
to implement its growth strategies and strengthen its position in the market. Risks and Uncertainties The operations of the Group are located in the PRC. Accordingly,
the Group’s business, financial condition, and results of operations may be influenced by political, economic, and legal
environments in the PRC, as well as by the general state of the PRC economy. The Group’s results may be adversely affected
by changes in the political, regulatory and social conditions in the PRC. Although the Group has not experienced losses from these
situations and believes that it is in compliance with existing laws and regulations including its organization and structure disclosed
in Note 1, this may not be indicative of future results. Recent Accounting Pronouncements The Group considers the applicability and impact of all ASUs.
Management periodically reviews new accounting standards that are issued. In June 2016, the FASB issued ASU No. 2016-13, “Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. This amends guidelines on
reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. For assets held at amortized
cost basis, Topic 326 eliminates the probable initial recognition threshold in current U.S. GAAP and, instead, requires an entity
to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted
from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available-for-sale
debt securities, credit losses should be measured in a manner similar to current U.S. GAAP, however Topic 326 will require that
credit losses be presented as an allowance rather than as a write-down. ASU 2016-13 affects entities holding financial assets and
net investment in leases that are not accounted for at fair value through net income. The amendments affect loans, debt securities,
trade receivables, net investments in leases, off balance sheet credit exposures, reinsurance receivables, and any other financial
assets not excluded from the scope that have the contractual right to receive cash. The amendments in this ASU will be effective
for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The Company is currently
evaluating the impact of the adoption of ASU 2016-13 on its consolidated financial statements. |
